A. Capital Management

For the purpose of Company's Capital Management, capital includes Issued Equity Capital, Securities Premium, and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company's Capital Management is to maximise the Share Holder Value.

As at 31 March 2023, the Company has only one class of equity shares and has no long term debt. Consequent to such capital structure, there are no externally imposed capital requirements. The Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.

B. Financial Risk Management

The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables, investments in mutual funds/equity shares & debt instruments and cash and short term deposits.

The Company has assessed market risk, credit risk and liquidity risk to its financial liabilities.

i) Market Risk

Market Risk is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans and borrowings, investments and foreign currency receivables, payables and borrowings.

Interest Rate Risks

The Company borrows funds in Indian Rupees to meet short term funding requirements. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the outstanding amounts due to bankers over a year.

If the interest rates had been 1% higher / lower and all other variables held constant, the company's profit for the year ended 31 March 2023 would have been decreased/increased by H 0.20 Lakhs. (PY 2021-22 : H 18.40 Lakhs)

The company is mainly exposed to changes in US Dollar. The sensitivity to a 1% increase or decrease in US Dollar against INR with all other variables held constant will be H 158.26 Lakhs (Previous Year - H 234.05 Lakhs)

The Sensitivity analysis is prepared on the net unhedged exposure of the company at the reporting date.

Derivatives - Forward Contracts

The Company enters into foreign exchange forward contracts with the intention to minimise the foreign exchange risk of firm commitments. The derivative that is either not designated as hedge or is so designated but is ineffective is categorised as a financial asset or liability at fair vale through Profit or Loss.

Price Risks

More than two-third of the Company's revenues are generated from exports and the raw materials are procured through import and local purchases where local purchases track import parity price. The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities, the Company enters into contract with the customers that has provision to pass on the change in the raw material prices and also the volatility in the exchange rate. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs.

The Company is exposed to price risk due to its investments in debt instruments and mutual funds. The price risk arises due to uncertainties about the future market values of these investments. The company manages the securities price risk through investments in debt funds and diversification by placing limits on individual and total investments. Reports on Investment Portfolio are reviewed on regular basis and all approvals of investment decisions are done in concurrence with the senior management.

As at 31st March 2023 the investments in mutual funds/Debt Instruments/ETF/Equity Shares amounts to H 15,290.37 Lakhs (PY 2021-22 : H 9,361.28 Lakhs Lakhs). A 1% point increase or decrease in the NAV with all other variables held constant would have lead to aprroximately an additional H 152.90 Lakhs (PY 2021-22 : H 93.61 Lakhs) on either side in the statement of profit and loss.

ii) Credit Risk

Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers, financial instruments viz., Investments in Debt Funds and Balances with Banks.

Trade receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, 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 also has an external credit risk insurance cover with ECGC Policy for specific customer(s).. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31 March 2023 is 0.04% (PY 202122: 0.16%) of the total trade receivables. The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. Historical experience of collecting receivables of the Company is supported by low level of past default and hence the credit risk is perceived to be low.

The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in mutual funds , debt funds and loans to other companies. It has a diversified portfolio of investments with various number of counterparties which have secure credit ratings, hence the risk is reduced. Individual risk limits are set for each counterparty based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by its treasury department.

iii) Liquidity Risk

The principal sources of liquidity of the Company are cash and cash equivalents, investment in mutual funds, fund and nonfund based working capital lines from banks and the cash flow that is generated from operations. It believes that current cash and cash equivalents, tied up borrowing lines and cash flow that is generated from operations is sufficient to meet requirements. Accordingly, liquidity risk is perceived to be low.

The following table shows the maturity analysis of financial liabilities of the Company based on contractually agreed undiscounted cash flows as at the Standalone Balance Sheet date.

h) Commitment

(i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for H 2038.25 Lakhs (Previous Year H 6682.40 Lakhs)

(ii) Other Commitments

a Bank Guarantees - H 2941.81 Lakhs (Previous Year - H 1921.84 Lakhs). b Letters of Credit issued by the Banks - H 1500.24 Lakhs (Previous Year - H 762.72 Lakhs).

i) Contingent Liabilities not provided for:

(a) Disputed Excise/Customs Duty/Service tax demands pending before the Appellate Authorities/High Court - H 49.32

Lakhs (Previous Year H 49.32 Lakhs) against which payment of H 1.88 Lakhs (Previous Year H 1.88 Lakhs) has been made.

(b) Disputed Income Tax Demands - H 10.59 Lakhs ((Previous Year H 0.86 Lakhs).

(c) Electricity Duty contested on co-power generation - H 1,713.62 Lakhs (Previous Year. H 1,294.79 Lakhs)

k) The Company has subscribed to additional 2,39,16,400 (P Y. 42,60,000) fully paid up equity shares of the face value of H 10/- each at par by way of subscription towards the right issue of Veeral Organics Pvt. Ltd., a wholly owned subsidiary of the company

l) i) Regarding the proposed scheme of amalgamation of Veeral Additives Private Limited with the Company, all necessary

approvals has been obtained except the final approval of the Hon'ble NCLT, Mumbai, which is pending for hearing.

ii) This is to facilitate forward integration to the existing product lines of the company. To expedite the completion of the project in time, and to avoid delays in the execution due to ongoing pandemic, the company has advanced loans of H 7619.50 Lakhs (PY. H 12,048 Lakhs) Lakhs to the proposed amalgamating company with a reference made in the scheme that Veeral Additives Private Limited will conduct all activites as trustees for the Company.

m) Events Occuring after the Balance Sheet date

The proposed final dividend for FY 2022-23 amounting to H 7,194.74 Lakhs (PY 2021-22 : 6,680.83 Lakhs) will be recognised as distribution to owners during the financial year 2023-24 on its approval by Shareholders. The proposed final dividend per share amounts to H 7/- (PY 2021-22 : H 6.50/-)

n) The company did not have any material transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act,1956 during the financial year

o) The figures for the corresponding previous year have been regrouped and/or rearranged wherever considered necessary