NOTES FORMING PART OF THE FINANCIAL STATEMENTS

CORPORATE INFORMATION AND SIGNIFICANT

1. CORPORATE INFORMATION

Strides Shasun Limited (Formerly Strides Arcolab Limited) (the "Company' or "Strides') is a pharmaceutical company headquartered in Bengaluru, India. Strides develops and manufactures a wide range of IP-led niche pharmaceutical products. The Company is listed on the BSE Limited and the National Stock Exchange of India Limited.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 The financial statements of the Company have been brpared 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") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention except for:

(i) fixed assets which were fair valued in earlier years based on the Scheme of Arrangement approved by the Honorable High Courts of Judicature (the 'Scheme') or,

(ii) financial assets and liabilities which were fair valued as permitted by Accounting  Standard (AS) 30: 'Financial Instruments: Recognition and Measurement' read with AS 31 'Financial Instruments: Presentation' and AS 32 'Financial Instruments: Disclosure' issued by the Institute of Chartered Accountants of India, to the extent such standards do not conflict with other standards notified under Companies (Accounting Standards) Rules, 2006 (as amended).

The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year.

2.2 Use of estimates

The brparation 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 brparation 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 recognised in the periods in which the results are known / materialise.

2.3 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 and, where applicable, excise duty. Cost is determined as follows

2.3 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 and, where applicable, excise duty. Cost is determined as follows

.6 Debrciation and amortisation

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

Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed 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 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.:

Dies and punches : 4 years

Mobiles phone : 3 years

Certain factory buildings : 18 years

Leasehold land is amortised over the duration of the lease.

Intangible assets are amortised over their estimated useful life on straight line method as follows:

Registration and Brands : 5 years to 10 years Software Licenses : 5 years

With respect to assets carried at fair value as permitted under the Scheme, debrciation / amortisation is recorded under the straight line method over the balance useful life of the respective assets.

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

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.

.7 Revenue recognition

(a) Sale of goods: Sales are recognised, 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. Sales include excise duty but exclude sales tax and value added tax.

(b) Revenue from product development services:

(i) In respect of contracts where the Company undertakes to develop products for its customers (on an end-to end basis), revenues are recognized based on technical estimates of the stage of work completed under the contracts.

(ii) I n respect of other contracts where the Company performs specifically identified services in the development of the products, revenues are recognized on the basis of the performance milestones provided in the contract.

(c) Revenue from contract manufacturing is recognised based on the services rendered in accordance with the terms of the contract.

(d) Export incentives are accrued for based on fulfillment of eligibility criteria for availing the incentives and when there is no uncertainty in receiving the same. These incentives include estimated realisable values/benefits from special import licenses and benefits under duty entitlement pass book schemes, Merchandise Export from India Scheme, wherever applicable.

(e) Income from rendering advisory / support services is recognized based on contractual terms.

(f) Share of profits and royalty incomes under manufacturing and supply agreements with customers are accrued based on confirmation received from customers.

2.8 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established. The Company provides corporate guarantees to subsidiaries and charges a commission for providing such guarantees. Such incomes are accrued in terms of the agreements with the parties.

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 debrciation and impairment losses, 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.

Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and debrciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously 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 and net realisable value and are disclosed separately.

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 amortisation 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 recognised 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. In-house product development costs are capitalised in accordance with note 2.18 below.

Intangible assets under development:

Expenditure on Research and development (Refer note 2.18) eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use.

2.10 Foreign currency transactions and translations Initial recognition

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

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 foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Integral foreign operations

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company's integral foreign operations are recognised 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 are accumulated in Exchange Reserve until disposal / recovery of the net investment, in which case the accumulated balance in Exchange Reserve is recognised as income / expense in the same period in which the gain or loss on disposal / recovery is recognised.

Non-integral foreign operations

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

Accounting for forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised 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 recognised as income or as expense in the period in which such cancellation or renewal is made. Refer note 2.B.21 for accounting for forward exchange contracts relating to firm commitments and highly probable forecast transactions.

2.11 Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

2.12 Employee benefits

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

Defined contribution plans

The Company's contribution to provident fund, superannuation 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.

Defined benefit plans

For defined benefit plans in the form of gratuity fund. The cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the brsent value of available refunds and reductions in future contributions to the schemes.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

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 recognised as a liability at the brsent 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.

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 are met.

2.13 Employee share based payments

The Company has formulated Employee Stock Option Plans (ESOP) in accordance with the Securities and Exchange Board of India (Share Based Employee Benefit) Regulations 2014. The Plans provide for grant of options to employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period. In accordance with the SEBI Guidelines, the excess, if any, of the closing market price on the day prior to the grant of the options (under ESOP) over the exercise price is amortised on a straight line basis over the vesting period in the Statement of Profit and Loss / Reserve for Business Restructure.

Employee stock options granted under the  above ESOP on or after April 01, 2005 are accounted under the 'Intrinsic Value Method' stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India.

Options with a cash settlement feature are fair valued at the time of the grant and at each reporting date. Changes in the fair value of the Options at each reporting date are recognised in the Statement of Profit and Loss.

2.14 Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

2.15 Leases

Where the Company as a lessor leases assets under finance leases, such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment.

Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value or the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.

2.16 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period brsented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

2.17 Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.

2.18 Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technical feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for Fixed Assets.

2.19 Impairment of assets

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. The following intangible assets are tested for impairment each financial year even if there is no indication that the asset is impaired:

a) an intangible asset that is not yet available for use; and (b) an intangible asset that is amortised over a period exceeding ten years from the date when the asset is available for use.

If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.

The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor.

When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was brviously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognised.

2.20 Provisions and contingencies

A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their 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. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

2.21Financial Assets, Financial Liabilities, Financial Instruments, Derivatives and Hedge Accounting

(a) The Company classifies its financial assets into the following categories:

Financial instruments at fair value through Statement of Profit and Loss, loans and receivables, held to maturity investments and available for sale financial assets.

Financial assets of the Company mainly include cash and bank balances, trade receivables, loans and advances and derivative financial instruments with a positive fair value.

Financial liabilities of the Company mainly comprise secured and unsecured loans, trade payables, accrued expenses and derivative financial instruments with a negative fair value.

Financial assets/ liabilities are recognized on the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when all of risks and rewards of the ownership have been transferred. The transfer of risks and rewards is evaluated by comparing the exposure, before and after the transfer, with the variability in the amounts and timing of the net cash flows of the transferred assets.

Available for sale financial assets (not covered under the notified Accounting Standards) are carried at fair value, with changes in fair value being recognised in Equity, unless they are designated in a fair value hedge relationship, where such changes are recognised in the Statement of Profit and Loss. Loans and receivables, considered not to be in the nature of short-term receivables, are discounted to their brsent value. Short-term receivables with no stated interest rates are measured at original invoice amount, if the effect of discounting is immaterial. Non-interest-bearing deposits, meeting the criteria of financial asset, are discounted to their brsent value.

Financial liabilities held for trading and liabilities designated at fair value, are carried at fair value through Statement of Profit and Loss

Other financial liabilities are carried at amortised cost using the effective interest method. The Company measures the short-term payables with no stated rate of interest at original invoice amount, if the effect of discounting is immaterial.

Financial liabilities are derecognized when extinguished.

(b) Determining fair value

Where the classification of a financial instrument requires it to be stated at fair value, fair value is determined with reference to a quoted market price for that instrument or by using a valuation model. Where the fair value is calculated using financial markets pricing models, the methodology is to calculate the expected cash flows under the terms of each specific contract and then discount these values back to a brsent value.

(c) Hedge accounting

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecast transactions. The Company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in "Accounting Standard 30 Financial Instruments: Recognition and Measurement" issued by the ICAI. These forward contracts are stated at fair value at each reporting date. Changes in the fair value of these forward contracts that are designated and effective as hedges of future cash flows are recognised directly in "Hedging reserve account" under Reserves and surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Amounts accumulated in the "Hedging reserve account" are reclassified to the Statement of Profit and Loss in the same periods during which the forecasted transaction affects profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. For forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in "Hedging reserve account" is retained until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative

gain or loss recognised in "Hedging reserve account" is immediately transferred to the Statement of Profit and Loss.

(d) Derivative contracts

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, and forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for foreign currency transactions and translations.

Derivative contracts designated as a hedging instrument for highly probable forecast transactions are accounted as per the policy stated for Hedge Accounting.

All other derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.

2.22 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

2.23 Deferred Revenue Expenditure

The Company operates in an environment which requires the manufacturing facilities to be approved by industry regulators in certain territories prior to manufacture and sale of products in such territories. If the interval between the date the facility is ready to commence commercial production and the date at which commercial production is expected to commence is prolonged, all expenses incurred during this period are treated as deferred revenue expenditure and amortised over a period not exceeding 3 years from the date of receipt of approvals.

2.24 Exceptional items

The Group classifies the following as exceptional items in the Statement of Profit and Loss:

(a) Exchange gain / loss arising on account of restatement and settlement of (i) long term foreign currency loans, (ii) intra-group loans;

(b) Changes in fair value of embedded derivatives in FCCBs and option contracts;

(c) Profit / loss on disposal of non-current investments and / or dividends received from proceeds of such disposal and provision for / reversals of provision for diminution in non-current investments, goodwill and other assets;

(d) Profit / loss arising on account of discontinuance of products / development activities;

(e) Restructuring costs.

2.25 Operating cycle

As mentioned in note 1 above under "Corporate information', the Company is into development and manufacture of pharmaceutical products. Based on the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 3 years to 5 years and 12 months relating to Research and Development activities and Manufacturing of Pharmaceutical products respectively. The above basis is used for classifying the assets and liabilities into current and non-current as the case may be.

NOTE NO. 3

SCHEME OF ARRANGEMENT UNDERSECTION 391 - 394 OF THE COMPANIES ACT, 1956

The Scheme of Restructuring approved by the shareholders on April 13, 2009 included a Scheme of Arrangement that envisaged the creation of a Reserve for Business Restructuring as set out in the Scheme. The Reserve was to be utilized by December 31, 2012 for specified purposes by either the Company or its subsidiaries. The balance of Rs. 3,846.38 Million identified under the Securities Premium Account rebrsents amounts utilized by the subsidiaries of the Company from the Reserve prior to December 31, 2012 and have been earmarked for set off on consolidation.

NOTE NO. 4 SALE OF NON-CURRENT INVESTMENTS AND RELATED MATTERS

Notification of claims received from Mylan under Share Purchase Agreements entered with Mylan in earlier years

The Company and its subsidiary Strides Pharma Asia Pte Limited ("Strides Singapore") entered into definitive agreements in February 27, 2013 with Mylan Inc. for sale of the Specialty products business. The transactions under the respective agreements was by way of (i) sale of investment held in Agila Specialties Private Limited ("ASPL"), an erstwhile wholly owned subsidiary of the Company), to Mylan Laboratories Limited ("MLL"), a Mylan group company and (ii) the sale of investment held in Agila Specialties Global Pte Ltd ("Agila Global", an erstwhile subsidiary of Strides Singapore, a subsidiary of the Company) to Mylan Institutional Inc., another Mylan group company. MLL and Mylan Institutional Inc together are referred to below as Mylan.

The sale of ASPL was recorded by the Company in terms of the Share purchase agreement dated December 4, 2013 (the "India SPA"). The sale of Agila Global was recorded by Strides Singapore in terms of the Share purchase agreement dated December 4, 2013 (the "Global SPA").

The Company has provided a corporate guarantee to Mylan Inc. for USD 200.00 Million (valid up to December 4, 2020) on behalf of Strides Singapore which can be used for discharging specified financial obligations, if any, of Strides Singapore to Mylan (disclosed under Contingent liabilities and commitments in Note 43).

The India SPA required Rs. 850 Million and USD 60 Million to be set aside by MLL in separate Escrow accounts (jointly controlled by both MLL and B. the Company), for payment to specified senior management personnel of ASPL and its subsidiary and for incurring certain regulatory expenses pertaining to ASPL, respectively. In terms of the India SPA, the unutilised amounts in the Escrow accounts, if any, would be payable to the Company.

The Global SPA required USD 100 Million and USD 40 Million be set aside by MLL in two separate Escrow accounts (jointly controlled by both MLL and the Company) towards tax contingencies and regulatory expenses respectively.

Given the uncertainties involved and in the absence of a right to receive, the amounts under the escrow arrangements were not included in the consideration accounted as income by the Company at the time of disposal of the investments.

During the year ended March 31, 2016, the Company has received Rs. 129.50 Million out of the escrow amount set aside under the India SPA for payment to senior management personnel of ASPL. This has been recognised as an exceptional item under Profit on sale of investments after adjusting related expenses of Rs. 3.29 Million.

Under the terms of the India SPA and the Global SPA (together the "SPA"s), claims against the Company / Strides Singapore can only be made under specific provisions contained in the SPAs which include the procedures and timelines for submission of notifications of claims and actual claims and commencing arbitration proceedings.

During the current year, the Company has received notifications of claims from Mylan under the terms of the SPAs. These include third party claims, tax claims, claims against the regulatory escrows and general claims. A significant portion of these are estimates of potential claims / losses that Mylan expects to incur and involve significant uncertainties. The Company has formally responded to Mylan disputing the claims and also sought further details / clarifications on each of the items mentioned in the notifications of claims.

Given the nature of the claims involved and the extent of information made available by Mylan so far, the Company is not able to make a reliable estimate of its obligations, if any, with regard to these claims.

Considering the terms of the SPAs and the amounts in the respective escrows, the Company believes that any further outflow of resources is not probable.

Sale of investment in Strides Pharmaceuticals Holdings) Limited, Cyprus

During the brvious year ended March 31, 2015, the Company has sold its investment in Strides Pharmaceuticals (Holdings) Limited, Cyprus ("SPHL"), a wholly owned subsidiary of the Company, having a carrying value of Rs. 2,956.98 Million to Strides Pharma Asia Pte Limited, Singapore, a wholly-owned subsidiary of the Company, for a consideration of USD 63.79 Million (Rs. 3,920.99 Million). Profit arising on such sale of investment amounting to Rs. 964.01 Million has been recognised in the Statement of Profit and Loss under Exceptional Items..

C. Sale of investment by erstwhile Shasun

Pharmaceuticals Limited in the brvious year

In the brvious year, erstwhile Shasun Pharmaceuticals Limited (which merged with the Company as explained in note 41 below) had disposed-off its investment in Alivira Animal Health Limited ('an associate') having carrying value of Rs. 630 Million to M/s Sequent Scientific Limited ('Sequent') for a consideration of Rs. 750 Million, of which a sum of Rs. 650 Million was receivable as at March 31, 2015. In the current year, such amount has been received from Sequent.

MERGERS AND ACQUISITION OF   BUSINESS / INVESTMENTS MADE

DURING THE YEAR:

(i) In accordance with the terms of the Scheme of Amalgamation (the 'Scheme') between the Shasun Pharmaceuticals Limited (Transferor Company) and the Company (Transferee Company), the

the Honorable High Court of Judicature with an appointed date of April 01, 2015 and the effective date of November 19, 2015 (the 'Effective Date'), being the date on which all the requirements under the Companies Act, 2013 and as per the Scheme have been completed. The merger has been accounted under the pooling of interest method referred to in Accounting Standard 14 "Accounting for Amalgamation" and the assets and liabilities transferred have been recorded at their book values.

Pursuant to the Scheme, the Company has allotted 21,017,329 equity shares to shareholders of erstwhile Shasun in the ratio of 5 equity shares of Rs. 10/- each of the Company for every 16 shares of Rs. 2/- each held by shareholders of erstwhile Shasun as at November 19, 2015, being the record date for issue of equity shares by the Company. These share have been considered for the purpose of calculation of earnings per share appropriately. An amount of Rs. 75.66 Million being the excess of the share capital issued by the Company over the share capital of the erstwhile Shasun has been debited to Reserves.

In accordance with the Scheme, the authorised share capital of the Transferor Company, as on the effective date is added to the authorised share capital of the Company and the brference share capital of the Company is reclassified into the equity share capital. Accordingly, the authorized share capital of the Company stands increased to 176.75 Million equity shares of Rs. 10 each, totaling to Rs. 1,767.50 Million.

The Transferor Company had adopted the provisions of para 46 / 46A ofAS 11 "The Effects of Changes in Foreign Exchange Rates". Accordingly, the exchange fluctuations on all long term monetary items so far as they related to the acquisition of a debrciable capital asset, were added to or deducted from the cost of the asset and were debrciated over the balance life of such assets. In cases other than those falling under above, exchange fluctuations were accumulated in 'Foreign Currency Monetary Item Translation Difference Account' (FCMITDA), grouped under Reserves and Surplus, and amortised over the balance period of long-term monetary asset/liability but not beyond March 31, 2020. In order to align with the Company's policy, the carrying value of such exchange differences included in the fixed assets amounting Rs. 163.94 Million and the accumulated balance in the FCMITDA Rs. 4.22 Million in the books of the Transferor Company as at the appointed date of the Scheme of merger have been charged-off to the Statement of Profit and Loss under exceptional items.

On completion of the merger of the Transferor Company with the Company, the following entities of the erstwhile Shasun became part of Company:

Aponia Laboratories Inc., USA Chemsynth Laboratories Private. Limited, India Clarion Wind Farm Private Limited, India Beta Wind Farm Private Limited, India Shasun NBI LLC, USA

Shasun Pharma Solutions Inc., USA Shasun Pharma Solutions Limited, UK Shasun USA Inc., USA Stabilis Pharma Inc., USA

SIPCOT Industrial Common Utilities Limited, India SVADS Holdings SA,Switzerland Tulysan Lec Limited, India

In accordance with the terms of the Scheme, the Company was required to issue stock options in the Company to the employees holding options issued by the Transferor Company aggregating to 156,400 as at the effective date of the Scheme in the ratio of 5 options in the Company for every 16 options held in erstwhile Shasun. The terms and conditions applicable to new options in the Company shall be no less favourable than those provided under erstwhile Shasun ESOP scheme. However, as at March 31, 2016, pending certain regulatory approvals, such options are not yet issued by the Company. Options reserved for issue in respect of the above at the balance sheet date are 48,875 options.

With effect from November 18, 2015, the name of the Company has been changed from Strides Arcolab Limited to Strides Shasun Limited.

In view of the merger of Shasun with the Company, the current year figures are not comparable with the brvious year figures.

(ii) During the current year, the Company has acquired the following business / assets:

(a) The Company acquired the 'Solus' and 'Solus Care' division operating in the central nervous system (CNS) segment in India from Sun Pharmaceuticals Industries Limited for a total consideration of Rs. 1,653.30 Million including duties and taxes in connection with the acquisition. The arrangement involved transfer of the above mentioned two marketing divisions, along with their employees to the Company. Allocation of the consideration over the acquired assets is given below:

NOTE NO. 5

During the current year, the Company has raised Rs. 11,026.62 Million on issue of 8,628,028 equity shares of Rs. 10 each at a brmium of Rs. 1,268 per equity share to Qualified Institutional Buyers in terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009. The Company has completed the allotment of equity shares on December 23, 2015 and expenses incurred in relation to the Qualified Institutional Placement to the extent of Rs. 148.59 Million has been debited to Securities Premium Account.

NOTE NO. 6 EMPLOYEE STOCK OPTION  PLAN (ESOP)

(a) In the extraordinary general meeting held on January 25, 2007, the shareholders approved the issue of 1,000,000 options under the Plan titled "Strides Arcolab ESOP 2006" (ESOP 2006). The ESOP 2006 allows the issue of options to employees of the Company and its subsidiaries (whether in India or abroad). Each option comprises one underlying equity share. As per the Plan, the Compensation committee grants the options to the employees deemed eligible. The exercise price of each option shall not be less than 85 per cent of the "Market Price" as defined in the Plan. The options granted vest over a period of 3 years from the date of the grant in proportions specified in the Plan. Options should be exercised within 30 days of vesting. No options were granted under this Plan during the current year.

(b) The ESOP titled "Strides Arcolab ESOP 2008" (ESOP  2008) was approved by the shareholders through postal ballot on June 18, 2008. 1,500,000 options are covered under the Plan for 1,500,000 equity shares. The options allotted under ESOP 2008 are convertible into equal number of equity shares. The vesting period of these options range over a period of three years. The options must be exercised within a period of 30 days from the date of vesting. No options were granted under this Plan during the current year.

(c) The ESOP titled "Strides Arcolab ESOP 2008 (Directors)" (ESOP 2008 Directors Plan) was approved by the shareholders through postal ballot on January 12, 2009. 500,000 options are

covered under the Plan for 500,000 equity shares. The options allotted under ESOP 2008 Directors Plan are convertible into equal number of equity shares. The vesting period of these options range over a period of three years. The options must be exercised within a period of 30 days from the date of vesting. No options were granted under this plan during the current year.

(d) The ESOP titled "Strides Arcolab ESOP 2011" (ESOP

2011) was approved by the shareholders on May 30, 2011. 1,500,000 options are covered under the Plan for 1,500,000 equity shares. The options allotted under ESOP 2011 are convertible into equal number of equity shares. The vesting period of these options range over a period of three years. The options must be exercised within a period of 30 days from the date of vesting. No options were granted under this plan during the current year.

(e) The ESOP titled "Strides Arcolab ESOP 2015" (ESOP 2015) was approved by the shareholders on November 6, 2015. 70,000 options are covered under the Plan for 70,000 equity shares. The options allotted under ESOP 2015 are convertible into equal number of equity shares. The vesting period of these options range over a period of five years. The options must be exercised within a period of

180 days from the date of vesting. No options were granted under this plan during the current year.

(f) SEBI had notified the Share Based Employee Benefits Regulations 2014, which replaced the erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. It mandates that all listed companies having existing stock option schemes comply with the revised regulation in their entirety.

There were no outstanding options under the ESOP

2006, ESOP 2008, ESOP 2008 (Directors) and ESOP

2011 Schemes other than the 265,000 options due for vesting under the ESOP 2011 Scheme.

Considering the above, the Nomination and Remuneration Committee resolved that the existing ESOP Schemes, under which there are no outstanding options, be terminated. Further, the Committee resolved that it should not grant further stock options under the ESOP 2011 Scheme. However, the outstanding options under the ESOP 2011 shall continue to vest as per the offer letter granted to employees of the Company.

TRANSFER PRICING

The detailed Transfer Pricing regulations ('régulations') for computing the income from "domestic transactions" with specified parties and international transactions between 'associated enterprises' on an 'arm's length' basis is applicable to the Company. These regulations, inter alia, also require the maintenance of brscribed documents and information including furnishing a report from an Accountant which is to be filed with the Income tax authorities.

The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Management is of the opinion that the transactions with associated enterprises and domestic transactions are at arm's length, and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

EARLY ADOPTION OF AS-30:

FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT, ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

The Company had chosen to early adopt AS 30: 'Financial Instruments: Recognition and Measurement', (as announced by the Institute of Chartered Accountants of India (ICAI)) during the year ended December 31, 2008, with effect from January 1, 2008. However, pursuant to a notification issued by the ICAI on February 11, 2011, the Company has adopted AS 30 only to the extent they do not conflict with the other mandatory accounting standards notified under Section 133 of the 2013 Act.

The impact of adoption of AS30 as mentioned above is as follows:

7. The financial assets and liabilities arising out of issue of corporate financial guarantees to third parties are accounted at fair values on initial recognition. Financial assets continue to be carried at fair values. Financial liabilities are subsequently measured at the higher of the amounts determined under AS 29 or the fair values on the measurement date. At March 31, 2016 and March 31, 2015, the fair values of such financial assets and financial liabilities amount to Nil.

8. There are no open derivative positions as on March 31, 2016 and as on March 31, 2015 not designated as hedging instruments except in respect of Interest Rate Swap contracts taken on foreign currency borrowings (value of such contracts outstanding as at March 31, 2016: USD 0.56 Million, as at March 31, 2015: USD Nil). The loss on fair valuation of such open derivatives amounting to Rs. 0.58 Million for the year ended March 31, 2016 (Rs. Nil for the year ended March 31, 2015) is recognised in the Statement of Profit and Loss.

9. The Company has availed bill discounting facilities from Banks which do not meet the de-recognition criteria for transfer of contractual rights to receive cash flows from the respective trade receivables since they are with recourse to the Company. Accordingly, as at March 31, 2016, trade receivables balances include Rs. 473.28 Million (As at March 31, 2015: Rs. 270.69 Million) and the corresponding financial liability to the Banks is included as part of working capital loans under short-term borrowings (secured).

10. The Company has designated certain highly probable forecasted US dollar denominated sales transactions and certain forward contracts to sell US dollars as hedged items and hedging instruments respectively, in a Cash Flow Hedge to hedge the foreign exchange risk arising out of fluctuations between the India rupee and the US dollar. The exchange fluctuations arising from marking to market of the hedging instruments, to the extent relatable to the hedge being effective has been recognised in a Hedge reserve account in the Balance sheet. Accordingly exchange fluctuations gains/ (losses) amounting to Rs. 140.30

Million as at March 31, 2016 (At March 31, 2015: Rs. 90.40 Million) have been recognized in the Hedge Reserve account. These exchange differences are considered in Statement of Profit and Loss as and when the forecasted transactions occur.

NOTE NO. 11

During 2011, the erstwhile Shasun Pharmaceuticals Limited ('Shasun') (which merged with the Company effective April 1, 2015 - refer Note 41(i)) had entered into an agreement with Nanoparticle Biochem Inc. for establishing a joint venture company in USA called Shasun NBI LLC and accordingly, held 50% interest in Shasun NBI LLC. The contractual arrangement between Nanoparticle Biochem Inc and the erstwhile Shasun indicates that the parties jointly control the financial and operating policies of Shasun NBI LLC in the ordinary course of business.

NOTE NO.12.

OTHER MATTERS

(a) In respect of freehold land to the extent of 7.20 acres (as at March 31, 2016 gross block and net block amounting to Rs. 257.67 Million) capitalised in the books of the Company, the title deeds are under dispute. The Company has been legally advised that it has title deed in its name and that it will be able defend any counter claims to such parcel of land under dispute.

(b) The title deeds of freehold land and building admeasuring 57.82 acres (as at March 31, 2016 gross block Rs. 2,191.62 Million and net block of Rs. 1,534.50 Million) capitalised in the books of the Company are in the name of erstwhile Companies which were merged with the Company under Section 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Courts of judicature. The Company is in the process of transferring the title deeds of such properties in its name.

(c) In respect of buildings admeasuring 1,470 sq. ft. (as at March 31, 2016 gross block of Rs. 4.05 Million and net block Rs. 1.59 Million) capitalised in the books of the Company, the title deeds are not in the name of the Company. The Company is in the process transferring the title deeds of such buildings in its name.

NOTE NO. 13.

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