Notes forming part of the Financial Statements Basis of brparation The financial statements of the company have been brpared in accordance with the generally accepted accounting principles in India {Indian GAAP). The company has brpared these financials statements to comply in all material aspects with the accounting standard notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies {Accounts) Rules 2014. The financial statements have been brpared under the historical cost convention on an accrual basis except in case of assets for which revaluation was carried out. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year. 1. Significant accounting policies: Use of estimates The brparation of financial statements in conformity with generally accepted accounting principles in India requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from the estimates and the difference is recognized in the statement of profit and loss of the relevant period. Tangible and intangible fixed assets Fixed assets are stated at cost {or revalued amounts, as the case may be) less accumulated debrciation/amortization and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Debrciation/amortisation Leasehold land is amortized on a straight line basis over the period of lease. Debrciation on fixed assets is calculated on straight line pasis using the rates arrived at based on the useful lives estimated by the management. The company has used the following life to provide Debrciation/amortization on its fixed assets:- The management has estimated, supported by independent assessment by professionals, the useful lives of the following classes of assets. The useful lives of plant and machinery are estimated as 10 years. These lives are lower than those indicated in schedule II of the Companies Act 2013. Further, the useful lives of office equipment and computers are estimated as 10 years and 4 years respectively. These lives are higher than those indicated in schedule II of the Companies Act2013. Research and development cost Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the company can demonstrate all the following: • The technical feasibility of completing the intangible asset so that it will be available for use or sale • Its intention to complete the asset • Its ability to use or sell the asset • How the asset will generate future economic benefits • The availability of adequate resources to complete the development and to use or sell the asset • The ability to measure reliably the expenditure attributable to the intangible asset during development. Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized on a straight line basis over the period of expected future benefit from the related project, i.e., the estimated useful life of five years. Amortization is recognized in the statement of profit and loss. During the period of development, the asset is tested for impairment annually. Impairment The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized whereverthe carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and valuein use. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Leases Companyis the Lessee Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis overthe lease term. Companyis the Less or Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the statement of profit and loss on a straight-line basis overthe lease term. Costs, including debrciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss. Investments Investments that are readily realisable and intended to be held for not more than a year from the date on which such investments are made are classified as current investments. These are valued at lower of cost or fair value {repurchase price or market value) on an individual item basis. Investments other than current are classified as Non-Current Investments which are valued at cost less provision for diminution in value, other than temporary, if any. Inventories Inventories are valued as follows: Raw Material and Packing Material Lower of cost and net realizable value. However, materials and other items 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. Cost is determined using standard cost method adjusted for variances, which approximates actual cost based on weighted cost formula. Work-in-progress and finished goods Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined using standard cost method adjusted for variances, which approximates actual cost based on weighted cost formula. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Traded goods are valued at lower of cost and net realizable value. Cost Includes cost of purchase and other costs incurred in bringing the inventories to their brsent location and condition. Cost is determined on a weighted average basis. Cash and Cash equivalents Cash and cash equivalents forthe purpose of Cash flow statement comprise of cash at bank and in hand and short term investments with an original maturity of three months or less. Foreign currency transactions Foreign currency transactions during the year are recorded at rates of exchange brvailing on the date of transactions. Foreign currency monetary items are translated into rupees at the rate of exchange brvailing on the date of the balance sheet. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year or reported in the brvious financial statements, are recognised as income or as expenses in the year in which they arise. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate atthe date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. Forward exchange contracts not intended for trading or speculation purposes The brmium or discounts arising at the inception of forward exchange contract is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized gs income or expense for the yegr. Revenue Recognition Revenue is recognized to the extent thgt it is probgble that the economic benefits will flow to the Compgny and the revenuecgn be reliably measured. Sale of Goods Revenue from sale of goods is recognized when significant risk and rewards of ownership gre transferred to customers, which is generally on dispatch of goods. Net sales gre stated exclusive of excise duty, sales tax, VAT, Trade discount and genet of sales return. Excise duty deducted from revenue {Gross) is the amount that is included in the revenue {gross) and not the entire amount of liability arising during the year. Income from service rendered is recognized based on the terms of the agreements and when services are rendered. Service income is net of service tax. Interest Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend Dividend Income is recognized when the company's right to receive dividend is established by the reporting date. Others Other income is accounted for on accrual basis except where the receipt of income is uncertain. Retirement & Other employee benefits (i) Long-term Employee Benefits (a) Defined Contribution Plans The Company has defined contribution plans for post employment benefits in the form of Superannuation Fund which is recognized by the Income-tax authorities and administered through trustees and/or Life Insurance Corporation of India (LIC). Further the Company also has a defined contribution plan in the form of a provident fund scheme for its staff and workmen at the Ankleshwar unit & Nepal and pension scheme under the Employee's Pension Scheme 1995 for its all employees, which are administered by the Provident Fund Commissioner. All the above mentioned schemes are classified as defined contribution plans as the Company has no further obligation peyond making the contributions. The Company's contributions to Defined Contribution Plans are charged to the statement of profit and loss , when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br payment will lead to, for example, a reduction in future payment or a cash refund. (b) Defined Benefit Plans The Company has for all employees other than Ankleshwar and Nepal Staff & Workmen, defined benefit plans for post employment benefits in the form of Provident Fund which is administered through trustees {treated as a defined benefit plan on account of guaranteed interest benefit). Further Company has defined benefit plan for post retirement benefit in the form of Gratuity which is administered through trustees and LIC for all its employees and pension for certain employees. Schemes of Provident Fund and Gratuity are recognised by the Income-tax authorities. Liability for Defined Benefit Plans is provided on the basis of valuation, as at the balance sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the Projected Unit Credit method. (c) Other Long-term Employee Benefit The Company has for all employees other long-term benefits in the form of Long Service Award and Leave Encashment as per the policy of the Company. Liabilities for such benefits are provided on the basis of valuation, as at the balance sheet date, carried out by an independent actuary. The actuarial valuation method used by an independent actuary for measuring the liability is the Projected Unit Credit method. (ii) Actuarial gains and losses (for defined benefit and other long term benefit) comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the statement of profit and loss as income or expense. (iii) Termination benefits are recognized as an expense as and when incurred. Taxation Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws brvailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to setoff current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. Segment Reporting Identification of segments According to the Nature of Products and Services provided, the operations of the Company rebrsent a single primary business segment relating to pharmaceuticals. Secondary segment reporting is performed on the basis of location of the customers. Allocation of common costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Seament accountina policies The company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the company as a whole. Earnings per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Provisions and Contingencies The Company creates a provision when there exist a brsent obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to its brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. viii) General descriptions of significant defined Plans Gratuity Plan Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement in terms of provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary Pension Plan Under the Company's Pension scheme, certain executives are eligible for fixed pension for five years, depending on their level at the time of retirement on superannuation, death or early retirement with the consent of the Company. Provident Fund The Company manages the provident fund through a Provident Fund Trust for its employees (except Staff and Workmen at Ankleshwar and Nepal unit) which are permitted under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The Plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement. 1. Previous year's figures have been regrouped wherever necessary to conform to this year's classification. As per our report of even date For SRBC&CO LLP Chartered Accountants ICAI Firm Registration No. : 324982E jer Vijay Maniar Partner Membership No. 36738 Mumbai : February 04, 2016 For and on behalf of the Board of Directors of Sanofi India Limited Dr. Vijay Mallya Chairman S. Ayyangar Managing Director Lionel Guerin Chief Financial Officer and Whole Time Director S. R. Gupte Director Rangaswamy R. Iyer Director A. K. R. Nedungadi Director Ashwani Sood Director N. Rajaram Director K. Subramani Company Secretary Place : Mumbai : date February 04, 2016 |