D. Rights & restrictions attached to equity shares:

The Company has one class of equity shares having a face value of H 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, If any is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

E. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.-Nil

F. The Board of Directors of the Company in its meeting held on March 30, 2023 declared interim dividend of 200% (i.e. H 2/- per share on face value of H 1/- per equity share for the F.Y. 2022-23 and the same is also proposed to be final dividend as resolved in the Board of directors meeting held on April 27, 2023. (in the F.Y. 2021-22, the Company paid total dividend of 325% i.e. H 3.25/- per share on face value of H 1 per equity share which comprised of interim & final dividend of H 2 per share for F.Y. 2021-22 and final dividend of H 1.25 per share for F.Y. 2020-21)

The amount shown above represents the best possible estimates arrived on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal process which have been invoked by the company or the claimants as the case may be and therefore it cannot be estimated accurately. The Company does not expect any reimbursement in respect of above contingent liabilities.

42. Allahabad High Court in the case of PIL Rashtriya Kisan Mazdoor Sangathan VS State of U.P. passed a final order on March 09, 2017 directing the Cane Commissioner to decide afresh the issue as to whether the Sugar Mills are entitled for waiver of interest on the delayed payment of the price of sugarcane for the seasons 2012-13, 2013-14 and 2014-15 under the provisions of Section 17(3) of the U.P. Sugarcane (Regulations of Supply and Purchase) Act, 1953 (in short ‘the Act’). Thereafter in an CAPL (contempt application) No. 2815/2018 titled ‘V M. Singh versus Shri Sanjay Bhoosereddy’ in the Hon’ble Allahabad High Court and its follow-on proceedings, the Cane Commissioner is understood to have filed an affidavit specifying interest rates on delayed cane price payments but no such order of the Cane Commissioner has been served on the Company or industry association. Subsequently State Government has filed modification application before and Mr. V M. Singh has also filed SLP with the Supreme Court in this matter and pending disposal of the same the High Court has deferred the hearing of contempt petition. The matter is still pending before the Supreme Court for adjudication. Based on the legal review of the facts of this case, possibility of liability crystalizing is remote and hence no provision is considered necessary.

43. Cane societies were in dispute with the State Government of Uttar Pradesh with regard to retrospective partial waiver of society commission payable by the sugar mills for the crushing seasons 2012-13,2014-15 and 2015-16 as a part of its relief package to sugar industry . Hon’ble Allahabad High Court held that concessional rate of society commission fixed by the U.P Government cannot have retrospective operations and shall be applicable prospectively from the date of the notification. Against the said judgment, the U.P. Sugar Mill Association filed SLP ( C ) No 032225-032227/2018 . Hon’ble Supreme Court, vide order dated 03.12.2018, issued notice and directed that no coercive steps shall be taken against the petitioners. The matter is pending for further adjudication. Based on the legal advice, no liability is likely to crystalize on the Company in this matter.

44. The Collector and Tax Assessing authorities has raised demands for the arrears of purchase tax for the sugar season 2016-17 aggregating to Rs 88.06 Lakhs along with penalty of Rs 1.05 lakhs in respect of purchase tax due on sugar stock held by mill as on 30.06.2017, the date at which the purchase tax has been subsumed in the Goods and Service Tax. The levy of purchase tax on sugar stock held by the mills as on 30.06.2017 has been challenged by U.P sugar Association before Lucknow Bench of Hon’ble Allahabad High Court in writ petition No 27169 of 2018 and the same is still pending for adjudication. However, the Hon’ble High Court has advised the authorities to desist from adopting any coercive measure till the final decision of the case. Based on the legal review of the facts of the case, the management estimates that the probabilities of crystallization of aforesaid demand is remote and therefore no provision for the same is required as on date.

45. Leases

Following are the changes in the carrying value of other right of use assets for the year ended March 31, 2023:

The aggregate depreciation expense on ROU (Right-of-use) assets is included under depreciation and amortization expense in the statement of Profit and Loss.

Term Loans and cash credit from banks aggregating to H Nil (previous year - H 46,278.94 Lakhs) are personally guaranteed by the Executive Chairman of the company out of which the company has given Counter guarantees of H Nil (previous year - H 35,856.80 Lakhs ) to him to secure all these personal guarantees.

Note: Figures in the brackets are for the previous year.

Difference between the value as per books of accounts and as per quarterly statement submitted to lenders:

The Company has been sanctioned and availed working capital finance of more than five crores during the year from consortium lenders against primary security of current assets. As per terms and conditions, the drawing power for utilization of the sanctioned working capital facilities is determined based on the value of stock reported to the banks on weekly basis. Accordingly, the date of stock statements submitted to the bank during the last week of each quarter during the year may not coincide with the last date of respective quarter end and hence, reporting of the difference in the value of stocks as reported in weekly stock statement with the value appearing in the books of account is practically not possible as in the books the inventory of finished goods and by products are valued only at quarter end for the purpose of quarterly financial results. The management confirms that there are no material differences between the value of store and spares, and the quantity of stocks of sugar, molasses and ethanol, as reported in the aforesaid weekly stock statements for the respective quarters and the value of stores and spares and quantity of stock of sugar, molasses and ethanol

as appearing in the books of accounts and stock records being maintained by the company. However, the following differences with regards to the adoption of valuation rates exist between the weekly stock statements and books of accounts: -

a) Stock of sugar is valued at the minimum support price announced by Central Government in the weekly stock statement but is valued at lower of cost of production or net realizable value in the books of account at the time of preparation of quarterly financial statements.

b) Stock of ethanol is valued at the price as fixed by Central Government in the weekly stock statement but is valued at lower of cost of production or net realizable value in the books of account at the time of preparation of quarterly financial statements.

c) Stock of “B” Heavy Molasses is valued at the price agreed with the lenders in the weekly stock statement but is valued at derived net realizable value in the books of account at the time of preparation of quarterly financial statements.

49. The micro, small and medium enterprises development (MSMED) act, 2006

Based on the information so far obtained by the company, payment to enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) has been made within 45 days or contract terms whichever is lower and disclosure in accordance with section 22 of the MSMED Act is as under:

(c) Sensitivity analysis

Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarizes the change in defined benefit obligation and impact in percentage terms compared with the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.

These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.

Special events:

There are no special events such as benefit improvements or curtailments or settlements during the inter-valuation period.

The Company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest Rate risk :

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Salary escalation risk :

The present value of the defined benefit plan is calculated with the assumption of salary increase 0.50% per annum of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Actual mortality & disability : deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

(d) The Company’s liability on account of Compensated Absences are determined at end of each Financial Year on the basis of Actuarial Valuation certificates obtained from registered actuary and company’s policy of compensated absence.The company’s Compensated Absence Policy is as follows:

General Policy: The Leave Cycle is Considered from 1 January to 31 December.

Accrual of Leave: The No. of Leaves that accrue during the year for Permanent Officers is 15 days, Permanent Technical is 18.25 days and for Management and others is 30 days .

(e) Social responsibility is a company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in line with public expectations. Dwarikesh Sugar Industries Limited emphasis utmost importance on its social responsibilities towards its stakeholders and makes continuous efforts to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.

The Company has adopted various policies such as Corporate Social Responsibility policy, Environment policy, Code of Conduct & Ethics and makes sure that strict adherence is followed for the same.

Various committees have been constituted by the Company for periodical reviews & checks of the line of actions under these policies.

The following methods and assumptions were used to estimate the fair values.

a) Company has adopted effective rate of interest for calculating Interest. This has been calculated as the weighted average of effective interest rates calculated for each loan. In addition processing fees and transaction cost relating to each loan has also been considered for calculating effective interest rate

b) Due to short term nature, the carrying amount of current financial assets (excluding investments) and current financial liabilities (excluding current maturities of long term debt) are considered to be the same as of their fair values . Hence, the figures are not shown in the above note.

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Fair value of investment has been done on the basis of latest available financials with the Company.

54. Financial risk management objectives and policies Financial risk factors

The Company’s principal financial liabilities includes borrowings, trade payable and other financial liabilities. The main purpose of these financial liabilities is to finance the Company’s assets and operations. The Company’s principal financial assets include trade receivables, cash and cash equivalents and other financial assets that are derived directly from its operations. The Company is exposed to credit risk, liquidity risk and market risk. The Company’s senior management oversees the management of these risks and the appropriate financial risk governance framework for the Company is in place. The senior management provides assurance that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. It is the Company’s policy that derivatives whenever used are used exclusively for hedging purposes and not for trading or speculative purposes. The Audit Committee and the Board are regularly apprised of these risks every quarter and each such risk and mitigation measures are extensively discussed and the same are summarized below:

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. One of the market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer.

A. Credit risk :

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, thereby leading to a financial loss. The Company’s major exposure of credit risk is from bank deposit and trade receivables. The Company’s sugar sales are totally on cash. Power and ethanol are sold to state government entities, thereby the credit default risk is significantly mitigated.

There is no change in loss allowances using expected credit loss model. The credit risk on deposits with banks is limited because the banks are assigned good credit ratings by international credit agencies and are scheduled banks with majority of ownership with Government of India.

B. Liquidity risk :

The liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The Company’s objective is to maintain optimum level of liquidity to meet its cash and collateral requirement. The Company’s management is responsible for liquidity , funding as well as settlement management. In addition process and policies related to such risks are overseen by senior management. Management monitors the company’s net liquidity position through rolling forecast on the basis of expected cash flow.

C. Market risk :

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate consequent up on changes in market prices. It mainly comprises of regulatory risk, commodity price risk & interest rate risk, which are discussed herein below:

Foreign Currency Risk

Foreign Currency Risk is the risk that the fair value or future value or future cash flow of an exposure will fluctuate due to changes in foreign exchange rate.

54. Financial risk management objectives and policies (Contd.)

The Company operates internationally and is transacted in foreign currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas. The Company holds derivative financial instruments such as foreign exchange forward to mitigate the risk of changes in exchange rates on foreign currency exposures.

There is no balance in cash flow hedge reserve as at March 31, 2023 and March 31, 2022.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

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

ii. Regulatory risk :

Sugar industry is regulated both by central government as well as state government. Central and State governments policies and regulations affects the Sugar industry and the Company’s operations and profitability. Distillery business is also dependent on the Government policy. However, with the removal of major regulatory control on sugar sales by the Central Government, the regulatory risks are moderated but not eliminated.

iii. Commodity price risk:

Sugar prices are market driven and sugar industry being cyclical in nature, realizations get adversely affected during downturn. Higher cane price or higher production than the demand ultimately affect profitability. The Company has mitigated this risk by well-integrated business model by diversifying into co-generation and distillation, thereby utilizing the by-products. Additionally Government has also fixed a minimum Selling price of sugar below which sugar cannot be sold.

iv. Capital management

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The primary objective of the Company’s Capital Management is to

55. Impairment review:

Assets are tested for impairment whenever there are any internal or external indicators of impairment. Impairment test is performed at the level of each Cash Generating Unit (‘CGU’) or groups of CGUs within the Company at which the assets are monitored for internal management purposes, within an operating segment. The impairment assessment is based on higher of value in use and value from sale calculations. During the year, the testing did not result in any impairment in the carrying amount of other assets. The measurement of the cash generating units’ value in use is determined based on financial plans that have been used by management for internal purposes. The planning horizon reflects the assumptions for short to- mid-term market conditions.

Key assumptions used in value-in-use calculations are:-

(i) Operating margins (Earnings before interest and taxes), (ii) Discount Rate, (iii) Growth Rates and (iv) Capital Expenditure

56. Based on the incentive policy announced by the State Government of Uttar Pradesh vide order no. -1631 (1) S.C./ 18-02-2004-57/ 2004 dated 24.08.2004 to encourage investment in the State, the company proceeded to invest amount in excess of threshold limit as set out in the policy for availing various benefits over ten years period. On 04.06.2017 the policy was unilaterally withdrawn vide G.O. No. 1216 S.C/18.02.2007-185/2006.

Aggrieved by the said order of withdrawal, the Company and other aggrieved sugar companies challenged the order by filing appropriate writ petitions. Hon’ble High Court on 12.02.2019 passed an order quashing & setting aside the order withdrawing the incentive scheme and held the same to be in violation of principle of estopple & natural justice.

Company has since then written to competent authorities and submitted the requisite information/documents in support of its claims, the matter is yet to be concluded by the authorities

57. The Central Government, vide its Notification No. 1(10)/2018-SP-I dated July 19, 2018, notified a Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. Every Sugar Mill which fulfils the conditions stipulated in the scheme will be eligible for interest subvention @ 50% of the rate of interest charged by bank, which shall be borne by central Government for a period of five years on diminishing balance of the loan availed for the said purpose. Till March 31, 2023, the Company has complied with all the conditions as stated in the scheme and submitted the requisite claim for interest subvention. The interest subvention, so accrued under the Scheme till 31st March 2023 is H 364.20 Lakhs of which an amount of H 144.18 Lakhs has been received till March, 2023.

58. The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post employment received Indian Parliament approval and Presidential assent in September 2020. The Code has been published in the Gazette of India and subsequently on 13 November 2020 draft rules were published and invited for stakeholders’ suggestions. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

57. Events occurring after the balance sheet date:

No adjusting or significant non adjusting events have occurred between the reporting date and date of authorization of financial statements.

^Pursuant to introduction of section 115BAA of the Income Tax Act, 1961 through Taxation Law (Amendment) Ordinance, 2019 (Ordinance), the domestic companies have with effect from financial year commencing from April 1, 2019 and thereafter, option to pay corporate income tax at reduced rate plus applicable surcharge and cess (New Tax Rate) by foregoing certain exemptions / deduction. Based on the assessment made by the company, exemptions / deductions as available to the company will get exhausted in future financial years after which the company will opt for lower tax rate as stated above. Accordingly Company has measured its deferred tax assets and liabilities using the dual income tax rate.

62. In the opinion of Board of Directors, trade receivable, other current financial assets and other current assets have a value on realisation in the ordinary course of the Company’s business which is at least equal to the amount at which they are stated in the balance sheet.

63. The Board of Directors at its meeting held on April 27, 2023 has approved the financial statements for the year ended March 31, 2023.

64. Other Statutory information

i) The Company do not have any benami property, and no proceeding has been initiated against the Company for holding any benami property.

ii) The Company does not have any transactions with struck off companies during the year, except for the following two companies who are the shareholders of the company:-

GVJ Projects Pvt. Ltd. - No. of equity shares held - 647

Vaishak Shares Ltd.- No. of equity shares held - 10

The above companies are not related parties

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

iv) The Company have not traded or invested in crypto currency or virtual currency during the financial year.

v) 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) 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.

vi) 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 Group 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.

vii) The Company have not 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.

viii) The Company have not declared willful defaulter by any banks or any other financial institution at any time during the financial year.

ix) All immovable properties are held in the name of the Company.