GSK_ Annual_Report_2021-22

119 Notes to the Standalone Financial Statements for the year ended March 31, 2022 Note 1: Significant accounting policies A. GENERAL INFORMATION GlaxoSmithKline Pharmaceuticals Limited (‘the Company’) is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on the BSE Ltd. (Bombay Stock Exchange) and the National Stock Exchange of India Ltd. (NSE). The registered office of the Company is located at Dr. Annie Besant Road, Worli, Mumbai 400 030. The Company is engaged interalia, in the business of manufacturing, distributing and trading in pharmaceuticals. B. SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 and relevant provisions of the Companies Act, 2013 (“the Act”) (as amended from time to time). The standalone financial statements have been prepared on a historical cost basis, except for the following: • certain financial assets and liabilities that are measured at fair value; • assets held for sale - measured at lower of carrying amount or fair value less cost to sell; • defined benefit plans - plan assets measured at fair value; and • share-based payments. The financial statements are presented in INR and all values are rounded to the nearest lakhs (INR 00,000), except where otherwise indicated. b) Revenue recognition Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved. The specific recognition criteria described below must also be met before revenue is recognised. Sale of goods Revenue from the sale of goods is recognised when the goods have been passed on to the buyer as per contractual terms, at which time all the following conditions are satisfied: • the company is recognizing revenue as and when it satisfies the performance obligation by transferring promised goods or services to a customer and customer obtains control of the same.; • the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the Company; • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of services Income from clinical research and data management services is recognised in the accounting period in which the services are rendered based on terms of the agreement. Rights of return Certain contracts provide a customer with a right to return the goods within a specified period. The Company uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Company will be entitled. The requirements in Ind AS 115 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods that are expected to be returned, instead of revenue, the Company recognises a refund liability. Trade Receivables A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (g) financial instruments.