7.1 2,20,000 Non Cumulative Redeemable Preference Share Capital (NCRPS) shall be entitled to a preferential dividend of 7.5 % per annum. The NCRPS shall be redeemed from the Financial Year 2027-28 (3 yearly installments) or such other period as may be agreed mutually.

7.2 38,000 Non Cumulative Optionally Convertible Preference Share Capital (NCOCPS) shall be entitled to a preferential dividend of 7.5 % per annum. The NCOCPS shall be redeemed or converted (as mutually agreed) in the Financial Year 2027-28 or such other period as may be agreed mutually.

7.3 "Equity Investments in Subsidiary company during the year (i) 45,00,000 Equity shares of ' 10/- each and (ii) 93,33,333 Equity shares of ' 10/- each with a security premium of ' 5/- each."

7.4 Investments in Subsidiary during the year is Non cumulative redeemable preference shares of 70,000 shares at a face value of ' 1000/- each.

7.5 70,000 Non Cumulative Redeemable Preference Share Capital (NCRPS) shall be entitled to a preferential dividend of 7.5 % per annum. The NCRPS shall be redeemable within such period as mutually agreed but not later than 20 years from the date of issue.

8.1 Note:

Term loan sanctioned and disbursed so far to wholly owned subsidiary (WOS) viz., Ultramarine Specialty Chemicals Ltd is ' 2,042 lakhs carrying interest rate in the range of 6.75% - 9.25% (repo rate plus 2.75%). This is repayable in 16 quarterly installments after a moratorium of 2 years and repayment commenced from March 31, 2024.

During the year, an amount of ' 548 Lakhs was prepaid by the WOS due to a change in finance structure of the projects.

(a) Trade Receivable includes receivables from Related party - ' 176.16 Lakhs ( 31st March 2023 - ' 48.26 lakhs)

(b) In determining the allowances for doubtful trade receivables the Company has used practical expediency by computing the expected credit loss allowance for trade receivables based on provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in provision matrix.

20.2 Terms/rights attached to equity shares

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

(b) The Company declares and pays dividends in Indian Rupees based on the profits available for distribution. The Board of Directors in their meeting held on 16th May 2024 proposed a final dividend of ' 5/- per share on the nominal value of ' 2/-each for the financial year ended March 31, 2024 and the proposal is subject to approval of shareholders at their meeting to be held on 25th July, 2024, if approved, would result in cash outflow of approximately '1460 Lakhs.

(c) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amount. The distribution will be proportionate to the number of equity shares held by the share holders.

(d) There is no change in issued and paid up share capital during the year.

(a) Loan from HSBC Bank is secured by an exclusive charge on the Industrial Plot, charge on movable fixed assets of the company at the plant located at Menakur Village, Naidupet Town. The term loan is repayable in 60 monthly installments from the date of disbursement with an initial moratorium period of 2 years and the first installment of repayment commenced in the month of December, 2021, carrying interest rate in the range of 6.10% to 8.73%.

(b) An additional loan of ' 837 Lakhs availed from HSBC in F.Y. 2022-23 with a moratorium period of 2 years and payable in 48 months installments. The repayment of the loan will commence from 30th June, 2024 carrying a interest rate of 8.16% p.a.

(c) During this F.Y. 2023-24 an additional loan of ' 383 Lakhs availed from HSBC with a moratorium period of 2 years and payable in 48 months installments. The repayment of the loan will commence from 30th August, 2025 carrying a interest rate of 8.59% p.a.

The Company availed concessional rate of customs duty under Export Promotion Capital Goods (EPCG) license scheme on import of capital goods and spares for which the company is obligated to fulfil export obligation / commitment as on 31.03.2024 amounting to ' 1422.86 lakh (Previous Year ' 1422.86 lakh). In this regard, export obligations/ commitments amounting to ' 1350.92 lakh have already been completed.

The Company is yet to fulfill the balance export obligations/commitments as on 31.03.2024 amounting to ' 71.94 lakh and the same is expected to be fulfilled by exports within the permitted time. The company also executed bonds to customs authorities for the customs duty concession availed as per the scheme on import of capital goods and spares amounting to ' 1422.86 Lakh (Previous year ' 1422.86 lakh).

[D] Pending Proceedings

The Company's pending litigation comprise of claims against the Company by the parties and proceedings pending with Revenue authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the 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 results.

42 The Company has availed credit facilities (both fund based and non-fund based) from two banks(HSBC Bank - ' 5 Crores & Axis Bank- ' 11 Crores) are secured by hypothecation of stocks (raw materials and finished goods) and book debts of the company at Ranipet and Naidupet Plant. However, no amount is outstanding (fund based) as on 31st March, 2024.

43 Employee benefits

[A] Defined contribution plans:

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable by the Company are at rates specified in the rules of the schemes.

9. Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

These plans typically expose the Company to actuarial risks such as : investment risk , interest risk , longevity risk and salary risk.

Investment risk:

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create plan deficit.

Interest risk:

A decrease in the bond interest rate will increase the plan liability; however, this will be partially off set by an increase in the plan assets.

Longevity risk:

The present value of the defined benefit 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.

Salary risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to offset current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

45 Financial instruments A Valuation:

All financial instruments are initially recognised and subsequently re-measured at fair value as described below:

i) The fair value of investment in quoted Equity shares is measured at quoted price or NAV

ii) The fair value of Forward Foreign Exchange contracts is determined using forward exchange rates at the balance sheet date.

iii) All foreign currency denominated assets and liabilities are translated using exchange rate at reporting date except advance received or paid.

iv) The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

Level wise disclosure of Financial Instruments

The financial instruments are categorised into three levels based on the inputs used to arrive at fair value measurements as described below:

i) Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price/NAV. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

ii) Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using the 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

iii) Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(*) These investments in equity instruments are not for trading. Instead, they are held for medium or long term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the Directors believe that this provides a more meaningful presentation for medium or long term strategic investments, than reflecting changes in fair value immediately in profit or loss.

45.1 Financial risk management

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

- credit risk

- liquidity risk

- market risk

- interest rate risk

Risk management framework

The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the company.

A Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers, loans and investment in debt securities. The Company establishes an allowance for doubtful trade receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer and including the default risk of the industry, also has an influence on credit risk assessment. 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 measures the expected credit loss of trade receivables based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends.

Loans

In the case of loans to employees, the same is managed by establishing limits. (Which in turn based on the employees salaries and number of years of service put in by the concern employee)

Investment in debt securities

The Company makes Investments in Deposits or Commercial papers or similar instruments in Companies having AA, AA or higher ratings from Credit rating agencies. The Company also makes investments in Debt Mutual funds.

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counter parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.

Customer credit risk is managed as per the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.

Cash and cash equivalents

The Company held cash and cash equivalents of ' 4268.77 Lakhs as at 31st March, 2024 (31st March, 2023: ' 3356.01 Lakhs). The cash and cash equivalents are held with banks.

Derivatives

The derivative contracts are entered into with scheduled banks and financial institutions which have good credit ratings.

B 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 responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company's short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by monitoring forecast and actual cash flows, maintaining adequate reserves and by matching the maturity profiles of financial assets and liabilities.

C Market risk

Market risk is the risk that the fair value or future cash flows of the financial instrument will fluctuate because of changes in market prices . Such changes in values of financial instruments may result from changes in foreign currency exchange rates, credit , liquidity and other market changes. The Company's exposure to market risk is primarily on account of foreign currency exchange rate risk.

(a) Foreign Currency Exchange Rate Risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed utilising forward foreign exchange contracts.

The following table analyzes foreign currency risk from financial instruments as of 31st March 2024 and 31st March 2023:

Foreign currency sensitivity analysis

The Company is mainly exposed to the currency : USD and GBP

The following table details the Company's sensitivity to a 5% increase and decrease in the Rupee against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% charge in foreign currency rate. A positive number below indicates an increase in the profit or equity where the Rupee strengthens 5% against the relevant currency. For a 5% weakening of the Rupee against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.

Forward foreign exchange contracts

The Company has entered into Forward Exchange Contracts, being derivative instruments for hedge purposes and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain receivables.

The following are the outstanding Forward Exchange Contracts entered into by the Company.

D Interest Rate Risk

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, in cases where the borrowings are measured at fair value through profit or loss. 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 Company's investments are primarily in fixed rate interest bearing investments. Hence , the Company is not significantly exposed to interest rate risk. The Company makes Investments in Deposits or Commercial papers or similar instruments in Companies having AA, AA or higher ratings from Credit rating agencies. The Company also makes investments in Debt Mutual funds.

Interest on lease liabilities is ' 68.85 Lakhs (March 31, 2023'46.00 Lakhs) for the year ended March 31, 2024.

The total cash outflow for leases is ' 205.98 Lakhs ( March 31, 2023 - ' 180.78 Lakhs) for the year ended March 31, 2024. The Company has lease term extension options that are not reflected in the measurement of lease liabilities.

Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the contract.

The table below provides details regarding the contractual maturities of lease liabilities as at March 31, 2024 on an undiscounted basis:

49 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.

56 Audit Trail

The company has used accounting software (ERP) for maintaining its books of account, have a feature of embedded audit trail at transaction level on application layer which creates unique events for every transaction along with date of creation , updation and identity of users. Transactions recorded in ERP are not allowed to be modified after posting. There are no instances of audit trail feature being tampered with and the same has been operated throughout the year for all transactions recorded in the accounting software. Post publication of ICAI implementation guide, direct database level changes was also included in audit trail scope. In respect of ERP, access to direct database level changes is available only to authorized personnel. However the software vendor confirmed that there is no audit trail enabled for database level changes and is in the process of developing audit trail for any database level changes and expected to be completed during June 2024.

57 Technical License Agreement

During the current financial year, the company has entered into technical license agreement (agreement) with its wholly owned subsidiary Ultramarine Specialty Chemicals Limited for granting access to use process know-how to manufacture, sale and / or distribution of Inorganic Pigments. The Subsidiary to pay Royalties @ 3% on net sales of Inorganic Pigments per contract year. Accordingly, Royalty revenue of ' 148.69 lakhs (refer Note No. 33) has been recognised during the current year including ' 48 lakhs for the first year of commercial operations.

58 Code on Social Securities

The Central Government has published The Code on Social Security, 2020 and Industrial Relations Code, 2020 ("the codes") in the Gazette of India, interalia, subsuming various existing labour and industrial laws which deals with employees including post employment period. The effective date of the code and the rules are yet to be notified. The impact of the legislative changes if any will be assessed and recognised post notification of relevant provisions.

61 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 traded or invested in Crypto currency or Virtual Currency during the financial year.

iii) The company have not advanced or loaned or invested funds to any other persons or entities including foreign entities (intermediates) 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.

iv) The company have not received any fund from any persons or entities including foreign entities (intermediates) 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.

v) The Company does not have any 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.

vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

vii) The Company is not declared willful defaulter by and bank or financials institution or lender during the year.

viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

ix) Quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

x) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.

xi) The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and equipment and capital work-in progress are held in the name of the Company as at the balance sheet date except :

62 Previous years figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/ disclosure.