The rights, preferences and restrictions including restrictions on the distribution of dividends and the repayment of capital

The Company is having only one class of shares i.e. Equity carrying a nominal value of H2/- per share. Every holder of the equity share of the Company is entitled to one vote per share held. In the event of liquidation of the Company, the equity shareholders will be entitled to receive remaining assets of the Company after the distribution/repayment of all creditors. The distribution to the equity shareholders will be in proportion of the number of shares held by each shareholder.

The Company declares and pays dividend on the equity shares in Indian Rupees. Dividend proposed by the Board of Directors is subject to approval of the shareholders at the ensuing Annual General Meeting, except in case of interim dividend.

Nature and purpose of each Reserve

General Reserve :- The reserve was created by transfer of a portion of the net profit.

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

Debenture Redemption Reserve : The company has created debenture redemption reserve out of the profits as prudent practice in accordance with erstwhile provision of Companies Act, 2013.

Other Comprehensive Income (OCI) : represents remeasurements of the defined benefits plan and fair value change of certain financial instruments.

4 Segment Reporting

Segment information as required under Ind AS 108 i.e. Operating Segments is given in the Consolidated financial statements of the Company.

A description of methods used for sensitivity analysis and its limitations:

S ensitivity analysis is performed by varying single parameter while keeping all the other parameters unchanged. Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if two or more variables are changed simultaneously. The method used does not indicate anything about the likelihood of change in any parameter and the extent of the change, if any.

Major risk to the plan

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 cash flow 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.

A . 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.

A. 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 valuation of liability is exposed to fluctuations in the yields as at the valuation date.

D. 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 recognized immediately in the year when any such amendment is effective.

6 Provident Fund

The Company is liable for any shortfall, as per terms of the Provident Fund Trust deed, in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same, no such shortfall during the year & in previous year. Contribution to Provident fund trust and ESIC H31.09 Crores (PY H27.73 Crores).

Refer Note No 5,7,8,9,10,27(22),16,17,18,27(7)J.

The Fair value of unquoted investment in Limited liability partnerships is arrived by Net Asset Value ('NAV') method under Cost Approach by external valuation agency. The valuation is carried out based on provisional financial statement of ABCD Technologies LLP as at 31^st December, 2022. With respect to the fair value of the investment in Rigimmune. Inc., due to insignificant change in fair valuation, transaction price is considered as fair value as at 31^st March, 2023.

C redit 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, Deposit, Cash and cash equivalents and other receivables.

Trade receivables

Che Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, demographics of the customer, default risk of the industry and country in which the customer 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 Company has used expected credit loss model for assessing the impairment loss.

Cash and cash equivalents

Cs at the year end, the Company held cash and cash equivalents of H21.67 Crores (PY ?13.56 Crores). The cash and cash equivalents, other bank balances and derivatives are held with banks having good credit rating.

Other financial assets

Other financial assets are neither past over due nor impaired.

Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company ensures that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions. The Company has sufficient unutilised fund and non fund based working capital credit limit duly sanctioned by various banks.

The company is rated by leading credit agency CRISIL, the rating "CRISIL A1 " and "AA /Stable" has been assigned for short term and long term facility respectively, indicating high degree of safety regarding timely payment and servicing of financial obligation.

iii) Market risk Currency Risk

The Company's foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company uses foreign exchange option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its business transactions and recognized assets and liabilities. The Company enters into foreign currency options contracts which are not intended for trading or speculative purposes but for mitigating currency risk.

Sensitivity analysis

For the year ended 31^st March, 2023 every 5% weakening of Indian Rupee as compare to the respective major currencies for the above mentioned financial assets/liabilities would increase Company's profit and equity by approximately H40.01 Crores (PY H34.39 Crores). A 5% strengthening of the Indian Rupee as compare to the respective major currencies would lead to an equal but opposite effect.

Interest rate risk and Exposure to interest rate risk

The Company has loan facilities on floating interest rate, which exposes the company to risk of changes in interest rates.

T or the year ended 31^st March, 2023 every 50 basis point decrease in the floating interest rate component applicable to its borrowings would decrease the Company's interest cost by approximately H2.68 Crores (PY ?0.90 Crores) on a yearly basis. A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.

Commodity rate risk

The Company's operating activities involve purchase and sale of Active Pharmaceutical Ingredients (API), whose prices are exposed to the risk of fluctuation over short periods of time. Commodity price risk exposure is evaluated and managed through procurement and other related operating policies.

Other Risk

S ince company has been significantly dealing in regulatory market, continuous compliance of all manufacturing facilities is pre requisite. Any adverse action by regulatory authority of the company's target market can adversely affect company's operation.

18 Capital Management

The Company's capital management objectives are:

* to ensure the Company's ability to continue as a going concern and

* to provide an adequate return to shareholders through optimisation of debts and equity balance.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company's objective for capital management is to maintain an optimum overall financial structure.

20 Disaggregation of revenue

The Company is engaged in Pharmaceuticals business considering nature of products, revenue can be disaggregated as API business and Formulation business H1165.16 Crores and H3983.84 Crores respectively, and considering Geographical business, revenue can be disaggregated as in India H2312.20 Crores and out side India H2836.80 Crores.

25 The Company has working capital borrowing from banks on the basis of security of current asset and quarterly returns filed by the Company with banks are in agreement with the books of account.

26 Business Combination

I n the previous year, the Board of Directors of the Company had at their meeting held on 29^th March, 2022 inter alia approved the Scheme of Arrangement in nature of Amalgamation of Aleor Dermaceuticals Ltd. ('the Transferor Company'/'Aleor') engaged in the business of Pharmaceuticals with Alembic Pharmaceuticals Ltd. ('the Transferee Company') and their respective shareholders ('the Scheme') with effect from the appointed date i.e. 1^st April, 2021. The said Scheme had been sanctioned by the Hon'ble National Company Law Tribunal, Ahmedabad Bench ("NCLT") vide its Order dated 29^th August, 2022. The Scheme was effective upon filing of the certified copy of the said Order with the Registrar of Companies, Gujarat/Ministry of Corporate Affairs. Accordingly, the Board approved the financial statements after giving effect to the Scheme.

Ts per Ind AS - 103, the financial information in the financial statements in respect of prior period is required to be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination, Accordinglly the Company has restated the financials of the comparative period, on account of Amalgamation of Aleor. The transaction does not have any impact on the consolidated financial statement.

The Standalone Financial Statements for the year ended 31^st March, 2022 were earlier approved by the Board of Directors on 2^nd May, 2022 on pre-Amalgamation basis. Pursuant to the approval of the Scheme by Hon'ble NCLT, this Standalone Financial Statement for the year ended 31^st March, 2022 had been revised as per the scheme by applying the principles as set out in Appendix C of Ind As 103 "Business Combination" and inter-company balances and inter-company investments between both companies stood canceled. The financial statements of Aleor for the year ended on March 31, 2022 and March 31, 2021 were audited by the statutory auditor of Aleor.

27 The Board of Directors of the Company at their meeting held on 2nd March, 2023, inter alia, considered and

approved:

a I impairment review of the capital work-in-progress ("CWIP") in respect of 3 (three) new manufacturing

facilities that were under construction viz. Formulation 2 located at Panelav, Gujarat, Formulation 3 located at Karakhadi, Gujarat and Formulation 4 located at Jarod, Gujarat, which indicated an aggregate impairment amount of ?1,150.43 Crores ("Identified CWIP"), to be charged to the Statement of Profit and Loss of FY 2022-23, as write-off in respect of manufacturing facilities or part thereof, for which the commercial operation has commenced during the FY 2022-23, and as provision for impairment / diminution in the value of assets in respect of manufacturing facilities or part thereof, for which the commercial operation has not commenced during the FY 2022-23; and

b D raft Scheme of Arrangement between the Company and its shareholders ("Scheme"), which provides for

reorganization / utilization of General Reserve of the Company, pursuant to the provisions of Section 230 and other applicable provisions of the Companies Act, 2013 read with applicable rules made thereunder, with the Appointed Date of 1^st January, 2023 subject to receipt of requisite regulatory, statutory and contractual approvals. Currently, the Scheme is pending with the Stock Exchanges / SEBI for their No-objection Letter as required under Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

I n view of above, an Identified CWIP amount of H676.87 Crores has been written off to the Statement of Profit and Loss for the year ended 31^st March, 2023, in respect of manufacturing facilities or part thereof, for which the commercial operation has commenced during the FY 2022-23 and an Identified CWIP amount of H473.56 Crores has been provided for in the Statement of Profit and Loss as provision for impairment /diminution in the value of assets in respect of manufacturing facilities or part thereof, for which the commercial operation has not commenced during the FY 2022-23. Further, an amount equivalent to the amount of write-off and impairment of assets (net of deferred tax) has been transferred from General Reserve to the Statement of Profit and Loss for the financial year ended on 31^st March, 2023.

Above items a) and b) are disclosed as Exceptional item. Refer Note 26.

c Dhe amount of H868.63 crores has been transferred from General Reserve to the Retained Earnings under

the head "Other Equity" during the financial year ended on 31^st March, 2023, pending requisite approvals as stated above, for which there is no specific accounting treatment specified in Ind AS.

28 Other Statutory information

i Dhe company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.

ii Dhe company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iii The company have not traded or invested in Crypto currency or Virtual Currency during the period/year.

iv The company have 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) d irectly 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.

v The company have 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) d irectly 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.

vi The company has no such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

vii The company holds all the title deeds of immovable properties in its name.

viii The company is not declared as wilful defaulter by any bank or financial Institution or other lender.

29 The previous year's figures have been regrouped / rearranged wherever necessary to make it comparable with the current year.