(C) Nature and Purpose of Reserves

(a) Capital reserve

During amalgamation/ merger approved by honourable court, the excess of net assets taken over the consideration paid, if any, is treated as capital reserve. This capital reserve has arisen as a result of scheme of amalgamation in the past periods.

(b) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

(c) General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations adjusted by utilisation of reserve in accordance with scheme of Amalgamation in earlier years. The requirement to mandatorily transfer a specified percentage of the net profit to general reserve before declaration of dividend has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

(d) Share options outstanding account

The share option outstanding account is used to recognise the grant date fair value of options issued to employees under Employee stock purchase plan.

Net of shares 41,960 (March 31,2022: 41,960) held by employee welfare trust included in the financial statements

(e) Retained earnings

Retained Earnings are profits that the Company has earned till date less transfer to General Reserve, dividend or other distribution or transaction with shareholders.

(a) The Company has availed secured loan of ' Nil (March 31, 2022: ' 250 crores), carrying interest rate of (3 months TBill rate plus (288 - 488 base points)) against the sanctioned term loan amount of ' Nil (March 31, 2022: ' 250 crores) from CITI Bank N.A. The Company has repaid its loan during the year. The current outstanding amount against the loan is ' Nil (March 31, 2022: ' 203.13 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during the previous year.The term loan was repayable in 16 equated quarterly instalments commencing from 15^th month from first drawdown date of April 21, 2020. This term loan was secured by way of first exclusive charge by way of a hypothecation over the Company’s all movable fixed assets both present and future situated at (i) SP 181 to 189 and 191 (A), Industrial Area, Phase II, Neemrana, Alwar, Rajasthan, India (ii) Unit-1 Village Dharampur,Sai Road,Baddi,Dist Solan,Himachal Pradesh,(iii) Unit-II Village Gulerwala,Dist Solan, Baddi,Himachal Pradesh,(iv) Unit-I,Sector -10,Plot No 2A,BHEL Complex,Haridwar (v) Unit-II, Plot No 2A and 2D/1 Sector-10,Sidcul Industrial Area,Haridwar, Uttarakhand

(b) The Company has availed secured loan of ' Nil (March 31, 2022: ' 250 Crores) carrying interest rate of 4 - 6 % against the sanctioned amount of ' Nil (March 31, 2022: ' 350 crores) from HDFC Bank Limited. The Company has repaid its loan during the year. The current outstanding amount against the loan is ' Nil (March 31, 2022: ' 190.52 crores).The loan was obtained for the purpose of fresh capital expenditure and reimbursement of prior capital expenditure incurred by the company during 12 months of first drawdown date of May 29, 2020. The term loan was repayable in quarterly instalments over the period of 5 years as per terms of agreement starting from [1^st Loan of ' 120 Crores (June 2020- May 2025) and 2^nd Loan of ' 130 Crores (April 2021- May-2025)]. This loan was secured by way of first exclusive charge by way of a hypothecation over the Company’s all movable fixed assets, plant and machinery and all movable properties both present and future situated at (i) A-461/462,SP-215 and 204 & 204A, Matsya Industrial Area, Alwar, Rajasthan and (ii) SP-1-133,General Zone, RIICO Industrial Area, Ghiloth.

(c) The Company was required to maintain the Debt Covenants i.e., Fixed assets coverage ratio, Debt service coverage ratio, gearing ratio, leverage ratio and interest coverage ratio and Company had complied with all such covenants in the previous year i.e. March 31, 2022.

(d) During the previous year, The Company had borrowings from banks and financial institutions on the basis of security of current assets. The Company had complied with the requirement of filing of monthly/ quarterly returns/statements of current assets with the banks or financial institutions, as applicable, and these returns were in agreement with the books of accounts for the year ended March 31, 2022. During the year, the Company has not been sanctioned working capital limits in excess of ' 5 crores, in aggregate from banks and financial institutions on the basis of security of current assets and accordingly, the quarterly returns or statements are not required to be filed with banks or financial institutions.

(e) As on the balance sheet date there is no default in repayment of loans and interest.

(f) The borrowings obtained by the company from banks and financial institutions had been applied for the purposes for which such loans were taken. In respect of the term loans which were taken in the previous years, those were applied in the respective years for the purpose for which the loans were obtained.

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

(i) The Company has unabsorbed capital loss of ' 390.84 crores as on March 31, 2023 (March 31, 2022: ' 369.61 crores) out of which capital loss of ' 219.75 crores will expire in financial year 2023-24, capital loss of ' 122.30 crores will expire in financial year 2025-26, capital loss of ' 27.51 crores will expire in financial year 2029-30 and capital loss of ' 21.27 crores will expire in financial year 2030-31, on which no deferred tax asset has been created by the management due to lack of probability of future capital gain against which such deferred tax assets can be realised. If the Company were able to recognise all unrecognised deferred tax assets, the profit after tax would have increased by ' 89.28 crores (March 31, 2022: ' 84.56 Crore).

(ii) Effective tax rate has been calculated on profit before tax.

a) Provision for warranties

(i) Warranties

A provision is recognized for expected warranty claims and after sales services on products sold during the last one to seven years, based on past experience of the level of repairs and defective returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will be incurred within seven years after the reporting date. Assumptions used to calculate the provisions for warranties are based on current sales levels and current information available about defective returns based on one to seven years warranty period for all products sold and are consistent with those in the prior years. The assumptions made in relation to the current year are consistent with those in the prior year.

b) Provision for litigations

Provision for litigation amounting to ' 6.70 Crores (March 31,2022: '7.28 Crores) is created against demands raised in various ongoing litigations in ordinary course of business. Based on the facts of the case and legal precedents, the management believes there would be a probable outflow of resources and accordingly, has created a provision in books of account.

(v) Performance obligation

Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.

Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of maintenance period based on time elapsed and acceptance of the customer. In certain non-standard contracts, where the Company provides warranties in service of consumer durable goods, the same is accounted for as a separate performance obligation and a portion of the transaction price is allocated based on its relative standalone prices. The performance obligation for the warranty service is satisfied over a period of time based on time elapsed.

Note: The remaining performance obligation expected to be recognised in more than one year relates to amounts received from customer against which performance obligation is to be satisfied over the period of one to seven years. All other remaining performance obligation are expected to be recognised within one year. During the year ended March 31, 2023, revenue recognised from amount included in contract liability at the beginning of year is ' 54.30 crores (March 31, 2022: ' 34.94 crores).

(vi) Disclosure pursuant to Appendix C of Ind AS 115

The Company was awarded a contract for replacement of existing conventional street/ park lights with LED street/ park lights by a Municipal Corporation in April 2017. As per the agreement, the Company shall also be responsible for the operation and maintenance of LED street/ park lights for a period of 7 years after installation. The consideration received by the Company under the contract is based on the energy savings resulting from the LED street/ park lights. The revenue recognised during the year and the contract assets balance as at year-end from such contract amounts to ' 45.89 Crores (March 31,2022: ' 45.43 crores) and ' 43.57Crores (March 31,2022: ' 56.83 crores) respectively.

The above figures are net off provisions made by the Company. The Company is contesting these demands and the management, believe that its position will likely to be upheld in the appellate process. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position and results of operations.

Notes:

C Undrawn committed borrowing facility

(a) During the Year, the company has availed fund and non fund based unsecured working capital limit amounting to ' 1382.50 Crores under multiple banking arrangements from IDBI Bank Limited, Yes Bank Limited, Standard Chartered Bank Limited, HSBC Bank, ICICI Bank Limited, IndusInd Bank Limited, HDFC Bank Limited, DBS Bank Limited and CITI Bank N.A. An amount of ' 1102.86 crores remain undrawn as at Mach 31,2023.

D Other Litigations

The Company has some sales tax and other tax related litigation of ' 6.70 crores (March 31,2022: ' 7.28 crores) against which liability has been assessed as probable and adequate provisions have been made with respect to the same.

E The Company has outstanding obligation amounting to ' 0.51 crores (March 31,2022: ' 0.52 crores) in respect of bonds given to central tax department against import of goods at concessional rate of basic custom duty. The Company expects to fulfil the obligation in due course of time.

F The Company has export obligation of ' 158.68 crores (March 31,2022: ' 34.95 crores) on account of import duty exemption of ' 8.72 crores (March 31, 2022: '1.50 crore) on capital goods under the Export Promotion Capital Goods (EPCG) and ' 0.15 crores Advance Authorisation scheme laid down by the Government of India. The Company expects to fulfil the obligation in due course of time.

3 Leases

i The Company's lease asset primarily consist of leases for land and buildings for branch offices and warehouses having the various lease terms. The Company also has certain leases of with lease terms of 12 months or less. The Company applies the ‘short-term lease' recognition exemptions for these leases. Payment made towards short term leases of low value assets (lease of assets worth less than ' 2 Lacs) other than building and warehouse are recognized in the statement of Profit and Loss as rental expenses over the tenure of such leases.

vii 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.

viii The Company has received the Covid-19-related rent concessions for lessees amounting to ' 0.12 crores (March 31,2022: ' 0.49 crores) and on the basis of practical expedient as per Ind AS 116 “Leases”, the same is not considered to be lease modification, hence the income towards rent concession is recognised in “Other Income” in the statement of profit and loss account.

ix The Company has applied a single discount rate to a portfolio of leases of a similar assets in similar economic environment with similar end date.

Defined Benefit Plan

The employees' Gratuity Fund Scheme, which is a defined benefit plan, is managed by the trust which maintains its investments with Bajaj Allianz Life Insurance Co. Ltd. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

j) The average duration of the defined benefit plan obligation at the end of the reporting period is 21.87 years (March 31,2022: 21.66 years).

k) The Company expects to contribute ' 29.08 crores (March 31,2022 : ' 8.65 crores) to the plan during the next financial year.

l) The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.

m) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

n) 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 an assumptions occurring at the end of the reporting period while holding all other assumption constraint. In practice it is unlikely to occur and change in some of the assumption may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

o) The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period

5 Segment Reporting

The segment reporting of the Company has been prepared in accordance with Ind AS-108, “Operating Segment” (specified under the section 133 of the Companies Act 2013 (the Act) read with Companies (Indian Accounting Standards) Rule 2015 (as amended from time to time) and other relevant provision of the Act). For management purposes, the Company is organized into business units based on its products and services and has six reportable segments as follows:

a) Operating Segments

Switchgears : Domestic and Industrial switchgears, electrical wiring accessories and capacitors.

Cables : Domestic cables and Industrial underground cables.

Lighting and Fixtures : Energy Saving Lamps (LED, Fixtures) and luminaries.

Electrical Consumer Durables : Fans, Water Heaters, Coolers, and Domestic Appliances Lloyd Consumer : Air Conditioner, Television, Refrigerator and Washing Machine

Others : Industrial motors, Pump, Water purifier, Solar, Personal Grooming

b) Identification of Segments:

The Board of Directors monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of the nature of product / services and have been identified as per the quantitative criteria specified in the Ind AS.

c) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “unallocable”.

d) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets, borrowings and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as “unallocable”.

e) There is no transfer of products between operating segments.

f) There are no customers having revenue exceeding 10% of total revenues

a) The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs through payment. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31,2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2022: ' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

b) As at March 31,2023, the Company has not granted any loans to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person (March 31,2022: Nil),

c) Transactions with related parties are reported gross of Goods and Service Tax.

7 Share based payments

The Company has in place following employee stock purchase plan approved by shareholders of the Company in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) regulations, 2021 :

(a) Havells Employee Long Term Incentive Plan 2014 : In accordance with this scheme, 41,817 (March 31,2022 : 68,356) share options of Re. 1 each were granted, out of which 41,415 (March 31,2022: 68,356) share options of Re. 1 each were vested and allotted on June 03, 2022 (March 31,2022 : June 05, 2021) to eligible employees at ' 1,289.85 (March 31,2022: ' 1,074.10) per share as contributed by these employees. As per the scheme, 50% of the shares are under lock in period of 13 months and balance 50% for 2 years. Also as per the scheme, the Company is obliged to pay 50% of the contribution made by eligible employees as retention bonus over a period of two years in equal instalments. Accordingly, a sum of ' 2.23 crores (March 31,2022 : ' 2.94 crores) has been recognised as employee stock purchase plan expense (refer note 27).

(b) Havells Employee Stock Purchase Plan 2015 : In accordance with this scheme, 150,000 (March 31,2022: 210,000) share options of Re. 1 each were granted, vested and allotted on June 03,2022 (March 31,2022: June 05, 2021) at ' 1,289.85 (March 31,2022: ' 1,074.10) per share to eligible employees as contributed by the Company. As per the scheme, 78% of the shares are under lock in period of 13 months and remaining 22% are under lock in period for 2 years. Accordingly, a sum of ' 19.35 crores (March 2022 :' 22.56 crores) has been recognised as employee stock purchase plan expenses (refer note 27).

(c) Havells Employee Stock Purchase Plan 2016 : In accordance with the said scheme, 24,942 (March 31,2022: 8,454) share options of Re. 1 each were granted to eligible employees with graded vesting in three years starting from 2022. During the year, 13534 equity shares of Re. 1 each (March 31,2022 : 11705 equity shares) were allotted at ' 1,289.85 (March 31,2022 : '1,074.10) per share on June 03, 2022. Accordingly, a sum of '2.69 crores (March 31,2021: 1.26 crores) has been recognised as employee stock purchase plan expense refer note 29 and balance outstanding of ' 1.48 crores (March 31,2022 : 0.53 crores) (refer note 14).'

(d) Havells Employee Stock Purchase Plan 2022 : In accordance with the said scheme, 17,733 (March 31,2022: NIL) share options of Re. 1 each were granted to eligible employees with graded vesting in three years starting from 2022. During the year, 1722 equity shares of Re. 1 each (March 31,2022 : NIL equity shares) were allotted at ' 1,348.55 (March 31, 2022 : NIL) per share on Nov 03, 2022. Accordingly, a sum of '1.06 crores (March 31,2021: NIL) has been recognised as employee stock purchase plan expense refer note 27 and balance outstanding of ' 0.82 crores (March 31,2022 : NIL) (refer note 14).'

The fair value at grant date of options granted during the year ended March 31,2023 was within range of ' 1271.53 to ' 1348.16 per share (March 31,2022 was within range of ' 1059.27 to ' 1073.90 per share). The fair value at the grant date is determined using Black Scholes valuation model which takes into account the exercise price, the terms of the options, the share price at grant date and expected price volatility of the underlying shares, the expected dividend yield and the risk free interest rate for the term of the option.

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

The fair value of the other financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

1) The fair value of unquoted instruments, other non-current financial assets and non-current financial liabilities is estimated by discounting future cash flows (DCF model) using rates currently available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

2) The fair values of the Company's interest-bearing borrowings are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own non-performance risk as at March 31,2023 was assessed to be insignificant.

3) Long-term receivables/payables are evaluated by the Company based on parameters such as interest rates, risk factors, individual creditworthiness of the counterparty and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.

4) Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: The fair value of financial instruments traded in active markets is based on quoted (unadjusted) market prices at the end of the reporting period for identical assets or liabilities

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

There are no transfers among levels 1,2 and 3 during the year.

This section explains the judgement and estimates made in determining the fair value of financial assets that are:

a) Recognised and measured at Fair value

b) Measured at amortised cost and for which fair value is disclosed in financial statements

10 Financial risk management objectives and policies

The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include trade and other receivables, and cash and cash equivalents that are derived directly from its operations.

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

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and Audit Committee. This process provides assurance to Company's senior management that the Company's financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objective. In the event of crisis caused due to external factors such as caused by recent pandemic “COVID-19”, the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors.

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

(a) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises three types of risk: currency rate risk, interest rate risk and other price

risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits, investments, and foreign currency receivables and payables. The sensitivity analysis in the following sections relate to the position as at reporting date. The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities. The sensitivity of the relevant Profit and Loss item and equity is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of March 31,2023 and March 31,2022

(i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in foreign currency). Foreign currency exchange rate exposure is partly balanced by purchasing of goods from the respective countries. The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.

Foreign currency risk sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD,EUR, JPY, CNY and other currencies including KES,NPR, CHF, LKR, MWK,AED,SLL and GBP exchange rates, with all other variables held constant. The impact on the Company profit before tax and equity is due to changes in the fair value of monetary assets and liabilities. Foreign currency exposures recognised by the Company that have not been hedged by a derivative instrument or otherwise are as under:

(ii) Interest Rate Risk

I nterest rate 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 the risk of changes in market interest rates relates primarily to the Company's long term debt obligation at floating interest rates. The Company's borrowings outstanding as at March 31,2023 and March 31,2022 comprise of long term loans.

(iii) Commodity Price Risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic cable and other electronic items and therefore require a continuous supply of copper and aluminium being the major input used in the manufacturing. To mitigate the risk of supply and price fluctuations, Domestic and overseas sources are bench-marked to Optimize the allocation of business share among various sources. The Company's Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company mitigated the risk of price volatility by entering Long Term & Short term contracts for the Purchase of these commodities basis estimated annual requirements.

(b) Credit Risk

Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

(i) Trade Receivables and Contract Assets

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Trade Receivable buyout facility without recourse, letters of credit and other forms of security.

An impairment analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method based on provision matrix. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

(ii) Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made in bank deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments. The Company’s maximum exposure to credit risk for the components of the balance sheet at March 31,2023 is the carrying amounts. The Company's maximum exposure relating to financial instrument is noted in liquidity table below.

(c) Liquidity risk

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

11 Capital Management

For the purposes of Company's capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company's capital management is to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31,2023 and March 31,2022.

15 Fire Incident in Neemrana Plant

There was a fire at Neemrana plant of the Company in July 2022 resulting in destruction/ damage of property, plant and equipment and inventories with book value of ' 47.53 crores and ' 64.99 crores respectively. The loss aggregating to ' 112.52 crores has been accounted for in the books and disclosed as “Exceptional Items” in the standalone statement of profit and loss. The process relating to filing of claim with the insurance company has been completed for property, plant and equipment and subsequent to the year-end, the Company has received interim payment amounting to ' 23.98 crores. The process of filing the surveyor report in respect of claim for inventories is in progress. The Company has adequate insurance coverage for the aforesaid loss and based on its assessment of the loss and the terms and conditions of the insurance policies, the claim is fully admissible. Accordingly, ' 112.52 crores has been disclosed as part of “Exceptional Items” in the standalone statement of profit and loss. Also refer to Note 11 (E).”

16 The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.

19 Additional regulatory information required by Schedule III of Companies Act, 2013

(i) Details of Benami property: No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

(ii) Utilisation of borrowed funds and share premium:

The Company has not advanced or loaned or invested 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

(iii) Compliance with number of layers of companies: The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(iv) 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.

(v) 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.

(vi) 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.

(vii) 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.

(viii) The company has not granted any loans or advances in the nature of loans either repayable on demand.

20 The figures have been rounded off to the nearest crore of rupees upto two decimal places. The figure 0.00 wherever stated represents value less than ' 50,000/-.

21 Note No.1 to 32 form integral part of the Standalone Balance Sheet and Standalone Statement of Profit and Loss.

1

Based on favourable decisions in similar cases, the Company does not expect any liability against these matters in accordance with principles of Ind AS -12 ‘Income taxes’ read with Ind AS -37 provisions, Contingent Liabilities and Contingent Assets’ and hence no provision has been considered in the books of accounts except for provision created in respect of few years {refer note 19(ii)}.

The above amounts contain interest and penalty where included in the order issued by the department to the Company