• Claims against the Company not acknowledged as debts include claims relating to pricing, commission, etc.

• It is not practicable for the Company to estimate the timing of cash outflow, if any, in respect of the Company pending resolution of the respective proceedings, as it is determined only on receipt of judgements/decisions pending with various forum/authorities.

• The Company's pending litigations comprise of proceedings pending with various direct tax, indirect tax and other authorities. The Company has reviewed all its pending litigations and proceedings, and has adequately provided for where provisions are required and disclosed as contingent liabilities, where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statement.

• Pharmaceutical Division of Unique Pharmaceutical Laboratories Ltd (UPLL), which was acquired by the Company on a going concern basis, had received demand notices from Department of Chemicals & Fertilizers, Govt. of India, New Delhi, demanding a sum of ' 461.47 lakhs in respect of the Bulk Drug Metronidazole and a further sum of '591.05 lakhs in respect of the Bulk Drug Oxyphenbutazone. These amounts were claimed on hypothetical basis in 1996, under para 7(2) of DPCO 79 read with para 14 of DPCO 87 and para 12 of DPCO 95, long after repeal of DPCO 79 and DPCO 87 and gains allegedly notionally made by it by procuring the Bulk Drugs at alleged lower cost. The Company has filed Writ Petitions bearing No. 446 of 2008 in respect of demand for Oxyphenbutazone, and Writ Petition No. 2623 of 2007 in respect of demand for Metronidazole in Bombay High Court. These Writ Petitions have been admitted, and the Hon. High Court has restrained the Government from adopting coercive steps to recover the amount till the disposal of the Writ Petition on the Company furnishing security as per the Orders. The Company has already furnished the Bank Guarantee of ' 402.35 lakhs as Security. As per the legal advice received by the Company, there is no liability, and accordingly, no provision is being made in the Standalone Financial Statements for these claims and demands.

The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Company's financial condition, results of operations or cash flows.

Future cash outflows, in respect of above matters, are dependent on the outcome of certain event and/or decisions of the relevant authorities for the matters under dispute.

The Company does not expect any reimbursements in respect of the above contingent liabilities.

40. RESEARCH AND DEVELOPMENT EXPENDITURE

The aggregate amount of revenue expenditure incurred during the year on Research & Development and shown in the respective heads of account is ' 3,558.30 lakhs (Previous year ' 3,048.09 lakhs).

The sensitivity analysis presented above may not be representative of the actual change in the defined benefits obligation as it is unlikely that the changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The method used for deriving sensitivity information and significant assumptions made did not change from the previous period.

ix. Investment Details:

The Company made annual contribution to the LIC of an amount advised by the LIC. The Company was not informed by LIC of the investments made or the break-down of the plan assets by investment type.

The Company expects to make a contribution of ' 480.96 lakhs (March 31, 2022: ' 1,147.67 lakhs) to the defined benefits plans during the next financial year.

x. Risk Exposure:

Through its defined benefits obligation, the Company is exposed to a number of risks, the most significant of which are detailed below:

Interest Rate Risk - The defined benefits obligation calculated uses a discount rate based on Government bonds. If bond yields fall, the defined benefits obligation will tend to increase.

Salary Inflation Risk - Higher than expected increase in salary will increase the defined benefits obligation.

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

Investment Return Risk - Lower the expected investment return, higher will be the defined benefits obligation. c. Compensated Absences:

The Company's employees are entitled for compensated absences, which are allowed to be accumulated and encashed as per the Company's rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using "Projected Unit Credit Method”. Accordingly, the Company has made provision for compensated absences for the year of '511.03 lakhs (previous year ' 382.01 lakhs) and accumulated liability is ' 1,766.38 lakhs as of March 31, 2023 (previous year ' 1,562.25 lakhs).

43. SEGMENT REPORTING

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the decision maker at respective entity level in assessing the performance and deciding on allocation of resources. The Company, accordingly, has only one reportable business segment, i.e., ‘Pharmaceuticals'.

In accordance with paragraph 4 of the Indian Accounting Standard (Ind AS 108), segment information has been given in the Consolidated Financial Statements of the Company, and therefore, no separate disclosure on segment information is given in these Standalone Financial Statements.

*The options granted represent the original grants as reduced by the lapsed due to resignations. It also includes an aggregate number of 123,650 options granted to the eligible employees of the subsidiary companies.

The above options include total of 1,545,483 performance-based option. Each vested option entitles the option grantee to apply for and be allotted one (1) equity share of ' 2 each in the Company, and the exercise period in respect of all the options is a period of ten (10) years from the date of grant.

The Scheme is compliant with the provisions of Securities and Exchange Board of India (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021, the Companies Act, 2013, and other applicable rules and regulations. The options granted, exercise price, vesting period, and other terms and conditions applicable to the grants made are in compliance with the Scheme and applicable regulations.

48. The Company has adopted Ind AS 116, effective annual reporting period beginning April 01, 2019 and applied this Standard to its leases, retrospectively, with the cumulative effect of initially applying the Standard, recognised on the date of initial application, that is, April 01,2019.

On initial application, the Company measures lease liability at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the date of initial application, and measure that right-of-use asset an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the Balance Sheet immediately before the date of initial application.

50. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company's financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

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

a) Credit Risk

b) Liquidity Risk

c) Market Risk

Risk Management Framework:

The Company's Board of Directors has overall responsibility for establishment of the Company's risk management framework. The Management is responsible for developing and monitoring the Company's risk management policies, under the guidance of the Audit Committee. The Management identifies, evaluates and analyses the risks to which the Company is exposed to and set appropriate mitigation measures and controls to monitor such risk and adherence to limits.

The Management periodically reviews its risk policy and systems to assess need for changes in the policies to adapt to the changes in the market conditions and align the same to the business of the Company. The Management, through its interaction and training to concerned employees, aims to maintain a disciplined and constructive control environment in which concerned employees understand their roles and the obligations. The Audit Committee oversees how the 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 to which the Company is exposed. The Audit Committee is assisted in its role by the internal auditor wherever required. Internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

a) Credit Risk:

Credit risk is the risk that a counter party will not meet its obligations 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, mutual funds and financial institutions, foreign exchange transactions and other financial instruments.

The Company has adopted a policy of only dealing with counterparties that have sufficiently high credit standards and financial strength. The Company's exposure and credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions is reasonably spread amongst the several counterparties.

Credit risk arising from derivative financial instruments and other balances with banks is limited, and there is no collateral held against these because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the reputed credit rating agencies.

As regards, credit risk for investment in mutual funds, the Company limits its exposure to credit risk by investing mainly in debt schemes issued by the mutual funds wherein the fund manager invests asset under management in highly rated instruments which are of high credit ranking from rating agency like CRISIL or the equivalent rating agency. The Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties from time to time.

Credit risk from trade receivables is managed by the Company's established policy, procedures and control relating to customer credit risk management. Trade receivables are mainly from stockist, distributors and direct customers, and are mostly non-interest bearing. Trade receivables generally ranges from 30-days to 180-days credit term. Credit limits are established for customers based on internal criteria and any deviation in credit limit require approval of Head of the Department depending upon the quantum and overall business risk. Majority of the customers have been doing business with the Company for more than 3 years, and they are being monitored by individual business managers who deals with those customers. The Management monitors trade receivables on regular basis and take the suitable action, where needed, to control the receivables crossing set criterias/limits. Also, in the case, of international business, particularly new customers, the Management reviews the business risk by evaluating economic situation of the country and the customers, and generally starts the relation either on advance payment or on the basis of confirmed irrevocable letter of credit.

The Management does an impairment analysis at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. Further, the Company's customers base is widely distributed both economically as well as geographically, and, in view of the same, the quantum risk also gets spread across

wide base, and hence, the Management considers risk with respect to trade receivable as low. Of the trade receivables, balance at the end of the year, ' 4,418.39 lakhs (March 31, 2022: ' 5,851.88 lakhs) is due from 2 related parties and ' 6,210.79 lakhs (March 31,2022: '6,845.93 lakhs) is due from a single counter party which is in excess of 10% of total trade receivables.

For trade receivables, as a practical expedient, the Company determines credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables, and is adjusted for forwardlooking estimates.

b) Liquidity Risk:

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company's objective is to, at all times, maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system.

The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash or cash equivalent, available to meet all its normal operating commitments in a timely and cost-effective manner. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels. The Company aims to maintain the level of its cash and cash equivalents, and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next three to six months.

Exposure to Liquidity Risk

The following are the remaining contractual maturities of undiscounted financial liabilities at the reporting date.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market conditions. Market risk comprises three types of risks:

i. Interest Rate Risk,

ii. Currency Risk, and

iii. Equity Price Risk.

Financial instruments affected by market risk include borrowings, trade payables, investments, trade receivables, loans and derivative financial instruments.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

i) Interest Rate Risk:

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 has not used any interest rate derivatives.

The Company's exposure to changes in interest rates relates mainly to outstanding long term debt. Interest rate for these debts is fixed for initial 3 years, and thereafter, 1 year MCLR Rate prevailing at that point of time. At present, the company does not have any interest rate risk for these debts for a period of around more than 2 years.

ii) Foreign Currency Risk:

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. Primarily, the exposure in foreign currencies are denominated in USD, EURO, RUBLE, AED and AUD. At any point of time, the Company covers foreign currency risk by taking appropriate percentage of its net foreign currency exposure by entering into foreign exchange forward contracts on Anticipated Exposure basis, mostly with a maturity of less than one year from the reporting date. In respect of monetary assets and liabilities denominated other than in USD, EURO, RUBLE, AED and AUD, the Company's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address shortterm imbalances.

All such hedged transactions are carried out within the guidelines set by the Risk Management Committee. The Company does not enter into any derivative instruments for trading or speculative purposes.

Impact of Hedging Activities:

The Company uses foreign exchange forward contracts to hedge against the foreign currency risk of highly probable sales. Such derivative financial instruments are governed by the Company's policies, approved by the Board of Directors, which provide written principles on the use of such instruments consistent with the Company's risk management strategy. As the value of the derivative instrument generally changes in response to the value of the hedged item, the economic relationship is established.

Hedge effectiveness is determined at the inception of hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instruments. It is calculated by comparing changes in fair value of the hedged item, with the changes in fair value of the hedging instruments.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item, so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

The Company does not have any material exposure to equity price risk, as there is no major investment in equity, except in its own subsidiaries, and accordingly, exposure to risk of changes in price is very low.

51. CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity share capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to safeguard the Company's ability to remain as a going concern and to maintain and optimal capital structure, so as to maximise shareholder's value.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions, annual operating plans and long term and other strategic investment plans. To maintain or adjust the capital structure, the Company may adjust the dividend payment

54. RECLASSIFICATION NOTE

The figures for the corresponding previous year have been regrouped/reclassified wherever necessary, to make them comparable.

55. UNFORESEEABLE LOSSES

The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company did not have any long-term contracts (including derivative contracts) for which there were any material foreseeable losses.

56. IMPACT OF CODE ON SOCIAL SECURITY, 2020

The Indian Parliament has approved the Code on Social Security, 2020, which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on 13th November, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective, and the related rules to determine the financial impact are published.

57. EvENTS AFTER THE REPORTING PERIOD

Dividend:

The Board of Directors has recommended a final dividend of ' 9.25 per fully paid-up equity shares (face value of ' 2/- each) amounting to ' 7,157.43 lakhs for the financial year 2022-23, which is based on relevant share capital as on March 31,2023. The actual dividend amount will be dependent on the relevant share capital outstanding as on record date/book closure. The recommended dividend is subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

Sub-Division of Equity Shares:

The Board of Directors of the Company, at its meeting held on May 24, 2023, has approved sub-division of each equity share of face value of ' 2 fully paid-up into 2 equity shares of face value of ' 1 each fully paid-up, subject to approval of the shareholders at the ensuing Annual General Meeting of the Company.

58. UNCERTAINTIES Relating TO The Geopolitical SITUATION IN RUSSIA AND UKRAINE

The Company considered the uncertainties relating to the geopolitical situation in Russia and Ukraine, in assessing the recoverability of receivables, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. Based on its judgement, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, investments and other assets. The Company will continue to closely monitor any material changes to future economic conditions.

59. 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 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.