Nature and purpose of reserves1) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to investors. This includes remeasurement of defined benefit plans arising due to acturial valuation of gratuity, that will not be routed through Statement of profit and loss subsequently.

2) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act,2013.

2) General reserve

General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.

3) Cash flow hedge reserve

For hedging foreign currency exposure risk, the Company uses forward contracts swaps which is also designated as cash flow hedges. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amount recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects profit or loss.

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 advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lendor 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(is), 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.

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 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).

vi) The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender inaccordance with the guidelines on willful defaulters issued by the Reserve Bank of India.

vii) The Company has complied with the number of layers for its holding in downstream companies prescribed under clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017

viii) The Company has not revalued any of its Property, Plant and Equipment (including Right-of-Use Assets) during the year.

The quarterly returns or statements filed by the Company for working capital limits with such banks are in agreement with the books of account of the Company except for statements filed for quarters during the year ended 31st March, 2022, where differences were noted between the amount as per books of account for respective quarters and amount as reported in the quarterly statements.

The differences were in case of trade receivables amounting to ' 150.56 lakhs, ' 142.35 lakhs, ' 639.89 lakhs for the quarter ended 30 June 2021, 30 September 2021 and 31 December 2021 respectively. These statements were subsequently rectified by way of submitting quarterly returns to the respective banks for the said period. However the said difference have no impact on borrowing power of the Company.

37. Contingent Liabilities and commitments to the extent not provided for in respect of: a) Contingent liabilities :-1) Claims against the company not acknowledged as debts: (' in lakhs)

* Includes ' 842.32 lakhs (Previous Year ' 842.32 lakhs) paid in full against the disputed Sales Tax liability under the Kerala General Sales Tax Act, 1963. The matter is pending for hearing in the Honorable Supreme Court of India.

Note: The Excise and Service Tax and Sales Tax demands are being contested by the Company at various levels. The Company has been legally advised that it has a good case and the demands by the authorities are not tenable. Future cash flows in respect of these are determinable only on receipt of judgements / decisions pending with various forums/ authorities.

b) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) ' 6,667.82 lakhs (Previous year ' 4,974.66 lakhs).

39. Share capital

a) Rights, preferences and restrictions attached to Equity Shares: The Company has only one class of equity shares having a par value of ' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

40. Borrowings:(A) Secured loans:(a) Working Capital loans:

Working capital facilities of ' 1,433.49 (Previous year ' Nil Lakhs) from Banks are secured on first pari passu basis by way of hypothecation of current assets (inventories and trade receivables) of the Company, second pari passu charge by way of equitable mortgage on the Company's immoveable property. Working Capital Loans repayable on Demand having Interest Rate from 7.10 % to 7.85 % p.a. (Previous Year 7.10% p.a to 8.90% p.a).

(b) Foreign Currency Term loans:

Foreign currency term loans of ' 2,967.61 Lakhs (Previous year ' 4,636.57 Lakhs) from the Banks are secured on first pari passu basis by way of equitable mortgage created on Company's all moveable properties. These loans are repayable in equal quarterly installment, last installments due on March 2023 and February 2024 as per repayment schedules, having interest rate from 3 month LIBOR 1.05% to 1.38% p.a. which are reset periodically.

(c) Non Convertible Debentures:

Non Convertible Debentures of ' 9,900 Lakhs (Previous year ' Nil Lakhs) from the Bank are secured on first pari passu basis by way of equitable mortgage created on Company's moveable properties Plant and Machinery, Furniture and Fixtures. These debentures are repayable in two bullet payments ' 5,000 lakhs due on 8^th March 2025 & ' 4900 lakhs due 8^th March 2027, having interest rate of 6.8% and 7.4% respectively.

(B) Commercial Paper balance outstanding at year end ' 2,500 lakhs repayable on 24^th May 2022, (Previous Year ' Nil). Maximum balance outstanding during the year ' 7,500 lakhs (Previous Year ' Nil).

41. Derivative Instruments outstanding as at Balance Sheet date:(a) Forward Contracts against imports:

Forward contracts to buy USD 21.72 Lakhs and EURO 2 Lakhs (Previous Year USD 29.23 Lakhs and CNY 15.61 Lakhs) amounting to ' 1,811.59 lakhs (Previous Year ' 2,319.01 lakhs).

(b) Forward Contracts against exports:

Forward contracts to sell USD Nil Lakhs (Previous Year USD 5.25 Lakhs) amounting to ' Nil lakhs (Previous Year ' 385.54 lakhs).

The above contracts / options have been undertaken to hedge against the foreign exchange exposures arising from transactions like import of goods.

(c) USD Floating rate/INR Floating rate cross-currency interest rate swap (CCIRS):

Outstanding USD/INR Floating rate cross-currency interest rate swap USD 39.15 Lakhs (Previous year USD 63.42 lakhs) amounting to ' 2,967.61 Lakhs (Previous Year ' 4,636.57 lakhs).

The above contracts have been undertaken to hedge against the foreign exchange exposures arising from foreign currency loan and interest there on, resulting net gain recognized in Cash flow Hedge Reserve of ' 60.03 lakhs (Previous Year loss of ' 61.44 lakhs)

42. Dues to micro and small suppliers

Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2^nd October 2006, as amended on 1^st June,2020, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues as at 31^st March,2022 to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

45. I n accordance with IND AS 108 - Operating Segment, segment information has been given in the Consolidated Financial Statement of Nilkamal Limited and therefore no separate disclosure on segment information is given in these financial statements.

46. Corporate Social Responsibility:

As required by Section 135 of Companies Act, 2013 and rules therein, a corporate social responsibility committee has been formed by the Company. The Company has spent the following amount during the year towards corporate social responsibility (CSR) for activities listed under schedule VII of the Companies Act, 2013

47. Covid-19 Impact:

During the year ended March 31, 2022 the spread of Coronavirus pandemic across the globe, impacted all the geographies of our operations in the early months of the year. As per our current assessment, no significant impact on carrying amounts of inventories, goodwill, intangible assets, trade receivables, other investments and other financial assets is expected, and we continue to monitor changes in future economic conditions.

48. Proposed Dividend:

The Board of Directors at its meeting held on 23rd May, 2022 have recommended a payment of final dividend of ' 15 (' Fifteen only) per equity share of face value of ' 10 each for the financial year ended 31st March, 2022. The same amounts to ' 2,238.38 lakhs and the same is subject to approval at the ensuing Annual General Meeting of the Company, hence is not recognised as a liability as at 31^st March, 2022.

C. Financial risk management

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

• Credit risk;

• Liquidity risk ; and

• Market risk

i. Risk management framework

The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's Risk Management framework. The Board of Directors have adopted an Enterprise Risk Management Policy framed by the Company, which identifies the risk and lays down the risk minimization procedures. The Management reviews the Risk management policies and systems on a regular basis to reflect changes in market conditions and the Company's activities, and the same is reported to the Board of Directors periodically. Further, the Company, in order to deal with the future risks, has in place various methods / processes which have been imbibed in its organizational structure and proper internal controls are in place to keep a check on lapses, and the same are been modified in accordance with the regular requirements.

The Audit Committee oversees how Management monitors compliance with the Company's Risk Management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by the internal auditors.

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 customers and loans and advances.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade receivables and loans and advances.

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer in which it operates. 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.

The Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. Further for domestic sales, the company segments the customers into Distributors and Others for credit monitoring.

The Company maintains security deposits for sales made to its distributors. For other trade receivables, the company individually monitors the sanctioned credit limits as against the outstanding balances. Accordingly, the Company makes specific provisions against such trade receivables wherever required and monitors the same at periodic intervals.

The Company monitors each loans and advances given and makes any specific provision wherever required.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables and loans and advances.

Cash and cash equivalents and other Bank balances

The Company held cash and cash equivalents and other bank balances of ' 5,936.20 lakhs as on 31 March 2022 (Previous year ' 6,752.79 lakhs). The cash and cash equivalents are held with bank counterparties with good credit ratings.

Derivatives

The derivatives are entered into with bank counterparties with good credit ratings.

Loans and Other financial assets:

The Company held loans and other financial assets of ' 4,356.43 lakhs as on March 31, 2022 (Previous year ' 4,942.31 lakhs). The loans and other financial assets are in nature of rent deposit paid to landlords, bank deposits with maturity more than twelve months and others and are fully recoverable.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

As of 31st March, 2022 and 31st March, 2021 the Company had unutilized credit limits from banks of ' 20,066.51 lakhs and ' 14,000 lakhs respectively.

The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to the financial liabilities which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.

Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

The Company is exposed to currency risk on account of its borrowings and other payables in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. 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. The period end balances are not necessarily representative of the average debt outstanding during the period.

Capital Management

For the purpose of the Company's capital management, capital includes issued capital and 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.

Employee Benefits

The Company contributes to the following post-employment defined benefit plans in India.

Defined Contribution Plans:

The contributions to the Provident Fund and Family Pension Fund of certain employees are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution.

The Company recognised ' 845.78 lakhs for year ended 31 March 2022 (Previous year ' 793.40 lakhs) provident fund contributions in the Statement of Profit and Loss.

The contributions payable to these plans by the Company are at rates specified in the rules of the schemes. Defined Benefit Plan:

Gratuity

The Company participates in the Employees Gratuity scheme, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity Act, 1972.

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, 2022. 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.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

Expected future cash flows

The expected future cash flows in respect of gratuity as at March 31, 2022 were as follows.

Expected contribution

The expected contributions for defined benefit plan for the next financial year will be in line with the contribution for the year ended March 31, 2022, i.e. ' 278.58 lakhs.

Compensated Absences:

The Compensated Absences is payable to all eligible employees for each day of accumulated leave on death or on resignation. Compensated Absences debited to Statement of Profit and Loss during the year amounts to ' 217.59 lakhs (Previous year ' 63.05 lakhs) and is included in Note 30 - 'Employee benefits expenses'. Accumulated non-current provision for leave encashment aggregates ' 462.89 lakhs (Previous year ' 416.96 lakhs) and current provision aggregates ' 419.54 lakhs (Previous year ' 418.36 lakhs).

52 Hedge accounting

The Company's risk management policy is to hedge its estimated foreign currency exposure in respect of highly probable forecast purchases and foreign currency borrowings. The Company uses forward exchange contracts to hedge its currency risk and cross currency interest rate swap to hedge its interest rate and currency risk related to foreign currency borrowings. Such contracts are generally designated as cash flow hedges.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The Company assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in the cash flows of the hedged item using the hypothetical derivative method.

53 Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

54 Previous year figures have been re-group / reclassified wherever necessary.