Accounting Policies of OneSource Specialty Pharma Ltd. Company

Mar 31, 2025

Note No. 2 Material accounting policies

2.1 Statement of compliance

These standalone financial statements have been
prepared in accordance with Indian Accounting
Standards ("Ind AS") as per the Companies (Indian
Accounting Standards) Rules 2015, as amended,
notified under Section 133 of Companies Act, 2013,
(the ''Act'') and other relevant provisions of the Act.

2.2 Basis of preparation and presentation

The Standalone Financial Statements of the Company
comprise of the Standalone Balance Sheet as at
March 31, 2025, the Standalone Statement of Profit
and Loss (including other comprehensive income),
the Standalone Statement of Changes In Equity
and the Standalone Statement of Cash Flows for
the year then ended, and notes to the Standalone
Financial Statements, including a summary of
material accounting policies and other explanatory
information (hereinafter collectively referred to as
"Standalone Financial Statements ".

(a) The Standalone Financial Statements have
been prepared on the historical cost basis
except for:

- certain financial instruments which are
measured at fair value

- defined benefit plans - plan assets
measured at fair value

- share-based payments which are
measured at fair value of the options

Accounting policies have been consistently
applied except where a newly issued
accounting standard is initially adopted or a
revision to an existing accounting standard
requires a change in the accounting policy
hitherto in use.

(b) During year ended March 31, 2025, the
Company has incurred loss of '' 200 million
(year ended March 31, 2024 : '' 3,649.34
million). The Company''s current liabilities
(including current maturities of long-term
debt) exceeded its current assets by '' 456.02
million as at March 31, 2025 (as at March 31,
2024 : '' 4,521.04 million) .

During the year ended March 31, 2025, the
Company received '' 802.84 million towards
pending partly paid-up shares. Also, the
Company has issued 6,277,909 equity shares
valued at '' 1,276 per share aggregates to
'' 8,010.61 million. The cost of issue of shares
of '' 58.22 million in relation to equity issue is
debited to equity.

The Company expects to grow the business
of Contract Development and Manufacturing
Operations (CDMO). The Company has also
signed several Manufacturing Services
Agreements (MSA) for its CDMO business
which is expected to convert into Commercial
supplies under a Commercial Sales Agreement

(CSA) on approval for the customer in future
to meet all future obligations as they fall due.
Further, the Management is confident that
the Scheme of arrangement referred in note
above will enhance business potential and
result in an increased capability to offer a
wider portfolio of products with a diversified
resource base and deeper client relationships.

Based on above, the Board of Directors have
approved preparation of the Standalone
Financial Statements on a going concern basis.

C) Basis of Combination and carve out

In preparation of the carved out financial
statements of Strides and Steriscience, the
assets, liabilities, income and expenses
specific to the entities acquired has been
included as per the allocation methodology
specified below :

2.3 Revenue recognition

Revenue is measured based on the transaction
price (net of variable consideration) allocated to that
performance obligation. The Company recognises
revenue when it transfers control of a product or
service to a customer. Revenue is recognised net
of discounts, volume rebates, outgoing sales taxes/
goods and service tax and other indirect taxes.

If the timing of payments agreed to by the parties to
the contract (either explicitly or implicitly) provides the
customer or the Company with a significant benefit
of financing the transfer of goods or services to the
customer, the Company adjusts the promised amount
of consideration for the effects of the time value of
money when determining the transaction price.

Goods and Service Tax [GST] is not received by
the Company on its own account. Rather, it is a tax
collected on value added to the goods and services
by the Company on behalf of the government.
Accordingly, it is excluded from revenue.

2.3.1 Sale of Services

Service income is recognised as per the
terms of contracts with the customers when
the related services are performed as per
the stage of completion or on achievement
of agreed milestones and are net of indirect
taxes, wherever applicable.

Materials consumed during the process of
providing aforesaid services are billed at cost
plus agreed upon mark up with the customers.

2.3.2 Capacity reservation fees

Capacity reservation fees charged by the
Company, which is associated with securing

specific guarantees that the reserved capacity
will be available for customer to use as and
when the customer decides, represents a
single stand-ready performance obligation
with control transferring and revenue being
recognized over time over the contractual
period basis the pattern of transfer of benefit
to the customer as well as entity''s effort to
fulfill the contract. However, where such
pattern and entity''s effort would not be
even throughout the period or cannot be
ascertained, revenue is recognised on straight
line basis over the contractual period.

2.3.3 License fees

Revenues include amounts derived from
licensing agreements. These arrangements
typically consist of an up-front payment
received/receivable on inception of the
license and/or subsequent receipts/
receivables dependent on achieving certain
milestones in accordance with the terms
prescribed in the agreement. In cases
where the transaction has two or more
performance obligations, the Company
accounts for the completed obligation (for
example, the transfer of title) as a separate
unit of accounting and record revenue upon
delivery of that component, provided that the
Company can make a reasonable estimate of
the fair value of the undelivered component.
Otherwise, up-front license fees received in
connection with licensing agreements are
deferred and recognised over the balance
period in which the Company has pending
performance obligations.

2.3.4 Sale of goods

Revenue from sale of goods is recognised upon
transfer of control to the customer. The point
at which control passes depends on the terms
set forth in the customer''s contract. Generally,
the control is transferred upon shipment of the
product to the customer or when the product
is made available to the customer, provided
transfer of title to the customer occurs and the
Company has not retained any significant risks
of ownership or future obligations with respect
to the product sold.

2.3.5 Profit share revenues

The Company from time to time enters
into marketing arrangements with certain
business partners for the sale of its products
in certain markets. Under such arrangements,
the Company sells its products to the business
partners at a base purchase price agreed
upon in the arrangement and is also entitled to
a profit share which is over and above the base
purchase price. The profit share is typically
dependent on the business partner''s ultimate
net sale proceeds or net profits, subject to any
reductions or adjustments that are required
by the terms of the arrangement. Such
arrangements typically require the business
partner to provide confirmation of units sold
and net sales or net profit computations for
the products covered under the arrangement.

Revenue is an amount equal to the base
purchase price and is recognised at that
point in time upon delivery of products to
the business partners. An additional amount
representing the profit share component
is recognised as revenue at that point in
time which corresponds to the ultimate
sales of the products made by business
partners only when the collectability of
the profit share becomes probable and a
reliable measurement of the profit share is
available. Otherwise, recognition is deferred
to a subsequent period pending satisfaction
of such collectability and measurability
requirements. In measuring the amount of
profit share revenue to be recognised for
each period, the Company uses all available
information and evidence, including any
confirmations from the business partner of
the profit share amount owed to the Company,
to the extent made available before the date
the Company''s Board of Directors authorises
the issuance of its financial statements for the
applicable period.

2.3.6 Deferred revenue

The Company recognises a deferred income
(contract liability) if consideration has been
received before the company transfers
the promised goods or services to the
customer. Deferred income mainly relates
to remaining performance obligations in
(partially) unsatisfied long-term contracts or
are related to amounts the Company expects
to receive for goods and services that have
not yet been transferred to customers
under existing, noncancellable or otherwise
enforceable contracts.

2.3.7 Dividend and interest income

Dividend income from investments is
recognised when the shareholder''s right
to receive payment has been established
(provided that it is probable that the economic
benefits will flow to the Company and the
amount of income can be measured reliably).

Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a
time basis, by reference to the principal
outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts
through the expected life of the financial asset
to that asset''s net carrying amount on initial
recognition.

2.4 Functional Currency

The Standalone Financial Statements are presented
in Indian rupees, which is the functional currency
of the Company. Functional currency of an entity is
the currency of the primary economic environment
in which the entity operates. All amounts have been
rounded-off to two decimal places to the nearest
million, unless otherwise indicated.

2.5 Foreign currencies transactions and
translation

At the end of each reporting year, monetary items
denominated in foreign currencies are retranslated at
the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at
the date when the fair value was determined. Non¬
monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.

Exchange differences on monetary items are
recognised in Statement of Profit and Loss in the year
in which they arise.

2.6 Leases

The Company as lessee

The Company assesses, whether the contract is, or
contains, a lease. A contract is, or contains, a lease if
the contract involves-

(a) the use of an identified asset,

(b) the right to obtain substantially all the
economic benefits from use of the identified
asset, and

(c) the right to direct the use of the identified
asset.

The Company has entered into lease arrangements
for its factory land and office premises. The Company
at the inception of the lease contract recognizes a
Right-of-Use (RoU) asset at cost and corresponding
lease liability, except for leases with term of less than
twelve months (short term) and low-value assets.

The cost of the right-of-use assets comprises the
amount of the initial measurement of the lease
liability, any lease payments made at or before the
inception date of the lease plus any initial direct costs,
less any lease incentives received. Subsequently,
the right-of-use assets is measured at cost less
any accumulated depreciation and accumulated
impairment losses, if any. The right-of-use assets is
depreciated using the straight-line method from the
commencement date over the shorter of lease term
or useful life of right-of-use assets.

The lease liability is initially measured at amortized
cost at the present value of the future lease
payments. The lease payments are discounted using
the interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing rates.
Lease liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the
Company changes its assessment if whether it will
exercise an extension or a termination option.

For short-term and low value leases, the Company
recognizes the lease payments as an operating
expense on a straight-line basis over the lease term.

2.7 Borrowing costs

Borrowing costs include:

(i) interest expense calculated using the effective
interest rate method,

(ii) finance charges in respect of finance
leases, and

(iii) exchange differences arising from foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs.
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially
ready for their intended use or sale.

Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.

All other borrowing costs are recognised in
Standalone Statement of Profit and Loss in the year
in which they are incurred.

2.8 Employee benefits

2.8.1 Short term obligations

Liabilities for wages and salaries, including
other benefits that are expected to be
settled wholly within 12 months after the
end of the year in which the employees
render the related services are recognised
in respect of employees'' services up to the
end of the reporting year and are measured
at the amounts expected to be paid when the
liabilities are settled.

2.8.2 Retirement benefit costs and termination
benefits

Payments to defined contribution retirement
benefit plans are recognised as an expense
when employees have rendered service
entitling them to the contributions.

For defined benefit retirement plans, the
cost of providing benefits is determined
using the projected unit credit method, with
actuarial valuations being carried out at the
end of each reporting year. Remeasurement,
comprising actuarial gains and losses, the
effect of the asset ceiling (if applicable)
and the return on plan assets (excluding
interest), are recognised immediately in the
balance sheet with a charge or credit to other
comprehensive income in the year in which
they occur. Remeasurement recognised in
other comprehensive income is reflected
immediately in retained earnings and is not
reclassified to profit and loss. Past service
cost is recognised in profit and loss when
the plan amendment or curtailment occurs,
or when the Company recognises related

restructuring costs or termination benefits, if
earlier. Net interest is calculated by applying
a discount rate to the net defined benefit
liability or asset. Defined benefit costs are
categorised as follows:

• service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);

• net interest expense or income; and

• remeasurement

The Company presents the first two components
of defined benefit costs in profit and loss in the
line item ''Employee benefits expense''.

The retirement benefit obligation recognised
in the balance sheet represents the actual
deficit or surplus in the Company''s defined
benefit plans. Any surplus resulting from this
calculation is limited to the present value of
any economic benefits available in the form of
refunds from the plans or reductions in future
contributions to the plans.

A liability for a termination benefit is recognised
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit
and when the entity recognises any related
restructuring costs.

2.8.3 Defined contribution plan

Contribution to defined contribution plans are
recognised as expense when employees have
rendered services entitling them to such benefits.

2.8.4 Compensated absences

Compensated absences which are not
expected to occur within twelve months after
the end of the year in which the employee
renders the related services are recognised
at an actuarially determined liability at the
present value of the defined benefit obligation
at the Balance sheet date. In respect of
compensated absences expected to occur
within twelve months after the end of the year
in which the employee renders the related
services, liability for short-term employee
benefits is measured at the undiscounted
amount of the benefits expected to be paid in
exchange for the related service.

2.8.5 Share based compensations

Equity-settled share-based payments to
employees are measured at the fair value
of the equity instruments at the grant date.

The fair value determined at the grant date
of the equity-settled share-based payments
is expensed on a straight-line basis over the
vesting period, based on the Company''s
estimate of equity instruments that will
eventually vest, with a corresponding increase
in equity. At the end of each reporting year, the
Company revises its estimate of the number
of equity instruments expected to vest. The
impact of the revision of the original estimates,
if any, is recognised in Statement of profit and
loss such that the cumulative expense reflects
the revised estimate, with a corresponding
adjustment to the equity-settled employee
benefits reserve.

2.9 Taxation

The income tax expense or credit for the year is the
tax payable on the current year''s taxable income,
based on the applicable income tax rate for each
jurisdiction adjusted by the changes in deferred
tax assets and liabilities attributable to temporary
differences.

2.9.1 Current tax

The tax currently payable is based on taxable
profit for the year. Taxable profit differs
from ''profit before tax'' as reported in the
Standalone Statement of Profit and Loss
because of items of income or expense that
are taxable or deductible in other years and
items that are never taxable or deductible. The
Company''s current tax is calculated using tax
rates that have been enacted or substantively
enacted by the end of the reporting year.

2.9.2 Deferred tax

Deferred tax is recognised on temporary
differences between the carrying amounts
of assets and liabilities in the Standalone
Statement of Profit and Loss and the
corresponding tax bases used in the
computation of taxable profit. Deferred tax
liabilities are generally recognised for all
taxable temporary differences. Deferred
tax assets are generally recognised for all
deductible temporary differences to the extent
that it is probable that taxable profits will be
available against which those deductible
temporary differences can be utilised. Such
deferred tax assets and liabilities are not
recognised if the temporary difference arises
from the initial recognition of assets and
liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets
is reviewed at the end of each reporting
year and reduced to the extent that it is
no longer probable that sufficient taxable
profits will be available to allow all or part
of the asset to be recovered.

Deferred tax liabilities and assets are
measured at the tax rates that are expected
to apply in the year in which the liability is
settled or the asset realised, based on tax
rates (and tax laws) that have been enacted
or substantively enacted by the end of the
reporting year.

The measurement of deferred tax liabilities
and assets reflects the tax consequences that
would follow from the manner in which the
Company expects, at the end of the reporting
year, to recover or settle the carrying amount
of its assets and liabilities.

Current tax assets and current tax liabilities
are offset when there is a legally enforceable
right to set off the recognised amounts and
there is an intention to settle the asset and the
liability on a net basis. Deferred tax assets and
deferred tax liabilities are offset when there
is a legally enforceable right to set off assets
against liabilities representing current tax and
where the deferred tax assets and the deferred
tax liabilities relate to taxes on income levied
by the same governing taxation laws.

2.9.3 Current and deferred tax

Current and deferred tax are recognised
in profit and loss, except when they relate
to items that are recognised in other
comprehensive income or directly in equity,
in which case, the current and deferred tax
are also recognised in other comprehensive
income or directly in equity respectively.

2.10 Property, plant and equipment and
depreciation

Property, plant and equipment held for use in the
production or supply of goods or services, or for
administrative purposes, are stated in the Standalone
Balance Sheet at cost less accumulated depreciation
and accumulated impairment losses.

Properties in the course of construction for
production, supply or administrative purposes are
carried at cost, less any recognised impairment
loss. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in
accordance with the Company''s accounting policy.

Such properties are classified to the appropriate
categories of property, plant and equipment when
completed and ready for intended use. Depreciation
of these assets, on the same basis as other property
assets, commences when the assets are ready for
their intended use.

Depreciation is recognised so as to write off the cost
of assets (other than properties under construction)
less their residual values over their useful lives,
using the straight-line method. The estimated useful
lives, residual values and depreciation method are
reviewed at the end of each reporting year, with the
effect of any changes in estimate accounted for on a
prospective basis.

Depreciation on property, plant and equipment has
been provided on the straight-line method as per the
useful life prescribed in Schedule II to the Companies
Act, 2013 except in respect of the following categories
of assets, in whose case the life of the assets has been
assessed to be different and are as under based on
technical advice, taking into account the nature of the
asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers
warranties and maintenance support, etc.:

Plant and equipment : 3-20 years

Furniture : 2-10 years

Office equipment: 2-5 years

Certain factory buildings: Lease term of the asset

Individual assets costing less than '' 5,000 are
depreciated in full in the year of purchase.

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying amount
of the asset and is recognised in Statement of
Profit and Loss.

When an item of property, plant and equipment is
acquired in exchange for a non-monetary asset
or assets, or a combination of monetary and non¬
monetary assets, the cost of that item is measured
at fair value (even if the entity cannot immediately
derecognise the asset given up) unless the exchange
transaction lacks commercial substance or the fair
value of neither the asset received nor the asset
given up is reliably measurable. If the acquired item
is not measured at fair value, its cost is measured at
the carrying amount of the asset given up.

Derecognition of Property, Plant & Equipment

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying amount
of the asset and is recognised in profit and loss.

2.11 Intangible assets and amortisation

2.11.1 Intangible assets acquired separately

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses. Intangible assets acquired
in a business combination are measured
at fair value as at the date of acquisition.
Amortisation is recognised on a straight-line
basis over their estimated useful lives. The
estimated useful life and amortisation method
are reviewed at the end of each reporting year,
with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives
that are acquired separately are carried at
cost less accumulated impairment losses.

2.11.2 Internally-generated intangible assets -
research and development expenditure

Expenditure on research activities is
recognised as an expense in the year in which
it is incurred.

An internally-generated intangible asset
arising from development (or from the
development phase of an internal project) is
recognised if, and only if, all of the following
have been demonstrated:

• the technical feasibility of completing the
intangible asset so that it will be available
for use or sale;

• the intention to complete the intangible
asset and use or sell it;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate
probable future economic benefits;

• the availability of adequate technical,
financial and other resources to complete
the development and to use or sell the
intangible asset; and

• the ability to measure reliably the
expenditure attributable to the intangible
asset during its development.

The amount initially recognised for internally-
generated intangible assets is the sum of the
expenditure incurred from the date when the
intangible asset first meets the recognition
criteria listed above. Where no internally-
generated intangible asset can be recognised,
development expenditure is recognised in
Standalone Statement of Profit and Loss in
the year in which it is incurred.

Expenses capitalised includes directly
attributable cost of preparing intangible
asset for its intended use and borrowing costs
capitalised in accordance with the Company''s
accounting policy.

Subsequent to initial recognition, internally-
generated intangible assets are reported at cost
less accumulated amortisation and accumulated
impairment losses, on the same basis as
intangible assets that are acquired separately.

2.11.3 Goodwill

The excess of the cost of an acquisition over
the Company''s share in the fair value of the
acquiree''s identifiable assets and liabilities
is recognised as goodwill. Goodwill is not
amortised but it is tested for impairment
annually, or more frequently if events or
changes in circumstances indicate that it
might be impaired, and is carried at cost less
accumulated impairment losses. Gains and
losses on the disposal of an entity include the
carrying amount of goodwill relating to the
entity sold.

Goodwill is allocated to cash-generating units
for the purpose of impairment testing. The
allocation is made to those cash-generating
units or groups of cash-generating units that
are expected to benefit from the business
combination in which the goodwill arose. The
units or groups of units are identified at the
lowest level at which goodwill is monitored
for internal Management purposes, which in
our case are operating segments.

2.11.4 Derecognition of intangible assets

An intangible asset is derecognised on
disposal, or when no future economic benefits
are expected from use or disposal. Gains
or losses arising from derecognition of an
intangible asset, measured as the difference
between the net disposal proceeds and the

carrying amount of the asset, are recognised
in Standalone Statement of Profit and Loss
when the asset is derecognised.

2.11.5 Useful lives of intangible assets

Intangible assets are amortised over their
estimated useful life on straight line method.

Software Licenses : 3 - 5 years

Marketing and manufacturing rights : 15 years

Product portfolio : 10 years

Customer relationship : 3 years

2.12 Inventories

Inventories are valued at the lower of cost and the
net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost
includes all charges in bringing the goods to the
point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress
and finished goods include appropriate proportion of
overheads. Cost is determined as follows: