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Accounting Policies of Kwality Pharmaceuticals Ltd. Company
Mar 31, 2025
2. Material Significant Policies
2.1 Statement of Compliance
These financial statements are Standalone Financial Statement of the Company that have been
prepared in accordance with Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules,2015 (as amended) together with the
comparative period data as at and for the year ended March 31, 2025 and the relevant provisions
of Divisions II of Schedule III to the Companies Act,2013 (âthe Actâ) and guidelines issued by
the Securities and Exchange Board of India (SEBI), as applicable.
2.2 Basis of Preparation and Presentation
The standalone financial statements have been prepared on the historical cost convention and on
an accrual basis, except for:
(i) certain financial instruments that are measured at fair values at the end of each reporting
period;
(ii) Defined benefit plans - plan assets that are measured at fair values at the end of each
reporting period, as explained in the accounting policies below:
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services
The standalone financial statements are presented in Indian Rupees (?) and all values are rounded
to the nearest Lakhs (? 00,000) upto Two decimal, except when otherwise indicated.
All the Assets & Liabilities have been classified as current or non-current as per the Companyâs
normal operating cycle and other criteria as set out in Ind AS and Schedule III to the said Act.
a. Classification of Current and Non-current
An asset is treated as current when it is:
i) Expected to be realized or intended to be sold or consumed in normal operating cycle and
company has identified twelve months as its normal operating cycle based on the time between
the acquisition of assets for processing and their realization in cash and cash equivalents.
ii) Held primarily for the purpose of trading,
iii) Expected to be realized within twelve months after the reporting period, or
iv) Cash or Cash equivalent unless restricted from being exchanged or used to settle a liability
for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
i) It is expected to be settled in normal operating cycle,
ii) It is held primarily for the purpose of trading,
iii) It is due to be settled within twelve months after the reporting period, or
iv) There is no unconditional right to determine the settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non - current.
b. Foreign Currency Transactions
On initial recognition, transactions in currencies other than the Company''s functional
currency(INR) are translated at exchange rates on the date of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated into the
functional currency at the exchange rate on that date. Exchange differences arising on the
settlement of monetary items or on translating monetary items at rates different from those at
which they were translated on initial recognition during the year or in previous period are
recognized in profit or loss in the period in which they arise.
c. Segment reporting
The Company operates in a Single segment of manufacturing of broad range of finished
pharmaceutical formulations in a dosage form viz. Tablets, Capsules, Syrup, Dry Syrup,
Injections etc. The product has the same risks and returns, which are predominantly governed by
market conditions, namely demand and supply position. Thus, in the context of Ind AS 108
âOperating Segmentâ, issued by the Institute of Chartered Accountants of India, there is only
one identified reportable segment.
d. Property, Plant and Equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated
depreciation/amortization and impairment losses, if any. The cost comprises of the purchase
price (net of GST credit wherever applicable) and any attributable cost of bringing the property,
plant and equipment to its working condition for its intended use.
Subsequent expenditures related to an item of property, plant, and equipment are added to its
gross book value only if it increases the future benefits from the existing asset beyond its
previously assessed standard of performance.
The Company identifies and determines separate useful life for each major component of
property, plant and equipment, if they have useful life that is materially different from that of the
remaining asset.
Items such as Laboratory items is recognized in accordance with Ind AS 16 âProperty, Plant and
Equipmentâ when they meet the definition of property, plant and equipment. Otherwise, such
items are classified as Consumable expense or Inventories as per the nature of item.
Property, plant and equipment not ready for the intended use on the date of Balance Sheet are
disclosed as âCapital work-in-progressâ. Advances given towards acquisition of property, plant
and equipmentâs outstanding at each Balance Sheet date are disclosed as Capital Advances under
âOther Non-Current Assetsâ.
Losses arising from the retirement of, and gains and losses arising from disposal of property,
plant and equipment are measured as the difference between the net disposal proceeds and the
carrying amount of the property, plant and equipment and are recognized in the statement of
profit and loss when the property, plant and equipment is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment
are reviewed at each financial year end and adjusted prospectively, if appropriate.
e. Intangible asset:
Intangible assets are identifiable non-monetary assets without physical substance, such as
software, licenses, trademarks, and similar rights. An intangible asset is recognised only when it
is identifiable, the Company has control over the asset, it is probable that future economic
benefits will flow to the Company, and the cost of the asset can be measured reliably.
Intangible assets are initially measured at cost, which includes the purchase price and any directly
attributable costs necessary to make the asset ready for its intended use. After initial recognition,
intangible assets with finite useful lives are amortised on a straight-line basis over their estimated
useful life. The Company generally assumes a nil residual value unless otherwise assessed. The
amortisation method and the useful life are reviewed annually, and any changes are accounted
for prospectively.
f. Depreciation &Amortization on Fixed asset:
Depreciation on fixed assets is calculated on written down value basis using the rates arrived at
based on the useful life of the assets prescribed under Schedule II of the Companies Act, 2013
for the year ended on March 31, 2025.
The useful life of Property, Plant and Equipment as estimated by the Management on the basis
of expert advice and past experience are as under:
During the year ended March 31, 2025, the Company acquired an Intangible asset Technical know
how. The asset is being amortised over an estimated useful life of 10 years on a straight-line
basis, starting from the date it was available for use
g. Investment in nature of equity in subsidiaries
The Company has elected to recognize its investments in equity instruments in subsidiaries at a
cost in the standalone financial statements.
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated
impairment losses, if any. Where an indication of impairment exists, the carrying amount of the
investment is assessed and written down immediately to its recoverable amount. On disposal of
investment in the subsidiary, the difference between net disposal proceeds and the carrying
amounts are recognized in the standalone statement of profit and loss.
h. Inventories
Inventories are stated at cost or net realizable value whichever is lower. Cost include purchase
price, non-refundable taxes and delivery and handling cost and all costs incurred in bringing the
inventory to its present location and condition. Cost of raw materials, process chemicals, stores
and spares, packing material, and another inventory is determined on weighted average basis.
Finished goods stock is valued at cost or net realizable value whichever is lower. Cost of finished
goods comprises direct materials, direct labour and an appropriate proportion of variable and
fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and costs necessary to make the sale.
The factors that the Company considers in determining the allowance for slow-moving, obsolete,
and other non-saleable inventory include estimated shelf life, planned product discontinuances,
price changes, ageing of inventory, and introduction of competitive new products, to the extent
each of these factors impacts the Companyâs business and markets. The Company considers all
these factors and adjusts the inventory provision to reflect its actual experience periodically.
i. Statement of Cash Flows
Standalone Statement of Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals
of past or future operating cash receipts or payments and item of income or expenses associated
with investing or financing cash flows. The cash flows are segregated into operating, investing
and financing activities.
Mar 31, 2024
1. General Information
The Standalone Financial Statements of "Kwality Pharmaceuticals Limited" ("the Company") are for the year ended 31st March, 2024.
The Company is a domestic public limited company incorporated and domiciled in India and has its registered office at Village Nagkalan, Majitha Road, Amritsar,Punjab - 143601, India.
The company was incorporated as private limited company on 04/05/1983 under the Companies Act, 1956. The company was then converted into public limited company on 28/12/2015, subsequently name changed to Kwality Pharmaceuticals Limited. After that, the company obtained listing status of SME platform of Bombay Stock Exchange by making the Initial Public Offer and the shares of the company were listed on the SME platform of BSE on 18th of July, 2016.
The Company made an application for Migration of the Company''s Equity Shares from SME Platform of BSE Limited to the Main Board of the BSE on 09th April 2022 and received the final approval from BSE Limited on 10th June, 2022. Accordingly, Equity Shares of the Company were listed on the Main Board of BSE Limited with effect from 13th June, 2022. The company is engaged in the business of manufacturers, buyers and sellers of and dealers in all kind of drugs intermediates, chemicals, extracts, alkaloids and other pharmaceutical goods, toilet requisites, medicines, beverages and other medical preparations.
2. Material Significant Policies
2.1 Statement of Compliance
These financial statements are Standalone Financial Statement of the Company that have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,2015 (as amended) together with the comparative period data as at and for the year ended March 31, 2023 and the relevant provisions of Divisions II of Schedule III to the Companies Act,2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
2.2 Basis of Preparation and Presentation
The standalone financial statements have been prepared on the historical cost convention and on an accrual basis, except for:
(i) certain financial instruments that are measured at fair values at the end of each reporting period;
(ii) Defined benefit plans - plan assets that are measured at fair values at the end of each reporting period, as explained in the accounting policies below:
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services
The standalone financial statements are presented in Indian Rupees (^) and all values are rounded to the nearest Lakhs (^ 00,000) upto Two decimal, except when otherwise indicated.
All the Assets & Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria as set out in Ind AS and Schedule III to the said Act.
a. Classification of Current and Non-current
An asset is treated as current when it is:
i) Expected to be realized or intended to be sold or consumed in normal operating cycle and company has identified twelve months as its normal operating cycle based on the time between the acquisition of assets for processing and their realization in cash and cash equivalents.
ii) Held primarily for the purpose of trading,
iii) Expected to be realized within twelve months after the reporting period, or
iv) Cash or Cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
i) It is expected to be settled in normal operating cycle,
ii) It is held primarily for the purpose of trading,
iii) It is due to be settled within twelve months after the reporting period, or
iv) There is no unconditional right to determine the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non - current.
b. Foreign Currency Transactions
On initial recognition, transactions in currencies other than the Company''s functional currency(INR) are
translated at exchange rates on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate on that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the year or in previous period are recognized in profit or loss in the period in which they arise.
c. Segment reporting
The Company operates in a Single segment of manufacturing of broad range of finished pharmaceutical formulations in a dosage form viz. Tablets, Capsules, Syrup, Dry Syrup, Injections etc. The product has the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. Thus, in the context of Ind AS 108 "Operating Segment", issued by the Institute of Chartered Accountants of India, there is only one identified reportable segment.
d. Property, Plant and Equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation/amortization and impairment losses, if any. The cost comprises of the purchase price (net of GST credit wherever applicable) and any attributable cost of bringing the property, plant and equipment to its working condition for its intended use.
Subsequent expenditures related to an item of property, plant, and equipment are added to its gross book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
The Company identifies and determines separate useful life for each major component of property, plant and equipment, if they have useful life that is materially different from that of the remaining asset.
Items such as Laboratory items is recognized in accordance with Ind AS 16 "Property, Plant and Equipment" when they meet the definition of property, plant and equipment. Otherwise, such items are classified as Consumable expense or Inventories as per the nature of item.
Property, plant and equipment not ready for the intended use on the date of Balance Sheet are disclosed as "Capital work-in-progress". Advances given towards acquisition of property, plant and equipment''s outstanding at each Balance Sheet date are disclosed as Capital Advances under "Other Non-Current Assets".
Losses arising from the retirement of, and gains and losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the property, plant and equipment and are recognized in the statement of profit and loss when the property, plant and equipment is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
e.
Depreciation on Property, plant and equipment:
Depreciation on fixed assets is calculated on written down value basis using the rates arrived at based on the useful life of the assets prescribed under Schedule II of the Companies Act, 2013 for the year ended on March 31, 2024.
The useful life of Property, Plant and Equipment as estimated by the Management on the basis of expert advice and past experience are as under:
|
Class of Assets |
Useful life (in years) |
|
Plant & Machinery |
20 years |
|
Building |
20-30 years |
|
Furniture |
10 years |
|
Vehicles |
8 years |
|
Computer Equipment |
3 years |
|
Laboratory Equipment |
10- 20 years |
|
Office Equipment |
5 years |
|
Lift |
8 years |
|
Electric Fittings |
10 years |
|
*Freehold Land held by the company is |
not depreciated. |
f. Investment in nature of equity in subsidiaries
The Company has elected to recognize its investments in equity instruments in subsidiaries at a cost in the standalone financial statements.
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investment in the subsidiary, the difference between net disposal proceeds and the carrying amounts are recognized in the standalone statement of profit and loss.
g. Inventories
Inventories are stated at cost or net realizable value whichever is lower. Cost include purchase price, non-refundable taxes and delivery and handling cost and all costs incurred in bringing the inventory to its present location and condition. Cost of raw materials, process chemicals, stores and spares, packing material, and another inventory is determined on weighted average basis.
Finished goods stock is valued at cost or net realizable value whichever is lower. Cost of finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs necessary to make the sale.
The factors that the Company considers in determining the allowance for slow-moving, obsolete, and other non-saleable inventory include estimated shelf life, planned product discontinuances, price changes, ageing of inventory, and introduction of competitive new products, to the extent each of these factors impacts the Company''s business and markets. The Company considers all these factors and adjusts the inventory provision to reflect its actual experience periodically.
h. Statement of Cash Flows
Standalone Statement of Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
i. Provisions, contingent liabilities, and contingent assets
Provisions are recognized when:
(i) The Company has a present obligation (legal or constructive) as a result of a past event,
(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.
When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities and contingent assets
Contingent liability is disclosed for,
(i) Possible obligations that will be confirmed only by future events not wholly within the control of the Company, or
(ii) Present obligations arise from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized in the financial statements. A contingent asset is disclosed where an inflow of economic benefits is probable. Contingent assets are assessed continually and, if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.
j.
Employee Benefits
The company''s contribution to the defined contribution plan paid/payable for the year is charged to the Standalone Statement of Profit and loss.
(b) Defined Benefit Plans
⢠The Company has gratuity as a defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The cost of providing benefits under the defined benefit plan is determined based on actuarial valuation using the projected unit credit method. The gratuity fund is administered through the Life Insurance Corporation of India.
⢠The liability in respect of defined benefit plans is calculated using the projected unit credit method (PUCM) with actuarial valuations being carried out at the end of each annual reporting period.
⢠The current service cost of the defined benefit plan, recognised in the statement of profit and loss as employee benefits expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements.
⢠The Net Interest Cost on Defined Benefit Obligations is also included in the Statement of Profit and Loss under the Head "Employees Benefit Expenses".
⢠Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to OCI in the period in which they arise and are reflected immediately in retained earnings and is not reclassified to profit or loss.
k. Taxes on Income
(a) Tax expense
⢠Tax expense consists of current and deferred tax. Income tax expense is recognized in the profit or loss except to the extent that it relates to items recognized in OCI or directly in equity as in that case it is recognized in OCI or directly in equity respectively. Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
⢠Deferred tax resulting from "timing differences" between taxable and accounting income that originate in one period and are capable of being reversed in one or more subsequent period is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets can be realized in future. However, where there is unabsorbed capital expenditure or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date.
l. Exceptional Items
Exceptional items refer to items of income or expense,including tax items, within the statement of profit and loss from ordinary activities which are non-recurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.
m. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
n. Revenue Recognition
The Company recognizes revenue when the same can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company''s activities as described below. Revenue is measured at the value of the consideration received or receivable, considering defined terms of payment and excluding taxes or duties collected on behalf of the government. Amounts disclosed as revenue are exclusive of GST and net of returns, trade allowances, rebates, discounts, and amounts collected on behalf of third parties.
i) Sale of goods
Sales are recognized when substantial risk and rewards of ownership are transferred to customer, in case of domestic customers, sales generally take place when goods are dispatched or delivery is handed over to the transporter. In case of export customers, sales generally take place when goods are shipped on-board based on bill of lading.
Interest & Other Indirect Income
ii)
a) Interest income is recognized on time proportion basis considering the amount invested and rate of interest.
b) Revenue in respect of other claims is recognized on an accrual basis to the extent the ultimate realization is reasonably certain.
o. Impairment
(i) Financial Assets
The company''s financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired, if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset.
(ii) Non-Financial Assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
An impairment loss is recognized in the Statement of Profit or Loss if the estimated recoverable amount of an asset or its cash generating unit is lower than its carrying amount.
p. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
Initial recognition and measurement:
Financial assets are classified into the following categories upon initial recognition:
(a) those measured at amortised cost
(b) those to be measured subsequently at fair value through Statement of Profit & Loss.
The classification depends on the entity s business model for managing the financial assets and the terms of cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income as the case may be.
All financial assets are initially recognized at fair value. Transaction costs of acquisition of financial assets carried at fair value through profit and loss are expensed in the Statement of Profit and Loss.
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured subsequently at amortized cost. Interest income from these financial assets is included in Other income as per interest received/receivable from Financial Institutions.
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.
Financial liabilities
Initial recognition and measurement:
All financial liabilities are recognized initially at fair value. The Company''s financial liabilities majorly comprises trade and other payables.
Financial liabilities are classified as ''FVTPL'' if they are held for trading or if they are designated as financial liabilities upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through profit and loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same creditor on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
q. Fair Value Measurement
The fair value of an asset or a liability is measured using the assumptions that the market participants would use when pricing the asset or liability.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year.
r. Investment in Subsidiary
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investment in subsidiary, the difference between net disposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.
s. Use of Judgment''s, Estimates and Assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Difference between actual results and estimates are recognised in the periods in which the results are known / materialise. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the financial statements were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised in the year in which the estimates are revised.
Judgements
In the process of applying the Company''s accounting policies, management has made the following judgements which have a significant effect on the amounts recognised in the financial statements:
> Defined benefit plans (Gratuity and Leave encashment benefits)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation and Leave encashment are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
> Useful life of Property, plant and equipment
The Company reviews the useful life of Property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expenses in the future years.
Mar 31, 2023
1. Corporate Information
The Standalone Financial Statements of "Kwality Pharmaceuticals Limited" ("the Company") are for the year ended 31st March, 2023.
The Company is a domestic public limited company incorporated and domiciled in India and has its registered office at Village Nagkalan, Majitha Road, Amritsar,Punjab - 143601, India.
The company was incorporated as private limited company on 04/05/1983 under the Companies Act, 1956. The company was then converted into public limited company on 28/12/2015, subsequently name changed to Kwality Pharmaceuticals Limited. Thereafter, the company obtained listing status of SME platform of Bombay Stock Exchange by making the Initial Public Offer and the shares of the company were listed on the SME platform of BSE on 18th of July, 2016.
The Company made an application for Migration of the Company''s Equity Shares from SME Platform of BSE Limited to the Main Board of the BSE on 09th April 2022 and received the final approval from BSE Limited on 10th June, 2022. Accordingly, Equity Shares of the Company were listed on the Main Board of BSE Limited with effect from 13th June, 2022. The company is engaged in the business of manufacturers, buyers and sellers of and dealers in all kind of drugs intermediates, chemicals, extracts, alkaloids and other pharmaceutical goods, toilet requisites, medicines, beverages and other medical preparations.
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,2015, and amendments made thereafter and the relevant provisions of the Companies Act,2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
2. Summary of Significant Accounting Policies:(a) Basis of preparation and Measurement:
The Financial statements have been prepared on an accrual basis of accounting and under the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values / amortized cost / net present value at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The Standalone Financial Statements have been presented in Indian Rupees (INR), which is also the Company''s presentation and functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.
All the Assets & Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria as set out in Ind AS 1 and Schedule III to the said Act.
(b) Classification of Current and Non-Current:
An asset is treated as current when it is:
i) Expected to be realized or intended to be sold or consumed in normal operating cycle,
ii) Held primarily for the purpose of trading,
iii) Expected to be realized within twelve months after the reporting period, or
iv) Cash or Cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
i) It is expected to be settled in normal operating cycle,
ii) It is held primarily for the purpose of trading,
iii) It is due to be settled within twelve months after the reporting period, or
iv) There is no unconditional right to determine the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non - current.
(c ) Property, plant and equipment:
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2022 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation/amortization and impairment losses, if any. The cost comprises of the purchase price (net of GST credit wherever applicable) and any attributable cost of bringing the property, plant and equipment to its working condition for its intended use.
Subsequent expenditure related to an item of property, plant and equipment are added to its gross book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
The Company identifies and determines separate useful life for each major component of property, plant and equipment, if they have useful life that is materially different from that of the remaining asset.
Items such as Laboratory items is recognized in accordance with Ind AS 16 "Property, Plant and Equipment" when they meet the definition of property, plant and equipment. Otherwise, such items are classified as Consumable expense or Inventories as per the nature of item.
Property, plant and equipment not ready for the intended use on the date of Balance Sheet are disclosed as "Capital work-in-progress". Advances given towards acquisition of property, plant and equipment''s outstanding at each Balance Sheet date are disclosed as Capital Advances under "Other Non-Current Assets".
Losses arising from the retirement of, and gains and losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the property, plant and equipment and are recognized in the statement of profit and loss when the property, plant and equipment is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(d) Depreciation on Property, plant and equipment:
Depreciation on fixed assets is calculated on written down value basis using the rates arrived at based on the useful life of the assets prescribed under Schedule II of the Companies Act, 2013 for the year ended on March 31, 2023.
The useful life of Property, Plant and Equipment as estimated by the Management on the basis of expert advice and past experience are as under:
|
Class of Assets |
Useful life (in years) |
|
Plant & Machinery |
20 years |
|
Building |
20-30 years |
|
Furniture |
10 years |
|
Vehicles |
8 years |
|
Computer Equipment |
3 years |
|
Laboratory Equipment |
10- 20 years |
|
Office Equipment |
5 years |
|
Lift |
8 years |
|
Electric Fittings |
10 years |
|
*Land held by the company is not depreciated. |
|
Inventories are stated at cost or net realizable value whichever is lower. Cost include purchase price, non-refundable taxes and delivery and handling cost and all costs incurred in bringing the inventory to its present location and condition. Cost of raw materials, process chemicals, stores and spares, packing material, and another inventory is determined on weighted average basis.
Finished goods stock is valued at cost or net realizable value whichever is lower. Cost of finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Standalone Statement of Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
(g) Employee BenefitsI. Defined Contribution Plan
The company''s contribution to defined contribution plan paid/payable for the year is charged to the Standalone Statement of Profit and loss.
The Company has gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The cost of providing benefits under the defined benefit plan is determined on the basis of actuarial valuation using the projected unit credit method. Gratuity fund is administered through Life Insurance Corporation of India.
Remeasurements, comprising of actuarial gains and losses, excluding amounts included in net interest on the net defined benefit liability are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
(h) Foreign Currency transactions
The Company''s financial statements are presented in INR, which is also the Company''s Functional Currency. Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates and recognized in the Statement of Profit and Loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
(i) Taxes on Income Income Tax Expense
Income tax expense represents the sum of current tax and deferred tax and includes any adjustments related to past periods in current and /or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant year. Current income tax is based on the taxable income and calculated using the applicable tax rates.
Deferred tax resulting from "timing differences" between taxable and accounting income that originate in one period and are capable of being reversed in one or more subsequent period is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets can be realized in future. However, where there is unabsorbed capital expenditure or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date.
The Company recognizes revenue when the same can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company''s activities as described below. Revenue is measured at the value of the consideration received or receivable, considering defined terms of payment and excluding taxes or duties collected on behalf of the government. Amounts disclosed as revenue are exclusive of GST and net of returns, trade allowances, rebates, discounts, and amounts collected on behalf of third parties.
Sales are recognized when substantial risk and rewards of ownership are transferred to customer, in case of domestic customers, sales generally take place when goods are dispatched or delivery is handed over to the transporter. In case of export customers, sales generally take place when goods are shipped on-board based on bill of lading.
ii) Interest & Other Indirect Income
a) Interest income is recognized on time proportion basis considering the amount invested and rate of interest.
b) Revenue in respect of other claims is recognised on accrual basis to the extent the ultimate realisation is reasonably certain.
The company recognises the Right to Use for Assets taken on lease only if the Lease is of a longterm duration and the underlying value of Asset is substantial in terms of Ind AS 116 Leases.
A provision is recognized when the Company has a present obligation Legal or Constructive that is reasonably estimable and it is probable that an outflow of economic benefits will be required to settle the obligation. These estimates are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The Company operates in Single segment of manufacturing of broad range of finished pharmaceutical formulations in a dosage form viz. Tablets, Capsules, Syrup, Dry Syrup, Injections etc. The product has the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. Thus, in the context of Ind AS 108 "Operating Segment", issued by the Institute of Chartered Accountants of India, there is only one identified reportable segment.
Basic earnings per share are calculated by dividing the net profit/ loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of diluted potential equity shares, if any.
(o) Contingent Liabilities and Assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Contingent Assets are not disclosed in the Financial Statements.
(p) Impairment Financial Assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired, if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In accordance with Ind AS 109, the Company applies Expected Credit Loss model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.
b) Other financial assets which are measured at amortised cost.
The Company follows simplified approach for recognition of impairment loss allowance on Trade receivables and other financial assets. The Company recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The carrying amount of non-financial assets other than inventories are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists or when annual impairment testing for an asset is required, then the asset''s recoverable amount is estimated. An impairment loss is recognised, as an expense in the Statement of Profit and Loss, for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less cost to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels into cash generating units for which there are separately identifiable cash flows.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.
Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of the instruments.
Financial AssetsInitial recognition and measurement:
Financial assets are classified into the following categories upon initial recognition:
(a) those measured at amortised cost
(b) those to be measured subsequently at fair value through Statement of Profit & Loss.
The classification depends on the entity''s business model for managing the financial assets and the terms of cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income as the case may be.
All financial assets are initially recognized at fair value. Transaction costs of acquisition of financial assets carried at fair value through profit and loss are expensed in the Statement of Profit and Loss.
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured subsequently at amortized cost. Interest income from these financial assets is included in Other income as per interest received/receivable from Financial Institutions.
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.
Financial liabilitiesInitial recognition and measurement:
All financial liabilities are recognized initially at fair value. The Company''s financial liabilities majorly comprises trade and other payables.
Financial liabilities are classified as ''FVTPL'' if they are held for trading or if they are designated as financial liabilities upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through profit and loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same creditor on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
The fair value of an asset or a liability is measured using the assumptions that the market participants would use when pricing the asset or liability.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year.
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investment in subsidiary, the difference between net disposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.
(t) Use of Judgment''s, Estimates and Assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Difference between actual results and estimates are recognised in the periods in which the results are known / materialise. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the financial statements were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised in the year in which the estimates are revised.
In the process of applying the Company''s accounting policies, management has made the following judgements which have a significant effect on the amounts recognised in the financial statements:
(u) Defined benefit plans (Gratuity and Leave encashment benefits)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation and Leave encashment are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(v) Useful life of Property, plant and equipment
The Company reviews the useful life of Property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expenses in the future years.
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
Corporate Information
The company was incorporated as private limited company on 04/05/1983 under the Companies Act, 1956, in the state of Punjab at Amritsar. The company was then converted into public limited company on 28/12/2015, subsequently name changed to Kwality Pharmaceuticals Limited. Thereafter, the company obtained listing status on the SME platform of Bombay Stock Exchange by making the Initial Public Offer and the shares of the company were listed on the SME platform of BSE on 18th of July, 2016.The company is engaged in the business of manufacturers, buyers and sellers of and dealers in all kinds of drugs intermediates, chemicals, extracts, alkaloids and other pharmaceutical goods, toilet requisites, medicines, beverages and other medical preparations.
i) Basis of preparation of Financial Statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 (âthe 2013 Actâ) as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian Rupees in Lakhs and rounded off upto two decimal places.
ij) Use of Estimates:
The preparation of financial statements in conformity with the Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. The difference between the actual results and estimates are recognized in the period in which the results are known / materialized.
iii) Current and Non-Current Classification:
All the Assets and Liabilities have been classified as current and non-current based on the normal operating cycle of the Company and other criteria laid down in Schedule III of the Companies Act, 2013. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
iv) Fixed Assets and Depreciation:
Fixed assets are carried at cost of acquisition or construction, less accumulated depreciation and adjusted for revaluation/impairment loss, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Depreciation on fixed assets is calculated on written down value basis using the rates arrived at based on the useful life of the assets prescribed under Schedule II of the Companies Act, 2013 for the year ended on March 31, 2018.
V) Leases:
The Companyâs Registered Office and Manufacturing unit is situated at Village Nagkalan, Majitha Road, Amritsar, Punjab, is on leased premises. The same premises is owned by Mr. Ramesh Arora & Mr. Ajay Arora, Promoters of the Company and the lease is for initial period of 49 years. Similarly, another manufacturing unit is situated at Plot No. 1-A, industrial Area Raja KaBagh, Tehsil Nurpur, District Kangra, Jassur, Himachal Pradesh is on also on leased premises. The same premise is owned by Government of Himachal Pradesh and the lease is for long term. Lease Rentals are for the assets taken on lease paid to the lessors are recognized as expense in the Statement of Profit and Loss.
vi) Revenue Recognition:
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from operations is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
vii) Inventories:
Inventories of finished goods are valued at lower of the cost or net realizable value (NRV). Raw Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realisable value, the materials are written down to net realisable value. In such circumstances, the replacement cost of the materials may be the best available measure of their net realisable value.
viii) Impairment of Assets:
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. However, no such instance is present in the financial statements for the year ended 31 March, 2018.
ix) Research and Development Cost:
Presently, companyâs R&D Centre situated at Amritsar for the identification and development of potential products. The Company intends to continue its initiatives in research and development in order to enhance its differentiated product portfolio in both the Domestic Market and international markets. Expenditure incurred on research and development is neither recognised nor treated separately in the books of accounts.
x) Investments:
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise, Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary.
xi) Foreign Currency Transactions and Translation:
Foreign Currency Transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currencies at the year-end are adjusted at the year-end exchange rates. Any gain or loss arising on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in case of Long Term Liabilities and assets. Non-monetary items are carried at historical cost.
xii) Government Grants and Subsidies:
Government grants are accounted when there is reasonable assurance that the Company will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value.
xiii) Provision for Current Tax and Deferred Tax:
Tax expenses comprises of Current tax and Deferred tax. Current Tax provision, if any, has been made on the basis of reliefs and deductions available under the Income Tax Act,1961. Deferred tax resulting from âtiming differencesâ between taxable and accounting income that originate in one period and are capable of being reversed in one or more subsequent period is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the assets can be realised in future. However, where there is unabsorbed capital expenditure or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date.
xiv) Employee Benefits:
Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. Post employment and other long term employee benefits are recognized by creating provisions against the expected payout and by contributions to the retirement funds such as provident fund contribution.
xv) Contingent Liabilities / Provisions:
Contingent liabilities are not provided in the accounts and are disclosed separately in notes on accounts. Provision is made in the accounts in respect of contingent liabilities which is likely to materialize into liabilities after the year end, till the finalization of accounts and which have material effect on the position stated in the Balance Sheet.
xvi) Revaluation of Assets:
The company assesses at each balance sheet date whether there is any indication due to external factors that an asset or group of assets comprising a cash generating unit (CGU) may be revalued. If any such indication exists, then the revaluation of the value of assets is done by certified valuer. If such recoverable amount of the asset or the recoverable amount of the CGU, to which the asset belongs is more than the carrying amount of the asset or the CGU as the case may be, the carrying amount is increased to its recoverable amount and the addition is treated as addition in the value of asset and is recognized in the Revaluation reserve under Reserves and Surplus. If at any subsequent balance sheet date, there is an indication that a previously assessed revaluation no longer exists, the recoverable amount is re assessed and the asset is reflected at recoverable amount subject to a maximum of depreciated historical cost and is accordingly reversed in the statement of profit and loss.
xvii) Earnings Per Share:
Basic earnings per share is computed by dividing the net profit for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, profit after tax for the year and weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2016
43. SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
THE COMPANY WAS INCORPORATED AS A PRIVATE LIMITED COMPANY ON 04/05/1983 UNDER THE COMPANIES ACT, 1956, IN THE STATE OF PUNJAB AT AMRITSAR. THE COMPANY WAS THEN CONVERTED INTO PUBLIC LIMITED COMPANY ON 28/12/2015, SUBSEQUENTLY NAME CHANGED TO KW ALITY PHARMACEUTICALS LIMITED WITH CIN NO U24232PB1983PLC005426. THE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURERS, BUYERS AND SELLERS OF AND DEALERS IN ALL KINDS OF DRUGS INTERMEDIATES, CHEMICALS, EXTRACTS, ALKALOIDS AND OTHER PHARMACEUTICAL GOODS, TOILET REQUISITES. MEDICINES, BEVERAGES AND OTHER MEDICAL PREPARATIONS.
i) Basis of preparation of Financial Statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian Rupees in Lakhs and rounded off upto two decimal places.
ii) Use of Estimates:
The preparation of financial statements in conformity with the Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. The difference between the actual results and estimates are recognized in the period in which the results are known / materialized.
iii) Current and Non-Current Classification:
All the Assets and Liabilities have been classified as current and non-current based on the normal operating cycle of the Company and other criteria laid down in Schedule III of the Companies Act, 2013. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
iv) Fixed Assets and Depreciation
Fixed assets are carried at cost of acquisition or construction, less accumulated depreciation and adjusted for revaluation/impairment loss, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.
Depreciation on fixed assets is calculated on written down value basis using the rates arrived at based on the useful life of the assets prescribed under Schedule II of the Companies Act, 2013 for the year ended on March 31, 2016.
v) Leases
The Companyâs Registered Office and Manufacturing unit is situated at Village Nagkalan, Majitha Road, Amritsar, Punjab, is on leased premises. The same premises is owned by Mr. Ramesh Arora Mr. Ajay Arora, Promoters of the Company and the lease is for initial period of 49 years. Similarly, another manufacturing unit is situated at Plot No. 1-A, industrial Area Raja KaBagh, Tehsil Nurpur, District Kangra, Jassur, Himachal Pradesh is on also on leased premises. The same premises is owned by Government of Himachal Pradesh and the lease is for initial period of 95 years. Lease Rentals are for the assets taken on lease paid to the lesser are recognized as expense in the Statement of Profit and Loss.
vi) Revenue Recognition:
Sale of traded goods/material is recognized as revenue when significant risk and rewards of ownership relating to the goods are transferred to the buyer.
vii) Inventories
Inventories of finished goods are valued at lower of the cost or net realizable value (NRV). Raw Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the materials may be the best available measure of their net realizable value.
viii) Impairment of Assets:
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. However, no such instance is present in the financial statements for the year ended 31 March, 2016.
ix) Research and Development Cost:
Presently, companyâs R&D Centre situated at Amritsar for the identification and development of potential products. The Company intends to continue its initiatives in research and development in order to enhance its differentiated product portfolio in both the Domestic Market and international markets. Expenditure incurred on research and development is neither recognized nor treated separately in the books of accounts.
x| Investments:
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise, Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary.
xi) Foreign Currency Transactions and Translation:
Foreign Currency Transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currencies at the year end are adjusted at the year end exchange rates. Any gain or loss arising on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in case of Long Term Liabilities. Non-monetary items are carried at historical cost.
xii) Government Grants and Subsidies:
Government grants are accounted when there is reasonable assurance that the Company will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value.
xiii) Provision for Current Tax and Deferred Tax:
Tax expenses comprises of Current tax and Deferred tax. Current Tax provision, if any, has been made on the basis of reliefs and deductions available under the Income Tax Act,1961. Deferred tax resulting from "timing differences" between taxable and accounting income that originate in one period and are capable of being reversed in one or more subsequent period is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets can be realized in future. However, where there is unabsorbed capital expenditure or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date.
xiv) Employee Benefits:
Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. Post employment and other long term employee benefits are recognized by creating provisions against the expected payout and by contributions to the retirement funds such as provident fund contribution.
xv) Contingent Liabilities / Provisions:
Contingent liabilities are not provided in the accounts and are disclosed separately in notes on accounts. Provision is made in the accounts in respect of contingent liabilities which is likely to materialize into liabilities after the year end, till the finalization of accounts and which have material effect on the position stated in the Balance Sheet.
xvi) Revaluation of Assets:
The company assesses at each balance sheet date whether there is any indication due to external factors that an asset or group of assets comprising a cash generating unit (CGU) may be revalued. If any such indication exists, then the revaluation of the value of assets is done by certified valuer. If such recoverable amount of the asset or the recoverable amount of the CGU, to which the asset belongs is more than the carrying amount of the asset or the CGU as the case may be, the carrying amount is increased to its recoverable amount and the addition is treated as addition in the value of asset and is recognized in the Revaluation reserve under Reserves and Surplus. If at any subsequent balance sheet date, there is an indication that a previously assessed revaluation no longer exists, the recoverable amount is re assessed and the asset is reflected at recoverable amount subject to a maximum of depreciated historical cost and is accordingly reversed in the statement of profit and loss.
xvii) Earnings Per Share:
Basic earnings per share is computed by dividing the net profit for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, profit after tax for the year and weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
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9 മാസത്തില് 314 ശതമാനം ഉയര്ന്ന് ഹിന്ദുസ്ഥാന് കോപ്പര് ഓഹരി, ഭാവി സാധ്യതകള് -
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