^AThe Company had given loan to Devyani International (Nepal) Private Limited, a wholly owned subsidiary, at interest rate which is lower than the market rate of interest. Such loan had been fair valued and recorded as additional investment in the wholly owned subsidiary per generally accepted accounting principles in India and also the Company had given financial guarantee to Everest Bank Limited on behalf of Devyani International (Nepal) Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary.

*The Company had given financial guarantee to Yes Bank Limited on behalf of Devyani Food Street Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary per generally accepted accounting principles in India. During the year ended 31 March 2022, the Company has waived INR 102.43 receivables of its wholly owned subsidiary, which is in substance being treated as capital contribution (investment) made towards the subsidiary.

**The preference shares are redeemable at the option of the subsidiary RV Enterprizes Pte. Limited, Singapore, hence the same are carried at cost considering the investment evidencing a residual interest and therefore treated as equity investment.

Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity share having a par value of INR 1.00/- per share. Each holder of the equity share is entitled to one vote per share and is entitled to dividend declared, if any. The paid up equity shares of the Company rank pari-passu in all respects, including dividend. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of the equity shares will be entitled to remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholder.

For the period of five years immediately preceding the reporting date, there was no share allotment made for consideration other than cash. Further, no bonus shares have been issued and there has been no buy back of shares during the period of five years immediately preceding 31 March 2023 and 31 March 2022.

a) Share application pending allotment represents the amount received on the share application on which allotment is not yet made.

b) Securities premium is used to record the premium on issue of shares. It will be utilised in accordance with the provisions of the Companies Act, 2013.

c) General reserve are free reserves of the Company which are kept aside out of the Company's profit to meet the future requirements as and when they arise. The Company had, in the previous years, transferred a portion of profit after tax to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956.

d) Retained earnings are the accumulated losses earned by the Company till date, as adjusted for distribution to owners.

e) Employee stock option outstanding account is used to record the impact of employee stock option schemes. Refer note 42 for further details of these plans.

b) Other comprehensive income

Other comprehensive income pertains to remeasurement gains/ (losses) on defined benefit plans, which are transferred

to retained earnings at the end of the year.

(a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date. Further, there were no loans taken by the Company during the year ended 31 March 2023.

(b) The quarterly returns/statements of current assets filed by the Company with banks or financial institutions in relation to secured borrowings / sanctioned loans, wherever applicable, are in agreement with the books of accounts.

(c) The charge created on property, plant and equipment as at 31 March 2023 is for undrawn facilities/sanctioned facilities.

(i) The Company has measured its deferred tax assets and liabilities based on the income tax rates that are expected to apply to the period when such assets/liabilities are expected to be realized/settled. As per section 115BAA of the Income-tax Act 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance), the Company has opted lower tax rate of 25.168%. Hence, deferred tax asset has been measured at 25.168%.

(ii) During the year ended 31 March 2022, the Company had recognized deferred tax assets of INR 410.78 based on the business projections of taxable earnings in the near future at that point in time. While recognizing such deferred tax assets, the Company has been cognizant enough to consider the history of losses they have, uncertainties of business in place and rising input costs. Carrying value of deferred tax assets (net) is INR 410.78 as at 31 March 2022. However, during the current year, owning to improved financial performance of the Company and expected taxable earnings for near future, the Company has recognised the unrecognised deferred tax asset amounting to INR 868.84 and the carrying value is INR 901.79 as at 31 March 2023.

35. FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS

a. Financial instruments - by category and fair values hierarchy

The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including their levels in the fair value hierarchy.

Other notes:

The investment in equity and preference shares of subsidiaries are measured at cost. Refer note 6A for further details. There has been no transfer from level 3 to level 1 and level 2 for the year ended 31 March 2023 and 31 March 2022. Valuation techniques used to determine fair values:

Specific valuation techniques used to value financial instruments include:

- Fair value of financial instruments using present value techniques, which is based on discounting expected cash flows using a risk-adjusted discount rate.

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team performs valuation either internally or externally through valuers and reports directly to the senior management. Discussions on valuation and results are held between the senior management and valuation team on annual basis. Further, the carrying value of investments measured at FVTPL, are not material.

Significant inputs

Significant unobservable input used in Level 3 fair values of investments measured at FVTPL is discount rate which is weighted average cost of borrowing of the Company plus spread of corporate guarantee commission which is 7.40% (31 March 2022: INR 7.20%) and estimated cash flows of respective companies in which investment in preference shares is made.

Risk Management Framework

The Board of Directors of the Company is responsible for reviewing the risk management policies and ensuring its effectiveness.

The Company's risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in the market conditions and the Company's activities.

The Board of Directors oversees how management monitors compliance with Company's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company.

i. Credit risk

The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk on cash and cash equivalents and bank deposits (shown under bank balances other than cash and cash equivalents, above) and other financial assets is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The other financial assets primarily represents security deposits given to lessors for premises taken on lease. Such deposits will be returned to the Company on vacation of the premises or termination of the agreement whichever is earlier. Loan to subsidiaries will be repaid as per the terms of the agreement and there has been no default in repayment of such loans by subsidiaries.

The exposure to the credit risk at the reporting date is primarily from loan to subsidiaries, security deposit receivables and investment in subsidiaries. The Investment and Borrowing Committee monitors the investment in subsidiaries and loans granted to subsidiaries and it evaluates if any impairment is required. As at year end, Investment and Borrowing Committee based on the internal and external valuation and after assessing the performance of the subsidiaries, is of the view that no impairment is required (refer note 32).

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and Nepal. Trade receivables also includes receivables from credit card companies and online aggregator platforms, which are generally realisable on fortnightly basis. The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.

The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company's historical experience for customers. Based on the business environment in which the Company operates, management considers that the trade receivables are in default (credit impaired) if the payments are more than 90 days past due however, the Company based upon past trends determines an impairment allowance for loss on receivables (other than receivables from related parties) outstanding for more than 180 days past due. Majority of trade receivables are from domestic customers, which are fragmented and are not concentrated to individual customers. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

- For trade receivables ageing refer note 11. Also, the management of the Company has preferred credit risk assessment on individual basis for trade receivables.

- For security deposits and other receivables also management has preferred credit risk assessment at category level and individual level. Based on this, the management has concluded that there are no significant Impact other than already provided for, in the standlone financial statements (refer note 8).

(ii) 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 other financial assets. The Company's approach to manage

liquidity is to have sufficient liquidity to meet it's liabilities when they are due, under both normal and stressed

circumstances, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company's liquidity management process as monitored by management, includes the following:

- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.

- Maintaining rolling forecasts of the Company's liquidity position on the basis of expected cash flows.

- It maintains adequate source of financing through the use of short term bank deposits and cash credit facility.

- The Company assessed the concentration of risk with respect to its financial liabilities and concluded it to be

low

As on 31 March 2023 the Company has undrawn credit facility for INR 975.33 (31 March 2022: INR 936.87)

(iii) Market risk

Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

Interest rate risk is the risk that the 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 borrowings with floating interest rates.

The Company is exposed to interest rate risk on account of variable rate borrowings. The Company's risk management policy is to mitigate its interest rate exposure in accordance with the exposure limits advised from time to time.

B. Currency risk

Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company's operating, investing and financing activities. The Investment and Borrowing Committee evaluates foreign exchange rate exposure arising from foreign currency transactions on periodic basis and follows appropriate risk management policies.

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupees against below currencies as at the year end would have affected the measurement of financial instruments denominated in foreign currency and affected profit or loss and other equity by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant.

C. Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company's performance to developments affecting a particular industry. Based upon the Company's evaluation, there is no excessive risk concentration.

During the year ended 31 March 2023 and 31 March 2022, consequential to COVID-19 pandemic, the Company has negotiated several rent concessions with the landlords. Further, in view of amendments by the Companies (Indian Accounting Standards) Amendment Rules, 2020, the Company has elected to apply the practical expedient of not assessing the rent concessions originally due on or before 30 June 2021 as a lease modification, as per MCA notification dated 24 July 2020, which has been further extended till 30 June 2022 on Ind AS 116 during the current year, for rent concessions received on account of COVID-19 pandemic.

Accordingly, as per requirements of MCA notifications, out of total rent concessions of INR Nil (31 March 2022: INR 271.49) confirmed till 31 March 2023, INR Nil (31 March 2022: INR 271.49) has been reduced towards rent expenses.

iv. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in Statement of profit and loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

B. Leases where the Company is a lessor

The Company has sub-leased out some of its leased properties primarily in various food courts. All leases are classified as operating leases from a lessor perspective with the exception of certain sub-leases, which the Company has classified as finance subleases.

The incremental borrowings rate range between 9.25% - 11.55% (31 March 2022: 9.25% - 11.55%).

The management of the Company estimates the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime expected credit loss under simplified approach. None of the finance lease receivables at the end of the reporting period is past due, and taking into account the historical default experience and the future prospects of the industries in which the lessees operate, together with the value of collateral held over these finance lease receivables (see note 8), the management of the Company consider that no finance lease receivable is impaired.

The Company entered into finance leasing arrangements as a lessor for certain leased properties under sub leasing arrangements. The term of finance leases entered into is ranging from 2.92 - 18.01 years (31 March 2022: 3.16 - 18.01 years). The Company is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in INR. Residual value risk on such right of use assets under lease is not significant.

ii. Operating lease (sub leases classified as operating leases)

Operating leases, in which the Company is the lessor, relate to leased properties by the Company with lease terms of between 1 to 9 years.

The unguaranteed residual values do not represent a significant risk for the Company, as they relate to leased properties of lessor under sub leasing contracts which are located in a location with active market for lessees. The Company did not identify any indications that this situation will change.

Estimation of fair value

* The Company's leasehold investment properties consist of right-of-use assets in leased food courts, which has been determined based on the nature, characteristics of leases of each property.

The fair value of investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs and has been arrived at using discounted cash flow projections based on reliable estimates of future cash flows considering growth in rental income of 8% to 10% (31 March 2022: 8% to 10% p.a) and discount rate of 14.20% p.a (31 March 2022: 12.09% p.a).

# The fair value of owned investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs. The fair value has been arrived using market prevailing rates applicable to same location.

Impairment of leasehold investment properties:

In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections. As on the reporting date for current year, the recoverable amount of this cash generating unit is determined at INR 282.01 (31 March 2022: INR 244.95) through an registered independent valuer, based on the value in use calculation which uses cash flow projections based on the projected business operations. The Company has determined an impairment charge of INR Nil (31 March 2022: 65.43) based on the discount rate of 14.20% p.a (31 March 2022: 12.09% p.a) and rental income growth rate of 8.00% to 10.00% (31 March 2022: 8.00% to 10.00% p.a). An analysis of the sensitivity of the computation to a change in key parameters (rental income and discount rates), based on reasonable assumptions, Management is of the view that there would be no material impact to the impairment charge which has already been recognised in the standalone financial statements of the Company in the previous year. Further, there is significant headroom available between carrying values of leasehold investment properties and its recoverable value as at reporting dates.

During the years ended 31 March 2023 and 31 March 2022 the Company has provided a letter of support for financial and operational assistance to Devyani Food Street Private Limited, Devyani Airport Services (Mumbai) Private Limited, RV Enterprizes Pte. Limited and Devyani International Nigeria Limited for ongoing operations for atleast 12 months from the reporting dates.

During the previous year ended 31 March 2022, Devyani Airport Services (Mumbai) Private Limited converted its Non-cumulative Redeemable Preference Shares to Compulsorily Convertible Preference Shares ("CCPS") pursuant to provisions of Section 48 of the Companies Act, 2013 as per shareholder's approval in Extra Ordinary General Meeting held on 17 August, 2021. Devyani Airport Services (Mumbai) Private Limited converted its CCPS to equity shares as on 01 October 2021.

(V) Terms and conditions

All transactions with related parties are made on the terms equivalent to those that prevail in arm's length transactions and within the ordinary course of business. Outstanding balances at respective year ends are unsecured and settlement is generally done in cash.

*Against the total tax demand of INR 200.77 (31 March 2022: INR 209.75) , the Company has filed appeals before various tax authorities. Based on management assessment and upon consideration of advice from the independent legal counsels, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the standalone financial statements.

# The Company is party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial position and hence no provision has been recorded against these legal proceedings at this stage. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. Accordingly, the above mentioned contingent liabilities are disclosed at undiscounted amount.

Also, during the years ended 31 March 2023 and 31 March 2022 the Company has provided a letter of support for financial and operational assistance to Devyani Food Street Private Limited, Devyani Airport Services (Mumbai) Private Limited, RV Enterprizes Pte. Limited and Devyani International Nigeria Limited for ongoing operations for at least 12 months from the reporting dates.

Note: Also, the Company has entered Development Agreements with Yum Restaurant (India) Private Limited and Costa International Limited. Based on such agreements, the Company has commitments to open specified number of restaurants under respective agreements from time to time. The amount of such commitments is not quantifiable as of now.

40. EMPLOYEE BENEFITS

A. Defined contribution plans

An amount of INR 201.83 (31 March 2022: INR 126.92) has been recognised as an expense in respect of the Company's contribution to provident and other funds deposited with the relevant authorities and has been charged to the Standalone Statement of Profit and Loss.

B. Defined benefit plans

The Company operates a gratuity plan wherein every employee is entitled to the benefit. Gratuity is payable to all eligible employees (who have completed 5 years or more of service) of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payments of Gratuity Act, 1972. Gratuity liability is partially funded by the Company through annual contribution to DIL Employees Gratuity Trust (the 'Trust') against ascertained gratuity liability. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by law of India.

The funding requirements of the plan are based on the gratuity fund's actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose for which assumptions may differ from the assumptions set out in (iii) below. Employees do not contribute to the plan.

The Company has defined that, in accordance with the terms and conditions of the aforesaid plan and in accordance with statutory requirements (including minimum funding requirements) of the plan of relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less than total present value of obligations.

The following table sets out the status of the gratuity plan as required under Ind AS 19 - 'Employee Benefits'

The sensitivity analysis is based on a change in above assumption while holding all other assumptions constant. The changes in some of the assumptions 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 year) has been applied when calculating the provision for defined benefit plan recognised in the Standalone Balance Sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.

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

Risk exposure:

The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:

Change in discount rates: A decrease is discount yield will increase plan liabilities

Mortality table: The gratuity plan obligations are to provide benefits for the life of the member, so increase in life expectancy will result in an increase in plan liabilities.

D. Code of Social Security

The Code on Social Security, 2020 ("the Code") relating to employee benefits during employment and postemployment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.

41. SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM is considered to be the Board of Directors who make strategic decisions and is responsible for allocating resources and assessing the financial performance of the operating segments.

As the Company's business activity primarily falls within a single business and geographical segment, i.e., food and beverages, and in India, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segments'. The CODM considers that the various goods and services provided by the Company constitutes single business segment.

42. SHARE BASED PAYMENTS

a. Description of share based payment arrangements i. Share Options Schemes (equity settled)

ESOS - 2011

On 20 September 2011 and 20 December 2011, the Board of Directors approved the Employees Stock Option Scheme 2011 ("ESOS 2011"), which was approved by the shareholders on 20 December 2011 and subsequently on 18 May 2012 for increasing the ceiling limit to 49,00,000 Options ("Ceiling Limit") with condition at any given point of time no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2011, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 111.70. ESOS 2011 was formulated with the objective to enable the Company to grant Options for equity shares of the Company to certain eligible employees, officers and directors of the Company and its subsidiaries, to purchase shares from the Company at a pre-determined price. A resolution was passed in the meeting of the Board of Directors held on 6 May 2014 wherein certain additional Options were granted at the same terms and conditions as mentioned in ESOS 2011.

Further, ESOS 2011 was amended subsequently and was approved by the shareholders on 17 March 2021. The resolution provides the delinking of vesting schedule of the Options from filing of the red herring prospectus (RHP) by the Company and for aligning the Scheme in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations") and accordingly all Options under ESOS 2011 were vested immediately on the day of passing the said resolution and the exercise window for ESOS 2011 was opened by the Nomination and Remuneration Committee on 17 March 2021.

ESOS - 2018

On 6 April 2018, the Board of Directors approved the Employees Stock Option Scheme 2018 ("ESOS 2018"), which was approved by the shareholders on 21 September 2018. ESOS 2018 has been formulated with the same objective as ESOS 2011. ESOS 2018 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2018 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 306.12.

Further ESOS 2018 was subsequently amended and approved by the shareholders on 17 March 2021 for linking the vesting of options to listing date of shares of the Company and to align the Scheme with compliance requirement of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"). Under the ESOS 2018, no vesting shall occur until date of listing of shares on recognized Stock Exchanges by the Company in respect of proposed offer.

ESOS - 2021

On 17 March 2021, the Board of Directors approved the Employees Stock Option Scheme 2021 (""ESOS 2021"") in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 ("SEBI SBEB Regulations"), which was approved by the shareholders on 17 March 2021. ESOS 2021 was formulated with the same objective of ESOS 2011 and ESOS 2018.

ESOS 2021 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting by way of a special resolution. As per ESOS 2021 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 433.28.

The risk free interest rates are determined based on current yield to maturity of 10 years Government Bonds with similar residual maturity equal to expected life of the Options. Expected volatility calculation is based on historical daily closing stock prices of competitors using standard deviation of daily change in stock price. The minimum life of the stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which options cannot be exercised. The expected life has been considered based on average of maximum life and minimum life and may not necessarily be indicative of exercise patterns that may occur.

45. IMPAIRMENT OF NON-FINANCIAL ASSETS

Non financial assets i.e PPE and other intangible assets (other than goodwill and investment properties)

In accordance with Ind AS 36 "Impairment of Assets", the Company has identified individual quick service restaurant (store) as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that a CGU may be impaired using a benchmark of two-year's history of operating losses or marginal profits for a store. In view of higher operating costs or decline in projected sales growth, certain stores have been impaired in the current and previous years. Based on the results of impairment testing for these stores in the current year, the property, plant and equipment, right-of-use assets and other intangible assets, carrying value of these stores aggregating INR 451.83 (net of opening provision for impairment of INR 53.38) (31 March 2022: INR 542.04 net of opening impairment provision of INR 5.05) have been reduced to the recoverable amount aggregating to INR 368.03 (31 March 2022: INR 409.97) by way of impairment charge of INR 83.80 (31 March 2022: INR132.07). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of 6% (31 March 2022: Nil-5%) and salary growth rate of 6% (31 March 2022: 6%), over balance lease term, discounted at rate (determined by an independent registered valuer) of 14.20% p.a. (31 March 2022: 12.15% p.a.). Carrying value of a store includes property, plant and equipment, intangible assets used at a store, right-of-use assets and allocated corporate assets. Further carrying value and recoverable value of each store is calculated net of lease liabilities.

Moreover, the impairment reversal of INR 89.20 (31 March 2022: INR 140.30) is primarily on account of stores where the actual sales growth rate has exceeded the projected sales growth rate, hence the recoverable amount aggregating to INR 2,940.87 (31 March 2022: INR 1,828.78) has exceeded the written down value of these stores aggregating INR 1,673.00 (after considering impairment charge recorded in previous years amounting to INR 305.27) (31 March 2022: INR 1,356.99 after considering impairment charge recorded in preceding previous year amounting to INR 370.76).

Goodwill on business combination

During the previous years, the Company had acquired 73 stores from Yum Restaurants (India) Private Limited ("Yum") in the States of Karnataka, Andhra Pradesh and Telangana (except in the city of Hyderabad). The Company acquired goodwill of INR 504.57 through business combinations which is attributable to the operational synergies and expansion on market share. In order to further expand its business operations, the Group has opened new stores in these States.

The Company has tested goodwill for impairment on the acquired stores as well as new stores opened in the acquired territories. Management periodically assesses whether there is an indication that such goodwill may be impaired. For goodwill, where impairment indicators exists, management compares the carrying amount of such goodwill with its recoverable amount. As on the reporting date, the recoverable amount of this cash generating unit is determined at INR 1,945.57 (31 March 2022: INR1,704.57). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of Nil-6% (31 March 2022:5%-20%) and salary growth rate of Nil - 6% (31 March 2022: 6%), over balance lease term, discounted at rate (determined by an independent registered valuer) of 14.20% p.a (31 March 2022: 12.15% p.a). As the recoverable amount is in excess of the carrying amount of goodwill, hence no impairment loss has been recorded on the aforesaid goodwill during the year.

The key assumptions have been determined based on management's calculations after considering, past experiences and other available internal information and are consistent with external sources of information to the extent applicable.

For goodwill impairment assessment, management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the said stores, as there is significant headroom between recoverable amount and the carrying amount.

Management has identified that a reasonably possible change in the three key assumptions could cause a change in amount of impairment loss/ (reversal). The following table shows the amount by which the impairment loss/(reversal) would increase/ (decrease) on change in these assumptions by 1%. All other factors remaining constant.

46. TRANSFER PRICING

The Company has established a comprehensive system of maintenance of information and documents that are required by the transfer pricing legislation under Section 92-92F of the Income tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by due date as required under the law. The management is of the opinion that its transactions with the associated enterprises are at arm's length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.

47. CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity capital, all other equity reserves attributable to the equity holders of the Company and combination of both long-term and short-term borrowings. The Company's objective for capital management is to maximize shareholder's value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plan and other strategic investment plans. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company's funding requirements are met through equity infusions, internal accruals and a combination of both long-term and short-term borrowings. The Company raises long term loans mostly for its expansion requirements and based on the working capital requirement utilise the working capital facilities. The Company monitors capital on the basis of consolidated total debt to consolidated total equity on a periodic basis. As a part of its capital management policy the Company ensures compliance with all covenants and other capital requirements related to its contractual obligations. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2023 and 31 March 2022.

48. ASSESSMENT OF INVESTMENT IN AND LOANS TO SUBSIDIARY COMPANY

The Company holds 87.00% (31 March 2022: 87.00%) of equity share capital and 76.00% (31 March 2022: 76.00%) preference share capital of RV Enterprizes Pte. Limited (hereinafter referred to as "RVE"). The carrying value of investments (equity and preference shares) as at the year end is INR 724.23 (31 March 2022: INR 724.23). The carrying value of the loans to RVE, including interest accrued thereon is INR 398.93 (31 March 2022: INR 350.01). RVE is a special purpose vehicle, which has invested the funds in Devyani International (Nigeria) Limited (a step down subsidiary) through investment in shares and grant of loans USD 3.75 million (31 March 2022: USD 2.92 million) and USD 16.56 (31 March 2022: USD 17.26 million), respectively.

During the current year, the step down subsidiary has generated (loss)/profit of INR (37.56) (31 March 2022: INR 3.36). As at 31 March 2023, RVE has not impaired the loan amounting to USD 16.56 million outstanding as at 31 March 2023 (31 March 2022: USD 17.26 million). Further, no impairment loss of property, plant and equipment has been recorded in the books of the step down subsidiary.

The management of the Company, based on cash flow projections of the step down subsidiary has concluded that there is no need to recognise any impairment loss on the investment made in and loan given (including interest accrued thereon) to RVE amounting to INR 724.23 (31 March 2022: INR 724.23 ) and INR 398.93 (31 March 2022: INR 350.01), respectively.

Key assumptions used in the calculating the recoverable value of the step down subsidiary:

- discount rates 28.60% (31 March 2022: 22.00% )

- terminal growth rate 3.00% (31 March 2022: 3.00%)

Further more, the recoverable value of investments (after adjusting loans) in RVE (derived based on the recoverable value of the step down subsidiary) was INR 1,234.56 (31 March 2022: INR 1,725.15).

The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the investments, as there is significant headroom available between recoverable amount and the carrying amount of investments.

49. INVESTMENT IN DEVYANI AIRPORT SERVICES (MUMBAI) PRIVATE LIMITED, A SUBSIDIARY ("DASMPL")

During the previous year ended 31 March 2022, pursuant to Deed of Settlement and Share Transfer Agreement dated 12 July 2021 executed between the Company, its subsidiary DASMPL and non-controlling shareholder High Street Food Services Private Limited, the Company has purchased 2,940,000 Equity Shares of face value of INR 10/- each and 11,316,693 8% Non-cumulative Redeemable Preference Shares ("NCRPS") for consideration of INR 69.04 (including INR 0.74 towards purchase of equity shares) from non-controlling shareholder. Pursuant to the acquisition, DASMPL became a wholly owned subsidiary of the Company. DASMPL converted its NCRPS to Compulsorily Convertible Preference Shares ("CCPS") pursuant to provisions of Section 48 of the Companies Act, 2013 as per shareholder's approval in Extra Ordinary General Meeting held on 17 August, 2021. DASMPL converted its CCPS to equity shares as on 01 October 2021.

As at 31 March 2023, the Company has investment in equity shares of DASMPL amounting to INR 153.87 (31 March 2022: INR 153.87), accounted for at cost under Ind AS 27. In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections.

During the year ended 31 March 2022, the Company has determined impairment reversal of INR 84.84 based on the discount rate of 18.78% and sales growth rate of 17%. Such impairment reversal has been disclosed under "Exceptional

items" in the Standalone Statement of Profit and Loss (refer note 32).An analysis of the sensitivity of the computation to a change in key parameters (sales growth and discount rates), based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount.

During the current year, the business performance of the subsidiary has improved substantially and the Company has witnessed significant uptake in the operations of the subsidiary, basis which the management believes that there are no internal or external indicators which can trigger impairment assessment as per Ind AS 36, 'Impairment of Assets', as at 31 March 2023.

50. INVESTMENT IN DEVYANI FOOD STREET PRIVATE LIMITED, A SUBSIDIARY ("DFSPL")

As at 31 March 2023, the Company has investment in equity shares of Devyani Food Street Private Limited (a subsidiary company) amounting to INR 175.92 (31 March 2022: INR 175.92), and additional deemed equity of INR 128.76 (31 March 2022: INR 128.76) accounted for under Ind AS 27. In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections.

During the previous year ended 31 March 2022, the recoverable amount of this cash generating unit was determined at INR 192.34, through an independent valuer, based on the value in use calculation which uses cash flow projections based on the projected profitability till the end of the contract period. The Company has determined impairment loss of INR 85.89 based on the discount rate of 18.5% and sales growth rate 30% - 109% and was of the view that there would be no material increase to the impairment charge which would impact the decision of the user of the financial statements. Such impairment charge had been disclosed under "Exceptional items" in the Standalone Statement of Profit and Loss (refer note 32). The Company had performed sensitivity analysis of impairment test to changes in the key assumptions used to determine the occurrence of impairment loss, if any, as if there was an increase in the discount rate by 0.50%, keeping the other variable constant, the impairment loss would have increased by INR INR 1.53.

During the current year, the business performance of the subsidiary has improved substantially and the Company has witnessed significant uptake in the operations of the subsidiary, basis which the management believes that there are no internal or external indicators which can trigger impairment assessment as per Ind AS 36, 'Impairment of Assets', as at 31 March 2023.

51. The Board of Directors of the Company ("Board") at its meeting dated 13 December 2021, had approved the Scheme of Amalgamation (the 'Scheme') for amalgamation of Devyani Food Street Private Limited and Devyani Airport Services (Mumbai) Private Limited (both are wholly owned subsidiary companies) with the Company. The Scheme was filed with the Hon'ble National Company Law Tribunal, New Delhi (NCLT) on 17 September 2022, and the NCLT had approved the first motion application on 11 November 2022. The equity shareholders and unsecured creditors of the Company at their respective meetings held on December 29, 2022, had approved the Scheme with requisite majority. Subsequently, the Company has filed second motion petition with NCLT and the Scheme is pending for final approval.

52. INITIAL PUBLIC OFFERING (IPO)

During the year ended 31 March 2022, the Company had completed its Initial Public Offer ("IPO") of 204,222,218 Equity Shares of Face Value of INR 1/- each ("equity shares") for a price of INR 90/- per Equity Share (including a share premium of INR 89/- per Equity Share) aggregating to INR 18,380 comprising a fresh issue of 48,888,888 Equity Shares for INR 4,400 (the "fresh issue") and an Offer for Sale of 155,333,330 Equity Shares for INR 13,980. The Equity Shares of the Company got listed with BSE Limited and National Stock Exchange of India Limited on 16 August 2021.

The Company had incurred expenses of INR 158.40 during the year ended 31 March 2022 in connection with public offer of equity shares. Out of this, INR 146.29 have been adjusted against securities premium as permissible under section 52 of the Companies Act, 2013 on successful completion of Initial Public Offer (IPO) and listing expenses of INR 12.10 have been shown as IPO expenses under exceptional items (refer note 32).

53. During the year ended 31 March 2022, the Company had paid remuneration to a whole-time director of INR 138.70, which was in excess of the limits laid down under the provisions of the section 197 read with Schedule V of the Companies Act, 2013 by INR 75.73 which had also resulted in exceeding the overall limit of remuneration payable by the Company to its directors by INR 53.79. Such remuneration exceeded by virtue of exercise of employee stock options. The Company had obtained approval from the Nomination and Remuneration Committee of the Company for the excess managerial remuneration paid and had obtained approval from its shareholders at the Annual General Meeting (AGM) held on 28 June 2022 by way of a special resolution as per the provisions of section 197 and Schedule V to the Act during the current year.

54. During the year ended 31 March 2022, the Company has signed amendment to Development Agreements with Yum Restaurant (India) Private Limited (franchiser) with revised store opening targets and terms, accordingly franchiser has agreed to give certain incentives to the Company in the form of initial fee waiver and certain other operational incentives. The Company has achieved the targets in both current and previous years for both KFC and PH brands and received incentives as per the aforesaid Development Agreement, which have been accounted as per Ind AS in the standalone financial statements.

a) The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.

c) The Company does not have any charge which is yet to be registered with ROC beyond the statutory period. The Company had obtained loans from banks in earlier years which have been fully repaid. However pending NOCs from banks, the satisfaction of charges is yet to be registered with ROC in some of the cases.

d) The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.

e) The Company has not advanced or provided loan to or invested funds in any entity(ies) including foreign entities (Intermediaries) or to any other person(s), 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

f) 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,

(g) The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(h) The Company has not been declared a 'Wilful Defaulter' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

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

57. The Company has generally been regular in depositing provident fund dues for employees on time, except in few cases due to Aadhaar Card demographic mismatches. The Company has already initiated the necessary steps to minimise such mismatches in future.

58. The previous year numbers have been regrouped/ reclassified wherever necessary to conform to current year presentation. The impact of such reclassification/regrouping is not material.