m. Provisions, contingent liabilities and
contingent assets

Provisions are recognised when the Company has
a present obligation (legal or constructive) as a
result of past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of obligation.
When the Company expects some or all of a
provision to be reimbursed, for example, under
an insurance contract, the reimbursement is
recognised as a separate asset, but only when the
reimbursement is certain. The expense relating to a
provision is presented in the statement of profit and
loss net of any reimbursement.

If the effect of the time value of money is material,
provisions are determined by discounting the
expected future cash flows at a pre-tax rate that
reflects current market assessments of the time
value of money and the risks specific to the liability.
Where discounting is used, the increase in the
provision due to the passage of time is recognised
as a finance cost.

Restructuring

A provision for restructuring is recognised when the
Company has a detailed formal restructuring plan
and has raised a valid expectation in those affected
that it will carry out the restructuring by starting
to implement the plan or announcing its main
features to those affected by it. The measurement
of a restructuring provision includes only the
direct expenditure arising from the restructuring,
which are those amounts that are both necessarily
entailed by the restructuring and not associated
with the ongoing activities of the entity.

Onerous contracts

Present obligations arising under onerous contracts
are recognised and measured as provisions. An
onerous contract is considered to exist where
the Company has a contract under which the
unavoidable costs of meeting the obligations under
the contract exceed the economic benefit expected
to be received from the contract.

Contingent liabilities and contingent assets

Contingent liability is disclosed for,

(i) Possible obligations which will be confirmed
only by future events not wholly within the
control of the Company, or

(ii) Present obligations arising from past events
where it is not probable that an outflow
of resources will be required to settle the
obligation or a reliable estimate of the amount
of the obligation cannot be made.

Contingent assets are not recognised in the
financial statements. A contingent asset is disclosed
where an inflow of economic benefits is probable.
Contingent assets are assessed continually
and, if it is virtually certain that an inflow of
economic benefits will arise, the asset and related
income are recognised in the period in which the
change occurs.

n. Revenue
Sale of goods

Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company has generally concluded
that it is the principal in its revenue arrangements,
since it is the primary obligor in all of its revenue
arrangement, as it has pricing latitude and is
exposed to inventory and credit risks. Revenue
is stated net of goods and service tax and net of
returns, chargebacks, rebates and other similar
allowances. These are calculated on the basis of
historical experience and the specific terms in the
individual contracts.

In determining the transaction price, the Company
considers the effects of variable consideration,
the existence of significant financing components,
non-cash consideration, and consideration payable
to the customer (if any). The Company estimates
variable consideration at contract inception until it
is highly probable that a significant revenue reversal
in the amount of cumulative revenue recognised
will not occur when the associated uncertainty with
the variable consideration is subsequently resolved.

Profit Sharing Revenues

The Company from time to time enters into
arrangements for the sale of its products in certain
markets. Under such arrangements, the Company
sells its products to the business partners at a base
purchase price agreed upon in the arrangement
and is also entitled to a profit share which is over
and above the base purchase price. The profit share

is typically dependent on the ultimate net sale
proceeds or net profits, subject to any reductions
or adjustments that are required by the terms of
the arrangement.

Revenue in an amount equal to the base purchase
price is recognised in these transactions upon
delivery of products to the business partners. An
additional amount representing the profit share
component is recognised as revenue only to the
extent that it is highly probable that a significant
reversal will not occur.

Out-licensing arrangements

Revenues include amounts derived from product
out-licensing agreements. These arrangements
typically consist of an initial up-front payment on
inception of the license and subsequent payments
dependent on achieving certain milestones in
accordance with the terms prescribed in the
agreement. Non-refundable up-front license fees
received in connection with product out-licensing
agreements are deferred and recognised over
the period in which the Company has continuing
performance obligations. Milestone payments
which are contingent on achieving certain clinical
milestones are recognised as revenues either on
achievement of such milestones, if the milestones
are considered substantive, or over the period the
Company has continuing performance obligations,
if the milestones are not considered substantive.

Sales returns

The Company accounts for sales returns accrual
by recording an allowance for sales returns
concurrent with the recognition of revenue at the
time of a product sale. This allowance is based
on the Company''s estimate of expected sales
returns. With respect to established products,
the Company considers its historical experience
of sales returns, levels of inventory in the
distribution channel, estimated shelf life, product
discontinuances, price changes of competitive
products, and the introduction of competitive
new products, to the extent each of these factors
impact the Company''s business and markets.

With respect to new products introduced by the
Company, such products have historically been
either extensions of an existing line of product
where the Company has historical experience or in
therapeutic categories where established products
exist and are sold either by the Company or the
Company''s competitors.

Contract balances
Contract assets

A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs by transferring
goods or services to a customer before the
customer pays consideration or before payment is
due, a contract asset is recognised for the earned
consideration that is conditional. Contract assets
are subject to impairment assessment.

Trade receivables

A receivable represents the Company''s right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment
of the consideration is due).

Contract liabilities

A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received consideration (or an amount
of consideration is due) from the customer. If a
customer pays consideration before the Company
transfers goods or services to the customer, a
contract liability is recognised when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when
the Company performs under the contract

Rendering of services

Revenue from services rendered is recognised in
the statement of profit and loss as the underlying
services are performed. Upfront non-refundable
payments received are deferred and recognised as
revenue over the expected period over which the
related services are expected to be performed.

Royalties

Royalty revenue is recognised on an accrual basis
in accordance with the substance of the relevant
agreement (provided that it is probable that
economic benefits will flow to the Company and
the amount of revenue can be measured reliably).
Royalty arrangements that are based on production,
sales and other measures are recognised by
reference to the underlying arrangement.

o. Dividend and interest income

Dividend income is recognised when the Company''s
right to receive the payment is established, which is
generally when shareholders approve the dividend.

Interest income from a financial asset is recognised
when it is probable that the economic benefits will
flow to the Company and the amount of income

can be measured reliably. Interest income is accrued
on a time basis, by reference to the principal
outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts
estimated future cash receipts through the
expected life of the financial asset to that asset''s
net carrying amount on initial recognition.

p. Government grants

The Company recognises government grants
only when there is reasonable assurance that
the conditions attached to them will be complied
with, and the grants will be received. When the
grant relates to an expense item, it is recognised
as income on a systematic basis over the periods
that the related costs, for which it is intended to
compensate, are expensed. When the grant relates
to an asset, the Company deducts such grant
amount from the carrying amount of the asset.

q. Employee benefits
Defined benefit plans

The Company operates a defined benefit gratuity
plan which requires contribution to be made to a
separately administered fund.

The liability in respect of defined benefit plans is
calculated using the projected unit credit method
with actuarial valuations being carried out at
the end of each annual reporting period. The
present value of the defined benefit obligation is
determined by discounting the estimated future
cash outflows by reference to market yields at
the end of the reporting period on government
bonds. The currency and term of the government
bonds shall be consistent with the currency and
estimated term of the post-employment benefit
obligations. The current service cost of the defined
benefit plan, recognised in the statement of profit
and loss as employee benefits expense, reflects the
increase in the defined benefit obligation resulting
from employee service in the current year, benefit
changes, curtailments and settlements. Past service
costs are recognised in the statement of profit and
loss in the period of a plan amendment. The net
interest cost is calculated by applying the discount
rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This
cost is included in employee benefit expense in the
statement of profit and loss. Actuarial gains and
losses arising from experience adjustments and
changes in actuarial assumptions are charged or

credited to OCI in the period in which they arise
and is reflected immediately in retained earnings
and is not reclassified to profit or loss.

Termination benefits

Termination benefits are recognised as an expense
in the statement of profit and loss when the
Company is demonstrably committed, without
realistic possibility of withdrawal, to a formal
detailed plan to either terminate employment
before the normal retirement date, or to provide
termination benefits as a result of an offer made
to encourage voluntary redundancy. Termination
benefits for voluntary redundancies are recognised
as an expense in the statement of profit and loss
if the Company has made an offer encouraging
voluntary redundancy, it is probable that the offer
will be accepted, and the number of acceptances
can be estimated reliably.

Short-term and Other long-term
employee benefits

Accumulated leave, which is expected to be utilised
within the next 12 months, is treated as short-term
employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the
unused entitlement that has accumulated at the
reporting date.

The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the projected unit credit method at the year-end.
Actuarial gains/losses are immediately taken to the
statement of profit and loss and are not deferred.

The Company''s net obligation in respect of other
long term employee benefits is the amount of
future benefit that employees have earned in
return for their service in the current and previous
periods. That benefit is discounted to determine its
present value.

Defined contribution plans

The Company''s contributions to defined
contribution plans are recognised as an expense
as and when the services are received from the
employees entitling them to the contributions. The
Company does not have any obligation other than
the contribution made.

r. Income tax

Income tax expense consists of current and
deferred tax. Income tax expense is recognised in
profit or loss except to the extent that it relates
to items recognised in OCI or directly in equity,
in which case it is recognised in OCI or directly in
equity respectively. Current tax is the expected
tax payable on the taxable profit for the year, using
tax rates enacted or substantively enacted by the
end of the reporting period, and any adjustment
to tax payable in respect of previous years.

Current tax assets and tax liabilities are offset
where the Company has a legally enforceable
right to offset and intends either to settle on a
net basis, or to realise the asset and settle the
liability simultaneously.

Deferred tax is recognised on temporary
differences between the carrying amounts of assets
and liabilities in the financial statements and the
corresponding tax bases used in the computation
of taxable profit. Deferred tax is not recognised for
the temporary differences that arise on the initial
recognition of assets or liabilities in a transaction
that is not a business combination and that affects
neither accounting nor taxable profits and taxable
temporary differences arising upon the initial
recognition of goodwill.

Deferred tax is measured at the tax rates that
are expected to be applied to the temporary
differences when they reverse, based on the laws
that have been enacted or substantively enacted
by the end of the reporting period. Deferred tax
assets and liabilities are offset if there is a legally
enforceable right to set off corresponding current
tax assets against current tax liabilities and the
deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same tax authority on
the Company.

The Company recognises a deferred tax asset
arising from unused tax losses or tax credits only
to the extent that the entity has sufficient taxable
temporary differences or there is convincing other
evidence that sufficient taxable profit will be
available against which the unused tax losses or
unused tax credits can be utilised by the entity.

A deferred tax asset is recognised to the extent
that it is probable that future taxable profits will be
available against which the temporary difference
can be utilised except:

• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects
neither the accounting profit nor taxable profit
or loss and does not give rise to equal taxable
and deductible temporary differences.

• In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures,
deferred tax assets are recognised only to the
extent that it is probable that the temporary
differences will reverse in the foreseeable
future and taxable profit will be available
against which the temporary differences can
be utilised.

Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no
longer probable that the related tax benefit will be
realised. Withholding tax arising out of payment of
dividends to shareholders under the Indian Income
tax regulations is not considered as tax expense for
the Company and all such taxes are recognised in
the statement of changes in equity as part of the
associated dividend payment.

Deferred tax liabilities are recognised for all taxable
temporary differences, except:

• When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss and does not give rise to equal
taxable and deductible temporary differences

• In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse
in the foreseeable future

Minimum Alternate Tax (''MAT'') credit is recognised
as deferred tax asset only when and to the extent
there is convincing evidence that the Company
will pay normal income tax during the period for
which the MAT credit can be carried forward for
set-off against the normal tax liability. MAT credit
recognised as an asset is reviewed at each Balance
Sheet date and written down to the extent the
aforesaid convincing evidence no longer exists.

Accruals for uncertain tax positions require
management to make judgements of potential
exposures. Accruals for uncertain tax positions are
measured using either the most likely amount or
the expected value amount depending on which
method the entity expects to better predict the
resolution of the uncertainty. Tax benefits are not
recognised unless the management based upon its
interpretation of applicable laws and regulations
and the expectation of how the tax authority will
resolve the matter concludes that such benefits will
be accepted by the authorities. Once considered
probable of not being accepted, management
reviews each material tax benefit and reflects the
effect of the uncertainty in determining the related
taxable amounts.

s. Exceptional items

Exceptional items refer to items of income or
expense, including tax items, within the statement
of profit and loss from ordinary activities which
are non-recurring and are of such size, nature
or incidence that their separate disclosure is
considered necessary to explain the performance of
the Company.

t. Recent Accounting pronouncements

Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. MCA has issued
following amendments:

Amendment to Ind AS 1 ''Presentation of Financial
Statements''- Classification of Liabilities as current
or non-current and non-current liabilities with
covenants. The amendment includes specific
provisions that will take effect for reporting
periods beginning on or after April 01, 2026,
retrospectively, as outlined below:

a) Breach of material covenant for long-term loan
arrangement on or before end of reporting
period with effect that liability becomes
payable on demand as on reporting date, then
it shall be classified as current liability, if lender
agreed after reporting period and before
approval of standalone financial statements

to not demand payment as a consequence
of breach.

b) Classify as non-current liability, if lender
agreed by end of reporting period to provide
grace period ending at least 12 months after
reporting period within which entity can
rectify the breach provided lender does not
demand immediate repayment.

c) Disclose information about the timing of
settlement to understand the impact of the
liability on the standalone financial statements.

The Company does not expect this amendment
to have an impact on its operations or standalone
financial statements.

(i) Buildings include ? 8,620 (As at March 31, 2025: ? 8,620) towards cost of shares in a co-operative housing society and also includes ? 1.1
Million (As at March 31, 2025: ? 1.1 Million) and ? 1,133.0 Million (As at March 31, 2025: ? 1,133.0 Million) towards cost of non-convertible
preference shares of face value of ? 10/- each and compulsorily convertible debentures of face value of ? 10,000/- each in a Company
respectively entitling the right of occupancy and use of premises and also includes ? 4.5 Million (March 31, 2025: ? 4.5 Million) towards cost
of flats not registered in the name of the Company but is entitled to right of use and occupancy.

(ii) The aggregate depreciation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.

(iii) The above table includes certain premises and plant and machinery given under operating lease or leave and license agreements having gross
carrying value of ? 22.7 Million (March 31, 2025: ? 205.7 Million) and accumulated depreciation of ? 11.7 Million (March 31, 2025: ? 37.4
Million). The depreciation charge for the year in relation to them is ? 0.3 Million (March 31, 2025: ? 3.3 Million).

(i) The aggregate amortisation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.

(ii) Refer Note 54 (1)

(iii) The recoverable amount of Goodwill has been determined based on value in use calculations which uses cash flow projections covering
generally a period of five years which are based on key assumptions such as margins, expected growth rates based on past experience and
Management''s expectations/ extrapolation of normal increase/ steady terminal growth rate and appropriate discount rates that reflects current
market assessments of time value of money. The average growth rate used in extrapolating cash flows beyond the planning period was 5.0% for
the years ended March 31, 2026 and 5.0% March 31, 2025. Discount rate reflects the current market assessment of the risks specific to a CGU
or group of CGUs. The discount rate is estimated on the weighted average cost of capital for respective CGU or group of CGUs. Discount rate
used was 9.2% for the years ended March 31, 2026 and 8.9% March 31, 2025. The management believes that any reasonable possible change

in key assumptions on which recoverable amount is based is not expected to cause the aggregate carrying amount to exceed the aggregate
recoverable amount of the cash generating unit.

Footnotes

(i) Rights, preference and Restrictions attached to equity shares: The equity shares of the Company, having par value of ? 1 per share, rank pari
passu in all respects including voting rights and entitlement to dividend.

(ii) Change in shareholding during the year represents the sale of 15,000 shares by Kumud S. Shanghvi.

(iii) Authorised capital is changed with effect from November 22, 2025, being the date of filing Form INC-28 with the Registrar of Companies
pursuant to the Composite Scheme of Arrangement involving amalgamation of Wholly-owned subsidiary companies, viz. Sun Pharmaceutical
Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private
Limited, Skisen Labs Private Limited (“Transferor Companies”) with Sun Pharmaceutical Industries Limited (“Transferee Company” or “the
Company”), as approved by the Hon''ble National Company Law Tribunal Ahmedabad Bench vide its Order dated October 07, 2025.

Nature and purpose of each reserve

Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any,
is treated as capital reserve.

Securities premium - The amount received in excess of face value of the equity shares is recognised in securities premium. In
case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of
share is accounted as securities premium. It is utilised in accordance with the provisions of the Companies Act, 2013.

Amalgamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.

Capital redemption reserve - The Company has recognised capital redemption reserve on buyback of equity shares from its
retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.

General reserve: The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act,
1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.

Retained earnings: The reserve is the profit/(loss) that the Company has earned/incurred till date, Add/less any transfers to/
from general reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss /
(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in
equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of
equity instrument.

Foreign currency translation reserve - Exchange differences relating to the translation of the results and the net assets of the
Company''s foreign operations from their functional currencies to the Company''s presentation currency (i.e ^) are recognised
directly in the other comprehensive income and accumulated in foreign currency translation reserve. Exchange Difference
in the foreign currency translation reserve are reclassified to statement of profit or loss account on the disposal of the
foreign operation.

Effective portion of cash flow hedges - The cash flow hedging reserve represents the cumulative effective portion of gains
or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The
cumulative gain or loss recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only
when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair
value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value
measurements and the costs represents estimate of fair value within that range.

#These investments in equity instruments are not held for trading. Upon the application of Ind AS 109, the Company has
chosen to designate these investments in equity instruments at fair value through other comprehensive income.

There were no transfers between Level 1 and 2 in the periods.

The management considers that the carrying amount of financial assets and financial liabilities carried at amortised cost
approximates their fair value.

NOTE: 42 CAPITAL MANAGEMENT

The Company''s capital management objectives are:

• to ensure the Company''s ability to continue as a going concern; and

• to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt as presented on the face of the financial statements.
The Company''s objective for capital management is to maintain an optimum overall financial structure. The Company
manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the
financial covenants.

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 share holder''s.

NOTE: 43 FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The
Company''s risk management assessment and policies and processes are established to identify and analyze the risks faced
by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk
assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the
Company''s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness
of counterparty to which the Company grants credit terms in the normal course of business.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have
a good credit rating. The Company does not expect any significant losses from non-performance by these counter-parties, and
does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Trade receivables

The Company has used Expected Credit Loss (ECL) model for assessing the impairment loss. For the purpose, the Company
uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and
internal risk factors and historical data of credit losses from various customers.

Other than trade receivables, the Company has recognised an allowance of ^ 15.3 Million (March 31, 2025: ^ 15.3 Million)
against past due loans/advance including interest and ^ 1,540.0 Million (March 31, 2025: ^ 1,540.0 Million) of other receivables
based on assessment regarding its future recoverability.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company
manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

The Company has unutilised working capital lines from banks of ^ 38,085.0 Million as on March 31, 2026 (March 31, 2025:

^ 30,193.3 Million).

The table below provides details regarding the contractual maturities of significant financial liabilities:

Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market
rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-
sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market
risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The
Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of
its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue
generating and operating activities in foreign currencies.

Foreign exchange risk

The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily
in US Dollars, Euros, South African Rand, Brazilian Real and Russian Rouble). As a result, if the value of the Indian rupee
appreciates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian rupees may
decrease or increase and vice-versa. The exchange rate between the Indian rupee and these foreign currencies have changed
substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses both
derivative and non-derivative financial instruments, such as foreign exchange forward contracts, option contracts, currency
swap contracts and foreign currency financial liabilities, to mitigate the risk of changes in foreign currency exchange rates in
respect of its highly probable forecasted transactions and recognised assets and liabilities.

b) Sensitivity

For the years ended March 31, 2026 and March 31, 2025, every 5% strengthening in the exchange rate between the
Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would (decrease) / increase
the Company''s profit and (decrease) / increase the Company''s equity by approximately ^ (5,738.2) Million and ^ (6,202.2)
Million respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but
opposite effect.

In management''s opinion, the sensitivity analysis is not representative of the inherent foreign exchange risk because the
exposure at the end of the reporting period does not reflect the exposure during the year.

c) Derivative contracts

The Company is exposed to exchange rate risk that arises from its foreign exchange revenues and expenses, primarily
in US Dollars, Euros, South African Rand, Brazilian Real and Russian Rouble. The Company uses foreign currency
forward contracts, foreign currency option contracts and currency swap contracts (collectively, “derivatives”) to mitigate
its risk of changes in foreign currency exchange rates. The counterparty for these contracts is generally a bank or a
financial institution.

Hedges of highly probable forecasted transactions

The Company designates its derivative contracts that hedge foreign exchange risk associated with its highly probable
forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow
hedges is recorded in other comprehensive income, and re-classified in the income statement as revenue in the period
corresponding to the occurrence of the forecasted transactions. The ineffective portion of such cash flow hedges is
immediately recorded in the statement of profit and loss.

In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded a net loss of
^ 2,862.8 Million for the year ended March 31, 2026 and net loss of ^ 180.1 Million for the year ended March 31, 2025
in other comprehensive income. The Company also recorded hedges as a component of revenue, loss of ^ 1,478.2 Million
for the year ended March 31, 2026 and loss of ^ 108.3 Million for the year ended March 31, 2025 on occurrence of
forecasted sale transaction.

Changes in the fair value of forward contracts and option contracts that economically hedge monetary assets and
liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the statement of profit and
loss. The changes in fair value of the forward contracts and option contracts, as well as the foreign exchange gains and
losses relating to the monetary items, are recognised in the statement of profit and loss.

Commodity rate risk

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchases and sales of
active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients.
These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the
Company''s raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in
the Company''s active pharmaceutical ingredients business are generally more volatile. Cost of raw materials forms the
largest portion of the Company''s cost of revenues. Commodity price risk exposure is evaluated and managed through
operating procedures and sourcing policies. As of March 31, 2026, the Company had not entered into any material
derivative contracts to hedge exposure to fluctuations in commodity prices.

EMPLOYEE BENEFITS

Defined contribution plan

Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC)
and other Funds which covers all regular employees. While both the employees and the Company make predetermined
contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are
made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary.
Amount recognised as expense in respect of these defined contribution plans, aggregate to ^ 1251.2 Million
(March 31, 2025: ^ 1,149.4 Million).

Defined benefit plan

a) Gratuity

In accordance with Indian Law, the Company operate a scheme of gratuity which is a defined benefit plan. The gratuity
plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of
employment in accordance with the provisions under the Code on Social Security, 2020 or as per the Company Scheme,
as applicable. Vesting occurs upon completion of contractual period of continuous years of service as defined in the
Code on Social Security, 2020. The Company manage the plan by contributing to LIC''s Recognised Group Gratuity Fund
Scheme. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each
year, the Company review the level of funding in gratuity fund. The company decide its contribution based on the results
of its annual review. The company aim to keep annual contributions relatively stable at a level such that the fund assets
meets the requirements of gratuity payments in short to medium term.

b) Pension fund

The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees,
who had already retired before March 01, 2013 and will continue to receive the pension as per the pension plan.

c) Covid-19 Employee children education support

The Company have undertaken an obligation to provide financial support towards education expenses of the children of
those employees who have lost their lives due to the COVID-19 pandemic.

Risks

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and
salary risk.

i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by
reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is
below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.

ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset
by an increase in the return on the plan''s debt investments.

iii) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of
the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan
participants will increase the plan''s liability.

iv) 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.

Other long term benefit plan

Actuarial Valuation for compensated absences is done as at the year end and the provision is made as per Company policy
with corresponding charge to the statement of profit and loss including impact on account of new labour code amounting to
^ 1,066.8 Million [March 31, 2025: ^ 550.9 Million] and it covers all regular employees. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the
year end using the ‘Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined
benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term
employee benefit plans are recognised in profit or loss.

a) The Company has recognised a lease liability measured at the present value of the remaining lease payments, and right-of-
use (ROU) asset at an amount equal to lease liability (adjusted for any related prepayments). Management has exercised
judgement in determining whether extension and termination options are reasonably certain to be exercised. Expenses
relating to short-term leases and low-value assets for year ended March 31, 2026 is ^ 46.13 Million (March 31, 2025:

^ 44.65 Million).

b) The Company has given certain premises and plant and machinery under operating lease or leave and license agreements.
These are generally not non-cancellable and periods range between 11 months to 5 years under leave and license/lease
and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free
security deposits where applicable in accordance with the agreed terms.

NOTE: 52 USE OF ESTIMATES, JUDGMENTS AND ASSUMPTIONS

The preparation of the Company''s financial statements requires the 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. Actual results may differ from these estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation
uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts
recognised in the financial statements is included in the following notes:

a) Litigations [Refer Note 2 (2.2) (m) and Note 38]

b) Revenue [Refer Note 2(2.2)(n)]

c) Impairment of goodwill and intangible assets [Refer Note 2(2.2) (f)]

d) Impairment of Investment in subsidiaries [Refer Note 2(2.2) (g)]

e) Income tax [Refer Note 2(2.2) (r)]

NOTE: 53 REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company has recorded an additional amount of ^ 870.7 Million (March 31, 2025: ^ 285.2 Million) as deferred revenue
pursuant to the requirements of Ind AS 115. Revenue of ^ 632.6 Million (March 31,2025: ^ 507.6 Million) has been recognised
as Revenue from contract with customer pursuant to completion of performance obligation in respect of the above contracts.
Further, deferred revenue amounting to ^ 37.5 million has been reversed during the year due to cancellation of agreement.

Contract balances of Trade receivables and Contract liabilities as on April 01. 2024 were ^ 88,353.1 Million and ^ 5,278.2
Million respectively.

Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront
revenue received from customer for which performance obligation has not yet been completed.

The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the
contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.

The Company has recognised revenue of ^ 100.2 Million (March 31, 2025 ^ 148.6 Million) from the amounts included under
advance received from customers at the beginning of the year.

1 Product related intangibles consisting of trademarks, designs, technical knowhow and other intangible assets are available
to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management''s best
estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles,
technical and technological obsolescence, market demand for products, competition and their expected future benefits to
the Company.

2 Exceptional items of ^ 5,463.4 Million and Exceptional tax expense of ^ 1,656.2 Million for year ended March 31, 2026 includes:

a) Discontinuation of development work of SCD-044, and includes, (i) Impairment of acquired intangible asset under
development of ^ 1,514.9 Million and (ii) Other costs of ^ 1,361.5 Million (included in research and development
expenses). Exceptional tax credit on this charge is ^ 1,005.1 Million.

b) The Government of India has consolidated 29 existing labour legislations into a unified framework comprising four
labour codes as follows: Code on Wages, 2019, Code on Social Security, 2020, Industrial Relations Code, 2020
and Occupational Safety, Health and Working Conditions Code, 2020 (collectively referred to as the "New Labour
Codes"). The New Labour Codes became effective from November 21, 2025 and introduce changes that include,
among other things, setting a uniform definition of wages. The Government is in the process of issuing related rules.
The New Labour Codes have implications on employee benefits including gratuity, leave encashment, and other
related obligations.

The Company has assessed the implications of the New Labour Codes and has recognized an incremental cost of
^ 2,587.0 Million and related tax credit of ^ 651.1 Million.

3 In May 2022, US FDA inspected Sun Pharma''s Halol facility, and the inspection was classified as Official Action Indicated
(“OAI”) in August 2022. Subsequently, in December 2022, US FDA placed the Halol facility on Import Alert 66-40 and
afterwards, issued a Warning Letter summarizing violations of current Good Manufacturing Practice (“cGMP”) at the
facility (amended in October 2023). Subsequently, following a June 2025 inspection, the US FDA classified Halol facility
as "Official Action Indicated" (OAI) in September 2025. The Company is taking corrective measures necessary to get the
facility back to fully compliant status.

4 In September 2013, US FDA had placed Sun Pharma''s Mohali facility on Import Alert; the site was also subjected to
certain provisions of the Consent Decree of Permanent Injunction entered against Ranbaxy Laboratories Ltd. in January
2012 (Ranbaxy Laboratories Ltd. was merged with Sun Pharma in March 2015). In March 2017, US FDA removed the
Import Alert on Mohali facility and indicated that the site was in substantial compliance with the provisions mentioned
in the Consent Decree. In August 2022, US FDA inspected the Mohali facility, and the inspection was classified as OAI.

In April 2023, US FDA issued a Consent Decree Correspondence / Non-Compliance letter to the Mohali facility in
which US FDA directed the Company to take certain corrective actions at the Mohali facility, and certain actions before
releasing finished drug product batches into the United States. These actions include, but are not limited to, retaining
an independent cGMP expert to conduct batch certifications of drug products manufactured at the Mohali facility for
shipment to the U.S. market.

5 In December 2023, US FDA inspected Sun Pharma''s Dadra facility and has subsequently determined the inspection
classification status of this facility as Official Action Indicated (OAI). In June 2024, US FDA issued a Warning Letter
summarizing violations of cGMP at the facility. The Company is taking corrective measures necessary to get the facility
back to fully compliant status.

6 In September 2025, US FDA inspected Sun Pharma''s Baska facility and has subsequently determined the inspection
classification status of this facility as Official Action Indicated (OAI). The Company is taking corrective measures necessary
to get the facility back to fully compliant status.

7 The Company has only one reportable segment namely ''Pharmaceuticals''. In accordance with Ind AS 108 “Operating
Segments”, segment information has been given in the consolidated Ind AS financial statements, and therefore, no
separate disclosure on segment information is given in these standalone financial statements.

8 Corporate social responsibility (CSR)

As per section 135 of the Companies Act, 2013, the Company is required to spend at least 2% of its average net profits
for the immediately preceding three financial years on corporate social responsibility activities. The CSR Committee of
the Company monitors the CSR activities and the projects are undertaken in pursuance of the Company''s CSR Policy
and the Annual Action Plan. Company''s Annual Action Plan for the financial year 2025-26 covered CSR activities
in the areas - Healthcare; Education; Environment Conservation; Drinking Water Project; Disaster Relief and Rural
Development Programme.

9 The Company considers climate-related matters in estimates and assumptions, where appropriate. This assessment
includes a wide range of possible impacts on the Company due to both physical and transition risks. Even though the
Company believes its business model and products will still be viable after the transition to a low-carbon economy,
climate-related matters increase the uncertainty in estimates and assumptions underpinning several items in the financial
statements. Even though climate-related risks might not currently have a significant impact on measurement, the
Company is closely monitoring relevant changes and developments, such as new climate-related legislation.

10 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. Further, there are no instance of audit trail feature being tampered with. Additionally, the audit trail of relevant
prior years has been preserved by the Company in accordance with statutory record retention requirements to the extent
it was enabled and recorded in those respective years, except that for two applications where the audit trail relating to
direct changes made using privileged/administrative access rights has not been preserved for the period May 2024 to
November 2024.

11 The Board of Directors of the Company at its meeting held on November 01, 2023 approved a Composite Scheme of
Arrangement covering two aspects (1) Amalgamation of five wholly-owned subsidiaries (Sun Pharmaceutical Medicare
Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade
Private Limited and Skisen Labs Private Limited) (collectively “Transferor Companies”) into the Company, and (2)
Reclassification of general reserves to retained earnings with an appointed date of April 01, 2023.

On October 7, 2025, the National Company Law Tribunal approved the above scheme. As a result, the impact of the
scheme for merger of Sun Pharmaceutical Medicare Limited including the tax credit on losses of ^ 1,401.9 Million has
been taken in the standalone I nd AS financial statements in accordance with I nd AS 103 - Business Combinations. The
financial statements for prior year has been restated to reflect the effects of the merger.

The other subsidiaries do not constitute a business under IND AS 103, and are accounted as an asset acquisition. The
Company has acquired a net liability from the said subsidiaries amounting to ^ 7.7 Million and thus the impact on the
financial position of the Company is not material on account of these subsidiaries.

13 No proceeding have been initiated or pending against the Company under the Benami Transactions (Prohibitions) Act,
1988 (45 of 1988) and the Rules made thereunder.

14 The Company has not traded or invested in crypto currency or virtual currency during the financial year.

15 The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either
severally or jointly with any other person. No trade or other receivable are due from directors of the Company either
severally or jointly with any other person.

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

17 The Company has not been sanctioned working capital limits from banks or financial institutions during any point of time
of the year on the basis of security of current assets.

18 The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.

19 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

However, the Company, as a part of its treasury operations, invests/advances loans to fund the operations of its
subsidiaries/associates/ joint venture which have further utilised these funds for their general corporate purposes/
working capital, etc. within the consolidated group of the Company and in the ordinary course of business. These
transactions are done on an arms length basis following a due approval process.

Further, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities
(“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall,
whether, 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 provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.

20 With effe

Disclosures relating to share capital

i Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares and declares and pays dividend In Indian Rupees. The equity shares of the Company, having par value of HI/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company on pro-rata basis. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of each reserve

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

General reserve - The reserve arises on transfer portion on the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

Retained earnings - Retained earnings are created from the profit/loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

The management assessed that cash and cash equivalents, bank balance other than cash and cash equivalents, trade receivables, loans, trade payables, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

There were no transfers between Level 1 and 2 during the years ended March 31, 2025 and March 31, 2024.

CAPITAL MANAGEMENT

The Company''s capital management objectives are:

- to ensure the Company''s ability to continue as a going concern (Refer Note 52a); and

- to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company''s objective for capital management is to maintain an optimum overall financial structure.

FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment, policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment, management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

The Company has unutilised working capital lines from banks and financial institutions of J21,681 Lakhs as on March 31, 2025 (Previous year: H37,800 Lakhs). The Company has also received a financial support letter from its promoter group entity.

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars and Euros). As a result, if the value of the Indian Rupee fluctuates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian Rupees may fluctuate. The exchange rate between the Indian Rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

b) Sensitivity

For the years ended March 31, 2025 and March 31, 2024, every 5% strengthening in the exchange rate between the Indian Rupee and the respective currencies for the above mentioned financial assets / liabilities would decrease the Company''s loss and increase the Company''s equity by approximately H510.47 Lakhs and H614.30 Lakhs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company''s borrowings include loans with floating interest rates linked to the MCLR. The Company is exposed to interest rate risk arising from these borrowings. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

A 50 basis points increase in interest rates would result in an additional interest expense of ^50 lakhs. A 50 basis point decrease in floating interest rate would have led to an equal but opposite effect.

Commodity rate risk

The Company being in the business of Research & Development, does not face any significant Commodity Price Risk.

DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

a) The principal amount remaining unpaid as at March 31, 2025 in respect of enterprises covered under the "Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) is J 93.65 Lakhs (Previous year: H105.78 Lakhs).

b) There are no amounts of interest paid/due/payable during the year/previous year/succeeding year. Also, there is no amount of interest accrued and remaining unpaid at the end of current accounting year/previous accounting year.

c) The list of undertakings covered under MSMED was determined by the Company on the basis of information available with the Company and has been relied upon by auditors.

EMPLOYEE BENEFIT PLANS Defined contribution plan

Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other statutory funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to J414.73 Lakhs (Previous year: H448.73 Lakhs).

Defined benefit plan

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Other long-term benefit plan

Actuarial valuation for compensated absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the statement of profit and loss amounting to H132.58 Lakhs (Previous year: H126.61 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long-term employee benefit plans are actuarially determined as at the year-end using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long-term employee benefit plans are recognised in the statement of profit and loss.

Salary escalation rate

The estimates of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Basis used to determine rate of return on plan assets

The rate of return on plan assets is based on expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligation.

The contribution expected to be made by the Company for gratuity in next financial year ending March 31, 2025 J256.22 Lakhs (Previous year: H165.10 Lakhs).

Contract balance of Trade receivable, Contract assets and Contract liabilities as on April 1, 2023 were H3,271.43 Lakhs, H351.62 Lakhs and H11,764.84 Lakhs respectively.

Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed. The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.

USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company''s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Provisions [Refer Note 21 and 28]

2 Contingent liabilities [Refer Note 44]

3 Financial risk management [Refer Note 38]

4 Revenue [Refer Note 29 and 46]

The Company does not have any transactions and balances with companies which are struck off except shares held by 9 shareholders holding 4,801 shares (Previous year: 9 shareholders holding 4,801 shares) having face value of ^ 1 per share.

Note 49.1 Decrease in current ratio Is due to cash losses in the current year and previous year.

Note 49.2 Decrease in debt equity ratio due to negative net-worth caused by cash losses.

Note 49.3 Debt service coverage ratio / Return on equity ratio / Return on capital employed / Net capital turnover ratio is negative since the Company has incurred losses in the current year and previous year.

Note 49.4 The Company does not have inventory and hence, this ratio is not applicable.

Note 49.5 Increase in trade receivable turnover ratio due to decrease in average receivable from customers.

Note 49.6 Decrease in Return on investment ratio is because the Company has not made any fresh investments in the current year.

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 has not been declared as wilful defaulter.

(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 advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with the understanding, (whether recorded in writing or otherwise) 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.

(vi) The Company has not received any funds 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.

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

(viii) The Company does not have any scheme of arrangements during the year.

BACK UP OF BOOKS OF ACCOUNTS AND AUDIT TRAIL

a) The Company maintains its books of account in electronic mode and these books of accounts are accessible in India at all times. The daily back up were taken on servers physically located in India.

b) 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. Further, there are no instance of audit trail feature being tampered with. Additionally, the audit trail of prior year has been preserved as per the statutory requirements for record retention.

GOING CONCERN

The Company has incurred cash losses in past years and in the current year and the current liabilities of the Company exceeds current assets as on March 31, 2025. The Company is subject to risks common to companies in the pharmaceutical research and development industry, including, but not limited to, risks of failure or unsatisfactory results of nonclinical studies and clinical trials, the need to obtain additional financing to fund the future development of its pipeline, the need to obtain marketing approval for its product candidates, the need to successfully commercialize its product candidates, development by competitors of technological innovations etc.

The Company has received a financial support letter from its Promoter Group Entity to ensure its status as "Going Concern" and the continuance of its operations, as and when required. The Company also plans to monetise some of these assets in the future and is exploring various options, including collaborations, sale etc.

The Company considers climate-related matters in estimates and assumptions, where appropriate. This assessment includes a wide range of possible impacts on the Company due to both physical and transition risks. Even though the Company believes its business model will still be viable after the transition to a low-carbon economy, climate-related matters increase the uncertainty in estimates and assumptions underpinning several items in the financial statements. Even though climate-related risks might not currently have a significant impact on measurement, the Company is closely monitoring relevant changes and developments, such as new climate-related legislation.

The management is continuously evaluating the developments and likely impact of imposition of tariffs by the United States of America and currently believes that there is no material impact on the financial statements.

The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules/Schemes thereunder are notified. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules / Schemes thereunder are notified.

l) Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an overflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flow as a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities and contingent assets-

Contingent liability is disclosed for,

i. Possible obligations which will be confirmed only by future events not wholly within the control of the Company, or

ii. Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are not recognised in the financial statements unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of benefits is probable, contingent assets are disclosed in financial statements.

m) Revenue from operations

Revenue from contracts with customers

Milestone payments and out licensing arrangements

Revenues include amounts derived from product out-licensing agreements. These arrangements typically consist of an initial up-front payment on inception of the license and subsequent payments dependent on achieving certain milestones in accordance with the terms prescribed in the agreement.

Non-refundable up-front license fees received in connection with product out-licensing agreements are recognised at a point in which the Company has no continuing performance obligations. However, in case of continued performance obligations, the Company deferred the non-refundable up-front license fees received in connection with product out-licensing agreements and recognises the same over the period.

Milestone payments which are contingent on achieving certain clinical milestones are recognised as revenues either on achievement of such milestones, if the milestones are considered substantive, or over the period the Company has continuing performance obligations, if the milestones are not considered substantive.

Research and development services

Revenue from services rendered, which primarily relate to research and development, is recognised in the statement of profit and loss as the underlying services are performed.

Royalties

Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement (provided that it is probable that economic benefits will flow to the Company and the amount of revenue can be measured reliably). Royalty arrangements that are based on sales and other measures are recognised by reference to the underlying arrangement.

Interest income

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.

Contract balances Unbilled receivable

During the end of reporting period, unbilled receivable is recognised for the royalty income, milestone payment or Research and development service on satisfaction of revenue recognition criteria mentioned above but the same is not billed to the customers. Upon billing, the amount recognized as unbilled receivable is reclassified to trade receivables.

Trade receivables

A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract liabilities

Advance received from customer

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is received or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.

n) Employee benefits Defined benefit plans

The Company operates a defined benefit gratuity plan which requires contribution to be made to a separately administered fund.

The liability in respect of defined benefit plans is calculated using the projected unit credit method with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds. The currency and term of the government bonds shall be consistent with the currency and estimated term of the post-employment benefit obligations. The current service cost of the defined benefit plan, recognised in the statement of profit and loss as employee benefits expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognised in statement of profit and loss in the period of a plan amendment. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in statement of profit and loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to OCI in the period in which they arise and is reflected immediately in retained earnings and is not reclassified to statement of profit and loss.

Short-term and other long-term employee benefits

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

The Company''s net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value.

Defined contribution plans

The Company''s contributions to defined contribution plans are recognised as an expense as and when the services are received from the employees entitling them to the contributions. The Company does not have any obligation other than the contribution made.

o) Borrowing cost

Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

p) Income tax

Income tax expense consists of current and deferred tax. Income tax expense is recognised in statement of profit and loss except to the extent that it relates to items recognised in OCI or directly in equity, in which case it is recognised in OCI or directly in equity respectively. Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Accruals for uncertain tax positions require management to make judgments of potential exposures. Accruals for uncertain tax positions are measured using either the most likely amount or the expected value amount depending on which method the entity expects to better predict the resolution of the uncertainty. Tax benefits are not recognised unless the management, based upon its interpretation of applicable laws and regulations and the expectation of how the tax authority will resolve the matter, concludes that such benefits will be accepted by the authorities. Once considered probable of not being accepted, management reviews each material tax benefit and reflects the effect of the uncertainty in determining the related taxable amounts.

q) Recent Accounting pronouncements

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

Disclosures relating to share capital

i Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares and declares and pays dividend in Indian Rupees. The equity shares of the Company, having par value of H 1/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company on pro-rata basis. The distribution will be in proportion to the number of equity shares held by the shareholders.

iv On July 08, 2021, the Company had allotted 6,24,74,082 warrants, each convertible into one equity share, on preferential basis at an issue price of H 178 each, upon receipt of 25% of the issue price (i.e. H 44.50 per warrant) as warrant subscription money. Balance 75% of the issue price (i.e. H 133.50 per warrant) was payable within 18 months from the allotment date, at the time of exercising the option to apply for fully paid-up equity share of H 1 each of the Company, against each warrant held by the warrant holder.

During the financial year ended March 31, 2022, the Company upon receipt of balance 75% of the issue price (i.e.H 133.50 per warrant) for 98,31,460 warrants, had allotted equal number of fully paid up equity shares against conversion of said warrants exercised by the warrant holder(s). During the previous financial year, for the remaining 5,26,42,622 warrants, the respective allottees had exercised their option for conversion/exchange the warrants into/for equity shares and accordingly, the Company had allotted equal number of fully paid up equity shares against conversion of said warrants exercised by the warrant holder(s).

v No equity share has been allotted as fully paid up bonus shares and / bought back during the period of five years immediately preceding the date at which the balance sheet is prepared.

Nature and purpose of each reserve

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

General reserve - The reserve arises on transfer portion on the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

Retained earnings - Retained earnings are created from the profit/loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

NOTE 36

FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment, policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment, management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

The Company has unutilised working capital lines from banks and financial institutions of J 37,800 Lakhs as on March 31, 2024 (Previous year : H 42,494.90 Lakhs)

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars and Euros). As a result, if the value of the Indian Rupee fluctuates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian Rupees may fluctuate. The exchange rate between the Indian Rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

b) Sensitivity

For the years ended March 31, 2024 and March 31, 2023, every 5% strengthening in the exchange rate between the Indian Rupee and the respective currencies for the above mentioned financial assets / liabilities would decrease the Company''s loss and increase the Company''s equity by approximately J 614.30 Lakhs and H 383.50 Lakhs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company has no loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company''s exposure to interest rate risk is not significant.

Commodity rate risk

The Company being in the business of Research & Development, does not face any significant Commodity Price Risk.

NOTE 38

DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

a) The principal amount remaining unpaid as at March 31, 2024 in respect of enterprises covered under the "Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) is ? 105.78 Lakhs (Previous year : H 220.54 Lakhs).

b) There are no amounts of interest paid/due/payable during the year/previous year/succeeding year. Also, there is no amount of interest accrued and remaining unpaid at the end of current accounting year/previous accounting year.

c) The list of undertakings covered under MSMED was determined by the Company on the basis of information available with the Company and has been relied upon by auditors.

EMPLOYEE BENEFIT PLANS Defined contribution plan

Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other statutory funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to H 448.73 Lakhs (Previous year : H 418.00 Lakhs).

? In I o h o

Defined benefit plan

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Other long term benefit plan

Actuarial valuation for compensated absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the statement of profit and loss amounting to H 126.61 Lakhs (Previous year : H 279.38 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in the statement of profit and loss.

USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company''s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Provisions [Refer Note 19 and 26]

2 Contingent liabilities [Refer Note 42]

3 Financial risk management [Refer Note 36]

4 Revenue [Refer Note 27 and 44]

NOTE 46

The Company does not have any transactions and balances with companies which are struck off except shares held by 9 shareholders holding 4,801 shares (Previous year : 9 shareholders holding 4,801 shares) having face value of ? 1 per share.

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 has not been declared as wilful defaulter.

(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 advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with the understanding, (whether recorded in writing or otherwise) 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.

(vi) The Company has not received any funds 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.

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

(viii) The Company does not have any scheme of arrangements during the year.

NOTE 49

The Company has incurred cash losses in past years and in the current year. The Company is subject to risks common to companies in the pharmaceutical research and development industry, including, but not limited to, risks of failure or unsatisfactory results of nonclinical studies and clinical trials, the need to obtain additional financing to fund the future development of its pipeline, the need to obtain marketing approval for its product candidates, the need to successfully commercialize its product candidates, development by competitors of technological innovations etc.

Based on the Company''s operating plan, management believes that its current cash, cash equivalents, available-for-sale investments and unutilized credit limits from banks (which are guaranteed by its Promoter Group Entity) and by its promoter group entity will allow the Company to meet its upcoming liquidity requirements and continue to fund work on its existing portfolio of research assets and new research. The Company also plans to monetise some of these assets in the future and is exploring various options, including collaborations, sale etc.

Further, the Company has also received a financial support letter from its Promoter Group Entity to ensure its status as "Going Concern" and the continuance of its operations, as and when required.

NOTE 50a

On March 01, 2023, the Company disclosed an information security incident that impacted some of the Company''s IT assets. The Company promptly took steps to contain and remediate the impact of the information security incident, including employing appropriate containment protocols to mitigate the threat, employing enhanced security measures and utilizing global cyber security experts to ensure the integrity of the Company''s IT systems'' infrastructure and data. As part of the containment measures, the Company proactively isolated its network and initiated recovery procedures. As a result of these measures, certain business operations were also impacted.

The Company has since strengthened its cybersecurity infrastructure and implemented improvements to its cyber and data security systems to safeguard against such risks in the future. The Company is also implementing certain long-term measures to augment its security controls systems across the organization. The Company worked with legal counsel across relevant jurisdictions to notify applicable regulatory and data protection authorities, where considered required, and the Company believes there is no material legal non-compliance by the Company on account of the information security incident. The Company believes that all known impacts on its standalone financial statements on account of this incident have been considered.

The Company considers climate-related matters in estimates and assumptions, where appropriate. This assessment includes a wide range of possible impacts on the Company due to both physical and transition risks. Even though the Company believes its business model will still be viable after the transition to a low-carbon economy, climate-related matters increase the uncertainty in estimates and assumptions underpinning several items in the financial statements. Even though climate-related risks might not currently have a significant impact on measurement, the Company is closely monitoring relevant changes and developments, such as new climate-related legislation.

NOTE 51

a) The Company maintains its books of account in electronic mode and these books of accounts are accessible in India at all times. However, due to the cyber incident (Refer Note 50a) in the previous year, the back-up of books of account was not taken on server physically located in India on a daily basis from April 01, 2023 to June 05, 2023 but were taken on an external device in India. The daily back up from June 06, 2023 to March 31, 2024 were taken on servers physically located in India.

b) 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. However, the Company has internal controls in place for unauthorized changes at database level. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.

NOTE 52

The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules/Schemes thereunder are notified.

As per our report of even date For and on behalf of the Board of Directors of

For S R B C & CO LLP SUN PHARMA ADVANCED RESEARCH COMPANY LIMITED

Chartered Accountants

ICAI Firm Registration No : 324982E/E300003

ANIL RAGHAVAN DILIP S. SHANGHVI

Chief Executive Officer Chairman

Place : New Jersey, U.S.A. DIN: 00005588

Place : Mumbai

per AMIT SINGH CHETAN M. RAJPARA SUDHIR V. VALIA

Partner Chief Financial Officer Director

Membership No. 408869 Place : London, U.K. DIN: 00005561

Place : Mumbai

KAJAL K. DAMANIA

Place : Mumbai Company Secretary

Date : May 24, 2024 Place : Mumbai Date : May 24, 2024

i Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares and declares and pays dividend in Indian Rupees. The equity shares of the Company, having par value of HI/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company on pro-rata basis. The distribution will be in proportion to the number of equity shares held by the shareholders.

iv On July 08, 2021, the Company had allotted 6,24,74,082 warrants, each convertible into one equity share, on preferential basis at an issue price of H178 each, upon receipt of 25% of the issue price (i.e. H44.50 per warrant) as warrant subscription money. Balance 75% of the issue price (i.e. H133.50 per warrant) was payable within 18 months from the allotment date, at the time of exercising the option to apply for fully paid-up equity share of H1 each of the Company, against each warrant held by the warrant holder.

During the previous financial year, the Company upon receipt of balance 75% of the issue price (i.e.H 133.50/- per warrant) for 98,31,460 warrants, had allotted equal no. of fully paid up equity shares against conversion of said warrants exercised by the warrant holder(s). Whereas during the current financial year, for the remaining 5,26,42,622 warrants, the respective allottees have exercised their option for conversion/exchange the warrants into/for equity shares and accordingly, the company has allotted equal no. of fully paid up equity shares against conversion of said warrants exercised by the warrant holder(s).

v No equity share has been allotted as fully paid up bonus shares and / bought back during the period of five years immediately preceding the date at which the balance sheet is prepared.

Nature and purpose of each reserve

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

General reserve - The reserve arises on transfer portion on the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

CAPITAL MANAGEMENT

The Company''s capital management objectives are:

- to ensure the Company''s ability to continue as a going concern; and

- to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company''s objective for capital management is to maintain an optimum overall financial structure.

FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment, policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment, management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business. However, the Company does not have any credit risk from financial assets as on balance sheet date.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

The Company has unutilised working capital lines from banks of J 17,494.90 Lakhs as on March 31, 2023 (Previous year : H 7,500 Lakhs)

The table below provides details regarding the contractual maturities of significant financial liabilities based on the contractual undiscounted payments :

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros). As a result, if the value of the Indian Rupee fluctuates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian Rupees may fluctuate. The exchange rate between the Indian Rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

b) Sensitivity

For the years ended March 31, 2023 and March 31, 2022, every 5% strengthening in the exchange rate between the Indian Rupee and the respective currencies for the above mentioned financial assets / liabilities would decrease the Company''s loss and increase

the Company''s equity by approximately J 383.85 Lakhs and H 200.00 Lakhs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company has no loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company''s exposure to interest rate risk is not significant.

Commodity rate risk

The Company being in the business of Research & Development, does not face any significant Commodity Price Risk.

DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

a) The principal amount remaining unpaid as at March 31, 2023 in respect of enterprises covered under the "Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) is ? 220.54 Lakhs (Previous year : H 5716 Lakhs).

b) There are no amounts of interest paid/due/payable during the year/previous year/succeeding year. Also, there is no amount of interest accrued and remaining unpaid at the end of current accounting year/previous accounting year.

c) The list of undertakings covered under MSMED was determined by the Company on the basis of information available with the Company and has been relied upon by auditors.

iii. For commitments relating to lease arrangement. (Refer Note 39)

iv. There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated 28th February, 2019. As a matter of caution, the Company has made a provision on a prospective basis from the date of the SC order. The Company will update its provision, on receiving further clarity on the subject.

* The Company is committed to pay milestone payments on a contract, however obligation to pay is contingent upon fulfilment of contractual obligation by parties to the contract.

NOTE 43

EMPLOYEE BENEFIT PLANS Defined contribution plan

Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other statutory funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to J 418.00 Lakhs (Previous year : H 38758 Lakhs).

Defined benefit plan

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Other long term benefit plan

Actuarial valuation for compensated absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the statement of profit and loss amounting to J 279.38 Lakhs (Previous year : H 161.63 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit

Salary escalation rate

The estimates of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Basis used to determine rate of return on plan assets

The rate of return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The contribution expected to be made by the Company for gratuity in next financial year ending March 31, 2024 J 300.87 Lakhs (Previous year : H 260.25 Lakhs).

Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed. The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.

The Company has recorded an additional amount of J 5,138.64 Lakhs (Previous year : H 2,760.25 Lakhs) as deferred revenue pursuant to the requirements of Ind AS 115.

NOTE 45

USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company''s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Provisions [Refer Note 19 and 26]

2 Contingent liabilities [Refer Note 42]

3 Financial risk management [Refer Note 36]

Note 47.1 Increase in current ratio is due to increase in investment in mutual funds, certificate of deposits and fixed deposits.

Note 472 Decrease in debt equity ratio is due to repayment of borrowings on receipt of funds on issue equity shares against

conversion of warrants.

Note 473 Debt service coverage ratio/Return on equity/Return on Capital employed is negative since the company has incurred losses in the current year and previous year.

Note 474 The Company does not have inventory and hence, this ratio is not applicable.

Note 475 Increase in trade receivable turnover ratio / net loss ratio is due to higher out-licensing revenue in the current year.

Note 476 Increase in Net capital turnover ratio is due to higher outlicensing revenue and increase in working capital during the

current year.

Note 477 Decrease Return on investment ratio is due to higher investment made towards end of the current year.

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 has not been declared as wilful defaulter.

(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 advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with the understanding, (whether recorded in writing or otherwise) 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.

(vi) The Company has not received any funds 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.

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

(viii) The Company does not have any scheme of arrangements during the year.

The Company had an information security incident (the ''incident'') that impacted some of the IT assets and infrastructure which the Company uses. Necessary steps were taken to gauge, contain and mitigate the impact of the incident as well as to safeguard the integrity of the systems infrastructure which included isolating its network and initiating recovery procedures. The Company believes there is no material legal non-compliance by the Company on account of the incident and all known impacts on its financial statements for the year ended March 31, 2023 on account of this incident have been considered. The Company is strengthening its cybersecurity infrastructure and is in the process of implementing improvements to its cyber and data security systems to safeguard against such risks in the future. The Company is also implementing certain long-term measures to augment its security controls systems across the organisation.

NOTE 50

There have been no events after the reporting date that require disclosure in these financial statements other than disclosed below:

The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules/Schemes thereunder are notified.

NOTE 51

Figures for previous year has been regrouped/reclassified wherever considered necessary.

i Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares and declares and pays dividend in Indian Rupees. The equity shares of the Company, having par value of H 1/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company on pro-rata basis. The distribution will be in proportion to the number of equity shares held by the shareholders.

iv During the year, the Company has allotted 6,24,74,082 warrants, each convertible into one equity share, on preferential basis at an issue price of H 178/- each, upon receipt of 25% of the issue price (i.e. H 44.50 per warrant) as warrant subscription money. Balance 75% of the issue price (i.e. H 133.50 per warrant) shall be payable within 18 months from the allotment date, at the time of exercising the option to apply for fully paid-up equity share of H 1/- each of the Company, against each warrant held by the warrant holder.

During the year, the Company upon receipt of balance 75% of the issue price (i.e.H 133.50/- per warrant) for 98,31,460 warrants, has allotted equal no. of fully paid up equity shares against conversion of said warrants exercised by the warrant holder(s). For the remaining 5,26,42,622 warrants, the respective allottees have not yet exercised their option for conversion/exchange the warrants into/for equity shares and accordingly, balance 75% money towards such remaining warrants is yet to be received. The last day for exercising the option for conversion/exchange the warrants into/for equity shares of the Company is January 07, 2023, being 18 months from the date of allotment of warrants i.e. July 08, 2021.

v No equity share has been allotted as fully paid up bonus shares and / bought back during the period of five years immediately preceding the date at which the balance sheet is prepared.

Nature and purpose of each reserve

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

General reserve - The reserve arises on transfer portion on the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

# The 720% term loan tenor is repayable by way of three equal instalments of H 2,500 lakhs as at March 31, 2022. The loan is secured by Corporate Guarantee given by Shanghvi Finance Private Limited and charge on all existing and future current assets. For the current maturities of long-term loan Refer Note 21 "Borrowings (Current)" .

The Company has availed working capital facilities from Kotak bank on the basis of security of current assets. However, for the year ended March 31, 2022 Company is not required to file quarterly statement with the bank. Further, the Company in the month of January 2022, has availed working capital facilities from ICICI bank on the basis of security of book debts (i.e. trade receivables). The Company has filed the Statement of trade receivables with value of H 2,773.61 lakhs as at March 31, 2022 for the quarter ended March 31, 2022 which is as per books of accounts.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

There were no transfers between Level 1 and 2 during the years ended March 31, 2022 and March 31, 2021.

NOTE 35

CAPITAL MANAGEMENT

The Company''s capital management objectives are:

- to ensure the Company''s ability to continue as a going concern; and

- to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company''s objective for capital management is to maintain an optimum overall financial structure.

FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment, policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment, management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business. However, the Company does not have any credit risk from financial assets as on balance sheet date.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

The Company has unutilised working capital lines from banks of H 7,500 Lakhs as on March 31, 2022 (Previous year : H 6,500 Lakhs)

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros). As a result, if the value of the Indian Rupee fluctuates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian Rupees may fluctuate. The exchange rate between the Indian Rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

b) Sensitivity

For the years ended March 31, 2022 and March 31, 2021, every 5% strengthening in the exchange rate between the Indian Rupee and the respective currencies for the above mentioned financial assets / liabilities would decrease the Company''s loss and increase the Company''s equity by approximately H 206.83 Lakhs and H 376.05 Lakhs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company has no loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company''s exposure to interest rate risk is not significant.

DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

a) The principal amount remaining unpaid as at March 31, 2022 in respect of enterprises covered under the "Micro, Small and Medium Enterprises Development Act, 2006" (MSMED) is H 57.16 Lakhs (Previous year : H 7.30 Lakhs).

b) There are no amounts of interest paid/due/payable during the year/previous year/succeeding year. Also, there is no amount of interest accrued and remaining unpaid at the end of current accounting year/previous accounting year.

c) The list of undertakings covered under MSMED was determined by the Company on the basis of information available with the Company and has been relied upon by auditors.

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Other long term benefit plan

Actuarial valuation for compensated absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the statement of profit and loss amounting to H 161.63 Lakhs (Previous year : H 204.28 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in the statement of profit and loss.

Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed. The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.

The Company has recorded an additional amount of H 2,760.25 Lakhs (Previous year : H NIL ) as deferred revenue pursuant to the requirements of Ind AS 115.

NOTE 45

USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company''s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Provisions [Refer Note 20 and 26]

2 Contingent liabilities [Refer Note 42]

3 Financial risk management [Refer Note 36]

Note 47.1 Increase in current ratio is due to repayment of borrowings during the year.

Note 47.2 Change is on account of issue of convertible warrants and equity shares during the year.

Note 47.3 Debt service coverage ratio/Return on equity/Return on Capital employed is negative since the company has incurred losses in the current year and previous year.

Note 47.4 The Company does not have inventory and hence, this ratio is not applicable.

Note 47.5 Decrease in trade receivable turnover ratio is due to higher out-licensing revenue in the previous year. Note 47.6 Ratio is negative because net working capital is negative.

Note 47.7 Increase in net loss ratio is due to higher out-licensing revenue in the previous year.

NOTE 48

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 has not been declared as wilful defaulter.

(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 advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with the understanding, (whether recorded in writing or otherwise) 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

(vi) The Company has not received any funds 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,

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

(viii) The Company does not have any scheme of arrangements during the year.

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

NOTE 49

The global spread of COVID-19 has been a fluid and challenging situation facing all the industries. The Company has taken all possible effective measures to limit and keep the impact of COVID-19 under control in order to ensure business continuity with minimal disruption. The Company has considered internal and external information while finalizing various estimates in relation to its financial statement captions upto the date of approval by the Board of Directors.

The Company continues to pay close attention to the development of COVID-19, and will further evaluate and actively respond to such impact on the financial position and financial performance of the Company.

NOTE 50

There have been no events after the reporting date that require disclosure in these financial statements other than disclosed below:

The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules/Schemes thereunder are notified.

NOTE 51

Figures for previous year has been regrouped/reclassified wherever considered necessary.

NOTE 34FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s risk management assessment, policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment, management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business. However, the Company does not have any credit risk from financial assets as on balance sheet date.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.

The Company has unutilised working capital lines from banks of R 6,500 Lakhs as on March 31, 2021 (Previous year: R 1,500 Lakhs)

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company’s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros). As a result, if the value of the Indian Rupee fluctuates relative to these foreign currencies, the Company’s revenues and expenses measured in Indian Rupees may fluctuate. The exchange rate between the Indian Rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

b) Sensitivity

For the years ended March 31, 2021 and March 31, 2020, every 5% strengthening in the exchange rate between the Indian Rupee and the respective currencies for the above mentioned financial assets / liabilities would decrease the Company’s loss and increase the Company’s equity by approximately R 376.05 Lakhs and R 706.08 Lakhs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company has no loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company’s exposure to interest rate risk is not significant.

Commodity rate risk

The Company being in the business of Research & Development, does not face any significant Commodity Price Risk.

a) The principal amount remaining unpaid as at March 31, 2021 in respect of enterprises covered under the “Micro, Small and Medium Enterprises Development Act, 2006” (MSMED) is R 7.30 Lakhs (Previous year: R 0.86 Lakhs).

b) There are no amounts of interest paid/due/payable during the year/previous year/succeeding year. Also, there is no amount of interest accrued and remaining unpaid at the end of current accounting year/previous accounting year.

c) The list of undertakings covered under MSMED was determinded by the Company on the basis of information available with the Company and has been relied upon by auditors.

iii. There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated February 28, 2019. As a matter of caution, the Company has made a provision on a prospective basis from the date of the SC order. The Company will update its provision, on receiving further clarity on the subject.

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC’s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member’s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Other long term benefit plan

Actuarial valuation for compensated absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the statement of profit and loss amounting to R 204.28 Lakhs (Previous year: R 279.72 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in the statement of profit and loss.

NOTE 43USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company’s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Provisions [Refer Note 19 and 24]2 Contingent liabilities [Refer Note 40]NOTE 44

The Company has a negative net worth as at March 31, 2021 and the current liabilities exceed current assets. The Board of Directors of the Company, at its meeting held on May 12, 2021 has approved preferential issue of warrants each convertible into one equity shares of the company to raise fund upto of H 1,20,096.96 Lakhs. The Company has also received a financial support letter from its parent company which is valid till time the Company is able to raise funds from external sources.

NOTE 45

The global wide spread of COVID-19 has been a fluid and challenging situation facing all the industries. The Company has taken all possible effective measures to limit and keep the impact of COVID-19 under control in order to ensure business continuity with minimal disruption. The Company has considered internal and external information while finalizing various estimates in relation to its financial statement captions upto the date of approval of the financial statements by the Board of Directors.

The Company will continue to pay close attention to the development of COVID-19, and will further evaluate and actively respond to such impact on the financial position and financial performance of the Company.

NOTE 46

There have been no events after the reporting date that require disclosure in these financial statements other than disclosed below:

The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the subsequent financial statements when the Rules/Schemes thereunder are notified.

NOTE 47

Figures for previous year has been regrouped/reclassified wherever considered necessary.

Terms and condition of transactions with related parties.

The sale of services to related parties are made on terms equivalent to those that prevail in arms length transactions. Outstanding balances at the year end are unsecured and interest free except for borrowing from Shanghvi Finance Private Limited and settlement occurs in cash. There have been no guarantees provided or received for any related parties receivables or payables.

* The Company has an outstanding corporate guarantee from Shanghvi Finance Private Limited amounting to R 20,000 Lakhs (Previous year: NIL) as at March 31, 2021. Refer Note 17.

1. Corporate Information

Sun Pharma Advanced Research Company Limited (“the Company”) is a public limited company incorporated and domiciled in India and has its listing on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Registered office is located at Akota Road, Akota, Vadodara - 390 020. The Company is in the business of research & development of pharmaceutical products.

The financial statements were authorised for issue in accordance with the resolution of the board of directors on May 8, 2018.

Note : There are no trade receivables which are due from directors or other officers of the company either severally or jointly. Trade receivable comprises of receivable due from related parties of Rs.1,692.96. For terms and conditions relating to related party receivables, refer Annexure A of Note 40.

Trade receivables are non-interest bearing and are generally on terms of 30-60 days.

Disclosures relating to Share Capital

i Rights, Preferences and Restrictions attached to Equity Shares

The Company has only one class of share referred to as equity shares having a par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share however voting rights in respect of 1,584 shares which have been transferred by the Company to ‘SPARC Unclaimed Suspense Account’ during the previous year in compliance with the requirements of SEBI (LODR) Regulations, 2015 is under suspension.

The Company declares and pays dividend in Indian Rupees. The final dividend 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 equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

iv During the financial year 2017-2018, company has issued 151,51,515 convertible warrants, each convertible into, or exchangeable for, one equity share of face value of ‘1/- each at a price of Rs.330/- each aggregating to Rs.50,000 Lakhs to certain promoter/Non-promoter Group entities on preferential basis. The company has allotted 40,40,404 fully paid-up equity shares of face value of ‘1/- each of the company on conversion of equivalent number of warrants. The company has not received balance 75% of allotment money for the remaining 11,111,111 warrants as the allottees can exercise option against such warrants upto 18 months from the date of allotment i.e. upto 13 th January 2019 and hence, no equity shares have been issued for remaining warrants.

Nature and purpose of each reserve

Security premium reserve - The amount received in excess of face value of the equity shares in recognised in Security Premium Reserve. This reserve is utilised in accordance with the provisions of the Companies Act, 2013.

General reserve - The reserve arises on transfer portion on the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

Outstanding Bank overdraft carry an average interest rate of MCLR - 6M 3 % p.a. (March 31, 2017 : FDR 2 % p.a., April 1, 2016 : FDR 2 % p.a.)

Outstanding cash credit facility carry an average interest rate of Nil (March 31, 2017 :Nil, April 1, 2016 : base rate 1% p.a.) Outstanding borrowings carry an average interest rate of Nil (March 31, 2017 :Nil, April 1, 2016 : 10.2 % p.a.)

Note : There are no trade payable which are due to directors or other officers of the company either severally or jointly. Trade payable comprises of payable due to related parties of Rs.2,376.58. For terms and conditions relating to related party payable, Refer Annexure A of Note 40

Trade payable are non interest bearing and are generally on terms of 30-90 days.

The management assessed that cash and cash equivalents, trade receivables, loans, trade payables, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

There were no transfers between Level 1 and 2 in the periods.

2 CAPITAL MANAGEMENT

The Company’s capital management objectives are:

- to ensure the Company’s ability to continue as a going concern; and

- to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company’s objective for capital management is to maintain an optimum overall financial structure.

3 FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business. However, the Company does not have any credit risk from above financial assets as on balance sheet date.

Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.

The Company has unutilised working capital lines from banks of Rs.2,989.60 Lakhs as on March 31, 2018, Rs.1,839.60 Lakhs as on March 31, 2017, Rs.1,533.08 Lakhs as on April 01, 2016.

The table below provides details regarding the contractual maturities of significant financial liabilities based on the contractual undiscounted payments :

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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include investments. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.

Foreign exchange risk

The Company’s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros). As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company’s revenues and expenses measured in Indian rupees may decrease or increase and vice-versa. The exchange rate between the Indian rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future.

a) Significant foreign currency risk exposure relating to trade receivables, cash and cash equivalents and trade payables

b) Sensitivity

For the years ended March 31, 2018, March 31, 2017 and April 01, 2016, every 5% strengthening in the exchange rate between the Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would decrease the Company’s loss and increase the Company’s equity by approximately Rs.199.14, Rs.133.69 and Rs.107.45 respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The Company has no loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company’s exposure to interest rate risk is not significant.

Commodity rate risk

The Company being in the business of Research & Development, does not face any significant Commodity Price Risk.

4 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no outstanding dues to Micro Enterprises and Small Enterprises during the year. Hence, there is no additional disclosure required to be made in this regard. This has been relied upon by the auditors.

5 LEASES

The Company has obtained premises for its business operations (including furniture and fittings therein as applicable) under operating lease or leave and license agreements. These are generally cancellable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms. Lease payments are recognised in the Statement of Profit and Loss under “Rent” in Note No. 30.

6 SEGMENT REPORTING

i. Primary Segment

The Company has identified “Pharmaceuticals Research & Development” which as per Ind AS 108 - “operating segment” is considered the only reportable business segment.

The company does not have any customer (other than related parties), which whom revenue from transactions is more than 10% of company’s total revenue.

7 RELATED PARTY DISCLOSURE

Disclosure with respect to Ind AS 24 on “Related Party Disclosures” is as per Annexure - “A” annexed.

8 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

i Contingent Liabilities

Future cash outflows in respect of the above matters are determinable only on receipt of judgements/decisions pending at various forums/authorities. The Company does not expect the outcome of the matters stated above to have material adverse impact on the Company’s financial condition, results of operation or cash flows.

ii Commitments

9 EMPLOYEE BENEFIT PLANS

Defined contribution plan

Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employee’s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs.347.88 Lakhs (Previous year Rs.293.50 Lakhs).

Defined benefit plan

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC’s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member’s length of service and salary at the time of retirement/termination age. Provision for Gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

Other long term benefit plan

Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the Statement of Profit and Loss amounting to Rs.640.59 Lakhs (Previous Year Rs.563.13 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in the Statement of Profit and Loss.

Salary escalation rate

The estimates of future salary increases take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Basis used to determine rate of return on plan assets

The rate of return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The contribution expected to be made by the company for gratuity, during financial year ending March 31, 2019 is Rs.185.68 (Previous year Rs.61.65).

10 FIRST TIME IND AS ADOPTION RECONCILIATION

Explanation to transition to Ind AS

Ind AS 101 -”First-time Adoption of Indian Accounting Standards” requires that all Ind AS and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended March 31, 2018 for the Company, be applied retrospectively and consistently for all financial years presented, except the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as described below. The Company has recognised all assets and liabilities whose recognition is required by Ind AS and has not recognised items of assets or liabilities which are not permitted by Ind AS, reclassified items from previous GAAP to Ind AS as required under Ind AS and applied Ind AS in measurement of recognised assets and liabilities.

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

Derecognition of financial assets and financial liabilities

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.

Classification and measurement of financial assets

The Company has assessed conditions for classification of the financial assets on the basis of the facts and circumstances that were exist on the date of transition to Ind AS.

Determining whether an arrangement contains a lease

The Company has applied Appendix C of Ind AS 17 “Determining whether an Arrangement contains a Lease” to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

Deemed cost of property, plant and equipment and intangible assets

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment and Intangible assets recognised as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment and intangible assets.

Fair value measurement of financial assets and financial liabilities at initial recognition

The Company has applied the requirements in paragraph B10 of Ind AS 101 prospectively to transactions entered into on or after the date of transition to Ind AS. This exemption has been availed by the Company.

Notes on reconciliations between previous GAAP and Ind AS

a) Investment

Under Indian GAAP, the Company recognised current investments in mutual funds at lower of cost or fair value and noncurrent investments at cost less provision for diminution in the value of investments, if any. Under Ind AS, the Company has designated such current investments at fair value through profit or loss (FVTPL).

b) Employee benefits

Under previous GAAP, actuarial gains and losses were recognised in statement of profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods. Actuarial losses of Rs.45.94 as at March 31, 2017 is recognised in OCI.

c) Share issue expenses

Under previous GAAP, expenses incurred in connection with issue of shares is accumulated and amortised over a period of 5 years from the year of issue of shares, where as under Ind AS the transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense.

d) Statement of cash flows

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

11 USE OF ESTIMATES AND JUDGEMENTS

The preparation of the Company’s financial statements requires the 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

1 Useful lives of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation and amortisation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

2 Assets and obligations relating to employee benefits

The employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/ (income) include the discount rate, inflation and mortality assumptions. Any changes in these assumptions will impact upon the carrying amount of employment benefit obligations.

3 Tax expense [Refer Note 6]

The Company’s tax jurisdiction is India. Significant judgements are involved in determining the provision for income taxes, if any, including amount expected to be paid/recovered for uncertain tax positions. Further, significant judgement is exercised to ascertain amount of deferred tax asset (DTA) that could be recognised based on the probability that future taxable profits will be available against which DTA can be utilized and amount of temporary difference in which DTA can not be recognised on want of probable taxable profits.

4 Provisions [Refer Note 2l]

5 Contingencies (Refer Note 41)

12 STANDARDS ISSUED BUT NOT YET EFFECTIVE

Ind AS 115 Revenue from Contracts with Customers

On 28 March 2018, the Ministry of Corporate Affairs (MCA) notified the new revenue recognition standard, viz., Ind AS 115 Revenue from Contracts with Customers. Ind AS 115 is applicable for the financial years beginning on or after 1 April 2018 for all Ind AS companies. The new standard establishes a five step model related to revenue recognition from contracts with customers. It permits either ‘full retrospective’ adoption in which the standard is applied to all of the periods presented or a ‘modified retrospective’ adoption.

The Company is evaluating its various contractual arrangements and the available transition methods. The Company has established an implementation team to implement Ind-AS related to recognition of revenue from customers and is also evaluating the changes that may be necessary to it’s accounting systems and processes. Reliable estimates of the quantitative impact of Ind-AS 115 on the financial statements will only be possible once implementation project has been completed.

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On March 28, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from April 1, 2018. The Company expects the impact of this on the financial statements to be insignificant.

Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

These amendments are effective for annual periods beginning on or after 1 April 2018. These amendments are expected to have insignificant impact on the Company.

1. The timing differences mainly relating to unabsorbed capital expenditure and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per Accounting Standard 22 on "Accounting for Taxes on Income". Deferred tax asset has been recognized in respect of unabsorbed business losses / capital expenditure, to the extent that future taxable income will be available from future reversal of any deferred tax liability recognized at the balance sheet date and is restricted to the extent of such liabilities, which management expects to be available after tax holiday period u/s 80-IB of the Income Tax Act, 1961. As a prudent measure, the excess deferred tax asset (net) of Rs, 7,895.51 Lakhs (Previous Year Rs, 5,524.85 Lakhs) in relation to the above has not been recognized in the financial statements as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

2. The net exchange gain / (loss) included under Revenue from Operations, Other Income, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss aggregates Rs, 179.02 Lakhs (Previous Year (Rs, 17.49 Lakhs)).

3 Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no outstanding dues to Micro Enterprises and Small Enterprises during the year. Hence, there is no additional disclosure required to be made in this regard.

4 As per the best estimate of the management, no provision is required to be made as per Accounting Standard - 29 on "Provisions, Contingent Liabilities and Contingent Assets" in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

5 Disclosure with respect to Accounting Standards-18 on "Related Party Disclosures" is as per Annexure - "A" annexed.

6 Accounting Standard (AS-19) on Leases

i The Company has obtained premises for its business operations (including furniture and fittings therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms.

ii Lease payments are recognized in the Statement of Profit and Loss under "Rent" in Note No. 22

7 Accounting Standard (AS-15) on Employee Benefits

Contributions are made to Government Provident Fund, Family Pension Fund, Employees'' State Insurance Corporation (ESIC) and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognized as an expense in respect of these defined contribution plans, aggregate Rs, 293.50 Lakhs (Previous Year Rs, 224.46 Lakhs) is included in Contribution to Provident and Other funds in Note 20.

In respect of Gratuity, contributions are made to Life Insurance Corporation of India (LIC) Recognized Group Gratuity Fund Scheme based on amount demanded by LIC. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting to Rs, 563.13 Lakhs (Previous Year Rs, 449.44 Lakhs) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ‘Projected Unit Credit'' method. Gains and Losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment''s size, funding requirements and expense.

Category of Plan Assets

The Company''s Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

The estimate of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

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

Accounting Standard (AS-18) “ Related Party Disclosures “

Names of related parties and description of relationship

9. Key Management Personnel

Mr. Dilip S. Shanghvi, Chairman & Managing Director

Mr. Sudhir V. Valia, Director (Director and Chief Financial Officer up to 31st January, 2017)

10. Enterprise under significant Influence of Key Management Personnel (with whom transactions are entered) Sun Pharmaceutical Industries Ltd. Taro Pharmaceuticals Industries Limited

Sun Pharma Laboratories Ltd. Alkaloida Chemical Company ZRT

Sun Pharma Global FZE Ranbaxy (S.A.) (PTY) Ltd.

Sun Pharmaceutical Industries Inc. Insite Vision Inc.

Sun Pharmaceutical Industries Europe Ranbaxy (Thailand) Co. Ltd.

Taro Pharmaceuticals Inc. Sun Farmaceutica Do Brasil Ltda

1 Contingent Liabilities and Commitments (to the extent not provided for)

Rs. in Thousand

As at As at 31st March, 2014 31st March, 2013

i Contingent Liabilities

Guarantees given by the bankers against Advance License Scheme 43,020 52,651

ii Commitments

Estimated amount of contracts remaining to be executed on capital 10,455 1,023 account and not provided for

2 Status of Utilisation of rights issue proceeds:

Given the highly unpredictable nature of the Company''s business of Pharmaceutical Research and Development, the actual utilisation of the funds varies from the projections.

** temporarily invested in Liquid Mutual Funds/Current Account with a Bank/ Inter Corporate Deposits

3 Disclosures relating to Share Capital

i Rights, Preferences and Restrictions attached to Equity Shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 1 per share. Each holder of equity shares is entitled to one vote per share however no shareholder who has not paid call money on his/her shares shall be entitled to vote either personally or by proxy in respect of any of such partly paid shares.

ii During the previous year, the Company had allotted 29,588,056 equity shares of Rs. 1 each, to its equity shareholders on rights basis in the ratio of 1 equity share of Rs. 1 each for every 7 equity shares of Rs. 1 each held, at a premium of Rs. 66 per equity share. On 60,071 (Previous Year 261,504) equity shares, calls has remained unpaid towards equity shares capital @ Rs.0.40 per equity share aggregating to Rs. 24 Thousand (Previous Year Rs. 105 Thousand) reduced from Share Capital in Note 1 above and towards securities premium @ Rs. 26.60 per equity share aggregating to Rs. 1,598 Thousand (Previous Year Rs. 6,956 Thousand).

4 The timing differences mainly relating to unabsorbed capital expenditure and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per Accounting Standard 22 on "Accountingfor Taxes on Income". Deferred tax asset has been recognised in respect of unabsorbed business losses/ capital expenditure, to the extent that future taxable income will be available from future reversal of any deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities, which management expects to be available aftertax holiday period u/s 80-IB of the Income Tax Act, 1961. As a prudent measure, the excess deferred tax asset (net) of Rs. 412,992 Thousand (Previous Year Rs. 495,642 Thousand) in relation to the above has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

5 The net exchange gain / (loss) included under Revenue from Operations, Other Income, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss aggregates Rs. 52,364 Thousand (Previous Year (Rs. 99,494 Thousand)).

6 Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

There is no additional disclosure required to be made in this regard.

7 Accounting Standard (AS-17) on Segment Reporting

i Primary Segment

The Company has identified "Pharmaceuticals Research & Development" as the only primary reportable business segment.

8 As per the best estimate of the management, no provision is required to be made as per Accounting Standard - 29 on "Provisions, Contingent Liabilities and Contingent Assets" in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

9 Disclosure with respect to Accounting Standards-18 on "Related Party Disclosures" is as perAnnexure- "A" annexed.

10 Accounting Standard (AS-19) on Leases

i The Company has obtained premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms.

ii Lease payments are recognised in the Statement of Profit and Loss under "Rent" in Note No. 24

11 Accounting Standard (AS-15) on Employee Benefits

Contributions are made to Government Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognised as an expense in respect of these defined contribution plans, aggregate Rs. 16,571 Thousand (Previous Year Rs. 14,286 Thousand).

In respect of Gratuity, Contributions are made to LIC''s Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting toRs. 21,203 Thousand (Previous Year Rs. 22,075 Thousand) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' method. Gains and Losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets

The Company''s Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

The estimate of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Contribution expected to be made by the Company duringfinancial year end ing31st March, 2015 isRs. 6,897 Thousand (Previous Year Rs. 22,613 Thousand) as per premium intimation received from LIC of India.

12 The managerial remuneration to the extent of Rs. 19,966 Thousand is in excess of the limits approved by the Central Government. In this regard, the Company has made further representations to the Central Government providing the rationale for increase in the remuneration, the response in respect of which is awaited. In case the requisite approval is not received from the Central Government, the excess remuneration paid would be recovered from the Whole-time Director.

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

Accounting Standard (AS-18) " Related Party Disclosures "

Names of related parties and description of relationship

1. Key Management Personnel

Mr. Dilip S. Shanghvi, Chairman & Managing Director

Dr. T. Rajamannar, Wholetime Director (up to 24th April, 2014)

2. Enterprise under significant Influence of Key Management Personnel (with whom transactions are entered)

Sun Pharmaceutical Industries Ltd.

Sun Pharma Laboratories Ltd.

Sun Pharma Global FZE

Sun Pharmaceutical Industries Inc. (Upto 28th February, 2013)

Caraco Pharmaceutical Industries Ltd.

Sun Pharmaceutical Industries (Converted into Part IX Company as Sun Pharma Medication Pvt. Ltd. w.e.f. 31st August, 2012

which amalgamated in Sun Pharma Laboratories Limited w.e.f. 1st September 2012)

Sun Pharma Sikkim (Converted into Part IX Company as Sun Pharma Drugs Pvt. Ltd. w.e.f. 31st August, 2012 which amalgamated in Sun Pharma Laboratories Limited w.e.f. 1st September 2012)

Taro Pharmaceuticals Inc.

1 Contingent Liabilities and Commitments (to the extent not provided for)

Rs. in Thousand

As at As at 31st March, 2013 31st March, 2012

i Contingent Liabilities

Guarantees given by the bankers against Advance License Scheme 52,651 49,900

ii Commitments

Estimated amount of contracts remaining to be executed on capital account 1,023 7,797 and not provided for

2 Disclosures relating to Share Capital

i Rights, Preferences and Restrictions attached to Equity Shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 1 per share. Each holder of equity shares is entitled to one vote per share however, shareholder who has not paid call money on his/her shares shall not be entitled to vote either personally or by proxy in respect of any of such partly paid shares.

ii Equity Shares held by each shareholder holding more than 5 percent Equity Shares in the Company are as follows :

iv During the year, the Company has allotted 29,588,056 equity shares of Rs. 1 each, to its equity shareholders on rights basis in the ratio of 1 equity share of Rs. 1 each for every 7 equity shares of Rs. 1 each held, at a premium of Rs. 66 per equity share. On 261,504 equity shares, calls has remained unpaid towards equity shares capital @ Rs. 0.40 per equity share aggregating to Rs. 105 Thousand reduced from Share Capital in Note 1 above and towards security premium @ Rs. 26.60 per equity share aggregating to Rs. 6,956 Thousand.

3 The timing differences mainly relating to unabsorbed depreciation and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per AS 22 on "Accounting for Taxes on Income". Deferred tax asset has been recognised in respect of unabsorbed business losses / capital expenditure, to the extent that future taxable income will be available from future reversal of any deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities, which management expects to be available after tax holiday period u/s 80-IB of the Income Tax Act, 1961. As a prudent measure, the excess deferred tax asset (net) of Rs. 4,95,642 Thousand (Previous Year Rs. 4,36,838 Thousand) in relation to the above has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

4 The net exchange loss / (gain) included under Revenue from Operations, Other Income, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss aggregates Rs. 99,494 Thousand (Previous Year (Rs. 9,199 Thousand)).

5 Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

There is no additional disclosure required to be made in this regard except for principal amount remaining unpaid of Rs. Nil as on 31st March, 2013 (Previous Year Rs. 57 Thousand).

6 Accounting Standard (AS-17) on Segment Reporting

i Primary Segment

The Company has identified "Pharmaceuticals Research & Development" as the only primary reportable business segment.

ii Secondary Segment (by Geographical Segment)

Consequent to the issue of equity shares, during the year, to its shareholders on rights basis, the Earnings Per Share for the previous year has been restated in accordance with Accounting Standard (AS - 20) on "Earnings Per Share" as notified under the Companies (Accounting Standards) Rules, 2006.

7 As per the best estimate of the management, no provision is required to be made as per Accounting Standard (AS-29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

8 Disclosure with respect to Accounting Standards (AS-18) on related party disclosure, as notified by Companies (Accounting Standard) Rules, 2006, is as per Annexure - "A" annexed.

9 Accounting Standard (AS-19) On Leases

i The Company has obtained premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms.

ii Lease payments are recognised in the Statement of Profit and Loss under "Rent" in Note No. 24

10 Accounting Standard (AS-15) on Employee Benefits

Contributions are made to Government Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognised as an expense in respect of these defined contribution plans, aggregate Rs. 14,286 Thousand (Previous Year Rs. 12,357 Thousand).

In respect of Gratuity, Contributions are made to LIC''s Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting to Rs. 22,075 Thousand (Previous Year Rs. 15,621 Thousand) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' method. Gains and Losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets

The Company''s Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

The estimate of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Contribution expected to be made by the Company during financial year ending 31st March, 2014 is Rs. 22,613 Thousand as per premium intimation received from LIC of India.

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

1 Contingent Liabilities and Commitments (to the extent not provided for)

Rs in Thousand As at As at 31st March, 2012 31st March, 2011

i Contingent Liabilities

Guarantees given by the bankers against Advance License Scheme 49,900 43,686

ii Commitments

Estimated amount of contracts remaining to be executed on 7,797 3,727 capital account and not provided for

2 The accumulated deficit of Rs 12,12,968 Thousand in the Statement of Profit and Loss has exceeded the aggregate of general reserve and paid up equity share capital, resulting in the net worth being negative at Rs 6,66,086 Thousand, as represented by shareholders' funds and also that the Company's current liabilities at Rs 14,50,042 Thousand have exceeded its current assets at Rs 1,82,174 Thousand. However, having regard to: (i) the nature of the Company's business; (ii) status of various projects of the Company some of which are at advanced stage of activity, which if successful could generate adequate cash flows; (iii) the Company having obtained shareholders' approval at their meeting held on 8th August, 2011 for issuing additional equity shares on a rights basis to its existing shareholders for an amount aggregating not in excess of Rs 20,00,000 Thousand, in respect of which the Draft Letter of Offer had been filed with the Securities and Exchange Board of India (SEBI) and SEBI has issued its observation letter to the Company on 25th April, 2012; the Company is in the process offinalising the Letter of Offer and initiating the opening of the Rights Issue; and (iv) in the interim, having procured loans and also received advances against share application money from the promoter group companies, to meet the fund requirements of the Company vis-a-vis the availability of funds with the Company, these financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities.

3 Disclosures relating to Share Capital

i Rights, Preferences and Restrictions attached to Equity Shares

The Company has only one class of shares referred to as equity shares having a par value of Rs 1 per share. Each holder of equity shares is entitled 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 equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

iii Nil (Previous Year 19,22,60,055) Equity Share have been allotted as fully paid up without payment being received in cash duringthe period of five years immediately precedingthe date as at which the Balance Sheet is prepared, to the shareholders of Sun Pharmaceutical Industries Limited pursuant to scheme of demerger.

4 The timing differences mainly relating to unabsorbed depreciation and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per AS 22 on "Accounting for Taxes on Income". Deferred tax asset has been recognised in respect of unabsorbed business losses / capital expenditure, to the extent that future taxable income will be available from future reversal of any deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities, which management expects to be available after tax holiday period u/s 80-IB of the Income Tax Act, 1961. As a prudent measure, the excess deferred tax asset (net) of Rs 4,36,838 Thousand (Previous YearRs 2,09,806 Thousand) in relation to the above has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

5 The net exchange gain included under Revenue from Operations, Other Income and Cost of Materials Consumed in the Statement of Profit and Loss aggregates Rs 9,199 Thousand (Previous YearRs 10,413 Thousand).

6 Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

There is no additional disclosure required to be made in this regard except for principal amount remaining unpaid of Rs 57 Thousand as on 31st March, 2012 (Previous YearRs 34 Thousand).

7 Accounting Standard (AS-17) on Segment Reporting

i Primary Segment

The Company has identified "Pharmaceuticals Research & Development" as the only primary reportable business segment.

8 As per the best estimate of the management, no provision is required to be made as per Accounting Standard (AS-29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

9 Disclosure with respect to Accounting Standards (AS-18) on related party disclosure, as notified by Companies (AccountingStandard) Rules, 2006, is as per Annexure - "A" annexed.

10 Accounting Standard (AS-19) On Operating Leases

i The Company has obtained premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancelable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms.

ii Lease payments are recognised in the Statement of Profit and Loss under "Rent" in Note No. 24

11 Details of Derivatives Instruments and Unhedged Foreign Currency Exposures

i The Company enters into Forward Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

12 Accounting Standard (AS-15) on Employee Benefits

Contributions are made to Government Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion ofthe employee's salary. Amount recognised as an expense in respect of these defined contribution plans, aggregate Rs 12,357 Thousand (Previous YearRs 10,475 Thousand).

In respect of Gratuity, Contributions are made to LIC's Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting to Rs 15,621 Thousand (Previous YearRs 13,984 Thousand) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the 'Projected Unit Credit' method. Gains and Losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets

The Company's Plan Assets in respect of Gratuity are funded through the Group Schemes ofthe Life Insurance Corporation of India.

The estimate of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Contribution expected to be made by the Company during financial year ending 31st March, 2013 is Rs 16,188 Thousand as per premium intimation received from LIC of India.

13 The Revised Schedule VI has been effective from 1st April, 2011forthe presentation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figure have been regrouped/ reclassified wherever necessary to correspond with the current year's classification / disclosure.

1 CONTINGENT LIABILITIES NOT PROVIDED FOR

As at 31st March, 2011 As at 31st March, 2010 Rs. in Thousand Rs. in Thousand

Guarantees given by the bankers (against Margin Money Deposit) 43,686 37,866 on behalf of the Company

The above remuneration is within the overall limits as approved by the shareholders of the Company and by the Central Government. Directors sitting fees of Rs. 1,460 Thousand (Previous Year Rs. 1,720 Thousand) paid to Non-Executive Directors is not included herein above.

No Commission was paid to Directors during the year accordingly, computation of net profits in accordance with Section 309(5) read with Section 349 of the Companies Act, 1956 has not been given.

The remuneration reported above excludes Gratuity and Compensated Absences, since the same is ascertained on an aggregated basis for the Company as a whole by way of actuarial valuation and separate values attributable to Director is not available.

3 The Company is engaged in Pharmaceutical Research & Development in the field of New Chemical Entity ( NCE) and New Drug Delivery System (NDDS). These activities involve uncertainties, high risk & reward, long gestation period and are capital intensive in nature. The Company is registered with the Department of Scientific and Industrial Research (DSIR), Government of India and is an approved commercial Research & Development Company under section 80-IB of the Income Tax Act, 1961. During the previous year, the DSIR had sanctioned a 15 year unsecured soft loan under its Drug and Pharmaceutical Research Programme for a project of the Company. The Company is of the view that barring unforeseen circumstances and based on its existing revenue streams consisting of fees for technology and royalty and considering the fact that some of the projects being undertaken by the Company are at advanced stages of activity, which if successful, could generate adequate cash flows for the Company so as to meet its obligations as they fall due and reduce / wipe off the accumulated losses. No development cost has been capitalised during year.

7 The timing differences mainly relating to unabsorbed depreciation and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per AS-22 - on "Accounting for Taxes on Income". Deferred tax asset has been recognised in respect of unabsorbed business losses / capital expenditure, to the extent that future taxable income will be available from future reversal of any deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities, which management expects to be avaialble after tax holiday period u/s 80-IB of the Income Tax Act, 1961. As a prudent measure, the excess of deferred tax asset (net) of Rs. 210,848 Thousand (Previous Year Rs. 209,572 Thousand) in relation to the above has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

8 The net exchange gain of Rs. 10,413 Thousand (Previous Year Rs. 24,690 Thousand) is included under respective heads of Profit and Loss Account.

9 Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

There is no additional disclosure required to be made in this regard except for principal amount remaining unpaid of Rs. 34 Thousand (Previous Year Rs. Nil) as on 31st March, 2011.

10 During the year, the Company has received the 2nd Installment of Rs. 41,700 Thousand against the loan of Rs. 96,600 Thousand sanctioned by the Department of Science and Technology, Government of India under the "Drug and Pharmaceutical Research Program" (DPRP). The loan is repayable (along with interest) in 10 equal annual installments commencing 1st August, 2012.

13 Other information required under Para 3 and information with regard to matters specified in paragraph 4 of Part II to Schedule VI of the Companies Act, 1956 is stated to the extent applicable to the Company.

14 As per the best estimate of the management, no provision is required to be made as per Accounting Standard (AS-29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

15 Disclosure with respect to Accounting Standard (AS-18) on related party disclosure, as notified by Companies (Accounting Standard) Rules, 2006, is as per Annexure - "A" annexed.

16 ACCOUNTING STANDARD (AS-19) ON OPERATING LEASES

(a) The Company has obtained premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancelable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewable by mutual consent on mutually agreeable terms.

(b) Lease payments are recognised in the Profit and Loss Account under "Rent" in Schedule 15.

17 The company enters into Forward Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

18 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund/ Government Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employees salary. Amount recognised as an expense in respect of these defined contribution plans, aggregate Rs. 10,475 Thousand (Previous Year Rs. 8,721 Thousand).

In respect of Gratuity, Contributions are made to LICs Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting to Rs. 13,984 Thousand (Previous Year Rs. 12,227 Thousand) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ‘Projected Unit Credit method. Gains and Losses on changes in actuarial assumptions are accounted for in the Profit and Loss Account.

Category of Plan Assets

The Companys Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

The estimate of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Contribution expected to be made by the Company during financial year ending 31st March, 2012 is Rs.14,244 Thousand as per premium intimation received from LIC of India.

As, this is the fourth year in which the AS-15 has been applied, the amounts of the present value of the obligation, fair value of plan assets, surplus or deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous three years only has been furnished.

19 Previous years figures are restated / regrouped / rearranged wherever necessary in order to confirm to current years groupings and classifications.

Accounting Standard (AS-18) "Related Party Disclosure" Annexure : A

Names of related parties and description of relationship

1. Key Management Personnel

Mr. Dilip S. Shanghvi, Chairman & Managing Director

Dr. T. Rajamannar, Whole time Director

2. Enterprise under significant Influence of Key Management Personnel (with whom transactions are entered)

Sun Pharmaceutical Industries Ltd.

Sun Pharma Global FZE

Sun Pharmaceutical Industries Inc.

Sun Pharmaceutical Industries

Sun Pharma Sikkim

Sun Petrochemicals Pvt Ltd.

1 CONTINGENT LIABILITIES NOT PROVIDED FOR

As at 31st March 2010 As at 31st March 2009 Rs in Thousand Rs in Thousand

Guarantees given by the bankers (against Margin Money Deposit) on behalf of the Company 37,866 31,189

2 The company is engaged in Pharmaceutical Research & Development in the field of New Chemical Entity ( NCE) and New Drug Delivery System (NDDS). These activities involve uncertainties, high risk & reward, long gestation period and are capital intensive in nature. The Company is registered with the Department of Scientific and Industrial Research (DSIR), Government of India and is an approved commercial Research & Development Company under section 80-IB of the Income Tax Act, 1961. During the year, the DSIR has also sanctioned a 15 year unsecured soft loan under its Drug and Pharmaceutical Research Programme for a project of the Company. The Company is of the view that barring unforeseen circumstances and based on its existing revenue streams consisting of fees for technology and royalty and considering the fact that some of the projects being undertaken by the Company are at advanced stages of activity, which if successful, could generate adequate cash flows for the Company so as meet its obligations as they fall due and reduce / wipe off the accumulated losses. No development cost has been capitalised during year.

3 The timing differences mainly relating to unabsorbed depreciation and carried forward losses under the Income Tax Act, 1961, results in a deferred tax asset as per AS-22 – on “Accounting for Taxes on Income”. Deferred tax asset has been recognised in respect of business losses to the extent that future taxable income will be available from future reversal of any deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities. As a prudent measure, the excess of deferred tax asset (net) of Rs. 209,572 Thousand (Previous Year Rs. 135,384 Thousand) in relation to the above has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

4 The net exchange gain of Rs.24,690 Thousand (Previous Year Rs. 6,963 Thousand) is included under respective heads of Profit and Loss Account.

5 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

6 During the current year, the Department of Science and Technology has sanctioned a loan of Rs. 96,600 Thousand of which the Company has received the first installment of Rs. 21,300 Thousand as at March 31, 2010. The balance 2 installments amounting to Rs. 75,300 Thousand will be received over next two years. The said loan is given to the Company under the “Drug and Pharmaceutical Research Program” (DPRP). The loan is repayable (along with interest ) annually in 10 equal installments commencing August 1, 2012.

7 Other information required under Para 3 and information with regard to matters specified in paragraph 4 of Part II to Schedule VI of the Companies Act, 1956 is stated to the extent applicable to the Company.

8 As per the best estimate of the management, no provision is required to be made as per Accounting Standards (AS- 29) as notified by Companies (Accounting Standard) Rules, 2006 in respect of any present obligation as a result of a past event that could lead to probable outflow of resources, which would be required to settle the obligation.

9 Disclosure with respect to Accounting Standards (AS-18) on related party disclosure, as notified by Companies (Accounting Standard) Rules, 2006, is as per Annexure - “A” annexed.

10 ACCOUNTING STANDARD (AS-19) ON OPERATING LEASES

(a) The company has obtained premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancelable and range between 11 months to 5 years under leave and license, or longer for the lease and are renewal by mutual consent on mutually agreeable terms.

(b) Lease payments are recognised in the Profit and Loss Account under “Rent” in Schedule 14.

11 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund/ Government Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee’s salary. Amount recognised as an expense in respect of these defined contribution plans, aggregate to Rs. 8,721 Thousand (Previous Year Rs 7,066 Thousand).

Contributions made to LIC of India’s Recognised Group Gratuity Fund scheme in respect of gratuity is in excess by Rs. Nil (Previous Year Rs. 675 Thousand) as compared to the actuarial valuation obtained from independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules amounting to Rs. 12,227 Thousand (Previous Year Rs. 10,417 Thousand) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and Losses on changes in actuarial determination are accounted for in the Profit and Loss Account.

12 Previous years’ figures are restated / regrouped / rearranged wherever necessary in order to confirm to current years’ groupings and classifications.

Accounting Standard (AS-18) “ Related Party Disclosure “ Annexure : ‘A’

Names of related parties and description of relationship

1. Key Management Personnel

Mr. Dilip S Shanghvi, Chairman & Managing Director Dr. T. Rajamannar, Whole time Director Mr. Sudhir V. Valia, Director

2. Enterprise under significant Influence of Key Management Personnel

Sun Pharma Global Inc. BVI. Sun Pharmaceutical Industries Ltd.

Sun Pharma Global FZE Universal Enterprises Pvt. Ltd.

Sun Pharmaceutical (Bangladesh) Ltd. Sun Petrochemicals Pvt Ltd.

Sun Pharma De Mexico SA DE C.V. Shantilal Shanghvi Foundation

SPIL De Mexico SA DE C.V. Sun Speciality Chemicals Pvt Ltd.

Sun Farmaceutica Ltda – Brazil Navjivan Rasayan (Gujarat) Pvt Ltd.

Sun Pharmaceutical Industries Inc. Sun Pharma Exports

Sun Pharmaceuticals UK Ltd Sun Pharmaceutical Industries

ALKALOIDA Chemical Company ZRT Sun Pharma Sikkim

(Formerly known as ALKALOIDA Chemical Company Exclusive Group Limited) Aditya Acquisition Company Ltd.

Caraco Pharmaceutical Laboratories Ltd. Aditya Thermal Energy Pvt. Ltd.

Caraco Pharma Inc. Sun Fastfin Services Pvt. Ltd.

Zao “Sun Pharma Industries Limited” Alfa Infraprop Pvt. Ltd.

Sun Pharmaceutical Peru S.A.C. SPARC Bio-Research Pvt. Ltd.

OOO “Sun Pharmaceutical Industries” Ltd.

Sun Pharmaceutical Industries (Australia) PTY. Ltds.

Sun Pharmaceuticals France

Sun Pharmaceuticals Germany GmbH

Sun Pharmaceuticals Italia S.R.L.

Sun Pharmaceutical Industries (Europe) B.V.

Sun Pharmaceutical Spain, SL.

Sun Pharmaceuticals (SA) (Pty) Ltd-South Africa

Sun Development Corporation

Chattem Chemical Inc.

TKS Farmaceutica Ltda.

Sun Global Canada Pty. Ltd.

In compliance with Clause 49 of the Listing Agreement with Stock Exchanges, the Company submits the report on the matters mentioned in the said Clause and lists the practices followed by the Company.