అకౌంట్స్ గమనికలుHaleos Labs Ltd.

Mar 31, 2025

3.17 Provisions

Provisions are recognized when there is a present
legal or constructive obligation that can be
estimated reliably, as a result of a past event,
when it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation. Provisions
are not recognized for future operating losses.

Any reimbursement that the Company can be
virtually certain to collect from a third party with
respect to the obligation is recognized as a separate
asset. However, this asset may not exceed the
amount of the related provisions.

Provisions are reviewed at each reporting date and
adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of economic
resources will be required to settle the obligation,
the provisions are reversed. Where the effect of the
time of money is material, provisions are discounted
using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When
discounting is used, the increase in the provisions
due to the passage of time is recognized as a finance
cost.

Provision for litigation related obligation represents
liabilities that are expected to materialize in respect
of matters in appeal

3.18 Trade Payables:

These amounts represent liabilities for goods
supplied to the Company prior to the end of
financial year which are unpaid. Trade payables are
presented as current liabilities unless payment is not
due within 12 months after the reporting period.
They are recognized initially at their fair value and
subsequently measured at amortized cost using the
effective interest method.

3.19 Dividends

The Company recognises a liability to make cash
distributions to equity holders when the distribution
is authorized and the distribution is no longer at the
discretion of the Company. As per the corporate
laws in India, a distribution is authorised when it
is approved by the shareholders. A corresponding
amount is recognized directly in equity. Interim
dividends are recorded as a liability on the date of
declaration by the Company''s Board of Directors.
The Company is required to pay/distribute dividend
after deducting applicable taxes. The remittance of
dividends outside India is governed by Indian law on
foreign exchange and is also subject to withholding
tax at applicable rates.

3.20 Equity:

Ordinary Shares are classified as Equity share
Capital. Incremental costs directly attributable to
the issue of new ordinary shares or share options
and buy back are recognized as a deduction from
equity, net of tax effects, if any.

3.21 Research and Development:

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 capitalized. Development
expenditure on an individual project are recognized
as an intangible asset when the Company can
demonstrate:

• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale

• Its intention to complete and its ability and
intention to use or sell the asset

• How the asset will generate future economic
benefits

• The availability of resources to complete the
asset

• The ability to measure reliability the
expenditure during development

The expenditure to be capitalized includes the cost
of materials and other costs directly attributable
to preparing the asset for its intended use. Other
development expenditures are recognized in the
statement of profit and loss as and when incurred.
As at 31^st March, 2025, none of the development
expenditure amounts has met the aforesaid
recognition criteria.

3.22 Post Employee Benefits:

(a) Defined Contribution Plans:

The Company''s contribution to provident
fund and employee state insurance schemes
is charged to the statement of profit and
loss. The Company''s contributions towards
Provident Fund are deposited with the Regional
Provident Fund Commissioner under a defined
contribution plan.

(b) Defined Benefit Plans:

The Company has gratuity as defined benefit
plan where the amount that an employee will
receive on retirement is defined by reference to
the employee''s length of service and final salary.

The liability recognized in the balance sheet
for defined benefit plans as the present value
of the Defined Benefit Obligation (DBO) at the
reporting date. Management estimates the DBO
annually with the assistance of independent
actuaries as per the requirements of IND AS 19
"Employee Benefits". Actuarial gains and losses
resulting from re-measurement of the liability
are included in other comprehensive income.

The Company has subscribed to a group
gratuity scheme of Life Insurance Corporation
of India (LIC). Under the said policy, the eligible
employees are entitled for gratuity upon their
resignation, retirement or in the event of death
in lump sum after deduction of necessary taxes
upto a maximum limit as per the Gratuity Act,
1972. Liabilities in respect of the Gratuity Plan
are determined by an actuarial valuation, based
upon which the Company makes contributions
to the Gratuity Fund

(C) Compensated Absence Policy:

The employees of Company are entitled to
compensated absences the employees can
carry forward a portion of the un utilised
accumulated compensated absences and
utilize in future periods or encash the leaves
at the time of retirement or termination
of employment. The Company records
an obligation in the period in which the
employee render the services that increases
this entitlement. The Company measures the
expected cost of compensated absences as the
additional amount that the Company expects
to pay as a result of the unused entitlement
that has accumulated at the end of the
reporting period. The Company recognises
accumulated compensated absences based
on actuarial valuation using the projected
unit credit method as on the reporting date
as per the requirements of IND AS "Employee
Benefits". Non accumulating compensated
absences are recognised in the period in which
the absences occur. Actuarial gains and losses
arising from experience adjustments and
changes in actuarial assumptions are recorded
in the statement of profit and loss in the year in
which such gains or losses arise.

(d) Short-Term Employee Benefits

Short -term employee benefits comprise of
employee costs such as salaries, bonus etc. is
recognized on the basis of the amount paid or
payable for the period during which services
are rendered by the employees.

3.23 Earnings per Share:

Basic earnings per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders (after deducting attributable taxes)
by the weighted average number of equity shares
outstanding during the year. The weighted average
number of equity shares outstanding during the
year is adjusted for events including a bonus issue.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable
to equity shareholders and the weighted average
number of shares outstanding during the year are
adjusted for the effects of all dilutive potential
equity shares.

3.24 Contingent Liabilities and Commit¬
ments:

Where it is not probable that an outflow of economic
resources will be required, or the amount cannot be
estimated reliably, the asset or the obligation is not
recognised in the statement of balance sheet and is
disclosed as a contingent liability.

Possible outcomes on obligations, whose existence
will only be confirmed by the occurrence or non¬
occurrence of one or more future events are also
disclosed as contingent liabilities.

Contingent Assets are neither recognized nor
disclosed. However, when realization of Income is
virtually certain, related asset is recognized.

3.25 Exceptional Items

Exceptional items are disclosed separately in the
financial statements where it is necessary to do so
to provide further understanding of the financial
performance of the Company. These are material
items of income or expense that have to be shown
separately due to the significance of their nature or
amount.

3.26 Fair Value Measurement

The Company measures Financial Instruments at fair
value at each Balance Sheet Date.

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. The fair value measurement is
based on the presumption that the transaction to
sell the asset or transfer the liability takes place
either in the principal market for such asset or
liability, or in the absence of a principal market, in
the most advantageous market which is accessible
to the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the standalone financial
statements are categorized within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted market prices) in
active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurements is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable

3.27 Estimates and Assumptions

The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts
of assets and liabilities within the next financial
year, are described below. The Company based its
assumptions and estimates on parameters available
when the standalone financial statements were
prepared. Existing circumstances and assumptions
about future developments, however, may change
due to market changes or circumstances arising
that are beyond the control of the Company. Such
changes are reflected in the assumptions when they
occur.

(i) Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be
recognized is based on an assessment of the
probability of the Company''s future taxable
income against which the deferred tax assets
can be utilized. In addition, significant judgment
is required in assessing the impact of any legal
or economic limits or uncertainties in various
tax jurisdictions.

(ii) Recognition of Deferred Tax
Liability on Undistributed Profits:

The extent to which the Company can control
the timing of reversal of deferred tax calculation
on undistributed profits of its subsidiaries
requires judgment.

(iii) Evaluation of Indicators for Impair¬
ment of Assets:

The evaluation of applicability of indicators
of impairment of assets requires assessment
of several external and internal factors which
could result in deterioration of recoverable
amount of the assets.

(iv) Recoverability of Advances/
Receivables:

At each balance sheet date, based on historical
default rates observed over expected life, the
management assesses the expected credit loss
on outstanding receivables and advances.

(v) Useful lives of Depreciable/Amor-
tizable Assets:

Management reviews its estimate of the useful
lives of depreciable/amortisable assets at each
reporting date, based on the expected utility
of the assets. Uncertainties in these estimates
relate to technical and economic obsolescence
that may change the utility of certain software,
customer relationships, IT equipment and
other plant and equipment.

(vi) Defined Benefit Obligation (DBO):

Management''s estimate of the DBO is based
on a number of critical underlying assumptions
such as standard rates of inflation, medical cost
trends, mortality, discount rate and anticipation
of future salary increases. Variation in these
assumptions may significantly impact the
DBO amount and the annual defined benefit
expenses.

(vii) Fair Value Measurements:

Management applies valuation techniques
to determine the fair value of financial
instruments (where active market quotes are
not available) and non-financial assets. This
involves developing estimates and assumptions
consistent with how market participants would
price the instrument. Management uses the
best information available. Estimated fair values
may vary from the actual prices that would be
achieved in an arm''s length transaction at the
reporting date.

(viii) Provisions:

At each balance sheet date the management
judgment, changes in facts and legal aspects,
the Company assesses the requirement of
provisions against the outstanding warranties
and guarantees. However, the actual future
outcome may be different from this judgment.

3.28 Recent Accounting Pronouncements:

Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. For the year
ended 31^st March, 2025 MCA has notified IndAS-117
Insurance contracts and amendments to IndAS-116
- Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f 1st April, 2024. The
Company has reviewed the new pronouncements
and its evaluation has determined that it does not
have any impact in Standalone financial Statements.

3.29 Rounding of Amounts:

All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
lakhs, as per the requirement of Schedule III of the
Companies Act, 2013 unless otherwise stated.

The Company does not face significant liquidity risk with regard to its lease liabilities as the current assets are
sufficient to meet the obligations related to lease liabilities as and when they fall due.

Lease agreement of office premises initially entered for three years in 2019, extended for Four years and
further extended for another two years with revised terms and conditions, it expires by 31^st January, 2028.

5.1 Operating Lease Commitments - Company as Lessor: The Company has given part of its office for sublease and
rental income is very meger and the same was included in other income.

a) No trade or other receivables are due from directors or other officers of the Company either severally or jointly
with any other person.

b) Trade receivables are non-interest bearing.

c) Of the trade receivables Rs. 4,124.21 Lakhs in aggregate (Previous Year Rs. 3,076.47 Lakhs) is due from the
Company''s customers individually representing more than 5% of the total trade receivables.

d) The Company has used practical expedient for computing the expected credit loss allowance for doubtful trade
receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience
in calculating expected credit loss.

38 Post Employment Benefits

38.1 Defined Contribution Plans

38.1.1 Employer''s Contribution to Provident Fund:

Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per
regulations. The contributions are made to registered provident fund administered by the government.
The obligation of the company is limited to the amount contributed and it has no further contractual nor
any constructive obligation. The expense recognised during the year towards PF Contribution is Rs.240.96
Lakhs (31^st March, 2024 Rs. 224.48 Lakhs).

38.1.2 Employer''s Contribution to State Insurance Scheme:

Contributions are made to State Insurance Scheme in India for employees at the rate of 3.25%. The
Contributions are made to Employees State Insurance Corporation(ESI) to the respective State Governments
of the Company''s location. This Corporation is administered by the Government and the obligation of
the company is limited to the amount contributed and it has no further contractual nor any constructive
obligation. The expense recognised during the period towards ESI Contribution is Rs.7.78 Lakhs (31^st March,
2024 - Rs. 8.67 Lakhs).

38.2 Defined Benefit Plans

The Company has a defined benefit gratuity plan governed by Payment of Gratuity Act, 1972. Every
Employee who has completed five years or more of service is entilted to a gratuity on departure at 15
days salary for each completed year of Service. The Scheme is funded through a policy with Life Insurance
Corporation of India (LIC).

The Company has a defined benefit Compensated Absence Plan governed by The Factories Act, 1948. Every
Employee who has worked for a period of 240 days or more during a calendar year shall be allowed during
the subsequent calendar year, leave with wages for a number of days calculated as per Act.

The following table summarise net benefit expenses recognised in the statement of profit and loss, the
status of funding and the amount recognised in the Balance Sheet for both the plans:

(a) Assumptions regarding future mortality experience are set in accordance with the published statistics
by the Life Insurance Corporation of India.

(b) Plan assets does not comprise any of the Company''s own financial instruments or any assets used by
the Company. The Company has the plan covered under a policy with the Life Insurance Corporation
of India.

(c) The Significant acturial assumptions for the determination of the defined benefit obligation are the
discount rate, the salary growth rate and the average life expectancy. The calculation of the net
defined benefit liability is sensitive to these assumptions. However, the impact of these changes is
not ascertained to be material by the management.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant acturial assumptions, the
same method (Projected Unit Credit Method) has been applied while calculating the defined benefit
liability recognised within the Balance Sheet.

38.2.10 Other Information

(i) Expected rate of return basis

EROA is the discount rate as at previous valuation date as per the accounting standard

(ii) Description of Plan Assets and Reimbursement Conditions

100% of the Plan Asset is entrusted to LIC of India under their Group Gratuity Scheme. The
reimbursement is subject to LIC''s Surrender Policy

(iii) Discount Rate

The discount rate has decreased from 6.97% to 6.77% and hence there is an increase in liability
leading to actuarial loss due to change in discount rate.

(iv) Present Value of Defined Benefit Obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit Method
(PUC Method). Under the PUC Method, a "projected accrued benefit" is calculated at the beginning
of the year and again at the end of the year for each benefit that will accrue for all active members of
the Plan. The "Projected accrued benefit" is based on the Plan''s accrual formula and upon service as
of the beginning or end of the year, but using a member''s final compensation, projected to the age at
which the employee is assumed to leave active service. The Plan Liability is the acturial present value
of the " Projected accrued benefits" as of the begining of the year for active members.

(v) Expected Average remaining service vs. Average remaining future service:

The average remaining service can be arithmatically arrived by deducting current age from normal
retirement age whereas the expected average remaining service is arrived acturially by applying
multiple decrements to the average remaining future service namely mortality and withdrawals. Thus,
the expected average remaining service is always less than the average remaining future service."

(vi) Current and Non Current Liability:

The total of current and non-current liability must be equal with the total of PVO (Present Value
Obligation) at the end of the period plus short term compensated liability if any. It has been classified
in terms of " Schedule III" of the Companies Act, 2013.

(vii) Defined Benefit Liability and Employer Contributions

The Company has purchased insurance policy to provide for payment of gratuity to the employees.
Every year, the insurance company carries out a funding valuation based on the latest employee data
provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by
the Company. The company considers that the contribution rate set at the last valuation date are
sufficient to eliminate the deficit over the agreed period and that regular contributions, which are
based on service costs will not increase significantly.

38.2.11 Risk exposure

Though it is defined benefit plan, the company is exposed to a number of risks, the most significant of
which are detailed below:

(a) Investment / Interest Risk:

The Company is exposed to Investment / Interest risk if the return on the invested fund falls below the
discount rate used to arrive at present value of the benefit.

(b) Longevity Risk:

The Company is not exposed to risk of the employees living longer as the benefit under the scheme
ceases on the employee separating from the employer for any reason.

(c) Risk of Salary Increase

The Company is exposed to higher liability if the future salaries rise more than assumption of salary
escalation.

39 Assets Pledged as Security

For Non Current Borrowings

Term Loans are Secured by First Charge on Property, Plant and Equipment and Second Charge on Current
Assets

Long Term Working Capital Term Loans are secured by Second charge on Property, Plant and Equipment
and Current Assets

42 Fair Value Measurements

42.1 Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observables market data rely as little as possible
on entry specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.

Valuation technique used to determine fair value:

Specific Valuation techniques used to value financial instruments include:

- The use of quoted market prices or dealer quotes for similar instruments.

- The fair value of remaining financial instruments is determined using discounted cashflow analysis.
Valuation Process:

The Finance and accounts department of the Company performs the valuation of financial assets and liabilities
required for financial reporting purposes, and report to the Board of Directors. The main Level 3 inputs are
derived using the discounted cash flow analysis, Market Approach, Net Assets Value Method as applicable.

43 Financial Risk Management Objectives and Policies

Financial Risk Management Framework

The Company is exposed primarily to credit risk, liquidity risk and market risk (fluctuations in foreign currency
exchange rates and interest rate), which may adversley impact the fair value of its financial instruments. The
Company assess the unpredictability of the financial environment and seeks to mitigate potential adverse
effects on the financial performance of the Company.

43.1 Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of
deterioration of creditwrothiness as well as concentration of risks. Credit risk is controlled by analysing credit
limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after
obtaining necessary approvals for cerdit. Financial instruments that are subject to concentration of credit risk
principally consist of trade receivables, cash and cash equivalents, bank deposits and other financial assets.
None of the financial instruments of the Company result in Material Concentration of credit risk, except for
Trade Receivables.

(i) Financial Instruments and Cash Deposits

For banks and financial institutions, only high rated banks/ institutions are accepted. Other Financial
assets (excluding Bank deposits) majorily constitute deposits given to State electricity department for
supply of power, which the company considers to have negligible credit exposure. Counterparty credit
limits are reviewed by the Management on an annual basis, and may be updated throughout the year.
The limits are set to minimise the concentration of risks and therefore mitigate financial loss through
counterparty''s potential failure to make payments.

43.2 Liquidity Risk:

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of
liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as
per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities
and reserve borrowing facilities, by continously monitoring forecast and actual cash flows, and by matching
the maturity profiles of financial assets and liabilities.

43.3 Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial isntrument will fluctuate because of
changes in market price. Market price comprises three types of risk, currency rate risk, interest rate risk and
other price risks such as equity risk. Financial instruments affected by market risk include loans and advances
deposits investments in debt securities mutual funds and other equity funds.

(i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of change in market ineterest rates. In order to optimize the Company''s position with regards
to interest income and interest expenses and to manage the interest rate risk, treasury performs a
comprehensive corporate interest risk management by balancing the proportion of fixed rate and
floating rate financial instruments in its portfolio.

(ii) Foreign Currency Exchange Rate Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign
exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from services provided or availed that are
denominated in a currency other than the functional currency. The foreign currencies in which these
transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade
payable balances at the end of the reporting period have similar exposures.

(b) Foreign Currency Sensitivity

The following table demonstrate the sensitivity to a reasonably possible change in USD exchange
rate, with all other variables held constant. The change in the fair value of monetary assets and
liabilites including foreign currency derivatives may impact on the company''s profit before tax.
The Company''s exposure to foreign currency changes for all other currencies is not material.

(iii) Other Price Risk:

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments
will fluctuate because of changes in market prices (other than those arising from interest rate risk or
currency risk) whether those changes are caused by factors specific to the individual financial instrument
or its issuer or by factors affecting all similar financial instruments traded in the market.

44 Capital Management

For the purpose of the Company''s Capital Management, capital includes issued equity capital, share
premium and all other equity reserves attributable to the equity holders. The primary objective of the
Company''s capital management is to maximise the shareholders value.

*Customs Duty Issue for imports against advance authorisations

Customs Department has raised demand for an amount of Rs 81.60 lakhs in the year 2000 for non fulfillment
of export obligations by earstwhile Plant Organics Limited which was merged with SMS Phamaceuticals
limited, demerged company vide BIFR order dated 28-08-2008 and vested with the company vide NCLT,
Hyderabad, demerger order dated 15-5-2017. Madras High Court has granted stay in 2011. Considering the
facts of the case and based on the legal advise, liability was not recognised in this regard.

# # IGST Exemption availed on Imports

The Company has received a Show Cause Notice from DRI, Kolkata for an amount of Rs.10.03 Crores IGST
payable on imports saying that the company has violated the pre import condition while availing the IGST
exemption on imports made against advance authorisations. The company has filed writ petition with
Honourable High Court of Telangana and the said High Count has granted stay. Considering the facts of the
case and based on the legal advise, liability was not recognised in this regard.

48 Segment Information

A Basis for segmentation

The operations of the Company are limited to one segment viz. Pharmaceutical products including ingredients
and intermediaries. The products being sold under this segment are of similar nature and comprises of
pharmaceutical products only. The Company''s Chief Operating Decision Maker (CODM) reviews the internal
management reports prepared based on aggregation of financial information of the Company on a periodic
basis, for the purpose of allocation of resources and evaluation of performance. Accordingly, management
has identified pharmaceutical segment as the only operating segment for the Company.

51 Other statutory information

i) The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Group for holding any Benami property. There are no proceedings initiated or pending against
the group as at 31^st March 2025 under prohibition of Benami Property transaction Act, 1988 and rules
made there under (as ammended in 2016).

ii) The Company does not have any transactions with companies struck off as per Section 248 of the
companies Act, 2013 and Section 560 of the Companies Act, 1956.

iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.

iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial
year.

v) The Company has not defaulted and has not been declared wilful defaulter by any bank or financial
institution or government or any government authority.

vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

viii) The Company has not any such transactions which is not recorded in the books of account that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act,
1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

ix) Title deeds of all Immovable properties were held in the name of the company.

x) The Company has not entered into any scheme of arrangements which has an accounting impact on
current and previous financial year

xi) The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMP''s
and the related parties as defined under the Companies Act, 2013.

xii) The Company has Complied with the relavant provisions of the Foreign Exchange Management Act 1999
and the companies act for the above transactions and the transactions are not violative of the Prevention
of Money Laundering Act 2002.

52 Subsequent Event

No significant subsequent events have been observed till 29th May, 2025 which may require any additional
disclosure or an adjustment to the standalone financial statements.

53 Figures have been rounded off to the nearest rupees in Lakhs.

54 Previous year figures have been regrouped and reclassified wherever considered necessary to confirm to this
year''s classifications.

as per our report of even date for and on behalf of the Board of Directors of

for RAMBABU & CO SMS Lifesciences India Limited

Chartered Accountants

^{FRN 002976S} TVVSN MURTHY T V PRAVEEN

Ravikumar Kilarapu N V Managing Director Executive Director

Partner DIN: 00465198 DIN: 08772030

M No. 255088

TRUPTI R MOHANTY N. RAJENDRA PRASAD

Place : Hyderabad Company Secretary Chief Financial Officer

Date : 29-05-2025 M No. F13407 M.No.026567

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Mar 31, 2024

3.17 Provisions

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.

3.18 Trade Payables:

These amounts represent liabilities for goods supplied to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

3.19 Dividends

The Company recognises a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognized directly in equity. Interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors. The Company is required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.

3.20 Equity:

Ordinary Shares are classified as Equity share Capital. Incremental costs directly attributable to the issue of new ordinary shares or share options and buy back are recognized as a deduction from equity, net of tax effects, if any.

3.21 Research and Development:

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 capitalized. Development expenditure on an individual project are recognized as an intangible asset when the Company can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

• Its intention to complete and its ability and intention to use or sell the asset

• How the asset will generate future economic benefits

• The availability of resources to complete the asset

• The ability to measure reliability the expenditure during development.

The expenditure to be capitalized includes the cost of materials and other costs directly attributable to preparing the asset for its intended use. Other development expenditures are recognized in the statement of profit and loss as and when incurred. As at 31^st March, 2024, none of the development expenditure amounts has met the aforesaid recognition criteria.

3.22 Post Employee Benefits:

(a) Defined Contribution Plans:

The Company''s contribution to provident fund and employee state insurance schemes is charged to the statement of profit and loss. The Company''s contributions towards Provident Fund are deposited with the Regional Provident Fund Commissioner under a defined contribution plan.

(b) Defined Benefit Plans:

The Company has gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The liability recosnized in the balance sheet

for defined benefit plans as the present value of the Defined Benefit Obligation (DBO) at the reporting date. Management estimates the DBO annually with the assistance of independent actuaries as per the requirements of IND AS 19 "Employee Benefits". Actuarial gains and losses resulting from re-measurement of the liability are included in other comprehensive income.

The Company has subscribed to a group gratuity scheme of Life Insurance Corporation of India (LIC). Under the said policy, the eligible employees are entitled for gratuity upon their resignation, retirement or in the event of death in lump sum after deduction of necessary taxes upto a maximum limit as per the Gratuity Act, 1972. Liabilities in respect of the Gratuity Plan are determined by an actuarial valuation, based upon which the Company makes contributions to the Gratuity Fund.

(b) Compensated Absence Policy:

The employees of Company are entitled to compensated absences the employees can carry forward a portion of the un utilised accumulated compensated absences and utilize in future periods or encash the leaves at the time of retirement or termination of employment. The Company records an obligation in the period in which the employee render the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognises accumulated compensated absences based on actuarial valuation using the projected unit credit method as on the reporting date as per the requirements of IND AS "Employee Benefits". Non accumulating compensated absences are recognised in the period in which the absences occur. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of profit and loss in the year in which such gains or losses arise.

(c) Short-Term Employee Benefits

Short -term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

3.23 Earnings per Share:

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events including a bonus issue.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

3.24 Contingent Liabilities and Commitments:

Where it is not probable that an outflow of economic resources will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statement of balance sheet and is disclosed as a contingent liability.

Possible outcomes on obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one or more future events are also disclosed as contingent liabilities.

Contingent Assets are neither recognized nor disclosed. However, when realization of Income is virtually certain, related asset is recognized.

3.25 Exceptional Items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Company. These are material items of income or expense that have to be shown separately due to the significance of their nature or amount.

3.26 Fair Value Measurement

The Company measures Financial Instruments at fair value at each Balance Sheet Date.

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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or in the absence of a principal market, in the most advantageous market which is accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted market prices) in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

3.27 Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(i) Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

(ii) Recognition of Deferred Tax Liability on Undistributed Profits:

The extent to which the Company can control the timing of reversal of deferred tax calculation on undistributed profits of its subsidiaries requires judgment.

(iii) Evaluation of Indicators for Impairment of Assets:

The evaluation of applicability of indicators of impairment of assets requires assessment

of several external and internal factors which could result in deterioration of recoverable amount of the assets.

(iv) Recoverability of Advances/Re-ceivables:

At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.

(v) Useful lives of Depreciable/Amor-tizable Assets:

Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.

(vi) Defined Benefit Obligation (DBO):

Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

(vii) Fair Value Measurements:

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.

(viii) Provisions:

At each balance sheet date the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgment.

3.28 Recent Accounting Pronouncements:

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024 MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

3.29 Rounding of Amounts:

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs, as per the requirement of Schedule III of the Companies Act, 2013 unless otherwise stated.

18.1.1 Security Terms

(a) Term Loan availed from Export-Import Bank of India and HDFC Bank are secured by first charge of all movable and immovable fixed assets both present and future on pari-passu basis. They are further secured by second charge of all current assets both present and future on pari-passu basis. These facilities are guaranteed by Sri TVVSN Murthy, Managing Director and T.V.Praveen, Executive Director of the Company in their personal capacity.

(b) Term Loan GECL (Gauranteed Emergency Credit Line) availed from Export-Import Bank of India and RBL Bank are Gauranteed by National Credit Gaurantee Trustee, secured by second charge of all movable and immovable fixed assets and current assets both present and future on pari-passu basis. These facilities are also guaranteed by Sri TVVSN Murthy, Managing Director and T.V.Praveen, Executive Director of the Company in their personal capacity.

(c) Term Loan availed from HDFC Bank Ltd is secured by first charge of all movable and immovable fixed assets both present and future and second charge of all current assets both present and future on pari passu basis and guaranteed by Sri TVVSN Murthy, Managing Director and T.V.Praveen, Executive Director of the Company in their personal capacity.

39 Post Employment Benefits

39.1 Defined Contribution Plans

39.1.1 Employer''s Contribution to Provident Fund: Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards PF Contribution is Rs.224.48 Lakhs (31^st March, 2022 Rs. 206.38 Lakhs).

39.1.2 Employer''s Contribution to State Insurance Scheme: Contributions are made to State Insurance Scheme in India for employees at the rate of 3.25%. The Contributions are made to Employee State Insurance Corporation(ESI) to the respective State Governments of the Company''s location. This Corporation is administered by the Government and the obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards ESI Contribution is Rs.8.67 Lakhs (31^st March, 2023 - Rs. 9.37 Lakhs).

39.2 Defined Benefit Plans

The Company has a defined benefit gratuity plan governed by Payment of Gratuity Act, 1972. Every Employee who has completed five years or more of service is entilted to a gratuity on departure at 15 days salary for each completed year of Service. The Scheme is funded through a policy with Life Insurance Corporation of India (LIC).

The Company has a defined benefit Compensated Absence Plan governed by The Factories Act, 1948. Every Employee who has worked for a period of 240 days or more during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated as per Act.

The following table summarise net benefit expenses recognised in the statement of profit and loss, the status of funding and the amount recognised in the Balance Sheet for both the plans:

39.2.10 Other Information

(i) Expected rate of return basis

EROA is the discount rate as at previous valuation date as per the accounting standard

(ii) Description of Plan Assets and Reimbursement Conditions

100% of the Plan Asset is entrusted to LIC of India under their Group Gratuity Scheme. The reimbursement is subject to LIC''s Surrender Policy

(iii) Discount Rate

The discount rate has decreased from 7.23% to 6.97% and hence there is an increase in liability leading to actuarial loss due to change in discount rate.

(iv) Present Value of Defined Benefit Obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit Method (PUC Method). Under the PUC Method, a "projected accrued benefit" is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The "Projected accrued benefit" is based on the Plan''s accrual formula and upon service as of the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the acturial present value of the " Projected accrued benefits" as of the begining of the year for active members.

(v) Expected Average remaining service vs. Average remaining future service:

The average remaining service can be arithmatically arrived by deducting current age from normal retirement age whereas the expected average remaining service is arrived acturially by applying multiple decrements to the average remaining future service namely mortality and withdrawals. Thus, the expected average remaining service is always less than the average remaining future service..

(vi) Current and Non Current Liability:

The total of current and non-current liability must be equal with the total of PVO (Present Value Obligation) at the end of the period plus short term compensated liability if any. It has been classified in terms of " Schedule III" of the Companies Act, 2013.

(vii) Defined Benefit Liability and Employer Contributions

The Company has purchased insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company. The company considers that the contribution rate set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs will not increase significantly.

39.2.11 Risk exposure

Though it is defined benefit plan, the company is exposed to a number of risks, the most significant of which are detailed below:

(a) Investment / Interest Risk:

The Company is exposed to Investment / Interest risk if the return on the invested fund falls below the discount rate used to arrive at present value of the benefit.

(b) Longevity Risk:

The Company is not exposed to risk of the employees living longer as the benefit under the scheme ceases on the employee separating from the employer for any reason.

(c) Risk of Salary Increase

The Company is exposed to higher liability if the future salaries rise more than assumption of salary escalation.

40 Assets Pledged as Security

For Non Current Borrowings

Term Loans are Secured by First Charge on Property, Plant and Equipment and Second Charge on Current Assets

Long Term Working Capital Term Loans are secured by Second charge on Property, Plant and Equipment and Current Assets

43 Fair Value Measurements

43.1 Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observables market data rely as little as possible on entry specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Valuation technique used to determine fair value:

Specific Valuation techniques used to value financial instruments include:

- The use of quoted market prices or dealer quotes for similar instruments.

- The fair value of remaining financial instruments is determined using discounted cashflow analysis. Valuation Process:

The Finance and accounts department of the Company performs the valuation of financial assets and liabilities required for financial reporting purposes, and report to the Board of Directors. The main Level 3 inputs are derived using the discounted cash flow analysis, Market Approach, Net Assets Value Method as applicable.

44 Financial Risk Management Objectives and Policies

Financial Risk Management Framework

The Company is exposed primarily to credit risk, liquidity risk and market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversley impact the fair value of its financial instruments. The Company assess the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

44.1 Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditwrothiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for cerdit. Financial instruments that are subject to concentration of credit risk principally consist of trade receivables, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in Material Concentration of credit risk, except for Trade Receivables.

(i) Financial Instruments and Cash Deposits

For banks and financial institutions, only high rated banks/ institutions are accepted. Other Financial assets (excluding Bank deposits) majorily constitute deposits given to State electricity department for supply of power, which the company considers to have negligible credit exposure. Counterparty credit limits are reviewed by the Management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market price. Market price comprises three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include loans and advances deposits investments in debt securities mutual funds and other equity funds.

(i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest risk management by balancing the proportion of fixed rate and floating rate financial instruments in its portfolio.

(ii) Foreign Currency Exchange Rate Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

45 Capital Management

For the purpose of the Company''s Capital Management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholders value.

52 Other statutory information

i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property. There are no proceedings initiated or pending against the group as at 31st March 2024 under prohibition of Binami Property transcation Act, 1988 and rules made there under ( as ammended in 2016).

ii) The Company does not have any transactions with companies struck off as per Section 248 of the companies Act, 2013 and Section 560 of the Copmanies Act, 1956.

iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

v) The Company has not defaulted and has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

viii) The Company has not any such transactions which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

ix) Title deeds of all Immovable properties were held in the name of the company.

x) The Company has not entered into any scheme of arrangements which has an accounting impact on current and previous financial year

xi) The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMP''s and the related parties as defined under Companies Act, 2013.

53 Subsequent Event

No significant subsequent events have been observed till 27th May, 2024 which may require any aditional disclosure or an adjustment to the standalone financial statements.

54 Figures have been rounded off to the nearest rupees in Lakhs.

55 Previous year figures have been regrouped and reclassified wherever considered necessary to confirm to this year''s classifications.

as per our report of even date for and on behalf of the Board of Directors of

for RAMBABU & CO SMS Lifesciences India Limited

Chartered Accountants

^{FRN 002976S} TVVSN MURTHY T V PRAVEEN

GVL PRASAD Managing Director Executive Director

Partner DIN: 00465198 DIN: 08772030

M.No.026548

TRUPTI R MOHANTY N. RAJENDRA PRASAD

Place : Hyderabad Company Secretary Chief Financial Officer

Date : 27-05-2024_M.No. 60358_M.No.026567_

---

Mar 31, 2023

3.17 Provisions

Provisions are recognized when there is a present
legal or constructive obligation that can be
estimated reliably, as a result of a past event,
when it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation. Provisions
are not recognized for future operating losses.

Any reimbursement that the Company can be
virtually certain to collect from a third party with

respect to the obligation is recognized as a separate
asset. However, this asset may not exceed the
amount of the related provisions.

Provisions are reviewed at each reporting date and
adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of economic
resources will be required to settle the obligation,
the provisions are reversed. Where the effect of the
time of money is material, provisions are discounted
using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When
discounting is used, the increase in the provisions
due to the passage of time is recognized as a finance
cost.

Provision for litigation related obligation represents
liabilities that are expected to materialize in respect
of matters in appeal.

3.18 Trade Payables:

These amounts represent liabilities for goods
supplied to the Company prior to the end of
financial year which are unpaid. Trade payables are
presented as current liabilities unless payment is not
due within 12 months after the reporting period.
They are recognized initially at their fair value and
subsequently measured at amortized cost using the
effective interest method.

3.19 Dividends

The Company recognises a liability to make cash
distributions to equity holders when the distribution
is authorized and the distribution is no longer at the
discretion of the Company. As per the corporate
laws in India, a distribution is authorised when it
is approved by the shareholders. A corresponding
amount is recognized directly in equity. Interim
dividends are recorded as a liability on the date of
declaration by the Company''s Board of Directors.
The Company is required to pay/distribute dividend
after deducting applicable taxes. The remittance of
dividends outside India is governed by Indian law on
foreign exchange and is also subject to withholding
tax at applicable rates.

3.20 Equity:

Ordinary Shares are classified as Equity share
Capital. Incremental costs directly attributable to
the issue of new ordinary shares or share options

and buy back are recognized as a deduction from
equity, net of tax effects, if any.

3.21 Research and Development:

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 capitalized. Development
expenditure on an individual project are recognized
as an intangible asset when the Company can
demonstrate:

• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale

• Its intention to complete and its ability and
intention to use or sell the asset

• How the asset will generate future economic
benefits

• The availability of resources to complete the
asset

• The ability to measure reliability the
expenditure during development.

The expenditure to be capitalized includes the cost
of materials and other costs directly attributable
to preparing the asset for its intended use. Other
development expenditures are recognized in the
statement of profit and loss as and when incurred.
As at 31^st March, 2023, none of the development
expenditure amounts has met the aforesaid
recognition criteria.

3.22 Post Employee Benefits:

(a) Defined Contribution Plans:

The Company''s contribution to provident
fund and employee state insurance schemes
is charged to the statement of profit and
loss. The Company''s contributions towards
Provident Fund are deposited with the Regional
Provident Fund Commissioner under a defined
contribution plan.

(b) Defined Benefit Plans:

The Company has gratuity as defined benefit
plan where the amount that an employee will

receive on retirement is defined by reference to
the employee''s length of service and final salary.
The liability recognized in the balance sheet
for defined benefit plans as the present value
of the Defined Benefit Obligation (DBO) at the
reporting date. Management estimates the DBO
annually with the assistance of independent
actuaries as per the requirements of Ind AS 19
"Employee Benefits". Actuarial gains and losses
resulting from re-measurement of the liability
are included in other comprehensive income.

The Company has subscribed to a group
gratuity scheme of Life Insurance Corporation
of India (LIC). Under the said policy, the eligible
employees are entitled for gratuity upon their
resignation, retirement or in the event of death
in lump sum after deduction of necessary taxes
upto a maximum limit as per the Gratuity Act,
1972. Liabilities in respect of the Gratuity Plan
are determined by an actuarial valuation, based
upon which the Company makes contributions
to the Gratuity Fund.

(b) Compensated Absence Policy:

The employees of Company are entitled to
compensated absences the employees can
carry forward a portion of the un utilised
accumulated compensated absences and
utilize in future periods or encash the leaves
at the time of retirement or termination
of employment. The Company records
an obligation in the period in which the
employee render the services that increases
this entitlement. The Company measures the
expected cost of compensated absences as the
additional amount that the Company expects
to pay as a result of the unused entitlement
that has accumulated at the end of the
reporting period. The Company recognises
accumulated compensated absences based
on actuarial valuation using the projected
unit credit method as on the reporting date
as per the requirements of Ind AS "Employee
Benefits". Non accumulating compensated
absences are recognised in the period in which
the absences occur. Actuarial gains and losses
arising from experience adjustments and

changes in actuarial assumptions are recorded
in the statement of profit and loss in the year in
which such gains or losses arise.

(c) Short-Term Employee Benefits

Short -term employee benefits comprise of
employee costs such as salaries, bonus etc. is
recognized on the basis of the amount paid or
payable for the period during which services
are rendered by the employee.

3.23 Earnings per Share:

Basic earnings per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders (after deducting attributable taxes)
by the weighted average number of equity shares
outstanding during the year. The weighted average
number of equity shares outstanding during the
year is adjusted for events including a bonus issue.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable
to equity shareholders and the weighted average
number of shares outstanding during the year are
adjusted for the effects of all dilutive potential
equity shares.

3.24 Contingent Liabilities and Commitments:

Where it is not probable that an outflow of economic
resources will be required, or the amount cannot be
estimated reliably, the asset or the obligation is not
recognised in the statement of balance sheet and is
disclosed as a contingent liability.

Possible outcomes on obligations, whose existence
will only be confirmed by the occurrence or non¬
occurrence of one or more future events are also
disclosed as contingent liabilities.

Contingent Assets are neither recognized nor
disclosed. However, when realization of Income is
virtually certain, related asset is recognized.

3.25 Exceptional Items

Exceptional items are disclosed separately in the
financial statements where it is necessary to do so
to provide further understanding of the financial
performance of the Company. These are material
items of income or expense that have to be shown
separately due to the significance of their nature or
amount.

3.26 Fair Value Measurement

The Company measures Financial Instruments at fair
value at each Balance Sheet Date.

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. The fair value measurement is
based on the presumption that the transaction to
sell the asset or transfer the liability takes place
either in the principal market for such asset or
liability, or in the absence of a principal market, in
the most advantageous market which is accessible
to the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the standalone financial
statements are categorized within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted market prices) in
active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurements is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable.

3.27 Estimates and Assumptions

The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts
of assets and liabilities within the next financial
year, are described below. The Company based its
assumptions and estimates on parameters available
when the standalone financial statements were
prepared. Existing circumstances and assumptions
about future developments, however, may change
due to market changes or circumstances arising
that are beyond the control of the Company. Such
changes are reflected in the assumptions when they
occur.

(i) Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be
recognized is based on an assessment of the
probability of the Company''s future taxable
income against which the deferred tax assets
can be utilized. In addition, significant judgment
is required in assessing the impact of any legal
or economic limits or uncertainties in various
tax jurisdictions.

(ii) Recognition of Deferred Tax Liability
on Undistributed Profits:

The extent to which the Company can control
the timing of reversal of deferred tax calculation
on undistributed profits of its subsidiaries
requires judgment.

(iii) Evaluation of Indicators for Impair¬
ment of Assets:

The evaluation of applicability of indicators
of impairment of assets requires assessment
of several external and internal factors which
could result in deterioration of recoverable
amount of the assets.

(iv) Recoverability of Advances/Receiv-
ables:

At each balance sheet date, based on historical
default rates observed over expected life, the
management assesses the expected credit loss
on outstanding receivables and advances.

(v) Useful lives of Depreciable/Amortiz-
able Assets:

Management reviews its estimate of the useful
lives of depreciable/amortisable assets at each
reporting date, based on the expected utility
of the assets. Uncertainties in these estimates
relate to technical and economic obsolescence
that may change the utility of certain software,
customer relationships, IT equipment and
other plant and equipment.

(vi) Defined Benefit Obligation (DBO):

Management''s estimate of the DBO is based
on a number of critical underlying assumptions
such as standard rates of inflation, medical cost
trends, mortality, discount rate and anticipation
of future salary increases. Variation in these
assumptions may significantly impact the
DBO amount and the annual defined benefit
expenses.

(vii) Fair Value Measurements:

Management applies valuation techniques
to determine the fair value of financial
instruments (where active market quotes are
not available) and non-financial assets. This
involves developing estimates and assumptions
consistent with how market participants would
price the instrument. Management uses the
best information available. Estimated fair values

may vary from the actual prices that would be
achieved in an arm''s length transaction at the
reporting date.

(viii) Provisions:

At each balance sheet date the management
judgment, changes in facts and legal aspects,
the Company assesses the requirement of
provisions against the outstanding warranties
and guarantees. However, the actual future
outcome may be different from this judgment.

3.28 Recent Accounting Pronouncements:

Ministry of Corporate Affairs ("MCA") notifies
new standards or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time. On
31^st March 2023, MCA amended the Companies
(Indian Accounting Standards) Rules 2015 by issuing
the companies (Indian Accounting Standards)
Amendment Rules, 2023, applicable from 1^st April,
2023. The amendments are not expected to have
a material impact on the standalone financial
statements of the Company.

3.29 Rounding of Amounts:

All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
lakhs, as per the requirement of Schedule III of the
Companies Act, 2013 unless otherwise stated.

(d) The carrying amounts of financial and non-financial assets pledged as security for current and
non- current borrowings are disclosed in Note 40.

18.1.2 Rate of Interest:

(a) Term Loan of Exim Bank carries an interest rate @ 8.75% p.a (LTMLR 115 bps p.a.)

(b) GECL Loan of EXIM Bank carries an interest rate @ 8.05% p.a (LTMLR p.a.)

(c) GECL Loan of RBL Bank carries an interest rate @ 7.85% p.a.

(d) HDFC Bank Term Loan carries an interest rate @ 8.35% p.a.

18.1.3 Terms of Repayment

Term Loan availed from Export Import Bank of India amounting to Rs. 20,00,00,000/- for funding the
Expansion Project of Kazipally unit. The said loan is repayable in 24 Quarterly Installments commencing
from February, 2020, as mentioned below

First 4 Quarters Rs. 25,00,000/- Each

Next 4 Quarters Rs. 75,00,000/- Each

Next 16 Quarters Rs. 1,00,00,000/- Each

GECL Term Loan availed from Export Import Bank of India amounting to Rs. 344.00 lakhs is for Long term
working capital. The said loan is repayable in 36 Monthly Installments commencing from April 2024.

GECL Term Loan availed from RBL Bank Limited amounting to Rs. 752.00 lakhs for Long term working
capital. The said loan is repayable in 36 Monthly Installments commencing from April 2022.

Term Loan availed from HDFC Bank amounting to Rs. 30,00,00,000/- for funding the Expansion Project of
Kazipally unit. The said loan is repayable in 20 Quarterly Installments commencing from November 2023
of Rs. 150 Lakhs each.

18.1.4 Company has not utilised short term funds for long term uses.

18.1.5 Loans obtained were utilised for the purpose for which they were obtained.

18.2.1 Un-Secured Loans

The Company has taken Unsecured Loan from Sri TVVSN Murthy, Managing Director for an amount of
Rs. 495.00. The said loan is carrying interest rate of 8.40% p.a. Part loan was repayed during the current
year and outstanding as on 31^st March 2023, is Rs. 360.00 lakhs.

39 Post Employment Benefits

39.1 Defined Contribution Plans

39.1.1 Employer''s Contribution to Provident Fund: Contributions are made to provident fund in India
for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered
provident fund administered by the government. The obligation of the company is limited to the amount
contributed and it has no further contractual nor any constructive obligation. The expense recognised
during the year towards PF Contribution is Rs.206.38 Lakhs (31^st March, 2022 Rs. 183.32 Lakhs).

39.1.2 Employer''s Contribution to State Insurance Scheme: Contributions are made to State
Insurance Scheme in India for employees at the rate of 3.25%. The Contributions are made to Employee
State Insurance Corporation(ESI) to the respective State Governments of the Company''s location. This
Corporation is administered by the Government and the obligation of the company is limited to the amount
contributed and it has no further contractual nor any constructive obligation. The expense recognised
during the period towards ESI Contribution is Rs.9.37 Lakhs (31^st March, 2022 - Rs. 11.20 Lakhs).

39.2 Defined Benefit Plans

The Company has a defined benefit gratuity plan governed by Payment of Gratuity Act, 1972. Every
Employee who has completed five years or more of service is entilted to a gratuity on departure at 15
days salary for each completed year of Service. The Scheme is funded through a policy with Life Insurance
Corporation of India (LIC).

The Company has a defined benefit Compensated Absence Plan governed by The Factories Act, 1948. Every
Employee who has worked for a period of 240 days or more during a calendar year shall be allowed during
the subsequent calendar year, leave with wages for a number of days calculated as per Act.

The following table summarise net benefit expenses recognised in the statement of profit and loss, the
status of funding and the amount recognised in the Balance Sheet for both the plans:

(iv) Present Value of Defined Benefit Obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit Method
(PUC Method). Under the PUC Method, a "projected accrued benefit" is calculated at the beginning
of the year and again at the end of the year for each benefit that will accrue for all active members of
the Plan. The "Projected accrued benefit" is based on the Plan''s accrual formula and upon service as
of the beginning or end of the year, but using a member''s final compensation, projected to the age at
which the employee is assumed to leave active service. The Plan Liability is the acturial present value
of the " Projected accrued benefits" as of the begining of the year for active members.

(v) Expected Average remaining service vs. Average remaining future service:

The average remaining service can be arithmatically arrived by deducting current age from normal
retirement age whereas the expected average remaining service is arrived acturially by applying
multiple decrements to the average remaining future service namely mortality and withdrawals. Thus,
the expected average remaining service is always less than the average remaining future service..

(vi) Current and Non Current Liability:

The total of current and non-current liability must be equal with the total of PVO (Present Value
Obligation) at the end of the period plus short term compensated liability if any. It has been classified
in terms of " Schedule III" of the Companies Act, 2013.

(vii) Defined Benefit Liability and Employer Contributions

The Company has purchased insurance policy to provide for payment of gratuity to the employees.
Every year, the insurance company carries out a funding valuation based on the latest employee data
provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by
the Company. The company considers that the contribution rate set at the last valuation date are
sufficient to eliminate the deficit over the agreed period and that regular contributions, which are
based on service costs will not increase significantly.

39.2.11 Risk exposure

Though it is defined benefit plan, the company is exposed to a number of risks, the most significant of
which are detailed below:

(a) Investment / Interest Risk:

The Company is exposed to Investment / Interest risk if the return on the invested fund falls below the
discount rate used to arrive at present value of the benefit.

(b) Longevity Risk:

The Company is not exposed to risk of the employees living longer as the benefit under the scheme
ceases on the employee separating from the employer for any reason.

(c) Risk of Salary Increase

The Company is exposed to higher liability if the future salaries rise more than assumption of salary
escalation.

40 Assets Pledged as Security

For Non Current Borrowings

Term Loans are Secured by First Charge on Property, Plant and Equipment and Second Charge on Current
Assets.

Long Term Working Capital Term Loans are secured by Second charge on Property, Plant and Equipment
and Current Assets.

43 Fair Value Measurements

43.1 Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observables market data rely as little as possible
on entry specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.

Valuation technique used to determine fair value:

Specific Valuation techniques used to value financial instruments include:

- The use of quoted market prices or dealer quotes for similar instruments.

- The fair value of remaining financial instruments is determined using discounted cashflow analysis.
Valuation Process:

The Finance and accounts department of the Company performs the valuation of financial assets and liabilities
required for financial reporting purposes, and report to the Board of Directors. The main Level 3 inputs are
derived using the discounted cash flow analysis, Market Approach, Net Assets Value Method as applicable.

44 Financial Risk Management Objectives and Policies

Financial Risk Management Framework

The Company is exposed primarily to credit risk, liquidity risk and market risk (fluctuations in foreign currency
exchange rates and interest rate), which may adversley impact the fair value of its financial instruments. The
Company assess the unpredictability of the financial environment and seeks to mitigate potential adverse
effects on the financial performance of the Company.

44.1 Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of
deterioration of creditwrothiness as well as concentration of risks. Credit risk is controlled by analysing credit
limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after
obtaining necessary approvals for cerdit. Financial instruments that are subject to concentration of credit risk
principally consist of trade receivables, cash and cash equivalents, bank deposits and other financial assets.
None of the financial instruments of the Company result in Material Concentration of credit risk, except for
Trade Receivables.

(i) Financial Instruments and Cash Deposits

For banks and financial institutions, only high rated banks/ institutions are accepted. Other Financial
assets (excluding Bank deposits) majorily constitute deposits given to State electricity department for
supply of power, which the company considers to have negligible credit exposure. Counterparty credit
limits are reviewed by the Management on an annual basis, and may be updated throughout the year.
The limits are set to minimise the concentration of risks and therefore mitigate financial loss through
counterparty''s potential failure to make payments.

iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial
year.

v) The Company has not defaulted and has not been declared wilful defaulter by any bank or financial
institution or government or any government authority.

vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities
(Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company
shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

viii) The Company has not any such transaction which is not recorded in the books of account that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act,
1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

ix) Title deeds of all Immovable properties were held in the name of the company.

53 Figures have been rounded of to the nearest rupees in Lakhs

54 Previous year figure have been regrouped and reclassified wherever considered necessary to confirm to this
year''s classifications.

as per our report of even date for and on behalf of the Board

for RAMBABU & CO SMS Lifesciences India Limited

Chartered Accountants

^{FRN 002976S} TVVSN MURTHY T V PRAVEEN

GVL PRASAD Managing Director Executive Director

Partner DIN: 00465198 DIN: 08772030

M.No.026548

TRUPTI R MOHANTY N. RAJENDRA PRASAD

Place : Hyderabad Company Secretary Chief Financial Officer

Date : 29-05-2023 M.No. 60358 M.No.026567

---

Mar 31, 2018

1. Corporate Information:

SMS Lifesciences India Limited (SMS Life), (the ‘Company’) is a Company limited by Shares domiciled in India incorporated under the Companies Act, 1956. The registered office of the Company is at Plot No. 19-III, Road No. 71, Jubliee Hills, and Hyderabad. The Equity Shares of the Company are listed in Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is engaged in the business of manufacturing of Active Pharma Ingredients and their intermediates. The Company is having manufacturing facilities at Khazipally, Jeedimetla, Hyderabad.

These Financial Statements for the year ended 31^st March, 2018 were authorized and approved for issue by the Board of Directors on 28^th May, 2018.

2. Basis of Preparation:

(i) Compliance with Ind AS

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 (“the Act”) read with the Companies (Indian Accounting Standards) Rules 2015 issued by Ministry of Corporate Affairs (‘MCA’). The Company has uniformly applied the accounting policies during the years presented.

For all years up to and including the year ended 31^st March 2017, the Company had prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (‘Indian GAAP’). Effective from 01^st April 2017, the Company has adopted all the Ind AS Standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with transition date as 01^st April 2016. The reconciliation of effects of the transition as required by Ind AS 101 is disclosed in Note No. 43 to these financial statements.

Amounts for the year ended and as at 31^st March, 2017 were audited by the previous auditors M/s. Rambabu & Co, Chartered Accountants.

(ii) Historical Cost Convention:

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

- Certain Financial Assets and Liabilities that is measured at Fair Value; (refer accounting policy regarding financial instruments).

- Defined Benefit Plans - Plan Assets measured at Fair Value.

(iii) Current and Non-Current Classification:

The Company presents assets and liabilities in the balance sheet based on current and noncurrent classification.

(a) An asset is treated as current when it satisfies the below mentioned criteria:

- Expected to be realized or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realized within twelve months after the reporting period, or

- Cash or Cash Equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

(b) All Other Assets are classified as noncurrent.

(c) A liability is classified as current when it satisfies the below mentioned criteria:

- Expected to settle the liability in normal operating cycle;

- Held primarily for the purpose of trading;

- Due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

(d) All Other liabilities are classified as noncurrent.

(e) Deferred Tax Assets and Liabilities are classified as non-current assets and liabilities.

(f) The Operating Cycle is the time between the acquisition of assets for processing and their realization in Cash and Cash Equivalents. The Company has identified Twelve months as its Operating Cycle.

3. New Standards and Interpretations not yet adopted:

3.1 Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration:

On March 28, 2018, Ministry of Corporate Affairs (““MCA”“) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from 01^st April 2018. The Company is evaluating the requirement of the amendment and the effect of the financial statements.

3.2 Ind AS 115- Revenue from Contract with Customers:

On March 28, 2018, Ministry of Corporate Affairs (““MCA”“) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

a. Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.

b. Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach).

The effective date for adoption of Ind AS 115 is financial years beginning on or after 01^st April 2018. The Company is evaluating the requirement of the amendment and the effect of the financial statements.

4.1 The Company has entered into a Share Purcahse Agreement with the Shareholders of M/s Mahi Drugs Private Limited to buy 100% holding @ Rs.55/- per share with face value of share Rs.10/- each to acquire their manufacturing facility situated at Jawaharlal Nehru Pharmacity, Parwada, Visakapatnam. During the year, the Company has purchased 9,00,000 Equity Shares which is 19% of holding.

5.1 Capital Advances consists of an amount of Rs.251.88 Lakhs (31st March, 2017, Rs. 251.88 Lakhs and 01st April, 2016 Rs. 251.88 Lakhs) paid for acquiring land to the extent of 19 acres, in JNPC, Parwada, Visakhapatnam District. The said land along with the proportionate amount of advance was vested with the Company in pursuance of demerger scheme between the Company and M/s. SMS Pharmaceuticals Ltd, the demerged Company, out of Ac.42.00 originally allotted to the demerged Company. On account of dispute between the demerged Company and the developer, the matter is sub-judice before the High Court of Judicature at Hyderabad (for the state of Andhra Pradesh and Telangana). The Company has impleaded in this case.

6.1 Finished Goods includes stock in transit of Rs. 299.02 Lakhs (31st March, 2017 Rs.Nil/-, 01st April, 2016 Rs. Nil/-).

7.1 The Company has computed the expected credit loss allowance for doubtful trade receivables based on past experience.

7.2 Trade Receivables includes an amount of Rs. 186.34 Lakhs (31^st March, 2017 Rs. 145.17 Lakhs, 01^st April, 2016 Rs. 145.33 Lakhs ) due from related Parties.

7.3 Trade Receivables amounting Rs. 104.20 Lakhs (31^st Mach, 2017 Rs. 188.02 Lakhs, 01^st April, 2016 Rs. 179.64 Lakhs) is held against letter of credit provided by customers of the Company.

8.1 Advance to Suppliers includes an amount of Rs. 182.82 Lakhs (31st March, 2017 Rs. 78.96 Lakhs, 01st April, 2016 Rs 93.24 Lakhs) to R Chem (Somanahalli) Pvt Ltd, a related Party.

8.2 The Company has paid an amount of Rs. 133.42 Lakhs as advance for import of raw materials. This amount was included in Advance to Suppliers. The said materials was kept with Universal Logisitics, (a Customs notifide godown) where the said material got damaged due to fire. Universal Logistics has filed a case aginst the insurance Company and made the Comapny as one of the party. Subsequently, the Company has also made a claim against the said Universal Logistics for recovery. The management is confident of recovery of the said amount.

9.1 All above shares are issued for consideration other than cash in pursuance of Demerger Scheme (Refer Note 41)

9.2 Reconciliation of Number of Equity Shares outstanding at the beginning and at the end of the Year

9.3 Rights attached to Equity Shares

The Company has only one class of equity shares having par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share at the general meetings of the Company. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

9.4 Details of shareholders holding more than 5% shares in the Company

10.1.1 Capital Reserve is created during the year due to cancellation of Equity Share Capital held by the Company before issue of Equity Shares in Pursuance of Demerger Scheme. (Refer Note 41).

11.1.1 Security Terms

(a) Term Loan availed from Export-Import Bank of India is secured by first charge of all movable and immovable fixed assets both present and future and second charge of all current assets both present and future and guaranteed by Sri P.Ramesh Babu, Director and Sri TVVSN Murthy, Managing Director of the Company in their personal capacities.

(b) Hire Purchase Loan availed from ICICI Bank Ltd is secured by the respective vehicles.

(c) The carrying amounts of financial and non-financial assets pledged as security for current and non current borrowings are disclosed in Note 44.

11.1.2 Rate of Interest: The above said term loan carries an interest rate @ 11.5% p.a (LTMLR 250 bps p.a.)

11.1.3 Terms of Repayment

Term loan availed from Export Import Bank of India amounting to Rs.3,000.00 Lakhs for funding the Expansion Project of Kazipally unit. The loan is repayable in 20 Quarterly Installments of Rs.150.00 Lakhs each, commencing from December, 2015.

11.1.4 Current Maturities of Long Term borrowings have been disclosed seperately under the head other current financial liabilities (Refer Note No.26)

11.2.1 Un-Secured Loans

(a) During the Year, the Company has taken Unsecured Loan from Sri TVVSN Murthy, Managing Director for an amount of Rs. 495.00 Lakhs. The above said loan is carrying interest rate of 9.75% pa.

(b) Sales Tax (deferment) Loan liability is due for repayment as under:

12.1.1 Security Terms

(a) Working capital facility sanctioned by RBL Bank Limited is secured by first charge on pari-passu basis of all current assets both present and future. These facilities are further secured by way of second charge on pari-passu basis of all movable and immovable fixed assets of the Company both present and future and also guaranteed by Sri TVVSN Murthy, Managing Director and Sri P.Ramesh Babu, Director of the Company in their personal capacities.

(b) The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrowings are disclosed in Note 44.

12.1.2 Rate of Interest: The above loan carries an interest rate of 9.75% p.a

12.1.3 During the year, RBL Bank Limited has extended total working capital facilities of Rs. 4,300.00 Lakhs consisting of fund based and non fund based with interchangebility. Fund based balance outstanding as on 31.03.2018 is Rs. 599.31 Lakhs and non fund based outstanding as on 31.03.2018 is Rs. 456.90 Lakhs.

12.1.4 Repayment Terms: The above working capital facilities are repayable on demand.

12.4 Debt Reconciliation as required by Ind AS -7, Statement of Cash Flows

13.1 Goods and Service Tax (GST) has come into force w.e.f 01st July, 2017. The revenue for the year ended 31st March, 2018 is net of such GST. However, the revenues for the year ended 31^st March, 2017 and current year upto 30th June, 2017 are inclusive of Excise Duty of an amount of Rs.1201.62 Lakhs and Rs.444.97 Lakhs respectively.

14.1 Expenditure relating to Directors Remuneratrion and Cost Audit fee for the previous year i.e. 2016-17 were considered in the books of Demerged Company, SMS Pharmaceuticals Ltd. Hence, current year figures under these heads are not comparable.

15 Scheme of arrangement (De-Merger) between the Company and SMS Pharmaceuticals Ltd, the Demerged Company.

The Demerger Scheme as sactioned by the National Company Law Tribunal (NCLT) has been implemented with appointed date as 01^st April, 2016 as provided in the Scheme. Accordingly, the Company has vested with all assets and liabilities pertaining to each of the demerged undertakings at their book value as appearing in the books of the demerged Company. The balances present in the financial statements as on 01st April, 2016 are conferred with the Company as per this scheme.

During the year, the Company has alloted 30,23,287 Equity Shares of Rs. 10/- each out of general reserve vested with the Company on 01^st April, 2016 in pursuance of the demerger scheme.

16 (i) M/s SMS Pharmaceuticals Ltd (SMSPL), the demerged Company, has entered in to an agreement with M/s. Divya Enterprises Limited for purchase of industrial plot bearing number D-63, Phase - I, IDA Jeedimetla, Hyderabad for a consideration of Rs.60.00 Lakhs. Pending registration of the same, Demerged Company has taken the possession during the year 2002-03 and has paid the concederation to the vendor.

(ii) The Company is pursuing to sought out the issue to get the title.

(iii) The Demerged Company has constructed/modified buildings and structures to suit the requirement for carrying out its manufacturing activity in the said premises and has incurred an amount of Rs.169.68 Lakhs during the earlier years for modification of buildings and also for acquiring required equipment and other assets. The said assets were capitalized In the books of the demerged Company and it has claimed depreciation up to 31-03-2016 and thereafter, the Company is contuing to charge the depreciation on these assets.

(iv) Central excise department has issued a demand for an amount of Rs.16.40 Lakhs towards interest for the period from 01-04-1995 to 18-03-2011 jointly in the name of Divya Enterprises Limited and Demerged Company for which M/s Divya Enterprises Limited has obtained stay from the Honourable High court of Andhra Pradesh in the year 2013.

(v) The assets mentioned in above (i) and (ii) have got transferred from the Demerged Company by virtue of scheme of arrangement approved by the NCLT (National Company Law Tribunal) dated 15-05-2017. presently no manufacturing activity is carried out at this premises.

17 Post Employment Benefits

17.1 Defined Contribution Plans

17.1.1 Employer’s Contribution to Provident Fund:

Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards PF Contribution is Rs.99.46 Lakhs. (Previous Year- Rs. 72.50 Lakhs).

17.1.2 Employer’s Contribution to State Insurance Scheme:

Contributions are made to State Insurance Scheme for employees at the rate of 4.75%. The Contributions are made to Employee State Insurance Corporation(ESI) to the respective State Governments of the Company’s location. This Corporation is administered by the Government and the obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards ESI Contribution is Rs.15.47 Lakhs (Previous Year - Rs.10.77 Lakhs).

17.2 Defined Benefit Plans

The Company has a defined benefit gratuity plan governed by Payment of Gratuity Act, 1972. Every Employee who has completed five years or more of service is entilted to a gratuity on departure at 15 days salary for each completed year of Service. The Scheme is funded through a policy with Life Insurance Corporation of India (LIC).

The Company has a defined benefit Compensated Absence Plan governed by The Factories Act, 1948. Every Employee who has worked for a period of 240 days or more during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated as per Act.

The following table summarise net benefit expenses recognised in the statement of profit and loss, the status of funding and the amount recognised in the Balance Sheet for both the plans:

(a) Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India.

(b) Plan assets does not comprise any of the Company’s own financial instruments or any assets used by the Company. The Company has the plan covered under a policy with the Life Insurance Corporation of India.

(c) The Significant acturial assumptions for the determination of the defined benefit obligation are the discount rate, the salary growth rate and the average life expectancy. The calculation of the net defined benefit liability is sensitive to these assumptions. However, the impact of these changes is not ascertained to be material by the management.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated When calculating the sensitivity of the defined benefit obligation to significant acturial assumptions, the same method (Projected Unit Credit Method) has been applied while calculating the defined benefit liability recognised within the Balance Sheet.

17.2.1 Other Information

(i) Expected rate of return basis

Since the scheme funds are invested with LIC of India EROA is based on rate of return declared by fund managers

(ii) Description of Plan Assets and Reimbursement Conditions

100% of the Plan Asset is entrusted to LIC of India under their Group Gratuity Scheme. The reimbursement is subject to LIC’s Surrender Policy

(iii) Discount Rate

The discount rate has increased from 6.69% to 7.68% and hence there is a decrease in liability leading to actuarial gain due to change in discount rate.

(iv) Present Value of Defined Benefit Obligation:

Present value of the deined benefit obligation is calculated by using Projected Unit Credit Method (PUC Method). Under the PUC Method, a “projected accrued benefit” is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The “Projected accrued benefit” is based on the Plan’s accrual formula and upon service as of the beginning or end of the year, but using a member’s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the acturial present value of the “ Projected accrued benefits” as of the begining of the year for active members.

(v) Expected Average remaining service vs. Average remaining future service:

The average remaining service can be arithmatically arrived by deducting current age from normal retirement age whereas the expected average remaining service is arrived acturially by applying multiple decrements to the average remaining future service namely mortality and withdrawals. Thus, the expected average remaining service is always less than the average remaining future service.

(vi) Current and Non Current Liability:

The total of current and non-current liability must be equal with the total of PVO (Present value oblition) at the end of the period plus short term compensated liability if any. It hasbeen classified in terms of “Schedule III” of the Companies Act, 2013.

(vii) Defined Benefit Liability and Employer Contributions

The Company has purchased insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company. The Company considers that the contribution rate set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs will not increase significantly.

17.2.2 Risk Exposure

Though it is defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

(a) Investment / Interest Risk:

The Company is exposed to Investment / Interest risk if the return on the invested fund falls below the discount rate used to arrive at present value of the benefit.

(b) Longevity Risk:

The Company is not exposed to risk of the employees living longer as the benefit under the scheme ceases on the employee separating from the employer for any reason.

(c) Risk of Salary Increase

The Company is exposed to higher liability if the future salaries rise more than assumption of salary escalation.

18 Assets pledged as Security For Non Current Borrowings

Secured by First Charge on Property, Plant and Equipment, Investment Property and Second Charge on Current Assets.

For Current Borroiwngs

Secured by First Charge on Current Assets and Second Charge on Property, Plant and Equipment and Investment Property.

The carrying amounts of Company’s assets pledged as security for Non Current and Current Borrowings of an amount of Rs.2,144.39 Lakhs (as at 31st March, 2017, Rs. 2,513.41 Lakhs and as at 01st April, 2016 Rs. 3,327.28 Lakhs) are as follows:

19 Fair Value Measurements

19.1 Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (un adjusted) in active market for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entry specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

19.2 Valuation techniques used to determine fair value:

Specific Valuation techniques used to value financial instruments include:

- The use of quoted market price or dealer quotes for similar instruments.

- The fair value of remaining financial instruments is determined using discounted cashflow analysis.

19.3 Valuation Process:

The Finance and accounts department of the Company performs the valuation of financial assets and liabilities required for financial reporting purposes, and report to the Board of Directors. The main Level 3 inputs are derived using the discounted cash flow analysis, Market Approach, Net Assets Value Method as applicable.

20 Financial Risk Management Objectives and Policies Financial Risk Management Framework

The Company is exposed primarily to credit risk, liquidity risk and market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversley impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

20.1 Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for cerdit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in Material Concentration of credit risk, except for Trade Receivables.

(i) Financial Instruments and Cash Deposits

For banks and financial institutions, only high rated banks/institutions are accepted. Other Financial Assets (excluding Bank Deposits) majorly constitute deposits given to State electricity departments for supply of power, which the Company considers to have negligible credit exposure. Counterparty credit limits are reviewed by the Management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

(ii) Expected Credit Loss for Trade Receivables under simplified approach

For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

20.2 Liquidity Risk:

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

20.3 Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial isntrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include loans and advances deposits investments in debt securities mutual funds and other equity funds.

(i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market ineterest rates. In order to optimize the Company’s position with regard to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest risk management by balancing the proportion of fixed rate and floating rate financial instruments in its portfolio.

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

(ii) Foreign Currency Exchange Rate Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from services provided or availed that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

(a) Details of Unhedged Foreign Currency Exposure:

The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are as under:

(b) Foreign Currency Sensitivity

The following table demonstrate the sensitivity to a reasonably possible change in USD exchange rate, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives. The Company’s exposure to foreign currency changes for all other currencies is not material.

(iii) Other Price Risk:

Other price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market price (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

21 Capital Management

For the purposes of the Company’s Capital Management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total equity plus net debt. The Company intends to keep the gearing ratio less than 1. The Company includes within net debt, borrowings including interest accrued on borrowings less cash and short term deposits.

22 Leases (Ind AS -17):

22.1 Operating Lease Commitments - Company as Lessee

The Company has taken leased premises for its office use on sub lease basis upto 31.03.2019. During the year, the Company has paid an amount of Rs. 22.27 Lakhs (Previous Year Rs. 22.42 Lakhs) towards rental charges. As the said lease is revocable by either of the parties with prior notice, other disclosure requirements under Ind AS 17 “Leases” is not applicable.

22.2 Operating Lease Commitments - Company as Lessor

The Company has given on Lease, its Premises in Sanath Nagar for a lease term of 12 Months. During the year, the Company has received annual lease receipts of Rs. 18.90 Lakhs.

23 Segment Information

(a) Description of Segments and Principal Activities

The Managing Director has been identified as being the chief operating decision maker(CODM). Operating segments are defined as components of an enterprise for which discrete financial information is available. This is evaluated regularly by the CODM, in deciding how to allocate resources and assessing the Company’s performance. The Company is engaged in manufacturing and sale of Active Pharma Ingredients and their Intermediates and operates in a single operating segment.

Revenues are attributed to geographical areas based on the location of the customers as detailed below:

24 Payables to Micro, Small & Medium Enterprises

The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’). The disclosures pursuant to the said MSMED Act are as follows:

*Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8th November, 2016.

25 First-Time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 4 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparitive information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 01st April, 2016 (Company’s date of transition to IND AS). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting standards) Rules, 2006 (as amended) and other relevant provisions of the Act(previous GAAP or Indian GAAP). An explanation on how the transition from previous GAAP to Ind AS has effected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

25.1 Exemptions and Exceptions Availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

25.1.1 Ind AS Optional Exemptions (a) Deemed Cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its Property, Plant and Equipment, Intangible assets and Investment Property as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and Investment Property at their previous GAAP carrying value.

25.1.2 Ind AS Mandatory Exceptions

(a) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with the estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 01st April, 2016 are consistent with the estimates as at the same date made in confirmity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

-Investment in Equity Instruments carried at FVPL or FVOCI -Investments in Debt Instruments carried at FVPL and;

-Impairment of Financial Asset based on Expected Credit Loss Model.

(b) Classification and Measurement of Financial Asset

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investments in debt instruments) on the basis of the facts and circumstances that exist on the date of transition to Ind AS.

25.2.1 Statement of Cash Flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

25.3 Notes to First-Time Adoption:

25.3.1 MAT Credit Entitlement

MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on “Accounting for Credit available in respect of MAT under the Income Tax Act, 1961” issued by ICAI. However, as per Ind AS, MAT credit entitlement is generally recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss. Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets as at 31st March, 2017, Rs. 84.18 Lakhs (01st April, 2016: Rs. 84.18 Lakhs).

25.3.2 Trade Receivables

As per Ind AS 109, the Company is required to apply Expected Credit Loss Model for recognising the allowance for doubtful debts.

25.3.3 Revenue Recognition and Excise Duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March, 2017 by Rs. 1,201.62 Lakhs. There is no impact on the total equity and profit.

25.3.4 Remeasurements of Post-Employement Benefit Obligations

Under Ind AS, remeasurements i.e. Acturial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31st March, 2017 increased by Rs. 37.19 Lakhs. There is no impact on the total equity as at March 3,1 2017.

25.3.5 Retained Earnings

Retained earnings as at 01st April, 2016 has been adjusted consequent to the above Ind AS transition adjustments.

25.3.6 Deferred Tax

Indian GAAP requires deferred tax accounting using the statement of profit and loss approach, which focuses on difference between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of the asset or liability in the balance sheet and its tax base.

As per Ind AS-12, the Company has recognised deferred tax asset on the indexation benefit available on free hold land as it has no plans to sell the business on a slump sale thereby increasing the retained earnings by Rs. 137.55 Lakhs as at 31st March, 2017 (01st April, 2016: INR 129.43 Lakhs).

Other Deferred tax adjustments amounting to (INR (30.61) Lakhs/-) as at 31st March, 2017 (01st April, 2016: INR (18.09) Lakhs) include deferred tax impact on account of differences between previous GAAP and Ind AS. The profit for the year ended i.e. 31st March, 2017 increased by INR 3.27 Lakhs due to the deferred tax adjustments made.

25.3.7 Other Comprehensive Income

Under Ind AS, all items of income and expense recognized in a period should be included in the profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit or loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of ‘other comprehensive income’ did not exist under previous GAAP.