Impairment testing of goodwill

The carrying amount of Goodwill of H 1,082.42 Lakh (March 31, 2022: H 1,082.42 Lakh) acquired pursuant to Business Transfer Agreement to Biscuit Business Unit (CGU) for impairment testing.

The Company performs annual impairment test for carrying value of goodwill. The Company considers the relationship between its market capitalisation based on other comparable companies and its book value, among other factors, when reviewing for indicators of impairment.

The recoverable amount of the Biscuit Business Unit (CGU) has been determined based on a value in use calculation using cash flow projections from financial projections approved by senior management of the Company, which are part of overall business plan covering a five-year period. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 21.72% and cash flows beyond the five-year period are extrapolated using a 3.00% growth rate which is consistent with the industry forecasts. As a result of the analysis, management did not identify any impairment for this CGU and accordingly, there is no need for impairment of goodwill.

The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.

Key assumptions used for value in use calculations:

The calculation of value in use for the CGU is most sensitive to the following assumptions:

EBITDA margins: EBITDA margins are estimated based on the trend of actual EBITDA of Biscuit Business Unit for past 1 year preceding the beginning of the budget period.

Discount Rate: Discount rates represent the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Company’s investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service. CGU specific risk is incorporated by applying individual beta factor. The beta factor is evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

Growth rates used to extrapolate cash flows beyond the forecast period

The Company has considered growth rate of 3.00% to extrapolate cash flows beyond the forecast period which is in line with the industry forecasts.

Note: The Company has entered into an agreement on December 5, 2016 to sale 18.1890 acres land situated at Taluka Alibagh, District Raigad for consideration of H 345.77 Lakh. As per the terms of the agreement, the Company is required to bear the conversion expenses upto H 3.75 Lakh per acre and also carry out certain improvements over the said land which shall be reimbursed by the purchaser. The Company has received part of the consideration by way of advance payment. The Company has also entered into contract for the purpose of undertaking the improvements agreed upon and paid an advance to the contractor. The Corporate Insolvency Resolution Process [‘CIRP’] was initiated in respect of Company under the provisions of the IBC by an order of the Hon’ble National Company Law Tribunal, Mumbai dated December 8, 2017 delivered on December 15, 2017 and a moratorium as per Section 14 of the Code was declared. The Resolution Plan was approved by the Hon’ble National Company Law Tribunal, Mumbai and a moratorium was in effect till September 6, 2019. The Collector of Alibagh has sent notices to the Company regarding the condition of not putting the land situated at Taluka Alibagh for industrial use in 15 years period. The company has filed an appeal in the case with the Hon’ble Supreme Court of India seeking to quash the notices issued during moratorium. The Hon’ble Supreme Court vide its order dated November 29, 2022 ordered the Company to purse its defences and remedies in accordance with law in respect of the said notices with the Collector of Alibagh. The Company continues to disclose the land and the advances paid for improvement of land and classify it as assets held for sale [Refer Note 10] and the amount of advance received form the buyer has been classified as Liabilities directly associated with assets classified as held for sale [Refer Note 20], till the final outcome of the said notices issued by the Collector, Alibagh. The Collector of Alibagh has not taken any action on the said notices till date.

(e) Rights, Preferences and Restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of H 2 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(f) For reconciliation of number of shares outstanding at the beginning and at the end of the year - [Refer Note (a) of SOCIE.]

(g) 76,301 Equity shares of the Company are held by Ruchi Soya Industries Limited Beneficiary Trust for the benefit of the Company and its successor. The investment Cost of acquisition of these treasury shares have been netted of from the Equity Share Capital and Securities premium account as per the provisions of Ind AS. The Dividend of earlier period received by the Trust in respect of these shares is included under the head ‘Dividend’ under ‘Other Income’.

(h) During the year ended March 31, 2020, in consideration for the amalgamation of the Patanjali Consortium Adhigrahan Private Limited, the Company has issued: -

1 (one) equity shares of face value of H 2 for every 1 (one) equity share of face value of H 7 of SPV, aggregating 29,25,00,000 equity shares of H 5,850.00 Lakh are issued.

1 (one) 0.0001% cumulative redeemable preference share of face value of H 100 each for every 1 (one) 0.0001% cumulative redeemable preference share of face value of H 100 each of the SPV, aggregating 4,50,00,000 preference share of H 45,000.00 Lakh are issued.

1 (one) 9% cumulative non-convertible debenture of face value of H 10,00,000 for every 1 (one) 9% cumulative non-convertible debenture of face value of H 10,00,000 each of SPV, aggregating 4,500 debentures of H 45,000.00 Lakh are issued.

(i) In terms of regulation 38 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a listed entity is mandatorily required to comply with the minimum public shareholding (“MPS”) requirements as specified in rule 19(2) and rule 19A of the Securities Contracts (Regulation) Rules, 1957 (“SCR Rules”). In this regard, rule 19A(5) of SCR Rules inter alia provides that where as a result of implementation of the resolution plan approved under section 31 of Insolvency and bankruptcy Code, 2016, public shareholding in a listed company falls below twenty-five percent then such company shall bring the public shareholding to twenty-five per cent within a maximum period of three years from the date of such shortfall and if the public shareholding falls below ten percent then the same shall be increased to at least ten percent, within a maximum period of twelve months (earlier “eighteen months” time-period was there when the Company was preparing to come up with further public offer so as to increase the public shareholding and the said time line “eighteen months” was substituted with “twelve months” w.e.f. 18.06.2021) from the date of such shortfall. However, the Company could achieve public shareholding to the extent of 19.18% only on completion of further public offering during the year 2022-23.

(j) In terms of SEBI circular no. CFD/CMD/CIR/P/ 2017/115 dated October 10, 2017, shareholding of promoters and promoter group in the Company has been freezed for non-compliance with minimum public shareholding requirements as per Regulation 38 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957, as amended (“MPS”).

(iii) General Reserve

The same is Created out of Surplus profits transferred as per the provisions of the Act, it is utilised as per provisions of the Act.

(iv) Capital Reserve

Capital Reserve amounting to H 15,662.53 Lakh was created on :

(a) amalgamation with Palm tech India Ltd by H 1,087.07 Lakh, and

(b) On 3,53,25,000 share warrants issued in an earlier year on preferential basis by H 2,241.69 Lakh. Holders of 64,00,000 warrants exercised the option and were allotted equity shares. Holders of balance 2,89,25,000 warrants did not exercise their option which was lapsed, on expiry on 18 months from the date of issue of warrants. Consequently, the amount of H 2,241.69 Lakh paid by these warrant holders were forfeited and transferred to capital reserve.

(c) ? 12,333.78 Lakh arising pursuant to amalgamation of Patanjali Consortium Adhigrahan Private Limited, a special purpose vehicle with and into the Company.

(d) ? 3,646.68 Lakh arising pursuant to slump purchase of Food Division of Patanjali Ayurved Limited as per BTA.

(v) Retained Earnings

The same is created out of profits over the years and shall be utilised as per the provisions of the Act.

(vi) Equity Instruments through Other Comprehensive Income

The company has elected to recognise changes in fair value of certain class of investments in other comprehensive income. These

fair value changes are accumulated within this reserve and shall be adjusted on derecognition of investment.

E. Interest rates on above term loans from 6.95% to 10.60% p.a.

F (i) Preference Share: 4,50,00,000 Nos. 0.0001% Non-Convertible Redeemable Cumulative Preference Share of H 100/- each were issued to the Patanjali Ayurved Limited in accordance with the Resolution Plan as approved by the Hon’ble NCLT Mumbai. The same are repayable on December 16, 2031. Out of these, 2,70,77,460 Nos. amounting to H 27,077.46 Lakh have been early reedemed out of further public issue proceeds.

D. Term loans referred to in (a) above and current maturities of long term borrowings referred in Note 17 (a)

H Nil (Previous year H 2,26,200.00/- Lakh) [including current maturities of H Nil (Previous year H 17,424.00/- Lakh)] are secured by way of first pari passu charge on all immovable and movable non current assets, present and future, of the Company. First pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Second pari passu charge over all current assets (both present & future). Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantees of the Directors of Patanjali Ayurved Limited.

Term Loans are repayable in door to door 9.5 years from the date of first disbursement. In case, repayable is not completed within door to door 9.5 years, the promoter will infuse additional resources to liquidate the term loans. The term loans agreement, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents. These term loans were prepaid fully out of further public issue proceeds.

D (i) Working Capital Loans loan are secured by first pari passu hypothecation charge over all current assets (both present & future) of the Company including Raw Materials, Stock in Process, Finished Goods, Receivables, Book Debts, and Other Current Assets wherever stored or in transit.

(ii) Working Capital Loans and Buyers Credit are repayable on demand.

(iii) The Bank have the right to convert the debt into equity in conformity with RBI guidelines including Circular DBR.No.BP.BC. 45/21.04.048/2018-19 dated June 7, 2019 on Resolution of Stressed Assets as may be amended or modified or supplemented from time to time.

(iv) Carrying interest at SOFR Spread and repayable between April 2023 to June 2023.

E (i) Working Capital Loans and Short term loan are secured by first pari passu charge over all current assets (both present & future) of the Company. Second pari passu charge on all immovable and movable non current assets, present and future. Second pari passu charge over all the rights, titles, interest, benefits, claims and demand whatsoever, present or future. First pari passu charge on intangibles, goodwill, uncalled capital, present and future. Pledge of 100% of fully paid up equity shares of the Company held by the promoters, on a pari passu basis, to lenders. Assignment of all rights of RSIL in and under the Take or Pay Agreement between Patanjali Ayurved Limited and RSIL. Letter of comfort backed by board resolution issued by Patanjali Ayurved Limited, Patanjali Parivahan Pvt Ltd, Yogakshem Sansthan and Patanjali Gramudyog Nayas, and Personal Guarantee of the Directors of Patanjali Ayurved Limited.

(ii) Working Capital Loans are repayable on demand and Short term loan to repayable in 12 months. In case, repayable is not completed within 12 months, the promoter will infuse additional resources to liquidate the short term loan.

(iii) The above short term loans and working capital loan, inter-alia, include an option to convert the outstanding amounts into equity shares of the Company in the event of default under the Facility Agreements or any other finance documents.

(iv) Represents amount due under factoring services on TReDS platform for MSME’s as per RBI guidelines.

(I) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.

(II) Includes H 10,064.58 Lakh payable to DBS Bank Limited and H 2,918.47 Lakh payable to ICICI Bank Limited pursuant to on-going case at Hon’ble Supreme Court

which are mentioned below.

DBS Bank: DBS Bank. had filed an application before Hon’ble National Company Law Tribunal, Mumbai (“NCLT”) seeking a prayer to set-aside the decision of Committee of Creditors of the Company to the extent of the distribution of proceeds of the Resolution Plan and to restrain the Resolution Applicant from distributing the proceeds of the Resolution Plan. NCLT ordered against DBS Bank by dismissing the application. NCLT order was challenged before the Hon’ble National Company Law Appellate Tribunal (“NCLAT”) and NCLAT dismissed the appeal. NCLAT order has now been challenged before Supreme Court by DBS Bank. Since, there was no stay or order against the distribution of proceeds of Resolution Plan, the proceeds have been distributed in terms of Escrow Agreement and the Resolution Plan has been successfully implemented. There is no further liability of the Company or the Resolution Applicant towards DBS Bank.

ICICI Bank: The erstwhile Resolution Professional, Mr. Shailendra Ajmera, had filed an application before Hon’ble National Company Law Tribunal, Mumbai

(“NCLT”) seeking a prayer to reverse the preferential transactions undertaken by ICICI Bank Limited. NCLT vide its order dated March 12, 2019 directed ICICI

Bank Limited to reverse the said transactions and deposit in the bank account of the Company, the amount withdrawn in such preferential transactions. ICICI Bank Limited had subsequently challenged the order of NCLT before National Company Law Appellate Tribunal (“NCLAT”). NCLAT passed the order in favour of ICICI Bank Limited by setting aside the order of NCLT. NCLAT order has now been challenged by the erstwhile Resolution Professional before Supreme Court which is still pending. The Company had filed an application before the Supreme Court seeking substitution of Resolution Professional of the Company with Ruchi Soya Industries Limited since the corporate insolvency resolution process has been completed. The said application has been allowed by the Supreme Court and RSIL is now the Appellant.

Liability against CIRP Payables is amount payable to financial and operational creditors is kept in separate escrow accounts. As per escrow agreement any amount unpaid in this Account is deemed to be utilised and the Company has no right, title and claim on the same.

(iii) Pursuant to the Resolution Plan, liabilities related to foreign financial and operational creditors are partially/fully extinguished. In respect of write back pertaining to foreign creditors, advances and loans process of obtaining approval from Reserve Bank of India (RBI) are still in process.

(iv) Other financial liabilities includes (a) Agency & other deposits H 5.00 Lakh [Previous year H 5.00 Lakh] (b) Creditors for capital expenditure H 5.42 Lakh [Previous year H 75.66 Lakh] (c) Retention money payable H 0.38 Lakh [Previous year H 0.30 Lakh] (d) Others H NIL [Previous year H 0.05 Lakh] due to Related parties. [Refer Note 36]

A. Defined Contribution Plans:

The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the specified rate as per regulations. The contributions are made to registered provident fund administered by the Government of India. The obligation of the Company is limited to the amount contributed and it Company has no further contractual, or any constructive obligation. The Company has recognised H 1,450.51 Lakh [Previous Year H 983.51 Lakh] towards contribution to Provident Fund and H 76.19 Lakh [Previous Year H 45.00 Lakh] towards Employee State Insurance in Profit and Loss account.

B. Defined Benefit Plan:

a) Gratuity

Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination/resignation is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number completed years of service. The gratuity plan is a funded plan and Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

b) Leave Obligations

The leave obligations cover the Company’s liability for casual, sick & earned leave. The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at balance sheet date:

The discount rate is based on the prevailing market yields of Government Securities (G. Sec.) as at the Balance Sheet date for the estimated term of the obligations.

Estimates of future salary increases have been done on the basis of current salary suitably projected for future, beginning one year after the valuation date, the period is validated based on the available information as to the salary revision date other than the date one year after the valuation date, taking into consideration the general trend in inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Gratuity is a defined benefit plan and entity is exposed to the Following Risks:

Interest rate risk: A fall in the discount rate which is linked to the G. Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

C As per approved resolution plan, the contingent liabilities and commitments, claims and obligations, stand extinguished and accordingly no outflow of economic benefits is expected in respect thereof. The Resolution plan, among other matters provide that upon the approval of this Resolution Plan by the National Company Law Tribunal (NCLT) and settlement and receipt of the payment towards the IRP Costs and by the creditors in terms of this plan, all the liabilities demands, damages, penalties, loss, claims of any nature whatsoever (whether admitted/verified/submitted/rejected or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, disputed or undisputed, present or future) including any liabilities, losses, penalties or damages arising out of non-compliances, to which the Company is or may be subject to and which pertains to the period on or before the Effective Date (i.e. September 6, 2019) and are remaining as on that date shall stand extinguished, abated and settled in perpetuity without any further act or deed. The Resolution plan further provides that implementation of resolution plan will not affect the rights of the Company to recover any amount due to the Company and there shall be no set off of any such amount recoverable by the Company against any liability discharged or extinguished.

Note - 32

On divestment of shares of Gemini Edibles and Oil Pvt. Ltd. in an earlier year, pursuant to the Share Purchase Agreement, the Company paid an amount of H 2,836.52 Lakh to the said Company by way of deposit which is refundable on receipt of various incentives by the said Company from Government authorities. Of the total amount paid, the Company has received refund of H 2,320.81 Lakh till March 31, 2023. Subsequent to year end March 31, 2023, the Company has received refund of H 364.22 Lakh and balance amount of H 151.48 Lakh has been written off in the statement of profit and loss account.

Note - 33

Ruchi J-Oil Private Limited (“Ruchi J-Oil”) is under liquidation, financial statements after March 31, 2019 are not available of “Ruchi J-Oil” and management of the Company expects to recover the carrying amount of investment, therefore in view of the management no consolidated financial statements are required to be prepared and presented.

Note - 34 Segment Reporting A. General Information

(a) Factors used to identify the entity’s reportable segments, including the basis of organisation

Based on the criterion as mentioned in Ind-As-108-”Operating Segment”, the Company has identified its reportable segments, as follows:

• Segment-1 Edible Oils #

• Segment-2 Food & FMCG #

• Segment-3 Wind Power Generation

Unallocable - All the segments other than segments identified above are collectively included in this segment.

The Chief Operating Decision Maker (“CODM”) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and gross profit as the performance indicator for all of the operating segments.

During the year ended March 31, 2023, the NCLT vide order June 27, 2022 quashed reassessment proceedings initiated vide notices u/s 148 for assessment years 2013-14, 2015-16 and 2016-17. Thereafter, inspite of NCLT order, the Income Tax Officer, completed the reassessment proceedings and demands aggregating to H 9,289.22 lakh have been raised on the Company . Further, during the year, for assessment year 2013-14 penalty has also been levied u/s 271(1)(c) of the IT Act consequent to the reassessment order passed wherein a demand of H 1,476.88 lakh have been raised on the Company. Accordingly, reassessment orders raising demand for assessment year 2015-16 & 2016-17 & penalty order for assessment year 2013-14 have been challenged by the Company before the NCLT and the same is pending as on date.

Further, for the year ended March 31, 2022, income tax assessments for Assessment Years 2017-18, 2018-19 and 2019-20 have been completed and demands aggregating to H 2,82,706.93 lakh had been raised on the Company. Accordingly, these demands had been challenged by the Company before NCLT and same has been quashed by NCLT vide order dated 11.04.2022. Post receiving the NCLT order the company has also applied for order giving effect to NCLT order before the Income Tax Officer. Further, in respect of demand of H 2,77,173.66 lakh pertaining to assessment year 2018-19 the Company as a prudent measure have also applied for rectification of errors apparent from records. It is understood that the Income Tax Department has preferred an appeal against the said orders of NCLT with High Court of Bombay and the same are pending as on date.

The above demands, penalties pertain to the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by the Hon’ble National Company Law Tribunal, Mumbai (“NCLT”). As per the orders dated September 4, 2019 of the Hon’ble NCLT, Mumbai, “ .... However, it is to be made clear that while approving the resolution plan, we have dealt with every aspect of the resolution plan in details and all the claims which have been admitted during CIRP are being dealt with by us in terms of the resolution plan. Anyone who has not filed its claim then he will not have any right to agitate the same after the approval of the resolution plan.” In respect of above demands, no claims were submitted by the Income Tax Department during the corporate insolvency resolution process.

In view of above, the Company does not expect any liability on account of above demands.

Note - 39

The shareholders of the Company approved a preferential issue of 1,86,70,213 Equity Shares at a price of H 7 per share to Ashav Advisory LLP (“AAL”) in February 2020, subject to receipt of necessary approvals ( including stock exchanges and the lenders of Company ). The Company did not received final approvals in this regard from the Stock Exchanges, Lenders and Securities Exchange Board of India (“SEBI”). Aggrieved by this, AAL filed an appeal before the Ho’ble Securities Appellate Tribunal at Mumbai (“SAT”) which has been dismissed by the SAT. AAL challenged the SAT order in Hon’ble Supreme Court of India. The matter is currently pending.

B. Fair Valuation Techniques used to determine Fair Value

The Company maintains procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions were used to estimate the fair values:

(i) Fair value of trade receivable, cash and cash equivalents, other bank balances, current borrowings, trade payables, other current financial assets and other current financial liabilities are approximate at their carrying amounts largely due to the short-term maturities of these instruments.

(ii) The fair values of non-current borrowings are approximate at their carrying amount due to interest bearing features of these instruments.

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

(iv) Fair values of quoted financial instruments are derived from quoted market prices in active markets.

(v) Fair value of forward contract are derived on the basis of mark-to-market as provided by the respective bank.

(vi) Fair value of open purchase and sale contracts is based on commodity prices listed on NCDEX stock exchange and prices available on Solvent Extractor’s association (SEA) along with quotations from brokers and adjustments made for grade and location of commodity and in case of Commodity futures it is based on commodity prices listed on MCX/NCDEX/ACE stock exchange.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows :

Level 1: Quoted prices / published NAV (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published by mutual fund operators at the balance sheet date.

Level 2: Inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on the Company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Note - 41 Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Market risk

(a) Currency risk;

(b) Interest rate risk;

(c) Commodity Risk;

(d) Equity Risk;

(ii) Credit risk ; and

(iii) Liquidity risk ;

Risk management framework

The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s primary risk management focus is to minimise potential adverse effects of risks on its financial performance. 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 and management of these policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors and the Audit Committee are responsible for overseeing these policies and processes.

Market risk is the risk of changes in the market prices on account of foreign exchange rates, interest rates and Commodity prices, which shall affect the Company’s income or the value of its holdings of its financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the returns.

(a) Currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction has more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar and Euro, against the respective functional currencies (INR) of Patanjali Foods Limited (Formerly known as Ruchi Soya Industries Limited).

The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange. The Company does not use derivative financial instruments for trading or speculative purposes.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to market risk for changes in interest rates relates to borrowings from banks and others.

For details of the Company’s short-term and long term loans and borrowings, Refer Note 13(a), 13(c) and 17(a) of these financial statements.

Interest rate sensitivity - fixed rate instruments

The Company’s fixed rate borrowings Preference Shares issued to Patanjali Ayurved Limited @ 0.0001% and Debentures issued to Patanjali Ayurved Limited @ 9% and Investments into Preference Shares of GHI Energy Private Limited @ 6% are carried at fair value. Interest rate gets fixed in respect of short term borrowing at the time of availment, hence there is no interest rate risk associated with such borrowing. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.

Interest rate sensitivity - variable rate instruments

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by amounts shown below. This analysis assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date.

(c) Commodity risk

The prices of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as demand and supply, import and exports, weather, government policies, changes in global demand resulting from population growth and changes in standards of living and global production of similar and competitive crops. During its ordinary course of business, the value of the Company’s open sales and purchases commitments and inventory of raw material changes continuously in line with movements in the prices of the underlying commodities. To the extent that its open sales and purchases commitments do not match at the end of each business day, the Company is subjected to price fluctuations in the commodities market.

While the company is exposed to fluctuations in agricultural commodities prices, its policy is to minimise its risks arising from such fluctuations by hedging its purchases either through direct sale of similar commodity or through futures contracts on the commodity exchanges.

In the course of hedging its purchases either through direct sale or through futures contracts, the company may also be exposed to the inherent risk associated with trading activities conducted by its personnel. Commodities price risk is the financial risk which effects company performance and company strategically manages it, by judicious usage of short term and long-term price contracts, hedging through derivatives product on various commodity exchanges. The company has in place a robust, well-designed risk management policy and governance framework to effectively safeguard its interest from price volatility and minimise risk exposure.

To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2023 is Crude Palm Oil 44,450.00

MT and Soya Degum Oil 4,082.40 MT.

To hedge commodity related risk, the open outstanding position of forward/future as on March 31, 2022 is Nil.

Equity Price Risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Company’s investments in Fair value through Other Comprehensive Income securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of equity securities as of March 31, 2023, was H 2,371.58 Lakh [Previous Year 2,766.97 Lakh]. A Sensex standard deviation of 5% [Previous Year 7%] would result in change in equity prices of securities held as of March 31, 2023 by H 118.58 Lakh. [Previous Year H 193.69 Lakh]

(ii) 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 customer. The Company establishes an allowance for doubtful debts, impairment and expected credit loss that represents its estimate on expected credit loss model.

A. Trade receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Expected credit loss assessment for customers as at March 31, 2023 and March 31, 2022

Exposures to customers outstanding at the end of each reporting year are reviewed by the Company to determine expected credit losses. Impaired amounts are based on lifetime expected losses based on the best estimate of the management. The impairment loss related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has been taking measures to ensure that the Company’s cash flow from business borrowing is sufficient to meet the cash requirements for the Company’s operations. The Company managing its liquidity needs by monitoring forecasted cash inflows and outflows in day to day business. Liquidity needs are monitored on various time bands, on a day to day and week to week basis, as well as on the basis of a rolling 30 day projections. Net cash requirements are compared to available working capital facilities in order to determine headroom or any short falls. Presently company’s objective is to maintain sufficient cash to meet its operational liquidity requirements.

Note - 42A. Capital Management

For the purpose of Company’s capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company’s capital management is to maximise shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

The Company monitors capital using gearing ratio, which is net debt divided by total equity. Net debt are non-current and current debts (including preference shares liabilities) as reduced by cash and cash equivalents. Equity comprises all components including other comprehensive income.

B. Cash and cash equivalents

The Company holds cash and cash equivalents with credit worthy banks of H 80,309.77 Lakh as at March 31, 2023 [Previous Year H 37,495.57 Lakh]. The credit worthiness of such banks is evaluated by the management on an on-going basis and is considered to be good.

C. Derivatives

The derivatives are entered into with credit worthy on counterparties. The credit worthiness of such counterparties is evaluated by the management on an on-going basis and is considered to be good.

D. Investments

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

B. Dividends

The Company has paid dividend of H 5/- per equity share of H 2/- each and 0.0001% per Non-Convertible Cumulative Redeemable Preference Share of H 100 each for the financial year ended March 31, 2022.

C. Debt Covenants

In order to achieve the overall objective of capital management amongst other things, aims to ensure that it meets critical covenants attached to interest bearing loans, there have been breaches in the critical covenants in current year.

— The Company needs to obtain external rating from an external credit rating agency, update the same at regular intervals and submit the same to the bank failing which penal interest will be levied.

The Serious Fraud Investigation Office (SFIO), New Delhi had started investigation into the affairs of Ruchi Soya Industries Limited in the year 2018 and it is still ongoing. Certain information have been sought from the company. Enforcement Directorate (ED) has sought certain information about the Company and its certain transactions with erstwhile foreign subsidiary and one overseas party for the period prior to the effective date (i.e. September 6, 2019) of the Resolution Plan as approved by Hon’ble National Company Law Tribunal ('NCLT"), Mumbai. ED has also sought certain information in connection with outstanding Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) related mostly to Pre CIRP period. The Company is fully co-operating with the both the authorities.

Since the above matters relates the period prior to the effective date (i.e. September 6, 2019) of Resolution Plan, the management is of the view that in terms of provisions of section 32 A of the Insolvency and Bankruptcy Code, 2016, Company shall not have any financial implication on it.

Note - 47 (A)

i) As approved by the Board of Directors on June 9, 2021, in respect of purchase of right of contract manufacturing business of breakfast cereal products Patanjali Ayurved Limited has assigned its rights and obligations under the contract manufacturing agreements in favour of the Company. One time consideration paid of H 350.00 Lakh have been accounted as “Intangible Assets”.

ii) The Company and Patanjali Ayurved Limited (“PAL”) entered into Contract Manufacturing Agreement with Patanjali Ayurved Limited for manufacture of nutraceutical products for the Company and also to enter into a Brand License Agreement to use ‘Patanjali’ Brand for the nutraceutical products of the Company on the terms and conditions mentioned in the respective Agreements.

iii) Accounting and disclosures on Business Combinations as per Ind AS 103:- The Board of Directors of the Company at its meeting held on May 10, 2021 approved the signing of the Business Transfer Agreement (“BTA”) with Patanjali Natural Biscuits Private Limited to acquire its business of manufacturing, packing and labelling of biscuits, cookies, rusk and other associated bakery products. The Company has a strong presence in the soya foods and edible oils segment. This acquisition will create a unique opportunity for the Company to participate and create value in the biscuit, cookies, rusk and other associated bakery product category in India.

Accounting and disclosures on Business Combinations as per Ind AS 103 :- The Board of Directors of the Company at its meeting held on May 18, 2022 approved the signing of the Business Transfer Agreement (“BTA”) with Patanjali Ayurved Limited ("PAL") to acquire its food retail business ("Food Retail Business Undertaking") including manufacturing plants. The Company has a strong presence in the soya foods and edible oils segment. This acquisition will create a unique opportunity for the Company to participate and create value in the various types of food product category in India.

Pursuant to BTA, as amended, entered with Patanjali Ayurved Limited (PAL), with effect from July 1, 2022 (“Acquisition Date”), the Company has acquired Food Retail Business (‘Food Retail Business Undertaking”) as a going concern on a Slump Sale basis for a cash consideration of H 69,000 Lakh. Accordingly, on acquisition date, all the assets acquired including intangible assets identified aggregating to H 73,733.69 Lakh are accounted at fair value in accordance with IND AS 103 on Business Combinations, differential amount of H 3,646.68 Lakh after considering effects of deferred tax liabilities are credited to Capital Reserve. Subsequent to in-principal approval of PAL’s lenders, No Objection Certificate from Lead Banker in respect of said transfer has been received and from other lenders the same is being obtained. The expenses incurred in connection with Business acquisition amounting to H 1,140.00 Lakh are charged to the statement of profit and loss account. The Following is the summary of total assets acquired by the Company at the date of acquisition:-

Note - 48

The Company has issued 6,61,53,846 equity shares of face value of H 2 each for cash at an issue price of H 650 (including share premium of H 648 per share) per equity shares aggregating to H 4,30,000 Lakh by the way of further public offering (FPO). On April 8, 2022, these equity shares of the Company have been listed on BSE Limited and National Stock Exchange of India Limited. Post allotment of aforesaid shares, the paid up equity share capital of the Company have been increased to H 7,238.37 Lakh divided into 36,19,18,552 equity shares (net of treasury shares) of face value of H 2 each from H 5,915.29 Lakh divided into 29,57,64,706 equity shares (net of treasury shares). Issue related expenses has been adjusted against Security Premium.

With effect from June 24, 2022, the Company’s name has been changed from “Ruchi Soya Industries Limited” to “Patanjali Foods Limited” as per approval received from Ministry of Corporate Affairs (“MCA”) and shareholders.

Note - 50Events after the reporting period :-

The Board of Directors has recommended dividend of H 6/- per equity share of H 2/- each for the financial year ended March 31, 2023. This payment of dividend is subject to approval of members of the Company at ensuing Annual General Meeting of the Company.

Note - 51 Relationship with Struck off Companies

There is no balance outstanding as on March 31, 2023 on account of any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

Note - 52 Other Statutory Information

(a) No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

(b) The Company does not have 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.

(c) 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 lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(d) The Company have not traded or invested in Crypto Currency or Virtual Currency during the financial year.

(e) The Company has not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

(f) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

Note - 53

The figures for the previous year have been re-grouped/ re-arranged, wherever necessary, to correspond with the current year classification/ disclosures. The same are strictly not comparable due to acquisition of Food Retail Business as mentioned in note 47 (B).