Significant Accounting Policies

I. Company overview:

Zydus Wellness Limited ["the Company"] was incorporated on November 1,1994 and operates as an integrated consumer company with business encompassing the entire value chain in the development, production, marketing and distribution of health and wellness products. The product portfolio of the Company includes brands like Sugar free, Everyuth and Nutralite.The Company's shares are listed on the National Stock Exchange of India Limited [NSE] and BSE Limited [BSE].

II. Significant Accounting Policies:

1 Basis of Accounting:

The financial statements are brpared under the historical cost convention on the "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted in India and they comply with the Accounting Standards brscribed under section 133 of the Companies Act, 2013 [Act] read with Rule 7 of the Companies [Accounts] Rules, 2014 and other pronouncements issued by the Institute of Chartered Accountants of India [ICAI], to the extent applicable, and with the applicable provisions of the Act.

2 Use of Estimates:

The brparation of Financial Statements in conformity with the Accounting Standards generally accepted in India requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses for the year while actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3 Fixed Assets, Debrciation and Amortisation:

A Fixed Assets are stated at historical cost of acquisition/ construction less accumulated debrciation and impairment loss. Cost [Net of Input tax credit received/ receivable] includes related expenditure and br-operative & project expenses for the period up to completion of construction/ assets are put to use.

B Where components of an asset are significant in value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognised separately as independent items and are debrciated over their estimated economic useful lives.

C Debrciation on tangible assets is provided on "straight line method" based on the useful lives as brscribed under Schedule II of the Act.

D Debrciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life.

E Debrciation on additions/ disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use.

F Trade Marks, Technical Know-how Fees and other similar rights are amortised over their estimated economic life of ten years.

G Leasehold land is amortized over the period of the lease.

H Goodwill arising on acquisition of business is assessed at each balance sheet date for any impairment loss.

I Capitalised cost incurred towards purchase/ development of software is amortised using straight line method over its useful life of four years as estimated by the management at the time of capitalisation.

J Where the actual cost of purchase of an asset is below Rs. 10,000/-, the debrciation is provided @ 100 %.

4 Impairment of Assets:

The Company, at each balance sheet date, assesses whether there is any indication of impairment of any asset and/ or cash generating unit. If such indication exists, assets are impaired by comparing carrying amount of each asset and/ or cash generating unit to the recoverable amount, being higher of the net selling price or value in use. Value in use is determined from the brsent value of the estimated future cash flows from the continuing use of the assets.

5 Expenditure during the Construction Period:

The expenditure incidental to the expansion/ new projects are allocated to Fixed Assets in the year of commencement of the commercial production.

6 Investments:

A Long term and strategic investments are stated at cost, less any diminution in the value other than temporary.

B Current investments are stated at lower of cost and fair value determined on individual investment basis.

7 Inventories:

A Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods, Stock-in-Trade and Work-in-Progress are valued at lower of cost and net realisable value.

B Cost [Net of Input tax credit availed] of Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Stock-in-Trade are determined on Moving Average Method.

C Cost of Finished Goods and Works-in-Progress are determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads.

8 Revenue Recognition:

A Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods have been passed on to the buyer.

B Service income is recognised as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax, wherever applicable.

C Interest income is recognised on time proportionate method.

D Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

9 Foreign Currency Transactions:

A The transactions in foreign currencies are stated at the rates of exchange brvailing on the dates of transactions.

B The net gain or loss on account of exchange differences either on settlement or on translation is recognised in the statement of Profit and Loss.

10 Employee Benefits:

A Defined Contribution Plans:

The Company contributes on a defined contribution basis to Employees' Provident Fund towards post employment benefits which is expensed in the year to which it pertains.

B Defined Benefit Plans:

The gratuity scheme is administered through the Life Insurance Corporation of India [LIC]. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method.

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the statement of Profit and Loss.

C Leave Liability:

The leave encashment scheme is administered through Life Insurance Corporation of India's Employees' Group Leave Encashment cum Life Assurance [Cash Accumulation] Scheme. The employees of the Company are entitled to leave as per the leave policy of the Company. The liability on account of accumulated leave as on last day of the accounting period is recognised [net of the fair value of plan assets as at the balance sheet date] at brsent value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

D Employee Separation Costs:

The compensation paid to the employees under Voluntary Retirement Scheme is expensed in the year of payment.

11 Taxes on Income:

A Tax expense comprises of current and deferred tax.

B Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961.

C Deferred tax reflects the impact of current year timing differences between accounting and taxable income and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets are recognised only to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised and are reviewed at each balance sheet date.

12 Provision for Product Expiry Claims:

Provision for product expiry claims in respect of products sold during the year is made based on the management's estimates.

13 Research and Development Cost:

A Expenditure on research and development is charged to the statement of Profit and Loss of the year in which it is incurred.

B Capital expenditure on research and development is given the same treatment as Fixed Assets.

14 Excise Duty:

Excise duty is accounted at a concessional rate as per Notification No. 1/2011-CE without availing CENVAT credit.

15 Leases:

Leases are classified as operating leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets. Operating lease payments are recognised as expenses in the Statement of Profit and Loss as and when paid.

16 Provisions, Contingent Liabilities and Contingent Assets:

Provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. A disclosure for contingent liability is made when there is a possible 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/disclosure is made. Contingent assets are not recognised in the financial statements. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the correct management estimates.

Note : 3 - Segment Information:

The Company operates in one segment only, namely "Consumer Products." The Company also exports its products to other countries. However the value being below threshold limit brscribed under Accounting Standard [AS]-17-"Segment Reporting", the reporting is not required.

a Effective from April 1, 2014, the Company had started providing debrciation on tangible assets on "straight line method" over the revised remaining useful lives of the tangible assets in alignment with useful lives brscribed in Schedule II to the Companies Act, 2013. Consequently, the debrciation charge for the year ended March 31, 2015 was higher by Rs. 196 Lacs. Further, an amount of Rs. 19 Lacs had been recognised in the opening balance of retained earnings which relate to the carrying amount of tangible assets whose revised remaining useful life was Nil as at April 1, 2014.

b Additionally, an amount of Rs. 7 Lacs had been recognised in the opening balance of retained earnings, which relate to the carrying amount of tangible assets of Zydus Wellness-Sikkim (the firm), whose revised remaining useful life was Nil as on April 1, 2014 and which had been adjusted against the current capital of the Company in the firm.

Note : 4

Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classifications/disclosure.

Signatures to Significant Accounting Policies and Notes 1 to 36 to the Financial Statements

As per our report of even date

For Dhirubhai Shah & Doshi,

Chartered Accountants

Firm Registration Number: 102511W

Kaushik D. Shah

Partner

Membership Number: 016502

For and on behalf of the Board

Amit B. Jain Chief Financial Officer

Sharvil P. Patel Chairman

Dhaval N. Soni Company Secretary

Tarun G. Arora Whole Time Director

Place : Ahmedabad.

Date : May 12, 2016.