అకౌంట్స్ గమనికలుSapphire Foods India Ltd.

Mar 31, 2025

d) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity share having par value of '' 10 each (pursuant to the share split from ''10 to ''2 per share with effect from 05 September 2024). Each holder of equity share is eligible to one vote per share. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

g) Shares reserved for issue under options

Information relating to Sapphire Foods Employee Stock Option Plan 2017 as amended from time to time, including details of options granted, exercised and lapsed during the current year and options outstanding at the end of reporting year, is set out in note 41.

h) Shares issued during the year ended March 31, 2025 includes:

i) Exercise of stock options 87,778 shares before share split and 22,29,924 after stock split.

1,61,875 shares were issued during the year ended March 31, 2024.

i) Shares allotted as fully paid-up without payment being received in cash during the period of 5 years immediately preceding the date of Balance Sheet are as under :

Nil

j) Pursuant to Composite Scheme of Arrangement with Gamma Pizzakraft (Overseas) Private Limited and Gamma Pizzakraft Private Limited in March 31 2024, the authorised share capital of the Company had automatically increased by 3,53,30,000 equity shares upon scheme becoming effective.(refer note 48)

k) The Shareholders of the Company, had approved the sub-division of one equity share of the face value of ''10 each into five equity shares of face value of '' 2 each. The record date for the said sub-division was 5 September 2024.

Note : Nature and purpose of reserves

a) Retained earnings - Retained earnings are the profits/ losses that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

b) Share based payment reserve - The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.

c) Capital reserve - Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Securities premium - The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

e) Capital Reserve on merger - This reserve comprises of the impact pursuant to merger of Gamma Pizzakraft Overseas Private Limited & Gamma Pizzakraft Private Limited on a going concern basis from the appointed date of the scheme ie 1^st April 2022. (Refer note 48)

f) Share application money pending allotment - This is amount received on account of exercise of employee stock option during the year the allotment for which is pending as on the reporting date and will be completed subsequently.

Others includes provision for certain litigation relating to service tax on rentals and other cases which is currently pending with Sabka Vishwas - (Legacy Dispute Resolution) Scheme 2019 (''SVLDRS'') committee. The company had applied for Service tax amnesty scheme for above litigation which was rejected pursuant to which company had filed a writ petition in the High Court of Mumbai. The Company has received a favorable order in the March 31, 2022, from the Bombay High court directing the service tax authority to quash the orders for rejecting the Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) filed by the company. Also, the company was awaiting name withdrawal from Supreme court petition filed by Retailers Association of India (''RAI''). The company was able to get the withdrawal order from Supreme Court during the year and accordingly have submitted the application with SVLDRS committee to consider the case for amnesty benefit.

(a) During the year, considering the continuous losses in one of the subsidiaries Gamma Island Foods Private Limited, the Company has revisited its projected cashflow from the said subsidiary and has determined the value in use of its investments in the said subsidiary. Accordingly, a provision for impairment of investment of ''143.50 million and expected credit loss for intercorporate deposit including interest receivable of '' 26.14 million totaling '' 169.64 million is recorded as an exceptional item.

(b) During the year,due to subdued performance of 1 acquired KFC store, the Company has planned its closure, accordingly the goodwill recorded specifically for this acquired store of '' 38.75 million has been impaired during the year.

29 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the (loss)/profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the (loss)/profit attributable to equity holders (after adjusting for cost of options) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares/options into Equity shares.

Note: On January 31, 2025, the company received a demand order of '' 1,127.13 million (includes tax '' 563.57 million and penalty '' 563.56 million) from Additional Commissioner (Office of the Commissioner of GST & Central Excise), Chennai South Commissionerate, Chennai against the Show Cause Notice (SCN) issued by Directorate General Goods and services tax Intelligence Chennai zone (DGGI).

The company has filed appeal against the demand order. The company, supported by the external independent expert''s advice, is of the view that it has a strong case on merits and thereby no provisions have been made in the financial statements. Subsequent to the balance sheet date, the Company has deposited amount of '' 41.98 million under protest"

There are several other cases which has been determined as remote by the Company and hence not been disclosed above.

(ii) The Company has entered into business transfer agreement with A. N. Traders Pvt Limited (ANTPL) in August 2016. The obligation of the parties was completed and the transaction of transferring the franchisee has been closed. One of the promoter of ANTPL has filed FIR against the company and various other parties. The Company has filed a quashing petition in the High Court of Delhi seeking an order to quash the FIR as the same had been filed on false and frivolous grounds. The petition is pending for hearing in the High Court of Delhi. The Company does not foresee any financial obligation against the FIR.

(iii) The Hon''ble Collector of Stamps, Enforcement - I, Mumbai ("COS, Mumbai”) had demanded stamp duty of ''194.60 million in the subject matter of Scheme of Arrangement between the Sapphire Foods India Limited (previously known as Sapphire Foods India Private Limited) ("Company”) & Sapphire Hospitality and Recreation Private Limited ("SHRPL”), Hansazone Private Limited ("HPL”), Pizzeria Fast Foods Restaurants (Madras) Private Limited ("Pizzeria”), KFCH Restaurants Private Limited ("KFCH”).

The Company on 11^th April, 2022 had received demand notice from COS, Mumbai for payment of '' 404.77 million as stamp duty including penalty. The Company, thereafter, appealed before CCRA, Pune, for grant of stay on the

demand notice and disposal of final hearing at the earliest. CCRA, Pune, subsequently, remanded back the case to COS, Mumbai to review its order as a fresh and decide the matter basis the facts involved.

The Company had received a Final Order from the Hon''ble Collector of Stamps, Enforcement I, Mumbai (the "Authority”) dated 25^th June 2024 ("Order”) as per which the total stamp duty determined by the Authority in relation to the Scheme of Arrangement was corrected to '' 3.24 million. The Company had already paid '' 2.74 million to the Authority. The balance stamp duty payable of '' 0.5 million was paid by the Company to the Authority within the stipulated timeline and the said matter was concluded during the year.

(iv) The Company has filed a writ petition before the Hon''ble High Court of Gujarat at Ahmedabad challenging the anti-profiteering investigation being conducted by the Directorate General of Anti-Profiteering ("Respondent”), on the grounds that the anti-profiteering investigation is ex-facie illegal and suffers from various infirmities including malice in law on the part of the Respondents including the National Anti-Profiteering Authority. The Respondents had initiated an anti-profiteering investigation under Section 171 of the Central Goods and Services Tax Act, 2017, basis a complaint against a singular Pizza Hut restaurant located in Ahmedabad, Gujarat. This investigation was initiated basis a reconsidered reference made by the Standing Committee on Anti-Profiteering in respect to a complaint filed with respect to supply of a product named ''veggie supreme'' by restaurant. Thereafter, the Company had responded and provided information to various summons and notices as demanded by the Respondent during the investigation. However, being aggrieved by the way the investigation was being conducted, the Company challenged the proceedings by the way of writ petition on the grounds that it was being conducted without any methodology or guidelines and was therefore manifestly arbitrary. By an order dated June 30, 2020, the High Court of Gujarat had directed the Respondent to not inquire about any other product of the Company other than the complained product. Subsequently the Company has filed its written submission dated March 30, 2021, before the High Court of Gujarat at Ahmedabad praying before the Court to allow the Writ Petition. The matter is currently pending for final orders and judgement.

(v) Subsequent to the Balance sheet date, Bombay High Court accepted the appeal of IT Department against the favorable ITAT Order in case of Pizzeria Pure Foods Restaurants (India) Pvt Ltd for AY 2011-12, the IT Department has served Memorandum of Appeal u/s 260A and the probable Income Tax Demand is '' 11.23 million. The company is of the view that it has a strong case on merits and thereby no provisions have been made in the financial statements.

Future cash outflows, if any, in respect of case (iv) and (v) are determinable only on receipt of judgement/decisions pending at various forums/ authorities or final outcome of matter.

The Company''s pending litigations comprise of proceedings pending with tax authorities and government body. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have materially adverse impact on its financial statements.

31 Commitments (a) Estimated amount of contracts to be executed on capital account and not provided for (net of advances) ('' in			million)
Particulars	As at March 31, 2025	As at March 31, 2024
Estimated amount of contracts to be executed on capital account and not provided for	741.90		798.05
Lease Commitments for non-cancellable leases

(b) The Company has entered into a Development Agreement with Yum Restaurants (India) Private Limited (''Yum'') to build a minimum Net New Stores of KFC as specified in the agreement over the 5 years period starting 1^st January 2022 until 31^st December 2026 ("Incentive Period”) amended from time to time consisting of Base and Tier 1 Targets, with certain incentives to be accrued on opening of such stores. In the event of company not meeting the build targets during the incentive period, Yum will have the right to consider revocation of development (exclusivity) rights of the Company. The Company has also issued an irrevocable and unconditional bank guarantee of initial fee for the target number of outlets of KFC amounting to '' 380.23 million for the year 2025. In case of not meeting the annual target, Yum shall be entitled to encash the bank guarantee provided.

During the year, the Company has agreed revised targets with YUM for Pizza Hut and has also got the existing Development Agreement amended till 2028.

Pursuant to above agreement, for PH the Company has paid an upfront deposit of USD 500,000, refundable on meeting the annual build targets. In case the annual targets are not met Yum shall be entitled to forfeit such deposit.

32 Segment Reporting

Description of segments and principal activities and information about products and services

As the Company''s business activity primarily falls within a single business and geographical segment i.e. Food and Beverages, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segment''. The management considers that the various goods and services provided by the Company constitutes single business segment, since the risk and rewards from these services are not different from one another.

Geographical information

All revenue and non-current assets of the Company is situated in India, hence, disclosure pertaining to geographical areas has not been presented.

Information about major customers

Company is not dependent on any single customer for its revenue and none of the customers contribute to more than 10% of revenue individually.

33 Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(a) Impairment of Non Financial Assets:

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (DCF) model. The cash flows are derived from the budget for the next five years. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are as under:

- Gross Margins

- Discount Rates

- Material Price inflation

- Growth rate

- Rent expense

- Salaries and wages

- Royalty and marketing fees

The management believes that no reasonably possible change in any of the key assumptions used in value in use calculation would cause the carrying value of the CGU to materially exceed its value in use.

Gross Margins - Gross margins are based on average values achieved in the preceding years and is expected to remain constant during the budget period. These have not increased over the budget period for anticipated efficiency improvements as the increase, if any, is expected to be marginal.

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from its weighted average cost of capital (WACC). The cost of equity is derived from the expected return on investment by the Company''s investors.

Materials price inflation - Past actual material price movements are used as an indicator of future price movements.

Growth rate estimates - Rates are based on management''s estimate through internal and published industry research.

Rent expense, Salaries and wages, Royalty and Marketing expenses - Past actual rate movements are used as an indicator of future rate movements.

Any subsequent changes in the above factors could impact the recoverable value.

(b) Investment impairment

Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use of investments. In considering the value in use, the Company has anticipated various assumptions which includes sales growth rate, gross margin, EBITDA margins, price inflation, long-term growth rate and the risk-adjusted discount rate and other factors of the underlying businesses / operations of the investee companies as more fully described in note 34. The discount rates are derived from the Company''s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made.

Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.

(c) Taxes

The Company has exposure to income taxes in Indian jurisdiction. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (Refer Note 15).

However, as on date the Company only has unabsorbed depreciation and hence no significant judgement involved.

(d) Employee Benefit Plans

The cost of defined benefit gratuity plan as well as the present value of the gratuity obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, expected rates of return of assets, future salary increase and mortality rates. Due to the complexity of the valuation, the underlying assumptions, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about gratuity obligation has been mentioned in Note 36.

(e) Useful lives of property, plant and equipment and intangible assets

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment''s estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 15 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Company''s property, plant and equipment at the end of the reporting period is disclosed in Note 3 to financial statements.

The cost of intangible assets is depreciated on a straight-line basis over the useful lives of the assets. The Management estimates the useful lives of these assets to be within 1 to 10 years, which Management believes are realistic and reflect fair approximation of the period over which assets are likely to be used. There are no intangible assets with indefinite useful life, other than goodwill.

(f) Contingencies

In the normal course of business, contingent liabilities may arise from litigations and other claims against the company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised. Refer Note 30 for further details.

(g) Leases

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

The Company included the renewal period as part of the lease term for leases of stores with shorter period (i.e., up to 10 years). The Company typically exercises its option to renew for these leases because there will be a potential negative effect on the revenue. The renewal periods for leases of stores with longer non-cancellable periods (i.e. More than 10 years) are not included as part of the lease term as these are not reasonably certain to be exercised.

(h) Share based payments

The company initially measures the cost of equity settled transaction with employees using Black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transaction requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The estimates also requires determination of the most appropriate inputs to the valuation model including expected life of the share option, volatility and dividend yield and making assumptions about them. The assumption and models used for estimating the fair value for share based-payment transaction are disclosed in note no. 41.

54 (a) Impairment Testing of Goodwill

Carrying amount of Goodwill as on March 31, 2025 is '' 1019.86 million pertain to single CGU i:e KFC brand (March 31, 2024 : '' 1,058.61 million)

Goodwill acquired through business combinations is not amortized but is evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable.

The Company performs an annual impairment assessment of Goodwill and the corresponding cash generating units to determine whether the recoverable value is below the carrying amount as at March 31, 2025. The Company performed its impairment test for the year ended March 31, 2025 on March 31, 2025.

For this purpose, the recoverable value of the cash generating unit is based on the value in use model, which has been derived from the discounted cash flow model. The model requires the Company to make significant assumptions such as discount rate, near and long-term revenue growth rate and projected margins which involves inherent uncertainty since they are based on future business prospects and economic outlook. The Company has used discounted Cash Flow Projections covering period upto the year 2030. The pre-tax discount rate is applied to cash flow projections. The Company has estimated a perpetuity growth rate to arrive at perpetual value post 2030. This analysis has resulted in no impairment charge as at March 31, 2025 except due to poor performance of 1 acquired KFC store, the Company has planned its closure, accordingly the goodwill recorded specifically for this acquired store of '' 38.75 million has been impaired during the year.

The key assumptions have been disclosed in Note 33(a).

(b) Impairment Testing of Investment

The Company had gross investment amounting to '' 402.72 million and inter-corporate deposit (ICD) amounting to '' 266.23 million as at 31 March 2024 in its wholly owned subsidiary Gamma Pizzakraft (Lanka) Private Limited (GPLPL), French Restaurants Limited (FRL) and Gamma Island Food Private Limited (GIF).

During the year, considering the continuous losses in one of the subsidiaries Gamma Island Foods Private Limited, the Group has revisited its forecast of future cash flow from the said subsidiary. Accordingly an impairment of '' 169.64 million was recorded against the property, plant and equipment and other assets of the subsidiary which has been disclosed as an exceptional item.

On the basis of the evaluation and current indicators of future economic conditions, the Company has concluded that no adjustments are required as of reporting date at this point in time for investment in Gamma Pizzakraft Lanka Private Limited. Management will continue to monitor the situation. Further, management does not expect any uncertainties that may impact business in Sri Lanka in the near future.

During the year, Gamma Pizzakraft (Lanka) Private Limited (GPLPL) has repaid the ICD alongwith the interest accrued.

The management has considered all internal and external sources of information including economic forecasts and estimates from market sources as at the reporting date in determining the recoverable value for such investments held in subsidiaries.

The key assumptions have been disclosed in Note 33(b).

The above information and that given in Note 17 - Trade Payables regarding Micro and Small Enterprises has been determined based on the information available with the Company.

36 Disclosure as per IND-AS 19, "Employee Benefits"

I. Defined contribution plan:

The Company has certain defined contribution plan such as provident fund, employee state insurance, national pension scheme, labour welfare fund wherein specified percentage is contributed to themThe contributions are made to registered fund administered by the government.The obligation of the company is limited to the amount contributed and it has no further contractual or constructive obligation.The expenses recognised towards defined contribution are as follows: [refer Note 24]

II. Defined benefit plan: Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each year of service and to employee who has completed 5 years or more of service. The same is payable on termination of service or retirement whichever is earlier. The Gratuity paid is governed by The Payment of Gratuity Act, 1972. The Company contributes to the fund based on actuarial report details of which is available in the table of investment pattern of plan asset, based on which the company is not exposed to market risk. The following table summarises the component of net defined benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for respective period.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

G. Risk exposure:

Through its defined benefits plan, the company is exposed to a number of risks, the most significant of which are detailed below:

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk

A decrease in the bond increase rate will increase the plan liability ; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effects of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

38 Fair Values and Fair Value hierarchy

The fair value of all current financial assets and liabilities including cash and cash equivalent, bank balances other than cash and cash equivalents, trade receivable, other financial assets, trade payables, lease liabilities, other financials liabilities and borrowings approximate their carrying amounts largely due to the short term maturities of these instruments.

The Company had investments in mutual funds which is subsequently measured at fair value through profit or loss (FVTPL) as per the closing net assets value (NAV) statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such mutual funds fall under fair value hierarchy level 1.

The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors. This process provides assurance to Company''s senior management that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.

Further, the company has a Risk Management Committee for overseeing the risk management framework & developing & monitoring the Company''s risk management policies.

The risk management policies aim to mitigate the following risks arising from the financial instruments.

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises of risks relating to interest rate risk and price risk. The impact of price risk is not material. The sensitivity analysis in the following sections relate to the position as at respective balance sheet date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity, pension obligation and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2025.

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 changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the outstanding financial liability.

The Company considers that the carrying amounts of these financial instruments recognised at amortised cost in the financial statements approximates its fair value.

39 Capital Risk Management

For the purpose of the company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders. The Company''s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and longterm and other strategic investment plans. The company''s capital requirement is mainly to fund its capacity expansion. The principal source of funding of the company has been and is expected to continue to be, cash generated from its operations backed by bank borrowings. The funding requirements are met through equity infusions, internal accruals and borrowings. As a part of its capital management policy the company ensures compliance with all covenants and other capital requirements related to its contractual obligations. The capital structure is governed by policies approved by the Board of Directors and is monitored by various matrices, funding requirements are reviewed periodically.

40 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise of borrowings, lease liabilities, trade and other payables. The Company''s principal financial assets include trade and other receivables, investments and cash and cash equivalents including bank balances other than cash and cash equivalents that derive directly from its operations.

The Company''s financial risk management is an integral part of how to plan and execute its business investments strategies. The Company is exposed to market risk, credit risk and liquidity risk.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on affected portion of loans and borrowings taken at floating rates. With all other variables held constant, the company''s loss before tax is affected through the impact of floating rate borrowings as follows :

ii) Foreign Currency risk

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates. Foreign currency risk sensitivity is the impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The following table demonstrate the sensitivity to a reasonably possible change in USD and EURO exchange rates, with all other variables held constant.

b) Credit risk

Credit risk is the risk that counterparty will default on its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

i) Trade Receivable

The trade receivable of the Company generally spread over limited numbers of parties. The Company evaluates the credit worthiness of the parties on an ongoing basis. Further, outstanding customer receivables are regularly monitored and followed up. Therefore, the Company does not expect any material risk on account of non-performance from these parties.

ii) Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

c) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company monitors its liquidity position and deploys a cash management system. It maintains adequate source of financing through the use of bank deposits and cash credit facilities. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

d) Excessive risk concentration

Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based on company''s evaluation there is no excessive risk concentration.

41 Share-based payments

Employee Stock Option Scheme (ESOS), 2017

The Company had received approval of the Board and Shareholders for issuance of 20,31,249 Equity Shares of ''10 each (1,01,56,245 Equity Shares of '' 2 each) for offering to eligible employees of the Company under Sapphire Foods Employee Stock Option Plan 2017 (the plan). There are 2 schemes of the plan implemented by the Company-Sapphire Foods Employee Stock Option Loyalty Scheme 2017- "Scheme I" (loyalty scheme) and Sapphire Foods Employee Stock Option Performance Scheme 2017- "Scheme II" (performance scheme).

The purpose of these schemes is to reward loyalty for past services with the Company, retention of critical employees, achieving company performance and aligning the shareholders interest.

During the year ended 31 March 2021, the Company has modified its existing schemes and implemented variation on 21 August 2020 by increasing the total number of options available for loyalty and performance options. It revised its target performance estimates and made it more favourable for its employees. These schemes were further modified on 30 December 2020 where Ruby options were introduced resulting in an increase in no of option granted and revised the terms of performance making it more favourable for its employees. The revised scheme hereinafter referred to as "Scheme IN" for employees other than CEO and "Scheme IV" for CEO respectively. Scheme III was further modified on 18 May 2021 for acceleration of vesting at the Board discretion.

The number of shares that will vest is conditional upon certain performance and market conditions that will be determined by the Board of Directors. The performance will be measured over vesting period of the options grated which range from 1-4 years and which will be exercised over a period of 1 year from date of vesting.

The ESOP pool was further increased by addition of 8,07,784 equity shares( 40,38,920 equity shares of ''2 each post split) vide shareholders approval in the meeting held on 23^rd July, 2021.

Employee Stock Option Scheme (ESOS), 2019

Under Sapphire Foods Employee Stock Option Scheme 2019 - " Scheme III” - Management other than CEO, 785,431 options( 39,27,155 options of '' 2 each post split) were granted to eligible employees on September 15, 2021 and an additional 4,747 options( 23,735 options of '' 2 each post slpit) were granted on September 29, 2021. The purpose of this scheme is to reward loyalty for past services with the Company, retention of critical employees, achieving company performance and aligning the shareholders interest.

The ESOP pool was further increased by addition of 1,494,856 equity shares( 74,74,280 equity shares of ''2 each post split) vide shareholders approval in the meeting held on 8^th April, 2022.

Employee Stock Option Scheme (ESOS), 2022

During FY 2022-23, the Company came up with the new ESOP scheme hereinafter referred to as Sapphire Foods Employee Stock Option Scheme 2022- "Scheme IMA" and Sapphire Foods Employee Stock Option Performance Scheme 2022- "Scheme IVA". "Scheme IMA" for management other than CEO and "Scheme IVA" for CEO."

Under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - ” Scheme MIA” - Management other than CEO, 805,486 options ( 40,27,430 options of '' 2 each post split ) were granted to eligible employees during the year and under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - ” Scheme IVA” - CEO, 1,079,000 options( 53,95,000 options of '' 2 each post split ) were granted on June 22, 2022. The scheme has been formulated with the same objective as ESOS 2019.

During the year, the Company modified ESOS 2022 and implemented variation on 06 February, 2025. The Company revised its target performance estimates and made it more favourable for the employees.

There are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for these awards.

Note: The Shareholders of the Company, had approved the sub-division of one equity share of the face value of ''10 each into five equity shares of face value of '' 2 each. The record date for the said sub-division was 5 September 2024. The impact of this split has been considered for outstanding stock options, stock options granted, fair value, exercise price as above. The same have been adjusted to ensure fair and reasonable adjustment to entitlement of eligible employees under the scheme due to sub-division/split of equity shares.

43 Leases

Leases where the Company is a Lessee

(a) The Company incurred ''57.88 million for the year ended March 31, 2025 (March 2024 : '' 59.12 million) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is '' 2,114.44 million for the year ended March 31, 2025 (March 2024 : '' 1,876.11 million), including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is '' 1,030.88 million for the year ended March 31, 2025 (March 2024 : '' 894.25 million).

(b) The Company''s leases mainly comprise of stores and buildings. The Company leases buildings for the purpose of business operations.

(c) The incremental borrowing rate ranges between 8.48%p.a.- 8.67%p.a.( March 2024- 5%p.a.- 8%p.a.)

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

48 Merger of Gamma Pizzakraft Private Limited (GPPL) and Gamma Pizzakraft Overseas Private Limited (GPOPL) (wholly owned subsidiary companies/ divisions) with Sapphire Foods India Limited

45 Corporate Social Responsibility (CSR)

The provisions of Section 135 of the Companies Act, 2013 for Corporate Social Responsibility (CSR) are applicable to the Company. Basis the assessment of spend criteria as defined in the section and basis the calculation of profits under Sec. 198 including adjustment of excess of expense over income of earlier years there is no CSR obligation for the current year and hence the Company is not required to spend on CSR for the current year.

46 The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the database level insofar as it relates to accounting software. Further no instance of audit trail feature being tampered with was noted in respect of accounting software(s) where the audit trail has been enabled. Additionally, the audit trail of prior year has been preserved by the Company as per the statutory requirements for record retention to the extent it was enabled and recorded in the respective years.

Pursuant to scheme of Merger by Absorption under section 230-232 of the Companies Act, 2013, between the Company and its wholly owned subsidiaries Gamma Pizzakraft Private Limited (GPPL) and Gamma Pizzakraft Overseas Private Limited (GPOPL) (transferor companies) sanctioned by National Company Law Tribunal by virtue of its order dated March 20, 2024. The transferor companies have merged into the Company on a going concern basis from the appointed date of the scheme i.e. April 1, 2022. These subsidiaries are in the business of operating Pizza Hut stores in India. The scheme became effective from March 31, 2024.

The arrangement have been accounted in the books of account of the Company in accordance with Appendix C of Ind AS 103 and considering that the transferor companies are ultimately controlled by the same entity both before and after the business combination, the said transaction is a common control transaction and has been accounted under pooling of interest method.

49 Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off u/s 248 of the Companies Act, 2013.

(iii) The Company does not have any satisfaction of charge 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 received any fund from any persons or entities, 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,

(vi) The Company has not advanced or loaned or invested funds to any other persons or entities (outside the group), 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 surrendered or disclosed any transaction, previously unrecorded in the books of accounts, in the tax assessments under the Income Tax Act, 1961 as income during the year.

50 Events after the reporting period

The Company has evaluated subsequent events from the balance sheet date through May 07, 2025, the date at which the financial statements were available to be issued and determined that there are no material items to disclose except as disclosed in note 30(v)- Contingent liabilities.

51 Fig ures of the previous year has been re-grouped/re-arranged wherever necessary. The impact of the same is not material to the users of financial statement.

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Mar 31, 2024

b) Capital work-in-progress mainly comprises of assets being constructed or held for utilisation at new stores. These will get appropriated towards new stores to be opened in future. There are no projects as on each reporting period where activity had been suspended. All the upcoming projects of the Company are within the timelines as estimated during the original plan and the actual cost of projects are within the total cost as estimated by the management of the Company as on March 31, 2024.

b) There are no projects as on each reporting period where activity had been suspended. All the upcoming projects of the Company are within the timelines as estimated during the original plan and the actual cost of projects are within the total cost as estimated by the management of the Company as on March 31, 2024.

a) Inter Corporate Deposit in subsidiary are denominated in USD 31,52,699 as on March 2024 (March 2023 : USD 47,57,272) and carries an interest rate of 5.50% - 8% p.a. The ICD was originally given for a period of 2 to 3 years for business purposes and does not indude interest receivabie of 12.93 million which is inciuded above as ''''interest accrued on fixed deposits and loan'''' (March 2023 : 11.68 million). (Refer note 46).

b) Amount includes 75.26 million as at March 31, 2024 (March 31, 2023 : 75.26 million) is restricted balance in current account and hence, restricted from current use of the Company.

c) These were receivabie as at March 2023 towards sale of materials, caii centre charges and reimbursement of expenses which are in the normai course of business. These have been reaiised as per payment terms agreed which is 20-25 days from the date of invoice.

d) This money was heid in escrow account towards IPO reiated expenses which has been settied in the current year.

g. Shares reserved for issue under options

Information relating to Sapphire Foods Employee Stock Option Plan 2017 as amended from time to time, including details of options granted, exercised and lapsed during the current year and options outstanding at the end of reporting year, is set out in note 40.

h. Shares issued during the year ended March 31, 2024 includes:

i) Exercise of stock options 1,61,875 shares

No shares issued during the year ended March 31, 2023."

i. Shares allotted as fully paid-up without payment being received in cash during the period of 5 years immediately preceding the date of Balance Sheet are as under :

Nil

j. Pursuant to Composite Scheme of Arrangement with Gamma Pizzakraft (Overseas) Private Limited and Gamma Pizzakraft Private Limited, the authorised share capital of the Company has automatically increased by 3,53,30,000 equity shares upon scheme becoming effective (refer note 41).

Note : Nature and purpose of reserves

a) Retained earnings- Retained earnings are the profits/ losses that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

b) Share based payment reserve - The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.

c) Capital reserve- Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Securities premium- The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

e) Capital Reserve on merger - This reserve comprises of the impact pursuant to merger of Gamma Pizzakraft Overseas Private Limited & Gamma Pizzakraft Private Limited on a going concern basis from the appointed date of the scheme ie 1^st April 2022 (Refer Note 41).

f) Share application money pending allotment - This is amount received on account of exercise of employee stock option during the year the allotment for which is pending as on the reporting date and will be completed subsequently.

ii. The Company is eligible for incentive basis the agreement with the franchisor and the same has been netted off against the royalty expenses.

iii. Payment to auditor includes payment to auditors of merged entity Gamma Pizzakraft Private Limited and Gamma Pizzakraft (Overseas) Private Limited for March 2024 ''0.76 million (March 2023 : ''1.65 million).

28 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders (after adjusting for cost of options) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

29 Contingent liabilities ('' in million)
Particulars	Year ended March 31, 2024	Year ended March 31, 2023*
i) Claims against the Company (excluding Interest) not acknowledged as debts in respect of
- Indirect Tax	90.54	13.13
- Income Tax	69.39	69.39
- Statutory dues	17.39	17.66
- Bank Gaurantee	-	0.10
- Other matters	126.48	83.30
Total	303.80	183.58
A Restated pursuant to merger (refer Note 41)

There are several other cases which has been determined as remote by the Company and hence not been disclosed above.

ii) The Company has entered into business transfer agreement with A. N. Traders Pvt Limited (ANTPL) in August 2016. The obligation of the parties was completed and the transaction of transferring the franchisee has been closed. One of the promoter of ANTPL has filed FIR against the company and various other parties. The Company has filed a quashing petition in the High Court of Delhi seeking an order to quash the FIR as the same had been filed on false and frivolous grounds. The petition is pending for hearing in the High Court of Delhi. The Company does not foresee any financial obligation against the FIR.

iii) The Hon''ble Collector of Stamps, Enforcement - I, Mumbai ("COS, Mumbai") had demanded stamp duty of '' 194.60 million in the subject matter of Scheme of Arrangement between the Sapphire Foods India Limited (previously known as Sapphire Foods India Private Limited) ("Company") & Sapphire Hospitality and Recreation Private Limited ("SHRPL"), Hansazone Private Limited ("HPL"), Pizzeria Fast Foods Restaurants (Madras) Private Limited ("Pizzeria"), KFCH Restaurants Private Limited ("KFCH"). As per Company''s estimation, the stamp duty amount shall not exceed '' 2.74 million. The Company believes that the excessive stamp duty is on account of calculation error by the Authority and therefore the Company had contested the demand and filed appeal u/s 53(1A) of Bombay Stamp Act, 1958 with Chief Controlling Revenue Authority, Pune, Department of Registrations & Stamps, Maharashtra ("CCRA, Pune"). The Company on 11^th April, 2022 had further received demand notice from COS, Mumbai for payment of '' 404.77 million as stamp duty including penalty. The Company, thereafter, appealed before CCRA, Pune, for applying stay on the demand notice and disposal of final hearing at the earliest. CCRA, Pune, subsequently, remanded back the case to COS, Mumbai to review its order as a fresh and decide the matter basis the facts involved. The stamp duty as per Company''s estimation i.e. '' 2.74 million which has been provided and has already been paid to the Authority and hence, the Company does not expect any further financial implications given the strong merits of the case.

iv) The Company has filed a writ petition before the High Court of Gujarat at Ahmedabad challenging the anti-profiteering investigation being conducted by the Directorate General of Anti-Profiteering ("Respondent"), on the grounds that the antiprofiteering investigation is ex-facie illegal and suffers from various infirmities including malice in law on the part of the Respondents including the National AntiProfiteering Authority. The Respondents had initiated an anti-profiteering investigation under Section 171 of the Central Goods and Services Tax Act, 2017, basis a complaint against a singular Pizza Hut restaurant located in Ahmedabad, Gujarat. This investigation was initiated basis a reconsidered reference made by the Standing Committee on Anti-Profiteering in respect to a complaint filed with respect to supply of a product named ''veggie supreme'' by restaurant. Thereafter, the Company had responded and provided information to various summons and notices as demanded by the Respondent during the investigation. However, being aggrieved by the way the investigation was being conducted, the Company challenged the proceedings by the way of writ petition on the grounds that it was being conducted without any methodology or guidelines and was therefore manifestly arbitrary. By an order dated June 30, 2020, the High Court of Gujarat had directed the Respondent to not inquire about any other product of the Company other than the complained product. Subsequently the Company has filed its written submission dated March 30, 2021, before the High Court of Gujarat at Ahmedabad praying before the Court to allow the Writ Petition. The matter is currently pending for final orders and judgement.

Future cash outflows, if any, in respect of above are determinable only on receipt of judgement/ decisions pending at various forums/ authorities or final outcome of matter.

The Company''s pending litigations comprise of proceedings pending with tax authorities and government body. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have materially adverse impact on its financial statements.

(b) The Company has entered into a Development Agreement with Yum Restaurants (India) Private Limited (''Yum'') to build a minimum Net New Stores of KFC as specified in the agreement over the 5 years period starting 1st January 2022 until 31st December 2026 ("Incentive Period") consisting of Base and Tier 1 Targets, with certain incentives to be accrued on opening of such stores. In the event of company not meeting the build targets during the incentive period, Yum will have the right to consider revocation of development (exclusivity) rights of the Company. The Company has also issued an irrevocable and unconditional bank guarantee of initial fee for the target number of outlets of KFC amounting to 475.09 million for the year 2024. In case of not meeting the annual target, Yum shall be entitled to encash the bank guarantee provided.

Pursuant to above agreement, for Pizza Hut the Company has paid an upfront deposit of USD 500,000, refundable on meeting the annual build targets. In case the annual targets are not met Yum shall be entitled to forfeit such deposit.

31 Segment Reporting

Description of segments and principal activities and information about products and services

As the Company''s business activity primarily falls within a single business and geographical segment i.e. Food and Beverages, thus there are no additional disclosures to be provided under Ind AS 108 -"Operating Segment''. The management considers that the various goods and services provided by the Company constitutes single business segment, since

the risk and rewards from these services are not different from one another.

Geographical information

All revenue and non-current assets of the Company is situated in India, hence, disclosure pertaining to geographical areas has not been presented.

Information about major customers

Company is not dependent on any single customer for its revenue and none of the customers contribute

to more than 10% of revenue individually.

32 Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(a) Impairment of Non Financial Assets:

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (DCF) model. The cash flows are derived from the budget for the next five years. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are as under:

- Gross Margins

- Discount Rates

- Material Price inflation

- Growth rate

- Rent expense

- Salaries and wages

- Royalty and marketing fees

The management believes that no reasonably possible change in any of the key assumptions

used in value in use calculation would cause the carrying value of the CGU to materially exceed its value in use.

Gross Margins - Gross margins are based on average values achieved in the preceding years and is expected to remain constant during the budget period. These have not increased over the budget period for anticipated efficiency improvements as the increase, if any, is expected to be marginal.

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from its weighted average cost of capital (WACC). The cost of equity is derived from the expected return on investment by the Company''s investors.

Materials price inflation - Past actual material price movements are used as an indicator of future price movements.

Growth rate estimates - Rates are based on management''s estimate through internal and published industry research.

Rent expense, Salaries and wages, Royalty and Marketing expenses - Past actual rate movements are used as an indicator of future rate movements.

Any subsequent changes in the above factors could impact the recoverable value.

(b) Investment impairment

Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use of investments. In considering the value in use, the directors have anticipated various assumptions which includes sales growth rate, gross margin, EBITDA margins, price inflation, long-term growth rate and the risk-adjusted discount rate and other factors of the underlying businesses / operations of the investee companies as more fully described in note 33. The discount rates are derived from the Company''s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made.

Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.

(c) Taxes

The Company has exposure to income taxes in Indian jurisdiction. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (Refer Note 15).

(d) Employee Benefit Plans

The cost of defined benefit gratuity plan as well as the present value of the gratuity obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, expected rates of return of assets, future salary increase and mortality rates. Due to the complexity of the valuation, the underlying assumptions, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about gratuity obligation has been mentioned in Note 35.

(e) Useful lives of property, plant and equipment and intangible assets

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment''s estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 15 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Company''s property, plant and equipment at the end of the reporting period is disclosed in Note 3 to financial statements.

The cost of intangible assets is depreciated on a straight-line basis over the useful lives of the assets. The Management estimates the useful

lives of these assets to be within 1 to 10 years, which Management believes are realistic and reflect fair approximation of the period over which assets are likely to be used. There are no intangible assets with indefinite useful life, other than goodwill.

(f) Contingencies

In the normal course of business, contingent liabilities may arise from litigations and other claims against the company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised. Refer Note 29 for further details.

(g) Leases

The Company determines the lease term as the non-canceiiabie term of the lease, together with any periods covered by an option to extend the iease if it is reasonabiy certain to be exercised, or any periods covered by an option to terminate the iease, if it is reasonabiy certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonabiy certain whether or not to exercise the option to renew or terminate the lease. That is, it considers aii relevant factors that create an economic incentive for it to exercise either the renewal or termination.

The Company included the renewal period as part of the iease term for ieases of stores with shorter period (i.e., up to 10 years). The Company typicaiiy exercises its option to renew for these ieases because there wiii be a potentiai negative effect on the revenue. The renewal periods for ieases of stores with ionger noncancellable periods (i.e. More than 10 years) are not inciuded as part of the iease term as these are not reasonabiy certain to be exercised.

(h) Share based payments

The company initially measures the cost of equity settled transaction with employees using Black Schoies model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transaction requires determination of the most appropriate vaiuation modei, which is dependent on the terms and conditions of the grant. The estimates also

requires determination of the most appropriate inputs to the vaiuation modei inciuding expected iife of the share option, voiatiiity and dividend yieid and making assumptions about them. The assumption and modeis used for estimating the fair vaiue for share based-payment transaction are disclosed in note no. 40.

(i) Incentive

The Company is eiigibie for certain incentive income basis the development agreement with franchisor basis opening of committed number of stores in a caiendar year. The Company has considered past experience and future outiook in determining whether the Company shaii be abie to achieve the opening of target number of outiets. Accordingiy incentive is recognised on pro-rata basis the number of stores opened as on reporting date.

33 a) Impairment Testing of Goodwill

Carrying amount of Goodwiii as on March 31, 2024 is '' 1058.61 miiiion pertain to singie CGU i:e KFC brand (March 31, 2023 : '' 1,058.61 miiiion)

Goodwiii acquired through business combinations is not amortized but is evaiuated for impairment annuaiiy or whenever events or changes in circumstances indicate the carrying vaiue may not be recoverabie.

The Company performs an annuai impairment assessment of Goodwiii and the corresponding cash generating units to determine whether the recoverabie vaiue is beiow the carrying amount as at March 31, 2024. The Company performed its impairment test for the year ended March 31, 2024 on March 31, 2024.

For this purpose, the recoverabie vaiue of the cash generating unit is based on the vaiue in use modei, which has been derived from the discounted cash flow modei. The modei requires the Company to make significant assumptions such as discount rate, near and iong-term revenue growth rate and projected margins which invoives inherent uncertainty since they are based on future business prospects and economic outiook. The Company has used discounted Cash Fiow Projections covering period upto the year 2029. The pre-tax discount rate is appiied to cash flow projections. The Company has estimated a perpetuity growth rate to arrive at perpetuai vaiue post 2029. As a resuit of this anaiysis there is no impairment charge as at March 31, 2024.

The key assumptions have been disciosed in Note 32(a)

b) Impairment Testing of Investment

The Company has gross investment amounting to '' 402.72 miiiion and inter-corporate deposit (ICD) amounting to '' 266.23 miiiion as at 31 March 2024 in its whoiiy owned subsidiary Gamma Pizzakraft (Lanka) Private Limited (GPLPL), French Restaurants Limited (FRL) and Gamma Isiand Food Private Limited (GIF).

Considering the macroeconomic chaiienges faced by Sri Lanka on account of depietion of forex reserves, significant depreciation of Sri Lankan currency to INR, shortage of fuei, inflationary pressures and the Sri Lankan government seeking financiai assistance from Internationai Monetary Fund (IMF), the situation provided an indicator for impairment in the investment. In the current year, there has been improvement in the economy, the forex rate has started stabiiising with

controiied inflation. Further Internationai Monetary Fund (IMF) had approved one faciiity during March 2023 and currentiy they are in discussion of second faciiity with the Sri Lankan Government.

Management has used externai speciaiists to support the recoverabie amounts of its Investment based on vaiue-in-use computation after taking into consideration potentiai impact of the crisis. The management has considered aii internai and externai sources of information inciuding economic forecasts and estimates from market sources as at the reporting date in determining the recoverabie vaiue for such investments heid in subsidiaries.

The key assumptions have been disciosed in Note 32(b)

The above information and that given in Note 17 - Trade Payables regarding Micro and Small Enterprises has been determined based on the information available with the Company.

35 Disclosure as per IND-AS 19, "Employee Benefits"

I. Defined contribution plan:

The Company has defined contribution plan. Contributions are made to provident fund 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 or constructive obligation. The expenses recognised during the period towards defined contribution plan is '' 191.90 million (31 March 2023 : '' 159.21 million) [refer Note 24].

II. Defined benefit plan: Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each year of service and to employee who has completed 5 years or more of service. The same is payable on termination of service or retirement whichever is earlier. The Gratuity paid is governed by The Payment of Gratuity Act, 1972. The Company contributes to the fund based on actuarial report details of which is available in the table of investment pattern of plan asset, based on which the company is not exposed to market risk. The following table summarises the component of net defined benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for respective period.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

G. Risk exposure:

Through its defined benefits plan, the company is exposed to a number of risks, the most significant of which are detailed below:

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk

A decrease in the bond increase rate will increase the plan liability ; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effects of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

Note:

i) During the year ended 31 March 2022 and year ending March 31, 2021, the Company has incurred share issue expenses in connection with proposed public offer of equity shares of which '' 237.81 million is accounted for various services received for Initial Public Offering (IPO). As per the Offer Agreement entered between the Company and the selling shareholders namely WWD Ruby Limited, Amethyst Private Limited, Aparajita Jethy Ahuja (Trustee of AAJV Investment Trust), Edelweiss Crossover Opportunities Fund - Series I, Edelweiss Crossover Opportunities Fund - Series II, shall reimburse the share issue expenses in proportion to the respective shares offered for sale. Accordingly, the Company has recovered the expenses incurred in connection with the Issue on completion of IPO and therefore, as at the year ended March 31, 2024 amount recoverable is disclosed under the head ""Other financial assets - Share issue expenses (Receivable from shareholders - Unbilled)"" which is Nil.

Further, as on March 31, 2023, the Company had a balance in Escrow account of '' 321.24 million refundable to selling shareholders representing amount set aside for the purpose of IPO share issue expenses, same has been settled during the year.

37 Fair Values and Fair Value hierarchy

The fair value of all current financial assets and liabilities including cash and cash equivalent, bank balances other than cash and cash equivalents, trade receivable, other financial assets, trade payables, lease liabilities, other financials liabilities and borrowings approximate their carrying amounts largely due to the short term maturities of these instruments.

The Company had investments in mutual funds which is subsequently measured at fair value through profit or loss (FVTPL) as per the closing net assets value (NAV) statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such mutual funds fall under fair value hierarchy level 1.

Further, during previous year, the company had invested surplus funds in bonds and debentures. The contractual cash flow from this investment meets the criteria for solely payment of principle and interest on principal amount and accordingly is recognised at amortised cost.

38 Capital Risk Management

For the purpose of the company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders. The Company''s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The company''s capital requirement is mainly to fund its capacity expansion. The principal source of funding of the company has been and is expected to continue to be, cash generated from its operations backed by bank borrowings. The funding requirements are met through equity infusions, internal accruals

and borrowings. As a part of its capital management policy the company ensures compliance with all covenants and other capital requirements related to its contractual obligations.

The capital structure is governed by policies approved by the Board of Directors and is monitored by various matrices, funding requirements are reviewed periodically.

39 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise of borrowings, lease liabilities, trade and other payables. The Company''s principal financial assets include trade and other receivables, investments and cash and cash equivalents including bank balances

other than cash and cash equivalents that derive directly from its operations.

The Company''s financial risk management is an integral part of how to plan and execute its business investments strategies. The Company is exposed to market risk, credit risk and liquidity risk.

The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors. This process provides assurance to Company''s senior management that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.

Further, the company has a Risk Management Committee for overseeing the risk management framework & developing & monitoring the Company''s risk management policies.

The risk management policies aim to mitigate the following risks arising from the financial instruments.

a Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises of risks relating to interest rate risk and price risk. The impact of price risk is not material. The sensitivity analysis in the following sections relate to the position as at respective balance sheet date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity, pension obligation and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2024.

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 changes in market interest rates. The Company exposure

to the risk of changes in market interest rates relates pr imarily to the outstanding financial liability.

The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing the debt obligations.

ii. Foreign Currency risk

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates. Foreign currency risk senstivity is the impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The following tables demonstrate the sensitivity to a reasonably possible change in USD and EURO exchange rates, with all other variables held constant.

b Credit risk

Credit risk is the risk that counterparty will default on its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

i. Trade Receivable

The trade receivable of the Company generally spread over limited numbers of parties. The Company evaluates the credit worthiness of the parties on an ongoing basis. Further, outstanding customer receivables are regularly monitored and followed up. Therefore, the Company does not expect any material risk on account of non-performance from these parties.

ii. Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus

funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

c Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company monitors its liquidity position and deploys a cash management system. It maintains adequate source of financing through the use of bank deposits and cash credit facilities. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

d Excessive risk concentration

Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based on company''s evaluation there is no excessive risk concentration.

40 Share-based payments

Employee Stock Option Scheme (ESOS), 2017

The Company had received approval of the Board and Shareholders for issuance of 20,31,249 Equity Shares of '' 10 each for offering to eligible employees of the Company under Sapphire Foods Employee Stock Option Plan 2017 (the plan). There are 2 schemes of the plan implemented by the Company- Sapphire Foods Employee Stock Option Loyalty Scheme 2017-"Scheme I" (loyalty scheme) and Sapphire Foods Employee Stock Option Performance Scheme 2017-"Scheme II" (performance scheme).

The purpose of these schemes is to reward loyalty for past services with the Company, retention of critical

employees, achieving company performance and aligning the shareholders interest.

During the year ended 31 March 2021, the Company has modified its existing schemes and implemented variation on 21 August 2020 by increasing the total number of options available for loyalty and performance options. It revised its target performance estimates and made it more favourable for its employees. These schemes were further modified on 30 December 2020 where Ruby options were introduced resulting in an increase in no of option granted and revised the terms of performance making it more favourable for its employees. The revised scheme hereinafter referred to as "Scheme III" for employees other than CEO and "Scheme IV" for CEO respectively. Scheme III was further modified on 18 May 2021 for acceleration of vesting at the Board discretion.

The number of shares that will vest is conditional upon certain performance and market conditions that will be determined by the Board of Directors. The performance will be measured over vesting period of the options grated which range from 1-4 years and which will be exercised over a period of 1 year from date of vesting.

The ESOP pool was further increased by addition of 807,784 equity shares vide shareholders approval in the meeting held on 23rd July, 2021

Employee Stock Option Scheme (ESOS), 2019

Under Sapphire Foods Employee Stock Option Scheme 2019 - " Scheme III" - Management other than CEO, 785,431 options were granted to eligible employees on September 15, 2021 and an additional 4,747 options were granted on September 29, 2021. The purpose of this scheme is to reward loyalty for past services with the Company, retention of critical employees, achieving company performance and aligning the shareholders interest.

The ESOP pool was further increased by addition of 1,494,856 equity shares vide shareholders approval in the meeting held on 8th April, 2022..

Employee Stock Option Scheme (ESOS), 2022

During FY 2022-23, the Company came up with the new ESOP scheme hereinafter referred to as

Sapphire Foods Employee Stock Option Scheme 2022- "Scheme IIIA" and Sapphire Foods Employee Stock Option Performance Scheme 2022- "Scheme IVA". "Scheme IIIA" for management other than CEO and "Scheme IVA" for CEO.

Under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - " Scheme IIIA" - Management other than CEO, 805,486 options were granted to eligible employees during the year and under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - " Scheme IVA" - CEO, 1,079,000 options were granted on June 22, 2022. The scheme has been formulated with the same objective as ESOS 2019.

There are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for these awards.

Accordingly, the comparative financial information of the Company for the year ended March 31, 2023 included in these standalone financial statements along with the notes to accounts and disclosure have been adjusted to give effect of the merger of transferor companies with effect from the date when such entities came under common control. Following the common control accounting guidance the financial statements of the following companies

have been included in the financial statement of the Company from:

Gamma Pizzakraft Private Limited (GPPL) - April 1, 2022

Gamma Pizzakraft Overseas Private Limited (GPOPL) - April 1, 2022

41 Merger of Gamma Pizzakraft Private Limited (GPPL) and Gamma Pizzakraft Overseas Private Limited (GPOPL) (wholly owned subsidiary companies/ divisions) with Sapphire Foods India Limited

Pursuant to scheme of Merger by Absorption under section 230-232 of the Companies Act, 2013, between the Company and its wholly owned subsidiaries Gamma Pizzakraft Private Limited (GPPL) and Gamma Pizzakraft Overseas Private Limited (GPOPL) (transferor companies) sanctioned by National Company Law Tribunal by virtue of its order dated March 20, 2024. The transferor companies have merged into the Company

on a going concern basis from the appointed date of the scheme i.e. April 1, 2022. These subsidiaries are in the business of operating Pizza Hut stores in India. The scheme became effective from March 31, 2024.

The arrangement have been accounted in the books of account of the Company in accordance with Appendix C of Ind AS 103 and considering that the transferor companies are ultimately controlled by the same entity both before and after the business combination, the said transaction is a common control transaction and has been accounted under pooling of interest method.

45 Corporate Social Responsibility (CSR)

The provisions of Section 135 of the Companies Act, 2013 for Corporate Social Responsibility (CSR) are applicable to the Company. Basis the assessment of spend criteria as defined in the section and basis the calculation of profits under Sec. 198 including adjustment of excess of expense over income of earlier years there is no CSR obligation for the current year and hence the Company is not required to spend on CSR for the current year.

46 Corporate Social Responsibility (CSR)

Currently, Sri Lanka has certain foreign currency repatriation restrictions due to the macroeconomic challenges and even though the Company is able to generate cash and managed the working capital requirement during the year, is unable to repay the intercorporate deposit to the Company. As a result during the year, the Company has extended the inter corporate deposit till January 31, 2030 or repayable on demand whichever is earlier.

49 Code of Social Security

The Code of Social Security 2020 (''Code'') relating to employee benefits during employment and postemployment received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period in which the Code becomes effective.

50 Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off u/s 248 of the Companies Act, 2013.

(iii) The Company does not have any satisfaction of charge 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 received any fund from any persons or entities, 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,

(vi) The Company has not advanced or loaned or invested funds to any other persons or entities (outside the group), 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 surrendered or disclosed any transaction, previously unrecorded in the books of accounts, in the tax assessments under the Income Tax Act, 1961 as income during the year.

51 Events after the reporting period

The Company has evaluated subsequent events from the balance sheet date through May 10, 2024, the date at which the financial statements were available to be issued and determined that there are no material items to disclose.

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Mar 31, 2023

a) I nter Corporate Deposit in subsidiary carries an interest rate of 12% p.a. and is given for a period of 2 to 3 years for business purposes and does not include interest receivable of ''19.17 million which is included above as ''''interest accrued on fixed deposits and loan'''' (Mar 2022 : ''2.70 million).

b) Amount includes ''75.26 million as at March 31, 2023 (March 31, 2022 : 75.27 million) is restricted balance in current account and hence, restricted from current use of the Company.

c) These are receivable towards sale of materials, call centre charges and reimbursement of expenses which are in the normal course of business. These will be realised as per payment terms agreed which is 20-25 days from the date of Invoice.

d) This money is held in escrow account towards IPO related expenses and will be settled as and when invoices are raised by vendors.

d. Rights, preferences and restrictions attached to equity shares

The Company has one class of equity share having par value of ''10 each. Each holder of equity share is eligible to one vote per share. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Note: Nature and purpose of reserves

a) Retained earnings- Retained earnings are the profits/losses that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

b) Share based payment reserve- The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme. (refer Note 40 for ESOP scheme issued by the company)

c) Capital reserve- Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Securities premium- The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

Note: During the year ended March 31, 2022 and till June 30, 2022, consequential to COVID 19 pandemic the Company has negotiated several rent concessions. In view of amendments by the Companies (Indian Accounting Standards) Amendment Rules, 2020, the Company has elected, as a practical expedient, not to assess these rent concessions as lease modifications and has recognised impact of such rent concession in Statement of Profit and Loss. The election is made for all such rent concessions as these satisfy the conditions mentioned in Para 46A and Para 46B of Ind AS 116 (as amended).

i. The Company is eligible for incentive basis the agreement with the franchisor and the same has been netted off against the royalty expenses.

ii. The above expenses excludes fees in respect of Initial Public Offer (IPO) '' Nil (March 31, 2022 ''16.56 million) including reimbursement of expenses and taxes, which is borne by promoters.

28 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders (after adjusting for cost of options) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

29 Contingent liabilities ('' in million)
Particulars	As at March 31, 2023	As at March 31, 2022
i) Claims against the Company (excluding Interest) not acknowledged as debts in respect of
- Indirect Tax	13.13	22.56
- Income Tax	53.92	69.57
- Statutory dues	17.66	5.35
- Other matters	85.02	24.43
Total	169.73	121.91

Note - There are several other cases which has been determined as remote by the Company and hence not been disclosed above.

ii) The Company has entered into business transfer agreement with A. N. Traders Pvt Limited (ANTPL) in August 2016. The obligation of the parties was completed and the transaction of transferring the franchisee has been closed. One of the promoter of ANTPL has filed FIR against the company and various other parties. The Company has filed a quashing petition in the High Court of Delhi seeking an order to quash the FIR as the same had been filed on false and frivolous grounds. The petition is pending for hearing in the High Court of Delhi. The Company does not foresee any financial obligation against the FIR.

iii) The Hon''ble Collector of Stamps, Mumbai, passed an order dated January 3, 2019, ("Order") against the Company for payment of stamp duty amounting to INR 194.60 million with respect to scheme of merger/amalgamation between the Company and SHRPL, Hansazone, Pizzeria, KFCH. Aggrieved by this, the Company filed an appeal before the Chief Controlling Revenue Authority, Pune, Maharashtra, challenging the Order on the grounds inter alia, that the amount of stamp duty has been calculated incorrectly and the current valuation of the stamp duty amounts to INR 2.74 million. The Company has got a stay order dated May 5, 2022, from the Hon''ble Collector of stamps on the aforesaid order till the date of next appeal. As on date the Company does not foresee any liability towards the same.

iv) The Company has filed a writ petition before the High Court of Gujarat at Ahmedabad challenging the anti-profiteering investigation being conducted by the Directorate General of Anti-Profiteering ("Respondent"), on the grounds that the antiprofiteering investigation is ex-facie illegal and suffers from various infirmities including malice in law on the part of the Respondents including the National Anti-Profiteering Authority. The Respondents had initiated an anti-profiteering investigation under Section 171 of the Central Goods and Services Tax Act, 2017, basis a complaint against a singular Pizza Hut restaurant located in Ahmedabad, Gujarat. This investigation was initiated basis a reconsidered reference made by the Standing Committee on Anti-Profiteering in respect to a complaint filed with respect to supply of a product named ''veggie supreme'' by restaurant. Thereafter, the Company had responded and provided information to various summons and notices as demanded by the Respondent during the investigation. However, being aggrieved by the way the investigation was being conducted, the Company challenged the proceedings by the way of writ petition on the grounds that it was being conducted without any methodology or guidelines and was therefore manifestly arbitrary. By an order dated June 30, 2020, the High Court of Gujarat had directed the Respondent to not inquire about any other product of the Company other than the complained product. The Company has filed its written submission dated March 30, 2021, before the High Court of Gujarat at Ahmedabad praying before the Court to allow the Writ Petition. The matter is currently pending for final order and judgement on the matter is awaited.

Future cash outflows, if any, in respect of above are determinable only on receipt of judgement/decisions pending at various forums/ authorities or final outcome of matter.

The Company''s pending litigations comprise of proceedings pending with tax authorities and government body. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have materially adverse impact on its financial statements.

30 Commitments (a) Estimated amount of contracts to be executed on capital account and not provided for (net of advances) ('' in million)
Particulars	As at March 31, 2023	As at March 31, 2022
Estimated amount of contracts to be executed on capital account and not provided for	969.04	696.13

(b) The Company has entered into a Development Agreement with Yum Restaurants (India) Private Limited (''Yum'') to build a minimum Net New Stores of KFC as specified in the agreement over the 5 years period starting 1^st January 2022 until 31^st Dec 2026 ("Incentive Period") consisting of Base, Tier 1 and Tier 2 Targets, with certain incentives to be accrued on opening of such stores. In the event of company not meeting the build targets during the incentive period, Yum will have the right to consider revocation of development (exclusivity) rights of the Company. The Company has also issued an irrevocable and unconditional bank guarantee of initial fee for the target number of outlets of KFC amounting to ''409.87 million for the year 2023. In case of not meeting the annual target, Yum shall be entitled to encash the bank guarantee provided.

Pursuant to above agreement, for Pizza Hut the Company has paid an upfront deposit of 500,000 USD, refundable on meeting the annual build targets. In case the annual targets are not met Yum shall be entitled to forfeit such deposit.

31 Segment Reporting

Description of segments and principal activities and information about products and services

As the Company''s business activity primarily falls within a single business and geographical segment i.e. Food and Beverages, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segment''. The management considers that the various goods and services provided by the Company constitutes single business segment, since the risk and rewards from these services are not different from one another.

Geographical information

All revenue and non-current assets of the Company is situated in India, hence, disclosure pertaining to geographical areas has not been presented.

Information about major customers

Company is not dependent on any single customer for its revenue and none of the customers contribute to more than 10% of revenue individually.

32 Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(a) Impairment of Non Financial Assets:

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (DCF) model. The cash flows are derived from the budget for the next four to five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are as under:

• Gross Margins

• Discount Rates

• Material Price inflation

• Growth rate

• Rent expense

• Salaries and wages

• Royalty and marketing fees

The management believes that no reasonably possible change in any of the key assumptions used in value in use calculation would cause the carrying value of the CGU to materially exceed its value in use.

Gross Margins - Gross margins are based on average values achieved in the preceding years and is expected to remain constant during the budget period. These have not increased over the budget period for anticipated efficiency improvements as the increase, if any, is expected to be marginal.

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from its weighted average cost of capital (WACC). The cost of equity is derived from the expected return on investment by the Company''s investors.

Materials price inflation - Past actual material price movements are used as an indicator of future price movements.

Growth rate estimates - Rates are based on management''s estimate through internal and published industry research.

Rent expense, Salaries and wages, Royalty and Marketing expenses - Past actual rate movements are used as an indicator of future rate movements.

Any subsequent changes in the above factors could impact the recoverable value .

(b) Investment impairment

Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use of investments. In considering the value in use, the directors have anticipated various assumptions which includes sales growth rate, gross margin, EBITDA margins, price inflation, long-term growth rate and the risk-adjusted discount rate and other factors of the underlying businesses / operations of the investee companies as more fully described in note 33. The discount rates are derived from the Company''s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made.

Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.

(c) Taxes

The Company has exposure to income taxes in Indian jurisdiction. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (Refer Note 15).

As at March 31, 2023, the company has reassessed the recoverability of unrecognised deferred tax assets on unabsorbed depreciation and other deductible temporary differences. Considering the Company has generated profits in previous year and continued generating the profits for the current year and forecasts taxable profits in future, the Company is confident of utilisation of unabsorbed depreciation and other temporary differences accordingly, has recognised deferred tax asset amounting to ''1,253.18 million as at March 31, 2023.

(d) Employee Benefit Plans

The cost of defined benefit gratuity plan as well as the present value of the gratuity obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, expected rates of return of assets, future salary increase and mortality rates. Due to the complexity of the valuation, the underlying assumptions, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about gratuity obligation has been mentioned in Note 35.

(e) Useful lives of property, plant and equipment and intangible assets.

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment''s estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 1.5 to 15 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Company''s property, plant and equipment at the end of the reporting period is disclosed in Note 3 to financial statements.

The cost of intangible assets is depreciated on a straight-line basis over the useful lives of the assets. The Management estimates the useful lives of these assets to be within 1 to 10 years, which Management believes are realistic and reflect fair approximation of the period over which assets are likely to be used. There are no intangible assets with indefinite useful life, other than goodwill.

(f) Contingencies

In the normal course of business, contingent liabilities may arise from litigations and other claims against the company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised. Refer Note 29 for further details.

(g) Leases

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

The Company included the renewal period as part of the lease term for leases of stores with shorter period (i.e., up to 10 years). The Company typically exercises its option to renew for these leases because there will be a potential negative effect on the revenue. The renewal periods for leases of stores with longer periods (i.e. More than 10 years) are not included as part of the lease term as these are not reasonably certain to be exercised.

(h) Share based payments

The company initially measures the cost of equity settled transaction with employees using Black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transaction requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The estimates also requires determination of the most appropriate inputs to the valuation model including expected life of the share option, volatility and dividend yield and making assumptions about them. The assumption and models used for estimating the fair value for share based-payment transaction are disclosed in note no. 40.

(i) Incentive

The Company is eligible for certain incentive income basis the development agreement with franchisor. The Company has considered past experience and future outlook in determining whether the Company shall be able to achieve the opening of target number of outlets. Accordingly incentive is recognised on pro-rata basis the number of stores opened and netted off against royalty expense.

33 Impairment

(a) Impairment Testing of Goodwill

Carrying amount of Goodwill as on March 31, 2023 is ''1,058.61 million pertain to single CGU i:e KFC brand (March 31, 2022; ''1,058.61 million)

Goodwill acquired through business combinations is not amortised but is evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable.

The Company performs an annual impairment assessment of Goodwill and the corresponding cash generating units to determine whether the recoverable value is below the carrying amount as at March 31, 2023. The Company performed its impairment test for the year ended March 31, 2023 on March 31, 2023.

For this purpose, the recoverable value of the cash generating unit is based on the value in use model, which has been derived from the discounted cash flow model. The model requires the Company to make significant assumptions such as discount rate, near and longterm revenue growth rate and projected margins which involves inherent uncertainty since they are based on future business prospects and economic outlook. The Company has used discounted Cash Flow Projections which has been approved by Board of Directors covering upto the year 2028. The post-tax discount rate is applied to cash flow projections. The Company has estimated a perpetuity growth rate to arrive at perpetual value post 2028. As a result of this analysis there is no impairment charge as at March 31,2023. The key assumptions have been disclosed in Note 32(a).

(b) Impairment Testing of Investment

The Company has gross investment amounting to ''1,817.12 million and inter-corporate deposit (ICD) amounting to ''360.00 million and accrued interest of ''19.17 million as at 31 March 2023 in its wholly owned subsidiary Gamma Pizzakraft Overseas Private Limited (GPOPL) who has further invested in its subsidiary Gamma Pizzakraft (Lanka) Private Limited (GPLPL), Gamma Pizzakraft Private Limited (GPPL), French Restaurants Limited (FRL) and Gamma Island Food Private Limited (GIF).

Considering the ongoing macroeconomic challenges faced by Sri Lanka on account of depletion of forex reserves, significant depreciation of Sri Lankan currency to INR, shortage of fuel, inflationary pressures and the Sri Lankan government seeking financial assistance from International Monetary Fund (IMF), the situation provides an indicator for impairment in the investment.

Management has used external specialists for determination of discount rate to be applied to future cash flow as forcasted by the company to support the recoverable amounts of its Investment based on value-in-use computation after taking into consideration potential impact of the crisis. The management has considered all internal and external sources of information including economic forecasts and estimates from market sources as at the reporting date in determining the recoverable value for such investments held in GPOPL.

35 Disclosure as per IND-AS 19, "Employee Benefits”

I. Defined contribution plan:

The Company has defined contribution plan. Contributions are made to provident fund 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 or constructive obligation. The expenses recognised during the period towards defined contribution plan is ''159.21 million (31 March 2022: ''119.83 million) [refer Note 24].

II. Defined benefit plan: Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each year of service and to employee who has completed 5 years or more of service. The same is payable on termination of service or retirement whichever is earlier. The Gratuity paid is governed by The Payment of Gratuity Act, 1972. The Company contributes to the fund based on actuarial report details of which is available in the table of investment pattern of plan asset, based on which the company is not exposed to market risk. The following table summarises the component of net defined benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for respective period.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

G. Risk exposure:

Through its defined benefits plan, the company is exposed to a number of risks, the most significant of which are detailed below: Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk

A decrease in the bond increase rate will increase the plan liability ; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effects of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

Note:

i) As on March 31, 2023, the Company has a balance in Escrow account of ''321.24 million (March 31, 2022 : ''540.98 million) refundable to selling shareholders representing amount set aside for the purpose of IPO share issue expenses.

ii) Pursuant to the scheme of arrangement under section 230 and 232 of the Companies Act 2013 between the Company and KFCH Restaurants Private Limited (KFCH) sanctioned by NCLT by virtue of order dated 25.01.2018, 13 stores of KFCH (''Demerged Undertaking'') got demerged and merged with the Company on a going concern basis from the appointed date of the scheme i.e. 1 April 2016. While the demerger was being operationalised, customers of the Demerged Undertaking of KFCH continued to remit the payments to the KFCH on behalf of the Company and vice versa. During the year, collections amount of '' Nil (March 31, 2022: 0.23 million) were received by SFIL on behalf of KFCH from its customers, the same has been remitted back to the Company during the year. Management is of the view that these transaction do not fall within the purview of IND AS 24 and hence excluded from related party disclosures noted above.

37 Fair Values and Fair Value hierarchy

The fair value of all current financial assets and liabilities including cash and cash equivalent, bank balances other than cash and cash equivalents, trade receivable, other financial assets, trade payables, lease liabilities, other financials liabilities and borrowings approximate their carrying amounts largely due to the short term maturities of these instruments.

The Company has investments in mutual funds which is subsequently measured at fair value through profit or loss (FVTPL) as per the closing net assets value (NAV) statement provided by the mutual fund house. The corresponding unrealised gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such mutual funds fall under fair value hierarchy level 1.

Further, during the year, the company has invested surplus funds in bonds and debentures. The contractual cash flow from this investment meets the criteria for solely payment of principle and interest on principal amount and accordingly is recognised at amortised cost.

The Company considers that the carrying amounts of these financial instruments recognised at amortised cost in the financial statements approximates its fair value.

38 Capital risk management

For the purpose of the company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders. The Company''s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The company''s capital requirement is mainly to fund its capacity expansion. The principal source of funding of the company has been and is expected to continue to be, cash generated from its operations backed by bank borrowings, if need be. The funding requirements are met through equity infusions, internal accruals and borrowings, if need be. As a part of its capital management policy the company ensures compliance with all covenants and other capital requirements related to its contractual obligations.

The capital structure is governed by policies approved by the Board of Directors and is monitored by various matrices, funding requirements are reviewed periodically.

39 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise of borrowings, lease liabilities, trade and other payables. The Company''s principal financial assets include trade and other receivables, investments and cash and cash equivalents including bank balances other than cash and cash equivalents that derive directly from its operations.

The Company''s financial risk management is an integral part of how to plan and execute its business investments strategies. The Company is exposed to market risk, credit risk and liquidity risk.

The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors. This process provides assurance to Company''s senior management that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.

Further, the company has a Risk Management Committee for overseeing the risk management framework & developing & monitoring the Company''s risk management policies.

The risk management policies aim to mitigate the following risks arising from the financial instruments. a Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises of risks relating to interest rate risk and price risk. The impact of price risk is not material. The sensitivity analysis in the following sections relate to the position as at respective balance sheet date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity, pension obligation and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item is the

effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2023.

i Interest rate risk

I nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the outstanding financial liability.

ii Foreign Currency risk

The Company has not entered into any derivative transaction during the year. The unhedged foreign currency exposure as at the year end is Nil.

b Credit risk

Credit risk is the risk that counterparty will default on its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

i Trade receivable

The trade receivable of the Company generally spread over limited numbers of parties. The Company evaluates the credit worthiness of the parties on an ongoing basis. Further, outstanding customer receivables are regularly monitored and followed up. Therefore, the Company does not expect any material risk on account of non-performance from these parties.

ii Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

c Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company monitors its liquidity position and deploys a cash management system. It maintains adequate source of financing through the use of bank deposits and cash credit facilities. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

d Excessive risk concentration

Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based on company''s evaluation there is no excessive risk concentration.

40 Share-based payments

Employee Stock Option Scheme (ESOS), 2017

The Company had received approval of the Board and Shareholders for issuance of 20,31,249 Equity Shares of ''10 each for offering to eligible employees of the Company under Sapphire Foods Employee Stock Option Plan 2017 (the plan). There are 2 schemes of the plan implemented by the Company- Sapphire Foods Employee Stock Option Loyalty Scheme 2017-"Scheme I" (loyalty scheme) and Sapphire Foods Employee Stock Option Performance Scheme 2017- "Scheme II" (performance scheme).

The purpose of these schemes is to reward loyalty for past services with the Company, retention of critical employees, achieving company performance and aligning the shareholders interest.

During the year ended 31 March 2021, the Company has modified its existing schemes and implemented variation on 21 August 2020 by increasing the total number of options available for loyalty and performance options. It revised its target performance estimates and made it more favourable for its employees. These schemes were further modified on 30 December 2020 where Ruby options were introduced resulting in an increase in no of option granted and revised the terms of performance making it more favourable for its employees. The revised scheme hereinafter referred to as "Scheme III" for employees other than CEO and "Scheme IV" for CEO respectively. Scheme III was further modified on 18 May 2021 for acceleration of vesting at the Board discretion.

The number of shares that will vest is conditional upon certain performance and market conditions that will be determined by the Board of Directors. The performance will be measured over vesting period of the options grated which range from 1-4 years and which will be exercised over a period of 1 year from date of vesting.

The ESOP pool was further increased by addition of 807,784 equity shares vide shareholders approval in the meeting held on 23^rd July, 2021.

During July 1, 2021 to September 15, 2021, the Company vested 13,78,661 options under the Sapphire Foods Employee Stock Option Scheme 2019 and accordingly recorded ESOP charge of ''233.99 million and such options were exercised by the employees.

Employee Stock Option Scheme (ESOS), 2019

Under Sapphire Foods Employee Stock Option Scheme 2019 - "Scheme III" - Management other than CEO, 785,431 options were granted to eligible employees on September 15, 2021 and an additional 4,747 options were granted on September 29, 2021. The purpose of this scheme is to reward loyalty for past services with the Company, retention of key employees, achieving company performance and aligning the shareholders interest.

The ESOP pool was further increased by addition of 1,494,856 equity shares vide shareholders approval in the meeting held on 8^th April, 2022.

Employee Stock Option Scheme (ESOS), 2022

During the year, the Company introduced new ESOP scheme hereinafter referred to as Sapphire Foods Employee Stock Option Scheme 2022- "Scheme IIIA" and Sapphire Foods Employee Stock Option Performance Scheme 2022- "Scheme IVA". "Scheme IIIA" for management other than CEO and "Scheme IVA" for CEO.

Under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - "Scheme IIIA" - Management other than CEO, 805,486 options were granted to eligible employees during the year and under ESOP Sapphire Foods Employee Stock Option Scheme 2022 - "Scheme IVA" - CEO, 1,079,000 options were granted on June 22, 2022. The scheme has been formulated with the same objective as ESOS 2019.

There are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for these awards.

42 Leases

Leases where the Company is a Lessee

(a) The Company incurred ''66.30 million for the year ended March 31, 2023 (March 2022: ''36.22 million) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is ''1,624.75 million for the year ended March 31, 2023 (March 2022: ''1,149.37 million, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is ''736.17 millions for the year ended March 31, 2023. (March 2022: ''581.85 million).

(b) The Company''s leases mainly comprise of stores and buildings. The Company leases buildings for the purpose of business operations.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

44 As per the Regulation 14(6)(ii) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (as amended from time to time), an Indian company making the Downstream Investment (DI) is required to notify the Secretariat for Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP) and Foreign Investment Promotion Board (FIPB) of its downstream investment along with the modality of investment and file Form DI with RBI within 30 days of allotment of capital instruments (wherever applicable). However, the Company had not notified the downstream investment to SIA, DIPP, FIPB and RBI (wherever applicable) for the financial years ended 31 March 2016, 31 March 2017, 31 March 2018 and 31 March 2019 within such deadlines. Further, the Company had not obtained the Statutory Auditor''s certificate in earlier years i.e. for year ended 31 March 2016, 31 March 2017, 31 March 2018 and 31 March 2019, nor had mentioned this non-compliance in its Directors Report for these periods. During the previous year ended March 31, 2022, the Company had regularised these filings and made good the non-compliance by paying a fees of ''9.54 million for which the Company has received RBI approval on 17 January 2022.

45 Utilisation of borrowed funds and share premium

During the year, the Company has made further investments and advanced loan to its subsidiariy company Gamma Pizzakraft (Overseas) Private Limited (GPOPL) who has further invested such amount in its subsidiary companies namely Gamma Pizzakraft Lanka Private Limited (GPLPL) and Gamma Island Food Private Limited (GIF). GPOPL is a company registered in India, GPLPL is a company registered in Sri Lanka and GIF is a company registered in Republic of Maldives.

47 Corporate Social Responsibility (CSR)

The provisions of Section 135 of the Companies Act, 2013 for Corporate Social Responsibility (CSR) are applicable to the Company. Basis the assessment of spend criteria as defined in the section, the Company is not required to spend on CSR for the current year considering the average net loss incurred in preceding three years.

48 Code of Social Security

The Code of Social Security 2020 (''Code'') relating to employee benefits during employment and post-employment received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period in which the Code becomes effective.

49 Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off u/s 248 of the Companies Act, 2013.

(iii) The Company does not have any satisfaction of charge 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 received any fund from any person or entity, 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.

(vi) The Company has not advanced or loaned or invested funds to any other person or entity (outside the group), 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 surrendered or disclosed any transaction, previously unrecorded in the books of accounts, in the tax assessments under the Income Tax Act, 1961 as income during the year.

50 The Board of Directors ("the Board") of the Company at its meeting held on February 1 1, 2022 has inter-alia, subject to requisite approvals/consents, considered and approved the Scheme of Merger by Absorption between Sapphire Foods India Limited (the "Transferee Company" or "Company'''') and wholly owned subsidiaries namely Gamma Pizzakraft Private Limited (Transferor Company I) and Gamma Pizzakraft (Overseas) Private Limited (Transferor Company 2") under Sections 230 to 232 of the Companies Act, 2013 ("Scheme"). The Scheme is subject to necessary statutory and regulatory approvals including the approval of Hon'' ble National Company Law Tribunal (NCLT), Mumbai bench. The Appointed Date of the Scheme is April 1, 2022. The scheme / application was filed and admitted with National Company Law Tribunal (NCLT), Mumbai Bench on May 5, 2022 and the matter is pending before the NCLT as on date. Accordingly, no impact of the scheme has been given in that standalone financial statments.

51 Events after the reporting period

The Company has evaluated subsequent events from the balance sheet date through May 12, 2023, the date at which the financial statements were available to be issued and determined that there are no material items to disclose.

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Mar 31, 2022

respective shares offered for sale. Accordingly, during the year ended March 31, 2022, Company has recovered the expenses incurred in connection with the Issue on completion of IPO and as at the year ended March 31, 2021 the same has been disclosed under the head "Other financial assets - Share issue expenses (Receivable from shareholders - Unbilled)”

c) Amount includes Rs 75.27 million as at March 31, 2022 (March 31, 2021: 50.27 million) is restricted balance in current account and hence, restricted from current use of the Company.

d) These are receivable towards sales of materials, call centre charges and reimbursement of expenses which are in the normal course of business. These will be realised as per payment terms agreed which is 20-25 days from the date of Invoice.

e) This money is held in escrow account towards IPO related expenses and will be settled as and when invoices are raised by vendors.

a) Loan to subsidiary carries an interest rate of 12% p.a. and is given for a period of 2 years for business purposes and does not include interest receivable of Rs 2.70 million which is included above as ‘’interest accrued on fixed deposits and loan’’ (Mar 2021 : Rs 0.19 million).

b) The Company has incurred share issue expenses in connection with proposed public offer of equity shares for various services received for Initial Public Offering (IPO). As per the Offer Agreement entered between the Company and the selling shareholders namely WWD Ruby Limited, Amethyst Private Limited, Aparajita Jethy Ahuja (Trustee of AAJV Investment Trust), Edelweiss Crossover Opportunities Fund - Series I, Edelweiss Crossover Opportunities Fund - Series II, shall reimburse the share issue expenses in proportion to the

This amount is accrued towards incentive basis number of stores opened as per agreement with the franchisor and is to be billed basis terms agreed in the development agreement with franchisor.

No amount is due which fall under the category of 1 to 2 year, 2 to 3 year and more than 3 year Trade Receivables are non interest bearing and are generally on terms of 7 - 30 days For explanation on the credit risk management process, refer Note 39 (b)

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person, nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

Rights, preferences and restrictions attached to equity shares

The Company has one class of equity share having par value of Rs. 10 each. Each holder of equity share is eligible to one vote per share. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Shares reserved for issue under options

Information relating to Sapphire Foods Employee Stock Option Plan 2017 as amended from time to time, including details of options granted, exercised and lapsed during the current year and options outstanding at the end of reporting year, is set out in note 40.

Shares issued during the year ended March 31, 2022 includes :

i) Exercise of stock options 13,78,661 shares

ii) Preferential allotment of 93,73,471 shares

Shares issued during the previous year ended March 31, 2021 includes :

i) Right issue of 23,65,930 shares

ii) Exercise of stock options 1,80,511 shares

Bonus shares issued during the period of five years immediately preceding the reporting date : The

Company had allotted 4,10,88,390 fully paid-up Equity Shares of face value Rs. 10/- each during the year ended 31st March, 2017, pursuant to bonus issue approved by the Shareholders in the meeting held on February 23, 2017. The book closure date fixed by the Board was February 23, 2017. The Bonus shares were issued in the proportion of 70 new fully paid-up equity shares for every 1 Equity Share.

a) Retained earnings- Retained earnings are the profits/ losses that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

b) Share based payment reserve - The Company offers ESOP, under which options to subscribe for the Company’s share have been granted to certain employees and senior management. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.

c) Capital reserve- Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Securities premium- The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

* The difference of tax computed on unabsorbed losses appearing in Balance Sheet is not considered in Statement of Profit and loss since the amount considered in Profit and Loss is restricted to the extent of deferred tax liability available since Company creates deferred tax assets only to the extent that it is probable that taxable profit will be available against which the deductible temporary difference could be utilised.

# Deferred tax assets are recognised to the extent of deferred tax liabilities and hence, net deferred tax assets in the Balance Sheet is Nil.

The Company has carried forward tax losses of Rs. 565.37 million (March 31, 2021 Rs. 974.90 million), unabsorbed depreciation of Rs. 3,123.97 million (March 31, 2021 Rs. 3,177.42 million) and Short Term Capital Loss of Rs. 22.92 million (March 31, 2021 Rs. 56.37 million)

During November, 2021, the company has completed its initial public offering (IPO) of its equity shares, comprising an offer for sale of 17,569,941 equity shares by its existing shareholder at an offer price of Rs. 1,180/- each aggregating to Rs. 20,732.53 million. Pursuant to the IPO, the equity shares of the Company have got listed on the NSE Limited and BSE Limited on 18 November 2021. Other payable include balance of Rs 540.98 million towards amounts refundable to shareholders.

Others includes provision for certain litigation relating to service tax on rentals and other cases which is currently pending judgement in the Supreme Court/other authorities. The company had applied for Service tax amnesty scheme for above litigation which was rejected pursuant to which company had filed a writ petition in the High Court of Mumbai. The Company has received a favourable order in the current year from the Bombay High court directing the service tax authority to quash the orders for rejecting the Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) filed by the company.

Note: During the current period consequential to COVID 19 pandemic the Company has negotiated several rent concessions. In view of recent amendments by the Companies (Indian Accounting Standards) Amendment Rules, 2020, the Company has elected, as a practical expedient, not to assess these rent concessions as lease modifications and has recognized impact of such rent concession in Statement of Profit and Loss. The election is made for all such rent concessions as these satisfy the conditions mentioned in Para 46A and Para 46B of Ind AS 116 (as amended). Accordingly an amount of Rs 131.67 million (March 31, 2021: 412.47 million) related to rent concessions has been recognised as other income.

i. The above expenses excludes fees in respect of Initial Public Offer (IPO) Rs 16.56 million (March 31, 2021 Rs 1.77 million) including reimbursement of expenses and taxes, which is borne by promoters

ii. The Company is eligible for incentive basis the agreement with the franchisor. these have been netted off against the royalty expenses.

ii) The Company has entered into business transfer agreement with A. N. Traders Pvt Limited (ANTPL) in August 2016. The obligation of the parties was completed and the transaction of transferring the franchisee has been closed. One of the promoter of ANTPL has filed FIR against the company and various other parties. The Company has filed a quashing petition in the High Court of Delhi seeking an order to quash the FIR as the same had been filed on false and frivolous grounds. The petition is pending for hearing in the High Court of Delhi. The Company does not foresee any financial obligation against the FIR.

28 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit/ (loss) for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit/ (loss) attributable to equity holders (after adjusting for cost of options) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

iii) The Hon’ble Collector of Stamps, Mumbai, passed an order dated January 3, 2019, ("Order”) against the Company for payment of stamp duty amounting to INR 194.60 million with respect to scheme of merger/ amalgamation between Company and SHRPL, Hansazone, Pizzeria, KFCH. Aggrieved by this, Company filed an appeal before the Chief Controlling Revenue Authority, Pune, Maharashtra, challenging the Order on the grounds inter alia, that the amount of stamp duty has been calculated incorrectly and the current valuation of the stamp duty amounts to INR 2.74 million. Subsequently the Company has got a stay order dated May 5, 2022, from The Hon’ble Collector of stamps on the aforesaid order till the date of next appeal. As on date the Company does not foresee any liability towards the same.

iv) The Company has filed a writ petition before the High Court of Gujarat at Ahmedabad challenging the antiprofiteering investigation being conducted by the Directorate General of Anti-Profiteering ("Respondent”), on the grounds that the anti-profiteering investigation is ex-facie illegal and suffers from various infirmities including malice in law on the part of the Respondents including the National Anti-Profiteering Authority. The Respondents had initiated an anti-profiteering investigation under Section 171 of the Central Goods and Services Tax Act, 2017, basis a complaint against a singular Pizza Hut restaurant located in Ahmedabad, Gujarat. This investigation was initiated basis an reconsidered reference made by the Standing Committee on Anti-Profiteering in respect to a complaint filed with respect to supply of a product named ‘veggie supreme’ by restaurant. Thereafter, the Company had responded and provided information to various summons and notices as demanded by the Respondent during the investigation. However, being aggrieved by the way the investigation was being conducted, the Company challenged the proceedings by the way of writ petition on the grounds that it was being conducted without any methodology or guidelines and was therefore manifestly arbitrary. By an order dated June 30, 2020, the High Court of Gujarat had directed the Respondent to not inquire about any other product of the Company other than the complained product. Subsequently the Company has filed its written submission dated March 30, 2021, before the High Court of Gujarat at Ahmedabad praying before the Court to allow the Writ Petition. The matter is currently pending for final orders and judgment.

Future cash outflows, if any, in respect of above are determinable only on receipt of judgement/decisions pending

at various forums/ authorities or final outcome of matter.

The Company’s pending litigations comprise of proceedings pending with tax authorities and government body. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have materially adverse impact on its financial statements.

(b) The Company has entered into a Development Agreement with Yum Restaurants (India) Private Limited (‘Yum’) to build a minimum Net New Stores of KFC as specified in the agreement over the 5 years period starting 1st January 2022 until 31st Dec 2026 ("Incentive Period”) consisting of Base and Tier 1 Targets, with certain incentives to be accrued on opening of such stores. In the event of company not meeting the build targets during the incentive period, Yum will have the right to consider revocation of development (exclusivity) rights of the Company. The Company has also issued an irrevocable and unconditional bank guarantee of initial fee for the target number of outlets of KFC amounting to Rs 326.28 million for the year 2022. In case of not meeting the annual target, Yum shall be entitled to encash the bank guarantee provided.

Pursuant to above agreement, for Pizza Hut the Company has paid an upfront deposit of 500,000 USD, refundable on meeting the annual build targets. In case the annual targets are not met Yum shall be entitled to forfeit such deposit.

31 Segment Reporting

Description of segments and principal activities and information about products and services

As the Company’s business activity primarily falls within a single business and geographical segment i.e. Food and Beverages, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segment’. The management considers that the various goods and services provided by the Company constitutes single business segment, since the risk and rewards from these services are not different from one another.

Geographical information

All revenue and non-current assets of the Company is situated in India, hence, disclosure pertaining to geographical areas has not been presented.

Information about major customers

Company is not dependent on any single customer for its revenue and none of the customers contribute to more than 10% of revenue individually.

32 Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(a) Impairment of Non Financial Assets:

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (DCF) model. The cash flows are derived from the budget for the next four years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are as under:

- Gross Margins

- Discount Rates

- Material Price inflation

- Growth rate

- Rent expense

- Salaries and wages

- Royalty and marketing fees

The management believes that no reasonably possible change in any of the key assumptions used in value in use calculation would cause the carrying value of the CGU to materially exceed its value in use.

Gross Margins - Gross margins are based on average values achieved in the preceding years and is expected to remain constant during the budget period. These have not increased over the budget period for anticipated efficiency improvements as the increase, if any, is expected to be marginal.

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from its weighted average cost of capital (WACC). The cost of equity is derived from the expected return on investment by the Company’s investors.

Materials price inflation - Past actual material price movements are used as an indicator of future price movements.

Growth rate estimates - Rates are based on management’s estimate through internal and published industry research.

Rent expense, Salaries and wages, Royalty and Marketing expenses - Past actual rate movements are used as an indicator of future rate movements.

Any increase/decrease in the above factors may result in impairment.

(b) Investment impairment

Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use of investments. In considering the value in use, the directors have anticipated various assumptions which includes sales growth rate, gross margin, EBITDA margins, price inflation, long-term growth rate and the risk-adjusted discount rate and other factors of the underlying businesses / operations of the investee companies as more fully described in note 33. The discount rates are derived from the Company’s weighted average cost of capital, taking into account the cost of capital, to which specific market-related premium adjustments are made.

Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.

(c) Taxes

The Company has exposure to income taxes in Indian jurisdiction. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax

assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Even though there is profit during the year but considering the history of losses, the Company has not recognised deferred tax assets on the losses in excess of deferred tax liabilities.

(d) Employee Benefit Plans

The cost of defined benefit gratuity plan as well as the present value of the gratuity obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, expected rates of return of assets, future salary increase and mortality rates. Due to the complexity of the valuation, the underlying assumptions, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about gratuity obligation has been mentioned in Note 35.

(e) Useful life and residual value of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment’s estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 15 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Company’s property, plant and equipment at the end of the reporting period is disclosed in Note 3 to financial statements.

The cost of intangible assets is depreciated on a straight-line basis over the useful lives of the assets. The Management estimates the useful lives of these assets to be within 1 to 10 years, which Management believes are realistic and reflect fair approximation of the period over which assets are likely to be used. There are no intangible assets with indefinite useful life, other than goodwill.

(f) Contingencies

In the normal course of business, contingent liabilities may arise from litigations and other claims against the company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised. Refer Note 29 for further details.

(g) Leases

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

The Company included the renewal period as part of the lease term for leases of stores with shorter period (i.e., up to 10 years). The Company typically exercises its option to renew for these leases because there will be a significant negative effect on the revenue. The renewal periods for leases of stores with longer non-cancellable periods (i.e. More than 10 years) are not included as part of the lease term as these are not reasonably certain to be exercised.

Refer to Note 39(c) for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term.

(h) Provision for inventories

The Company has calculated the provision for inventory basis the percentage as per historical experience for inventory lying from the last inventory count date to the reporting date.

(i) Share based payments

The company initially measures the cost of equity settled transaction with employees using Black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transaction requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The estimates also requires determination of the most appropriate inputs to the valuation model including expected life of the share option, volatility and dividend yield and making assumptions about them. The assumption and models used for estimating the fair value for share based-payment transaction are disclosed in note no. 40.

(j) Incentive

The Company is eligible for certain incentive income basis the development agreement with franchisor. The Company has considered past experience and future outlook in determining whether the Company shall be able to achieve the opening of target number of outlets. Accordingly the incentive is recognised pro-rata basis the number of stores opened.

Carrying amount of Goodwill as on March 31, 2022 is Rs. 1,058.61 million pertain to single CGU i:e KFC brand (March 31, 2021 ; Rs. 1,058.61 million)

Goodwill acquired through business combinations is not amortized but is evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable.

The Company performs an annual impairment assessment of Goodwill and the corresponding cash generating units to determine whether the recoverable value is below the carrying amount as at March 31, 2022. The Company performed its impairment test for the year ended March 31, 2022 on March 31, 2022.

For this purpose, the recoverable value of the cash generating unit is based on the value in use model, which has been derived from the discounted cash flow model. The model requires the Company to make significant assumptions such as discount rate, near and long-term revenue growth rate and projected margins which involves inherent uncertainty since they are based on future business prospects and economic outlook. The Company has used discounted Cash Flow Projections which has been approved by Board of Directors covering upto the year 2026. The pre-tax discount rate is applied to cash flow projections. The Company has estimated a perpetuity growth rate to arrive at perpetual value post 2026. As a result of this analysis there is no impairment charge as at March 31, 2022 and March 31, 2021.

The Company has gross investment amounting to Rs1,685.99 million and inter-corporate deposit (ICD) amounting to Rs120.00 million as at 31 March 2022 in its wholly owned subsidiary Gamma Pizzakraft (Overseas) Private Limited (GPOPL) who has further invested in its subsidiary Gamma Pizzakraft (Lanka) Private Limited (GPLPL). GPLPL operates Pizza Hut brand in Sri Lanka.

Considering the macroeconomic challenges currently faced by Sri Lanka on account of rising prices, depletion of forex reserves, significant depreciation of Sri Lankan currency to INR, shortage of fuel, inflationary pressures and the Sri Lankan government seeking financial assistance from International Monetary Fund (IMF), the situation provides an indicator for impairment in the investment.

Management has used external specialists to support the recoverable amounts of its Investment based on value-in-use computation after taking into consideration potential impact of ongoing crisis. The management has considered all internal and external sources of information including economic forecasts and estimates from market sources as at the reporting date in determining the recoverable value for such investments held in GPOPL.

On the basis of the evaluation and current indicators of future economic conditions, the Company has concluded that no adjustments are required as of reporting date at this point in time. Management will continue to monitor the situation. Further, management does not expect any uncertainties that may impact business in Sri Lanka in the near future.

I. Defined contribution plan:

The Company has defined contribution plan. Contributions are made to provident fund 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 or constructive obligation. The expenses recognised during the period towards defined contribution plan is Rs. 119.83 million (31 March 2021: Rs. 78.28 million) [refer Note 24].

II. Defined benefit plan: Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each year of service and to employee who has completed 5 years or more of service. The same is payable on termination of service or retirement whichever is earlier. The Gratuity paid is governed by The Payment of Gratuity Act, 1972. The Company contributes to the fund based on actuarial report details of which is available in the table of investment pattern of plan asset, based on which the company is not exposed to market risk. The following table summarises the component of net defined benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for respective period.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk

A decrease in the bond increase rate will increase the plan liability ; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effects of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

i) During the year ended 31 March 2022 and year ending March 31, 2021, the Company has incurred share issue expenses in connection with proposed public offer of equity shares of which Rs. 237.81 million is accounted for various services received for Initial Public Offering (IPO). As per the Offer Agreement entered between the Company and the selling shareholders namely WWD Ruby Limited, Amethyst Private Limited, Aparajita Jethy Ahuja (Trustee of AAJV Investment Trust), Edelweiss Crossover Opportunities Fund - Series I, Edelweiss Crossover Opportunities Fund - Series II, shall reimburse the share issue expenses in proportion to the respective shares offered for sale. Accordingly, the Company has recovered the expenses incurred in connection with the Issue on completion of IPO and therefore, as at year ended March 31, 2022 no amount is recoverable and same has been disclosed under the head “"Other financial assets - Share issue expenses (Receivable from shareholders - Unbilled)"

Further, the Company has a balance in Escrow account of Rs 540.98 million refundable to selling shareholders representing amount set aside for the purpose of IPO share issue expenses.

ii) Pursuant to the scheme of arrangement under section 230 and 232 of the Companies Act 2013 between the Company and KFCH Restaurants Private Limited (KFCH) sanctioned by NCLT by virtue of order dated 25.01.2018,13 stores of KFCH (‘Demerged Undertaking’) got demerged and merged with the Company on a going concern basis from the appointed date of the scheme i.e. 1 April 2016. While the demerger was being operationalized, customers of the Demerged Undertaking of KFCH continued to remit the payments to the KFCH on behalf of the Company and vice versa. During the year, collections amount to Rs. Nil (March 31, 2021: Rs 5.68 million) were received by KFCH on behalf of SFIL from its customers and collections amount to Rs. 0.23 million (March 31, 2021: Nil) were received by SFIL on behalf of KFCH from its customers, the same has been remitted back to the Company during the year. Management is of the view that these transaction do not fall within the purview of IND AS 24 and hence excluded from related party disclosures noted above.

37 Fair Values and Fair Value hierarchy

The fair value of all current financial assets and liabilities including cash and cash equivalent, bank balances other than cash and cash equivalents, trade receivable, other financial assets, trade payables, lease liabilities, other financials liabilities and borrowings approximate their carrying amounts largely due to the short term maturities of these instruments.

The Company has investments in debt mutual funds which are not quoted in the active market. These debt mutual funds are subsequently measured at fair value through profit or loss (FVTPL) as per the closing net assets value (NAV) statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such debt mutual funds fall under fair value hierarchy level 1.

38 Capital Risk Management

For the purpose of the company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholders. The Company’s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity infusions, internal accruals and borrowings. The Company raises long term loans mainly for its expansion requirements. As a part of its capital management policy the company ensures compliance with all covenants and other capital requirements related to its contractual obligations.

The capital structure is governed by policies approved by the Board of Directors and is monitored by various matrices, funding requirements are reviewed periodically.

39 Financial risk management objectives and policies

The Company’s principal financial liabilities comprise of borrowings, lease liabilities, trade and other payables. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents including bank balances other than cash and cash equivalents that derive directly from its operations.

The Company’s financial risk management is an integral part of how to plan and execute its business investments strategies. The Company is exposed to market risk, credit risk and liquidity risk.

The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors. This process provides assurance to Company’s senior management that the Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below:

a Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises of risks relating to interest rate risk and price risk. The impact of price risk is not material. The sensitivity analysis in the following sections relate to the position as at respective balance sheet date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity, pension obligation and other post-retirement obligations; provisions; and the nonfinancial assets and liabilities. The sensitivity of the relevant Profit and Loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2022.

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 changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the outstanding financial liability.

b 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. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

i Trade Receivable

The trade receivable of the Company generally spread over limited numbers of parties. The Company evaluates the credit worthiness of the parties on an ongoing basis. Further, outstanding customer receivables are regularly monitored and followed up. Therefore, the Company does not expect any material risk on account of non-performance from these parties.

ii Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

c Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company’s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company monitors its liquidity position and deploys a cash management system. It maintains adequate source of financing through the use of bank deposits and cash credit facilities. Processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

d Excessive risk concentration

Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

40 Share-based payments

The Company had received approval of the Board and Shareholders for issuance of 20,31,249 Equity Shares of Rs.10 each for offering to eligible employees of the Company under Sapphire Foods Employee Stock Option Plan 2017 (the plan). There are 2 schemes of the plan implemented by the Company- Sapphire Foods Employee Stock Option Loyalty Scheme 2017- “"Scheme I”” (loyalty scheme) and Sapphire Foods Employee Stock Option Performance Scheme 2017- “"Scheme 11”” (performance scheme).

The purpose of these schemes is to reward loyalty for past services with the Company, retention of critical employees, achieving company performance a B17nd aligning the shareholders interest.

During the previous year the Company has modified its existing schemes and implemented variation on 21 August 2020 by increasing the total number of options available for loyalty and performance options. It revised its target performance estimates and made it more favourable for its employees. These schemes were further modified on 30 December 2020 where Ruby options were introduced resulting in an increase in no of option granted and revised the terms of performance making it more favourable for its employees. The revised scheme hereinafter referred to as “Scheme IN” for employees other than CEO and “Scheme IV” for CEO respectively.

The number of shares that will vest is conditional upon certain performance and market conditions that will be determined by the Board of Directors. The performance will be measured over vesting period of the options grated which range from 1-4 years and which will be exercised over a period of 1 year from date of vesting.

The ESOP pool was further increased by addition of 807,784 equity shares vide shareholders approval in the meeting held on 23rd July, 2021.

During July 1, 2021 to September 15, 2021, the Company has also vested 13,78,661 options under the Sapphire Foods Employee Stock Option Scheme 2019 and accordingly has recorded ESOP charge of Rs 233.99 million and such options were exercised by the employees.

Under ESOP Sapphire Foods Employee Stock Option Scheme 2019 - “ Scheme III” - Management other than CEO, 785,431 options were granted to eligible employees on September 15, 2021 and an additional 4,747 options were granted on September 29, 2021. The purpose of this scheme is to reward loyalty for past services with the Company.

There are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for these awards.

42 Leases - Ind AS 116

Leases where the Company is a Lessee

(a) The Company incurred Rs.36.22 million for the year ended March 31,2022 (March 2021: Rs 17.89 million) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is Rs.1,149.37 million for the year ended March 31, 2022 (March 2021: Rs 765.61 million, including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is Rs. 581.85 millions for the year ended March 31, 2022. (March 2021: Rs 553.73 million).

(b) The Company’s leases mainly comprise of stores and buildings. The Company leases buildings for the purpose of business operations.

A 5% increase in revenue for the relevant stores would increase total lease payments by 5%.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company’s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

44 During the year in November, 2021, the company has completed its initial public offering (IPO) of its equity shares, comprising an offer for sale of 17,569,941 equity shares by its existing shareholder at an offer price of Rs. 1,180/- each aggregating to Rs. 20,732.53 million. Pursuant to the IPO, the equity shares of the Company have got listed on the NSE Limited and BSE Limited on 18 November 2021.

45 a) As per the Regulation 14(6)(ii) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (as amended from time to time), an Indian company making the Downstream Investment (DI) is required to notify the Secretariat for Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP) and Foreign Investment Promotion Board (FIPB) of its downstream investment along with the modality of investment and file Form DI with RBI within 30 days of allotment of capital instruments (wherever applicable). However, the Company had not notified the downstream investment to SIA, DIPP, FIPB and RBI (wherever applicable) for the financial years ended 31 March 2016, 31 March 2017, 31 March 2018 and 31 March 2019 within such deadlines. Further, the Company had not obtained the Statutory Auditor’s certificate in earlier years i.e. for year ended 31 March 2016, 31 March 2017, 31 March 2018 and 31 March 2019, nor had mentioned this non-compliance in its Directors Report for these periods. During the year the Company has regularised these filings and made good the non-compliance by paying a fees of Rs 9.54 million. Further, the Company has received RBI approval on 17 January 2022.

46 Utilisation of borrowed funds and share premium

During the year, the Company has made further investments and advanced loan to its subsidiary company Gamma Pizzakraft (Overseas) Private Limited who has further advanced such amounts to its subsidiary Gamma Pizzakraft Lanka Private Limited. Gamma Pizzakraft (Overseas) Private Limited is a company registered in India and GPLPL is a company registered in Sri Lanka.

48 Code of Social Security

The Code of Social Security 2020 (‘Code’) relating to employee benefits during employment and post-employment received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period in which the Code becomes effective.

49 Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off u/s 248 of the Companies Act, 2013.

(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 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,

(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies) (outside the group), 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 surrendered or disclosed any transaction, previously unrecorded in the books of accounts, in the tax assessments under the Income Tax Act, 1961 as income during the year.

50 The Board of Directors ("the Board”) of the Company at its meeting held on February 11, 2022 has inter-alia, subject to requisite approvals/consents, considered and approved the Scheme of Merger by Absorption between Sapphire Foods India Limited (the "Transferee Company” or "Company’’) and wholly owned subsidiaries namely Gamma Pizzakraft Private Limited (Transferor Company I) and Gamma Pizzakraft (Overseas) Private Limited (Transferor Company 2”) under Sections 230 to 232 of the Companies Act, 2013 ("Scheme”). The Scheme is subject to necessary statutory and regulatory approvals including the approval of Hon’ ble National Company Law Tribunal (NCL T), Mumbai bench. The Appointed Date of the Scheme is April 1, 2022. The scheme / application was filed and admitted with National Company Law Tribunal (NCLT), Mumbai Bench on May 5, 2022.

51 Events after the reporting period

The Company has evaluated subsequent events from the balance sheet date through May 17, 2022, the date at which the financial statements were available to be issued and determined that there are no material items to disclose.