Impairment of Goodwill

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition. The Company internally reviews the goodwill for impairment for the acquired business.

Value in use is calculated using cash flow projections over a period of 5 years, with amounts based on medium term strategic plans approved by the Board. Any major variations to strategic plan, based on experience are incorporated in the calculations. Cash flows beyond the 5 year period are extrapolated using a long term growth rate.

Management reviews the carrying value of goodwill annually to determine whether there has been any impairment. This involves making an assessment of the value of goodwill and comparing it to the carrying value. If the assessed value is lower than the carrying value, then an impairment charge is recognised to reduce the carrying value to this amount.

Key assumptions in the budgets and plans include future revenue volume/price growth rates, associated future levels of marketing support, cost-base of manufacture and supply and directly associated overheads. These assumptions are based on historical trends and future market expectations (also considering the possible effect of COVID-19, if any) and the markets and geographies in which they operate.

Other key assumptions applied in determining value in use are

(a) long term growth rate - Cash flows beyond the five-year period are extrapolated using the estimated long-term growth rate applicable for the geographies, with reference to historical economic growth rates. The growth rate assumed for the current financial year was 4%.

(b) discount rate - The discount rate is based on a Weighted Average Cost of Capital (WACC) for comparable companies operating in similar markets and geographies. The pre-tax discount rate assumed for the current financial year was 22.4%.

The Company has performed sensitivity analysis around the base assumptions and has concluded that no reasonable possible changes in key assumptions would cause the recoverable amount to be less than the carrying value.

Notes:

6.1 During the previous year, Rossari Personal Care Private Limited (“the subsidiary company”) had split its equity shares of the face value of ' 100 each to face value of ' 10 each resulting in the increase of equity shares to 10,000 from 1,000 equity shares. Further the subsidiary company had issued bonus shares in the ratio 1:29 thereby increasing the number of equity shares to 300,000.

During the year ended 31^st March, 2022, the Company has acquired the remaining 40% stake i.e. 200,000 equity shares for a consideration of ' 20.00 million making it a wholly owned subsidiary of the Company w.e.f. 23^rd July, 2021.

Includes deemed investment amounting to ' 0.71 million (31st March, 2021 - ' 0.71 million).

6.2 During the previous year, the Company had acquired the balance 40% stake in Buzil Rossari Private Limited aggregating to 2,928,615 number of shares from BUZIL-WERK Wagner GmbH & Co for a total consideration of ' 45.91 million making it a wholly owned subsidiary of the Company.

6.3 On 26^th August, 2021, the Company has completed the acquisition of 65% equity shares of Unitop Chemicals Private Limited (Unitop) for a consideration of ' 2,709.46 million from the existing shareholders (including ' 12.00 million paid to employees of Unitop for employee retention bonus). Further the remaining 35% equity shares will be acquired in multiple tranches for ' 1,452.50 million, subject to the customary terms and conditions as defined in the Share Purchase Agreement.

6.4 On 1^st September, 2021, the Company has completed the acquisition of 76% equity shares of Tristar Intermediates Private Limited for a consideration of ' 821.41 million from the existing shareholders. Further the remaining 24% equity shares will be acquired in multiple tranches for ' 259.20 million, subject to the customary terms and conditions as defined in the Share Purchase Agreement.

6.5 On 25^th November, 2021, the Company has completed the acquisition of 50.10% equity shares of Romakk Chemicals Private Limited for a consideration of ' 75.10 million.

18.1 During the previous year, the Company has completed the Initial Public Offer (IPO) of 11,676,470 Equity Shares of the face value of ' 2/- each at an issue price of ' 425/- per Equity Share, comprising offer for sale of 10,500,000 shares by Selling Shareholders and fresh issue of 1,176,470 shares. The Equity Shares of the Company were listed on July 23, 2020 on BSE Limited and National Stock Exchange of India Limited.

18.2 During the year ended on 31^st March, 2021, the Board of Directors at its meeting held on 23^rd March, 2021, interalia approved the issue of 3,012,046 equity shares on preferential basis for cash consideration. Consequently, the shareholder of the Company at its Extra Ordinary General meeting held on 17^th April, 2021 has approved issue of 3,012,046 shares of face value of ' 2 each on preferential basis at ' 996 per share aggregating to ' 3,000.00 million to certain parties. During the current year, pursuant to Section 42 and 62 and other applicable provisions, if any, of the Companies Act, 2013 read with rules made there under and as per the approval of the Members of the Company, the Board of Directors of the Company at their meeting held on 21^st April, 2021 allotted 3,012,046 Equity Shares of the Face Value of ' 2/- each, at the issue price of ' 996/- each including a premium of '994/- each on preferential basis by way of a private placement.

18.3 During the year, company has issued 114,950 equity shares of the Face Value of ' 2/- each, at the exercise price of ' 425/- each including a premium of ' 423/- each under Employee Stock Option Plan. Information relating to Employee Stock Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in note 30.1.

b) Terms of Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ' 2/- per share. Each holder of equity shares is entitled to one vote per share. 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.

Description of Nature and purpose of other equity:

Retained Earnings:

Retained earnings represent the amount of accumulated earnings.

Securities Premium:

Securities premium is created when shares are issued at premium. The reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Employee Stock Options Outstanding:

Employee Stock Options Outstanding represents reserve in respect of equity settled share options granted to the Company's employees in pursuance of the Employee Stock Option Plan.

30.1 Employee Stock Option plan

The Company has implemented - Rossari Employee Stock Option Plan, 2019 (“ESOP 2019”) as approved by the shareholders of the Company and the Nomination & Remuneration Committee (NRC) of the Board of Directors (the ‘Board').

As per the ESOP 2019, the Board of Directors at Board Meeting dated 12^th December, 2019 granted ESOP's to the eligible employees to acquire equity shares of the Company, that vests in a graded manner. The vested options can be exercised within two years from respective vesting date or the period as specified by Nomination & Remuneration Committee as specified in the ESOP 2019. The number of options granted is calculated in accordance with the experience and performance- based formula recommended by the Board and approved by the NRC.

The Company has granted 705,000 Employee Stock Options under ESOP 2019 to its identified employees. This grant is effective from 12^th December, 2019. These shall vest as per the vesting schedule approved by the Board and NRC and can be exercised over the exercise period as approved in the meeting held on 12^th December, 2019.

This was further Modified/revised in accordance with the resolution passed by the Nomination and Remuneration Committee of the Board of Directors of the Company at their meeting held on 22 ^nd July, 2020. The exercise price of the shares granted under the scheme was reduced from ' 475 to ' 425.

The scheme was ratified by the shareholders at its extraordinary general meeting held on 17^th April, 2021.

During the year, the Company has granted 57,000 Employee Stock Options under ESOP 2019 to its identified employees. These shall vest as per the vesting schedule approved by the Board and NRC and can be exercised over the exercise period as approved in the Board meeting.

NOTE 39: CONTINGENT LIABILITY AND COMMITMENTS:Commitments

(i) Estimated amount of contracts remaining to be executed of Property, Plant & Equipment's (net of advances) and not provided for ' 22.87 million (31st March, 2021 - ' 51.33 million).

(ii) Other Commitments related to acquisition of balance equity share capital of Unitop Chemicals Private Limited(Unitop) and Tristar Intermediates Private Limited as per the contractual arrangement amounting to ' 1,711.70 million (31st March, 2021 - Nil) (refer note 6.3 and 6.4).

(iii) Additionally, the acquisition of Unitop have retention payouts payable to the eligible key employees of the Unitop, subject to their continuous employment amounting to ' 48.00 million (31st March, 2021 - Nil).

NOTE 40: RELATED PARTY DISCLOSURE:

i. List of Related Parties:

a) Subsidiary Companies

Rossari Personal Care Products Private Limited (Formerly known as Neutron Impex Private Limited)

Buzil Rossari Private Limited (from 31^st August, 2020)

Unitop Chemicals Private Limited (w.e.f. 26^th August, 2021)

Tristar Intermediaries Private Limited (w.e.f. 1^st September, 2021)

b) Joint venture

Buzil Rossari Private Limited (upto 30^th August, 2020)

c) Associate

Romakk Chemicals Private Limited (w.e.f. 25^th November,2021)

d) Key Managerial Persons (KMP)

Mr. Edward Menezes

Mr. Sunil Chari

e) Relatives of KMP Ms. Anita Menezes Ms. jyotishna Chari Mr. Mikhail Menezes Mr. Yash Chari

f) Enterprises on which key managerial persons or their relatives are able to exercise significant influence

Rossari Biotech (India) Private Limited

NOTE 41: EMPLOYEE BENEFITS Defined contribution plan

The Company makes contributions towards Provident Fund, Employee's State Insurance Corporation (ESIC) for qualifying employees. The Company has recognised ' 8.53 million (31^st March, 2021 - ' 7.28 million), being Company's contribution to Provident Fund and ESIC, as an expense and included in note 30 - Employee Benefit Expenses in the Statement of Profit and Loss.

Defined benefit plani. Gratuity plan

The Gratuity Benefits are classified as Post-Retirement Benefits as per Ind AS 19 and the accounting policy is outlined as follows.

As per Ind AS 19, the service cost and the net interest cost would be charged to the profit or loss. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognises these remeasurements in the Other Comprehensive Income (OCI).

When the benefits of the plan are changed, or when a plan is curtailed or settlement occurs, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment or settlement, is recognised immediately in the profit or loss account when the plan amendment or when a curtailment or settlement occurs.

Through its gratuity plans the Company is exposed to a number of risks, the most significant of which are detailed below:

a) Actuarial Risk

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption then the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

b) Investment Risk

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

c) Liquidity Risk

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the Company, there can be strain on the cash flows.

d) Market Risk

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the evaluation of liability is exposed to fluctuations in the yields as at the valuation date.

e) Legislative Risk

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the payment of gratuity act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and the same will have to be recognised immediately in the year when any such amendment is effective.

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

Rent expense recorded for short-term leases was ' 35.37 million (31^st March, 2021 - ' 32.78 million)

The Company's lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange of consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all the economic benefits from the use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

NOTE 43: CAPITAL MANAGEMENT

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management's judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, customer, creditors and market confidence.

The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders.

The Company may take appropriate steps in order to maintain, or if necessary, adjust, its capital structure. The Company does not have any borrowings as at 31^st March, 2022 and 31^st March, 2021.

NOTE 44: FINANCIAL RISK MANAGEMENT FRAMEWORK

The Company has formulated and implemented a policy on risk management, so as to develop an approach to identify, assess and manage the various risks associated with our business activities in a systematic manner. The policy lays down guiding principles on proactive planning for identifying, analysing and mitigating material risks, both external and internal, and covering operational, financial and strategic risks. After risks have been identified, risk mitigation solutions are determined to bring risk exposure levels in line with risk appetite. The Company's risk management policies and systems are reviewed regularly to reflect changes in market conditions and our business activities. The Company's business activities are exposed to a variety of financial risks, namely Credit risk, Liquidity risk, Currency risk, Interest risks. For COVID related disclosures refer note 2 (i)(e) in our critical estimates and judgements.

Market Risk

The Company's size and operations result in it being exposed to the market risks that arise from its use of financial instruments namely Currency risk. This risk may affect the Company's income and expenses, or the value of its financial instruments. The Company's exposure to and management of this risk is explained below.

Currency Risk

The Company is exposed to exchange rate risk as certain portion of the revenues and expenditure are denominated in foreign currencies. The Company imports certain raw materials, the price of which we are required to pay in foreign currency, which is mostly the U.S. Dollar or Euro. Products that we export are paid for in foreign currency, which together acts as a natural hedge. Any appreciation/depreciation in the value of the Rupee against U.S. Dollar, Euro or other foreign currencies would decrease / increase the Rupee value of debtors/ creditors. For exposure beyond natural hedge, the Company uses foreign exchange derivatives such as foreign exchange forward contracts to minimise the risk.

Liquidity riskLiquidity risk management

Liquidity risk is the risk that we will encounter difficulties in meeting the obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure that we have sufficient liquidity or access to funds to meet our liabilities when they are due.

NOTE 45: CREDIT RISK MANAGEMENT

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. We are exposed to credit risk from our operating activities, primarily from trade receivables. The Company's customer base majorly has creditworthy counterparties which limits the credit risk. The Company's exposures are continuously monitored and wherever necessary we take advances/Letter of Credits to minimise the risk.

NOTE 46: TRADE RECEIVABLE AND ADVANCES

The Company applies the simplified approach to provide for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables/Advances. The Company has computed expected credit losses based on actual basis. Forward-looking information (including macroeconomic information) has been incorporated into the determination of expected credit losses Reconciliation of allowance for expected credit loss in respect of trade receivables:

If the change in rates decline by a similar percentage, there will be opposite impact of similar amount on Profit Before Tax and Pre-tax Equity Effect.

The sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

NOTE 48: OFFSETTING OF BALANCES:

The Company has not offset financial assets and financial liabilities, unless permissible contractually.

NOTE 49: FAIR VALUE DISCLOSURES

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

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

• Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices)

or indirectly (i.e. derived from prices).

• The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation

techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If significant

inputs required to fair value an instrument are observable, the instrument is included in Level 2.

• Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.

The fair value of trade receivables, trade payables and other Current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature.

All financial liabilities and financial assets have no material impact.

Financial instruments measured using fair value.

NOTE 52: ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III

(i) Details of benami property held

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(ii) Borrowing secured against current assets

The Company have sanctioned borrowings/facilities from banks on the basis of security of current assets. The quarterly returns or statements of current assets filed by the Company with banks and financial institutions are in agreement with the books of accounts.

(iii) Wilful defaulter

The Company has not been declared wilful defaulter by any bank or financial institution or any lender.

(iv) Relationship with struck off companies

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

(v) Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(vi) Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(vii) Utilisation of borrowed funds and share premium

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(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

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

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

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

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

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(viii) Undisclosed Income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(ix) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(x) Valuation of PP&E, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

(xi) Registration of charges or satisfaction with Registrar of Companies

There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

NOTE 53: Figures for previous periods have been regrouped wherever considered necessary.