a. Pursuant to the Scheme of Arrangement between Aarti Industries Limited, Aarti Pharmalabs Limited and their shareholders, the demerged Pharma Undertaking of Aarti Industries Limited is transferred to Aarti Pharmalabs Limited with effect from 1^st of July 2021, being the Appointed Date. Property, Plant and Equipment transfered to Company are shown as addtion during the year on account of scheme of Arrangment.

b. Ind AS 103 - Business Combination requires that acquirer shall record all assets and liabilities aquired under business combinations at Fair Value. In Preparation of Financial Statements, Ind AS are complied by Aarti Industries Limited and hence assets and liabilites were already at Fair Value in the books of Demerged Company at the time of Demerger. Accordingly, the management has considered these book values as fair value for the purpose of recording of assets and liabilities in the books of the Company. The same is also in accordance with the Scheme of Arrangment approved by NCLT.

c. Company has not capitalised any Borrowing costs to the Fixed Assets

d. * Legal tittle of All the Property, Plant and Equipment transferred under Demerger is under process of tranfer.

e. During Fy 2021 -22, Dpreciation to the extent of ? 1.46 lakhs in respect of assets utilised for creation/generation of intangible assts are appropirately capitalised under applicatble intangible assets under developments under R&D

12.1 - Pursuant to the Scheme of Arrangment, Aarti Pharmalabs Limited has issued to the Equity Shareholders of Aarti

Industries Limited -For every 4 equity shares of Held in Aarti Industries Limited, 1 Equity Shares of Face Value ' 5 each of the Company

- Pursuant to Scheme of Arrangment Authorised share capital is Increased to 10,00,00,000 Shares of ' 5 Each for Issue of Shares to the Shareholders of Demerged Company Aarti Industries limited

12.2 Share Capital Cancancellation

- Before scheme of arrangment, Aarti Pharmalabs limited was incorporated as an 100% Subsidiary of Aarti Industries limited. As per the order of NCLT, upon scheme becoming effective, original share capital of ' 25 Lakhs stands automatically cancelled and reinstated to ' 4,531.30 lakhs by payment of applicable stamp duty and compliance of ROC formalities. As at Balance Sheet date, ROC formalities with respect to increase in authorised share capital, allotment of share capital and cancellation of existing share capital was duly executed as per ROC norms.

12.4 Rights, preferences and restrictions attached to equity shares :

The Company has only one class of equity shares with voting rights having par value of ' 5 each post Scheme of Arranment is Effective and the holder of the equity share is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.

12.3 Dividend

Company declares & pay dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of shareholders in the ensuring Annual General Meeting, except in case of Interim Dividend, if any

During FY 2022-23, Company has paid to the Equity shareholders, dividend @ ' 2/- per share as an Interim dividend (previous year ' Nil)

12.4 Details of shareholders holding more than 5% shares:

There are no shareholders holding more than 5% of shares in this year (Previous year before scheme of arrangement company was 100% subsidiary of Aarti Industries Ltd)

13.1 Pursuant to the scheme of arrangement approved by NCLT, Ahmedabad Bench, Excess of the Net Assets transfered over the face value of the New Securities to be allotted in accordance with the Scheme, shall be credited to same reserves as debited in the books of Aarti Industries Limited with adjustment for balance, if any, to Profit and Loss Account/Retained Earnings. Accordingly Reserves for Fy 2021-22 are created in the books of Account.

13.2 Nature of Reserve:

Security Premium: Securities premium account comprises of premium on issue of shares. Balance of securities premium as at Balance Sheet date represent amount transfered to the company pursument to the scheme.

General Reserve: General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income. Balance of General Reserve as at Balance Sheet date represent amount transfered to the company pursuant to the scheme.

Capital Redemption Reserve: This reserve comprises of amount on Equity share cancellation on account of Scheme of arrangement on Demerger. This reserve can be utilised in accordance with the provision of section 69 of the Companies Act, 2013.

16.1 Pursuant to the Scheme of Arrangement, common working capital borrowing was allocated to Aarti pharmalabs Limited in the ratio of value of Assets transfered in the scheme of arrangement to the total assets of Aarti Industries Limited prior to demerger. During the year almost all part of working capital loan was repaid and amount of ' 2090 lakhs was payable for loan disbursement pending.

16.2 Company has working capital limit santioned of ' 375 Crores from banks and has offered the following security -(i) First pari-passu hypothecation charge on all existing and future current assets/ of the Borrower under multiple banking arrangement, (ii) Second pari-passu charge on all existing and future movable fixed assets of the Borrower, to under multiple banking

16.3 There are no material differences between the quarterly statements of stock filed by the company with banks and the books of accounts.

16.4 The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

There are no Micro and Small Enterprise, to whom the Company owes dues, which are outstanding for more than 45 days as at 31^st March, 2023. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

Basic earnings per share has been computed by dividing the profit/loss for the year by the weighted average number of shares outstanding during the year.

Diluted earnings per share has been computed using weighted avearage number of shares dilutive potential shares, except where the results would be anit-dilutive.

29.1 Pursuant to the Scheme of Arrangment approved by NCLT, Aarti Pharmalabs Limited has issued to the Equity Shareholders of Aarti Industries Limited -For every 4 equity shares of Held in Aarti Industries Limited, 1 Equity Shares of Face Value ' 5 each of the Company. The Company to allot 90626008 equity shares (1 Equity shares of Company for Every 4 Equity Shares held in Aarti Industries Limited). Existing Paid Capital of ' 25 lakhs is Cancelled pursuant to Scheme provision.

33 SEGMENT REPORTING

The Company has identified only one segment i.e. Pharmeceuticals as reporting segment based on the information reviewed by Chief Operating Decision Maker (CODM).

34 RELATED PARTY DISCLOSURE UNDER ACCOUNTING STATNDARD (IND AS 24) ARE GIVEN BELOW:

A Relationship:

I Following are the Subsidiaries of the company

1. Aarti USA Inc

2. Aarti Pharmachem Limited

II Following are the Joint Ventures / Associates of the Company

1. Ganesh Polychem Limited

Data related to Gratuity valuation as per IND AS is provided for current year 2022-23 only. Previous year data relates to period of demerger, for which sepearate acturual valuation was not obtained.

The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion, other relevant factor's including supply and demand in the employment market. The above information is certified by the actuary.

Leave Encashment liability amounting to ' 654.30 lakhs (Previous Year - ' 512.72 lakhs) has been provided in the Books of Accounts.

36 DERIVATIVES AND FORWARD CONTRACT INSTRUMENT

The Company uses Forward Exchange Contract to hedge against its Foreign Exchange exposures relating to underlying transactions and firm commitments. The Company does not enter into any derivatives instruments for Trading or Speculative purposes.

During the Year Company had hedged in aggregate an amount of ' 5063.02 lakhs out of its annual trade related operations (Exports & Imports) (previous year: Nil).

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

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; and

Level 2: Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

41 CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net Debt is calculated as loans and borrowings less cash & marketable securities.

42 FINANCIAL RISK MANAGEMENT

The Company's principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to credit risk, market risk and liquidity risk. The Company's senior management oversees the management of these risks

I Credit Risk

The company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities (deposits with banks and other financial instruments).

Credit risk is the risk that a customer or counterparty to a financial instrument fails to perform or pay the amounts due causing financial loss to the company. Credit risk arises from company's activities in investments, dealing in derivatives and outstanding receivables from customers.

The company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. Sales made to customers on credit are generally secured through Letters of Credit, Bank Guarantees, Parent Company Guarantees, advance payments.

Credit risk Management

To manage the credit risk, the Company follows an adequate credit control policy and also has an external credit insurance cover with ECGC policy wherein the customers are required to make an advance payment before procurement of goods. Thus, the requirement of assessing the impairment loss on trade receivables does not arise, since the collectability risk is mitigated.

Bank balances are held with only high rated banks and majority of other security deposits are placed majorly with government/statutory agencies.

II Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities such as trade payables and other financial liabilities

a) Liquidity Risk Management

The Company's corporate treasury department is responsible for liquidity and funding as well as settlement. In addition, processes and policies related to such risks are overseen by senior anagement. Management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows.

III Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. Financial instruments affected by market risk include borrowings, investment in securities, Loan given, trade receivables and trade payable.

IV Foreign Currency Risk

The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities in exports and imports which is majorly in US dollars.

V Commodity Price Risk

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's commodity risk is managed centrally through well-established trading operations and control processes. In accordance with the risk management policy, the Company enters into various transactions using derivatives and uses Over the Counter (OTC) as well as Exchange Traded Futures, Options and Swap contracts to hedge its commodity and freight exposure.

Notes for Ratio:

a. Debt equity ratio declined due to debt repayment from internal accruals.

b. Inventory turnover ratio increased due to increase in cost of materials consumed in proportion to increase in sales.

c. Due to execution of NCLT order under scheme of demerger, figures for previous year under Profit and Loss acocunt represent profit & loss account for period of 9 months, as compared to currenty year period of 12 months, thus ratio having components of Profit and Loss are non comparable.

* Previous year figures are realligned for 12 months, in order to arrive at the ratio for analysis and comparitive purposes.

d. Ratio of Return on capital employed and investment ratio has shown upward trend due to increase in Profit and decrease in borrowings.

44 OTHER DISCLOSURES a Details of Benami Property Held

The company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder. No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

b Relationship With Struck off Companies

The Company has no transactions/balance with struck off companies under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956.

c Willful Defaulter

The Company has not been declared a willful defaulter by any bank or financial institution or other lender (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

d Registration Of Charges Or Satisfaction With Registrar Of Companies

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

e Details Of Crypto Currency Or Virtual Currency

The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

f The Company has not advanced or loaned or invested funds to any other person or entity, 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 on behalf of the ultimate beneficiaries.

g 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 h Undisclosed Income

The Company has not had 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).

i Borrowings Obtained on the Basis of Security of Current Assets

For the borrowings secured against current assets, the company has filed Quarterly statements of current assets with the banks and the same are in agreement with the books of accounts.

j Utilisation of Borrowed Funds and Share Premium

As on March 31,2023 there is no unutilised amounts in respect of any issue of securities and long term borrowings from banks and financial institutions. The borrowed funds have been utilised for the specific purpose for which the funds were raised.

k Revaluation Of Property, Plant And Equipment And Intangible Assets

The Company has not revalued any of its property, plant and equipment (including Right of Use assets) and intangible assets during the year.

l Compliance With Number of Layers of Companies

The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017

m Scheme of Arrangement

Where the Scheme of Arrangements has been approved by the Competent Authority in terms of Section 230 to 237 of the Companies Act 2013, The company shall disclose that the effecrt of such Scheme of Arrangemnets have been accounted for in the books of account of the Company in accordance with the Scheme and in accordance with accounting standards and any deviation in this regard shall be explained.

n Events after the reporting period

Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors in case of a company, and, by the corresponding approving authority in case of any other entity for issue. Two types of events can be identified:

(a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and

(b) t hose that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period).

As on 12^th May, 2023 there were no material subsequent events to be recognized or reported that are not already disclosed.

o Standards Notified But Not Yet Effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. The Company intends to adopt these standards, if applicable, as and when they become effective.

The Ministry of Corporate affairs (MCA) has notified certain amendments to Ind AS, through Companies (Indian Accounting Standards) Amendment Rules, 2023 on 31^st March, 2023. The amendments have been made in the following standards:

i. Ind AS 1: Presentation of Financial Statements is amended to replace the term "significant accounting policies" with "material accounting policy information" and providing guidance relating to immaterial transactions, disclosure of entity specific transactions and more.

ii. Ind AS 8: Accounting Policies, Changes in Accounting Estimates and Errors to include the definition of accounting estimates as "monetary amounts in financial statements that are subject to measurement uncertainty.

iii. Ind AS 12: Income Taxes relating to initial recognition exemption of deferred tax related to assets and liabilities arising from a single transaction.

iv. Other Amendments in Ind AS 102 - Share based Payments, Ind AS 103 - Business Combinations, Ind AS 109 -Financial Instruments, Ind AS 115 - Revenue from Contracts with Customers which are mainly editorial in nature in order to provide better clarification of the respective Ind AS's.

v. These amendments shall come into force with effect from April 01, 2023. The Company is assessing the potential effect of the amendments on its financial statements. The Company will adopt these amendments,,if applicable, from applicability date.

45 The figures of previous year have been regrouped and rearranged wherever necessary.