Quest Laboratories Ltd. कंपली की लेखा नीति

Mar 31, 2025

A. COMPANY BACKGROUND

Incorporated as Quest Laboratories Private Limited on 01^st June 1998 under the Companies Act, 1956 and converted
to public limited company on 23^rd January 2024 with the name of Quest Laboratories Limited. The Company has
been listed on the National Stock Exchange since 23^rd May, 2024.

Basis of Preparation of Financial Statements

(i) Compliance with Ind AS

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter
referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies
Act, 2013 (‘Act’) read with of the Companies (Indian Accounting Standards) Rules,2015 as amended and other
relevant provisions of the Act.

The accounting policies are applied consistently to all the periods presented in the financial statements.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

1) certain financial assets and liabilities that are measured at fair value.

2) assets held for sale - measured at lower of carrying amount or fair value less cost to sell.

(iii) Current non-current classification

All the assets and liabilities have been classified as current or non-current as per the Company’s normal
operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing and their realisation in cash and cash
equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current -
noncurrent classification of assets and liabilities.

(iv) Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.

2. Use of estimates and critical accounting judgements

In the preparation of financial statements, the Company makes judgements, estimates and assumptions about the
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these
estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised, and future periods affected.

Key source of estimation of uncertainty at the date of standalone financial statements, which may cause material
adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment,
useful lives of property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions,
contingent liabilities, and fair value measurements of financial instruments as discussed below. Key source of
estimation of uncertainty in respect of revenue recognition and employee benefits have been discussed in the
respective policies.

3. Revenue Recognition

Revenue is measured at the fair value of consideration received or receivable net of discounts, considering
contractually defined terms and excluding taxes and duties collected on behalf of the government.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the Company and specific criteria have been met for each of the Company’s activities
as described below.

Sale of goods

Revenue from sale of goods is recognised when the Company has transferred to the buyer the significant risks and
rewards of ownership, no longer retains 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 and the costs
incurred or to be incurred in respect of the transaction can be measured reliably. Depending on the contractual terms,
risks and rewards of ownership is transferred when the delivery is completed. In case of exports sale delivery is
completed on issuance of bill of lading

Interest income

Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest
rate applicable.

Dividend income

Dividend income is recognized at the time when the right to receive is established by the reporting date.

Other operating revenue - Export incentives

Export Incentives under various schemes are recognized on accrual basis.

Other Incomes

Other incomes have been recognized on accrual basis in the financial statements, except when there is uncertainty of
collection.

4. Property, plant, and equipment

An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits
associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is
applied to costs incurred initially to acquire an item of property, plant, and equipment and to costs incurred
subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing,
are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the
replaced part is derecognised. Where an item of property, plant and equipment comprises major components having
different useful lives, these components are accounted for as separate items.

Property, plant, and equipment is stated at cost/deemed cost, less accumulated depreciation, and impairment. Cost
includes all direct costs and expenditures incurred to bring the asset to it

s working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised.

Capital work-in-progress and intangible assets under development represents expenditure incurred in respect of capital
projects / intangible assets under development and are carried at cost. Cost comprises of purchase cost, related
acquisition expenses, development / construction costs, borrowing costs and other direct expenditure.

Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset. The gain or
loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale
proceeds and carrying value of such item and is recognised in the statement of profit and loss.

5. Depreciation and amortisation of property, plant and equipment and intangible assets

Depreciation of these assets commences when the assets are ready for their intended use which is generally on
commissioning. Items of property, plant and equipment are depreciated in a manner that amortizes the cost (or other
amount substituted for cost) of the assets after commissioning, less its residual value, over their useful lives as
specified in Schedule II of the Companies Act, 2013 on a Written Down Value basis. Land is not depreciated.

Property, plant and equipment’s residual values and useful lives are reviewed at each balance sheet date and changes,
if any, are treated as changes in accounting estimate.

a. Fixed asset is depreciated on a written down value basis over the useful lives of assets as prescribed under Part C
of Schedule II of the Companies Act 2013.

b. Depreciation for assets purchased or sold during the period is charged to revenue pro-rata to the period of their
use.

6. Inventories

Finished goods (including for trade), work in process and raw materials are stated at ‘Cost or Net Realizable Value,
whichever is lower’. Cost of Inventories comprises cost of purchases and other costs incurred in bringing the
inventories to their present location and condition. ‘First In First Out’ cost formula is used for determination of cost
of inventories.

7. Foreign Currency Transactions

(i) Functional and presentation currency

The financial statements are presented in Indian rupee (INR), which is Company’s functional and presentation
currency.

(ii) Transactions and balances

Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates.
Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of
Profit and Loss. Monetary foreign currency assets and liabilities at the year-end are translated at the year-end
exchange rates and the resultant exchange differences are recognized in the Statement of Profit and Loss.

8. Employee Benefit

a. Post employment and other long term employee benefits are recognised as expense in the Statement of profit and
loss for the year in which the employee has rendered services. The expense is recognised at the value of the
amounts payable determined using actuarial valuation techniques as certified by the Actuary. Actuarial gains and
losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss.

b. Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state
managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the
Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement
benefit scheme.

9. Borrowing Cost

Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds and include
exchange differences to the extent regarded as an adjustment to the same. Borrowing costs directly attributable to the
acquisition and/ or construction of a qualifying asset are capitalized during the period that is necessary to complete
and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period to
get ready for its intended use. All other borrowing costs are charged to the Standalone Statement of Profit and Loss as
incurred.

10. Borrowings

Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost. Any
difference between theproceeds (net of transaction costs) and the redemption amount is recognized in the Statement
of Profit and Loss over the period of the borrowings using the effective interest method.

Preference shares, which are mandatorily redeemable on a specific date are classified as liabilities. The dividend on
these preferenceshares is recognised in Statement of Profit and Loss as finance costs.

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Mar 31, 2024

A. ACCOUNTING POLICIES

1. Accounting Convention

The Financial statements have been prepared in accordance with the historical cost convention on an accrual basis and comply with the applicable Accounting Standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and Accounting Standard - 30 on Financial Instruments to the extent it does not contradict with any other Accounting Standard.

These Financial Statements have been prepared as required under relevant provision of the Companies Act, 2013 and the presentation is based on the Schedule III of the Companies Act, 2013.

2. Fixed Assets and Depreciation

Fixed Assets are stated at cost of acquisition/construction.

Tangible Assets are carried at cost of acquisition less accumulated depreciation and accumulated impairment losses, if any. The costs of acquisition of assets are inclusive of all the rates taxes and freight paid less any taxes or input receivables.

Depreciation

During the year Company has charged Depreciation as per Straight line method on the basis of single shift at the rates and in the manner prescribed in Schedule II of the Companies Act 2013.

3. Revenue Recognition

Sales are recognized when significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of contract. Provisions for sales returns and other off invoice allowances relating to that year’s sale are offset from sales. Other incomes are recognized on accrual basis.

4. Inventories

Inventories, other than stores and spares are stated at cost or net realizable value whichever is lower. Stores and spares are carried at cost; provision is made for obsolete, slow-moving and defective stocks, wherever necessary. Cost is determined on FIFO method for all categories of inventories. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition.

5. Impairment of assets

An Asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is normally charged to Profit& Loss account in the year in which an asset is identified as impaired. The Company holds no asset whose carrying cost exceeds its recoverable value as on 31/03/2024.

6. Borrowing cost

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of such assets. Borrowing costs include amortization of issue &ancillary costs relating to the borrowings which are appropriately amortized over the expected term of the borrowing.

7. Employee Benefit Expenses

Employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent valuation at year end and charge is recognized in the statement of profit and loss.

8. Accounting For Taxes On Income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with local laws of various jurisdiction.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to the timing differences that result between taxable profit and the profit as per the financial statement. Income Tax liability has been computed under Minimum Alternate Tax (MAT). The excess tax paid under MAT provisions being over and above regular tax liability can be carried forward for a period of ten years from the year of recognition and is available for set off against future tax liabilities computed under regular tax provisions, to the extent of MAT (i.e. Minimum 15% tax of Book Profit). The difference of tax payable on normal provision and the MAT provision is Booked as MAT credit entitlement^ During the year amount of Rs 4,20,66,551.25/-has been recognized as provision for income tax and Rs 14,53,580.94/- as provision for Deferred Tax Liability)