MARKSANS PHARMA Accounting Policy

1 Background


Marksans Pharma Limited (The Company) operates as an international pharmaceutical organization with business encompassing the research, manufacturing, marketing and distribution of pharmaceutical products. The Company head office is situated in Mumbai, India and operates across many countries. The Company''''s equity shares are listed for trading on National Stock Exchange of India Limited and BSE Limited.


2 Significant Accounting Policies used in preparation of the Financial Statements of the Company.


2.1 Basis of Accounting


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 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention.


2.2 Use of estimates


The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities(including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/ materialized.


2.3 Inventories


Inventories are valued at the lower of cost and the net realizable 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 and, where applicable, excise duty. Cost is determined as follows:


Raw Materials, Packing Materials and Stores - At Weighted Average Cost on FIFO basis.


Work-in-Progress - At Material Cost and an appropriate share of production overheads.


Finished Goods - At Material Cost and an appropriate share of production overheads and excise duty, wherever applicable.


Stock-in-trade - At Weighted Average basis


2.4 Cash and cash equivalents (for purpose of Cash Flow Statement)


Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.


2.5 Cash Flow Statement


Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.


2.6 Depreciation and amortization


Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.


Depreciation on tangible fixed assets of the Company has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except leasehold land.


Intangible assets are amortized over their estimated life on straight-line method as follows:


Internally Generated ANDA, Market Authorization, Product Licences & Others : 5 to 10 years Individual assets costing less than H5,000/- are depreciated in full in the year of purchase.


2.7 Revenue Recognition Sale of goods


Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer as per the terms of the arrangements with buyer.


2.8 Other Income


Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.


2.9 Fixed Assets


Tangible fixed assets, except to the extent permitted to be fair valued under the Scheme, are carried at cost less accumulated depreciation and amortization. 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.


Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase/ completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash consideration. Fair market value is determined either for the assets acquired or asset given up, whichever is more clearly evident. Fixed assets acquired in exchange for securities of the Company are recorded at the fair market value of the assets or the fair market value of the securities issued, whichever is more clearly evident.


Fixed assets retired from active use and held for sale are stated at the lower of their net book value or net realizable value and are disclosed separately.


i. Capital work-in-progress


Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.


Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase/ completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.


2.10 Foreign Currency Transactions and Translations Initial Recognition


Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions or at rates that closely approximate the rate at the date of the transaction.


Integral foreign operations:


Transactions in foreign currencies entered into by the Company''''s integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.


Net investment in non-integral foreign operations:


Net investment in non-integral foreign operations is accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.


Non-integral foreign operations:


Transactions of non-integral foreign operations are translated at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.


The exchange differences relating to non-integral foreign operations are accumulated in a "foreign currency translation reserve" until disposal of the operation, in which case the accumulated balance in "foreign currency translation reserve" is recognized as income/expense in the same period in which the gain or loss on disposal is recognized.


Measurement at the Balance Sheet Date


Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year- end rates. Non-monetary items of the Company are carried at historical cost.


Integral foreign operations


Foreign currency monetary items (other than derivative contracts) of the Company''''s integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company''''s integral foreign operations are carried at historical cost.


Net investment in non-integral foreign operations:


Foreign currency monetary items (other than derivative contracts) of the Company''''s net investment in non-integral foreign operations outstanding at the balance sheet date are restated at the year-end rates.


Non-integral foreign operations:


All assets and liabilities of non-integral foreign operations are translated at the year-end rates.


Treatment of exchange differences


Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.


Integral foreign operations:


Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company''''s integral foreign operations are recognized as income or expense in the Statement of Profit and Loss.


Net investment in non-integral foreign operations:


The exchange differences on restatement of long-term receivables/ payables from/ to non-integral foreign operations that are considered as net investment in such operations is accounted as per policy for long-term foreign currency monetary items stated below until disposal/ recovery of such net investment, in which case the accumulated balance in "foreign currency translation reserve" is recognized as income/ expense in the same period in which the gain or loss on disposal/ recovery is recognized.


Non-integral foreign operations:


The exchange differences relating to non-integral foreign operations are accumulated in a "foreign currency translation reserve" until disposal of the operation, in which case the accumulated balance in "foreign currency translation reserve" is recognized as income/ expense in the same period in which the gain or loss on disposal is recognized.


Exchange difference on long-term foreign currency monetary items


The exchange differences arising on settlement/ restatement of long-term foreign currency monetary items are capitalized as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortized over the maturity period/ upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortization is taken to "foreign currency translation reserve" until disposal/ recovery of the net investment. The unamortized exchange difference is carried under Reserves and Surplus as " foreign currency monetary item translation difference account" net of the tax effect thereon, where applicable.


Accounting for forward contracts


Premium/ discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.


Forward exchange contracts outstanding as at the year-end on account of firm commitment transaction are marked to market and the losses, if any are recognized in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of the Institute of Chartered Accountants of India on ''''Accounting for Derivatives'''' issued in March 2008.


Gain/Loss on account of foreign exchange fluctuation in respect of long term liabilities in foreign currencies specific to acquisition of fixed assets are recognized in the Statement of Profit and Loss.


2.11 Investments


Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long term investments are stated at cost less any provision for permanent diminution, other than temporary, in the value of such investments. The current investments are valued at lower of cost or fair market value.


Cost of investments include acquisition charges such as brokerage, fees and duties.


2.12 Employee Benefits


Employee benefits include provident fund, employee state insurance scheme, gratuity fund, compensated absences, long service awards and post-employment medical benefits.


i. Short-term employee benefits


Short-term employee benefits: All employee benefits falling due within twelve months of the end of the period in which the employees render the related services are classified as short-term employee benefits, which include benefits like salaries, wages, short term compensated absences, performance incentives, etc. and are recognized as expenses in the period in which the employee renders the related service and measured accordingly.


ii. Post-employment benefits


Post-employment benefits: Post employment benefit plans are classified into defined contribution plans and defined benefit plans in line with the requirements of AS 15 on "Employee Benefits".


a. Gratuity


The liability in respect of Gratuity, a defined benefit plan, is recognized in the books of account based on actuarial valuation using projected unit credit method as at Balance Sheet date by an independent actuary. Actuarial gains and losses arising from the experience adjustment and change in actuarial assumption are immediately recognized in the Statement of Profit and Loss as an income or expense.


b. Provident Fund


The Company''''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.


iii. Long-term employee benefits


Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.


iv. Long Term Incentive Plan (''''Plan'''')


Under the Plan, certain employees are eligible for retention and performance linked payouts. These payouts are accrued as and when services are rendered and/ or when the specific performance criteria is met.


v. Other long-term employee benefits


Accumulated compensated absences are treated as other long-term employee benefits. The Company''''s liability in respect of other long term employee benefits is recognized in the books of account based on actuarial valuation using projected unit credit method as at Balance Sheet date by an independent actuary. Actuarial losses/ gains are recognized in the Statement of Profit and Loss.


Liability for Gratuity is accounted on accrual basis.


Annual contributions to Provident Fund & Employee State Insurance Scheme are accounted on accrual basis and charged to the Statement of Profit and Loss.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

  • Download our Mobile App
  • Available on Google Play
  • Available on App Store
  • RSS