(i) Term Loans from banks referred above to the extent of:

(a) '657.42 crores (Previous year '947.60 crores ) are secured by first pari-passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at village Indrad (Manufacturing facility on identified land), Bhat (Research facility), Corporate office, Ahmedabad, all in Gujarat, and village Baddi (Manufacturing facility) in Himachal Pradesh as well as on certain identified trademarks of the Company including its future line extensions.

(b) '209.37 crores (Previous year '355.34 crores) are secured by first pari passu mortgage/ charge on immovable and tangible movable assets, present and future, located at Dahej (SEZ) in Gujarat (Manufacturing facility) and Gangtok in Sikkim (Manufacturing facility) as well as on certain identified trademarks of the Company including its future line extensions.

(c) '145.00 crores (Previous year 'NIL) are secured by first pari passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at Dahej (SEZ) in Gujarat (Manufacturing facility) as well as on certain identified trademarks of the Company including its future line extensions, in respect of which company is in the process of creating charge.

(d) '349.78 crores (Previous year 'NIL) are secured by first pari-passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at village Indrad (Manufacturing facility on identified land) and Bhat (Research facility) as well as on certain identified trademarks of the Company including its future line extensions.

(e) '400.00 crores (Previous year 'NIL) are secured by first pari-passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at village Indrad (Manufacturing facility on identified land) and Bhat (Research facility) as well as on certain identified trademarks of the Company including its future line extensions, in respect of which company is in the process of creating charge.

(ii) Non-convertible debentures referred above to the extent of :

(a) '427.89 crores (Previous year '570.50 crores) are secured by first pari-passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at village Indrad (Manufacturing facility on identified land), Bhat (Research facility), Corporate office, Ahmedabad, all in Gujarat, and village Baddi (Manufacturing facility) in Himachal Pradesh as well as on certain identified trademarks of the Company including its future line extensions.

(b) '345.00 crores (Previous year '670.00 crores) are secured by first pari passu mortgage/ charge on tangible immovable and movable assets, present and future, located at Dahej (SEZ) in Gujarat (Manufacturing facility) as well as on certain identified trademarks of the Company including its future line extensions.

(c) '500.00 crores (Previous year 'NIL) are secured by first pari-passu mortgage/ charge on immovable as well as tangible movable assets, present and future, located at village Indrad (Manufacturing facility on identified land) and Bhat (Research facility) as well as on certain identified trademarks of the Company including its future line extensions.

(iii) Term Loans from others referred above to the extent of '333.33 crores (previous year '400.00 crores) are secured by first

exclusive mortgage/ charge on identified Land situated at ShiIaj-Thaltej, Ahmedabad as well as first pari passu mortgage/ charge

on certain identified trademarks of the Company including its future line extensions.

(iv) Short term Borrowings from banks are in nature of working capital facilities which are secured by hypothecation of inventories

and book debts.

(v) Average interest rate on borrowings is 7.52% for the year ended 31^st March, 2023 (previous year 6.09%).

Determination of fair values:

The following are the basis of assumptions used to estimate the fair value of financial assets and liabilities that are measured at fair value on recurring basis:

Investment in mutual funds: The fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors.

Equity investments: Equity investments traded in an active market determined by reference to their quoted market prices. Other equity investments where quoted prices are not available, fair values are determined by reference to the expected discounted cash flows from the underlying net assets or current market value of net assets.

Derivative instruments: For forward contracts and cross currency interest rate swaps, future cash flows are estimated based on forward exchange rates and forward interest rates (from observable forward exchange rates / yield curves at the end of the reporting period) and contract forward exchange rates and forward interest rates, discounted at a rate that reflects the credit risk of respective counterparties.

(iii) Financial risk management

The Company’s activities are exposed to variety of financial risks. These risks include market risk (including foreign exchange risk and interest rate risks), credit risks and liquidity risk. The Company’s overall risk management programme seeks to minimise potential adverse effects on the financial performance of the Company through established policies and processes which are laid down to ascertain the extent of risks, setting appropriate limits, controls, continuous monitoring and its compliance.

(a) Market risk:

Market risk refers to the possibility that changes in the market rates may have impact on the Company’s profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates and underlying equity prices.

(a1) Foreign currency exchange rate risk:

The Company’s foreign currency risk arises from its foreign operations, investments in foreign subsidiaries, foreign currency transactions and foreign currency borrowings. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.

Since a major part of the Company’s revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Company’s performance. Consequently, the overall objective of the foreign currency risk management is to minimise the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance.

The major foreign currency exposures for the Company are denominated in USD & EURO. Additionally, there are transactions which are entered into in other currencies and are not significant in relation to the total volume of the foreign currency exposures. The Company hedges all trade receivables and future cash flows upto a maximum of 24 months forward based on historical trends, budgets and monthly sales estimates. The foreign exchange forward contracts are denominated in the same currency as the highly probable forecast sales, therefore the hedge ratio is 1:1 based on management's current assessment. Hedge effectiveness is assessed on a regular basis.

With respect to the Company’s derivative financial instruments which is in the form of forward contracts and currency swap, a 5% increase / decrease in relation to USD & EURO of each of the currencies underlying such contracts would have resulted in increase / decrease of '89.31 crores ('66.50 crores) in the Company’s net profit and '143.62 crores ('70.57 crores) in cash flow hedge reserve from such contracts as at 31^st March, 2023 and 31^st March, 2022 respectively.

With respect to the Company’s non-derivative financial instruments (as given above), a 5% increase / decrease in relation to USD & EURO on the underlying would have resulted in increase /decrease of '62.92 crores ('51.75 crores ) in the Company’s net profit for the year ended 31^st March, 2023 and 31^st March, 2022 respectively.

(a2) Interest rate risk:

Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company is exposed to fluctuations in interest rates in respect of foreign currency borrowings and rupee borrowings.

As at 31^st March, 2023, the Company has outstanding rupee borrowings of '3,541.76 crores with variable rate of interest and '1,027.10 crores with fixed rate of interest.

Cash flow risk in respect of variable rate instruments:

A change of 100 basis points in interest rate at the reporting date would have increased / (decreased) profit by '35.42 crores. This analysis assumes that all other variables remains constant and change occurs on reporting date. The year end balances are not representative of the average borrowings during the year.

Fair value risk in respect of fixed rate instruments:

The Company carries borrowings at amortised cost and hence, change in the interest rate at reporting date does not affect statement of profit or loss.

(b) Credit risk:

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables, investments and derivative financial instruments.

All trade receivables are subject to credit risk exposure. 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 established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company does not have significant concentration of credit risk related to trade receivables. No single third party customer contributes to more than 10 % of outstanding accounts receivable (excluding outstanding from subsidiaries) as at 31^st March, 2023 and 31^st March, 2022.

With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company’s investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible.

With respect to derivatives, the Company's forex management policy lays down guidelines with respect to exposure per counter party i.e. with banks with high credit rating, processes in terms of control and continuous monitoring. The fair value of the derivatives are credit adjusted at the period end.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk is '2,151.14 crores and '1,928.56 crores as at 31^st March, 2023 and 31^st March, 2022 respectively, being the total of the carrying amount of balances with banks, bank deposits, trade receivables, other financial assets and investments excluding equity investments, and these financial assets are of good credit quality including those that are past due.

(c) Liquidity risk:

Liquidity risk refers to the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company generates cash flows from operations to meet its financial obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short term line of credits from banks to ensure necessary liquidity.

In most of the cases above, the relevant authorities have raised a demand or disallowed / deducted the relevant taxes. The Company has preferred an appeal and the outcome is awaited.

Against the claims not acknowledged as debts, the Company has paid '3.96 crores (previous year '3.84 crores). The expected outflow will be determined at the time of final outcome in respect of the concerned matter. No amount is expected to be reimbursed.

41 Commitments and Contingencies (Continued)

(b) The Company and/or its subsidiaries are involved in certain legal proceedings, including product liability and other commercial matters, that arise from time to time in the ordinary course of business. It is difficult to ascertain the financial effect, if any, of such proceedings that will result from its ultimate disposition due to involvement of complex issues with substantial uncertainties and without any precedents. Additionally, many factors like stage of the proceedings, overall length and extent of discovery process; the entitlement of the parties to an action to appeal a decision; the extent of the claims; the possible need for further legal proceedings to establish the appropriate amount of damages, if any; the settlement posture of the other parties to the litigation; uncertainty in timing of litigation and any other factors that may have an implications on the ultimate outcome of the ongoing litigations. The Company assesses likely outcome based on internal assessment as well as considers views of legal counsel representing the Company. Moreover, Company carries product liability insurance policy of amount which it believes to be sufficient for its needs.

(c) In view of amendment in Section 37(1) of Income Tax Act, 1961 introduced in Finance Act, 2022, it is possible that the Company may get involved in the litigation on allowability of certain expenses in relation to the years for which assessment proceedings have not commenced. It is difficult to ascertain the financial effects from such future proceedings, if any, that will result in to its ultimate disposition. The Company assesses likely outcome based on internal assessment as well as considers views of external consultants representing the Company.

42 Acquisition And Amalgamation of Curatio Health Care (I) Private Limited

On 14^th October, 2022, the Company acquired 100% shares in Curatio Health Care (I) Private Limited (‘Curatio’), including its two subsidiaries for a consideration of '2,000 crores. Curatio has presence in the cosmetic dermatology segment with a portfolio of over 50 brands, marketed in India.

The Board of Directors of the Company, at its meeting held on 21^st December, 2022, had approved the Scheme of Arrangement in the nature of Amalgamation of Curatio with the Company subject to requisite statutory and regulatory approvals. The scheme was approved by the National Company Law Tribunal (‘NCLT’), Ahmedabad Bench vide its order dated 17^th May, 2023 and certified copy of the said order was filed with Registrar of Companies on 25^th May, 2023. The management has determined this as a subsequent adjusting event and hence, the financial statements for the year ended 31^st March, 2023 reflect the financial information of Curatio from the date of its acquisition, i.e. 14^th October, 2022.

Identifiable assets acquired and liabilities assumed

The Company has accounted for the transaction in accordance with Ind AS 103, “Business Combinations”, and carrying value of assets and liabilities pertaining to Curatio as appearing in the consolidated financial statements of the Company as at appointed date (i.e. at fair values of identifiable assets acquired and liabilities assumed based on purchase price allocation as determined by independent valuer) has been recognised in the standalone financial statements of the Company.

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition

Gross amount required to be spent by Curatio (merged with the Company with effect from 14^th October, 2022) was '0.68 crores for the year ended 31^st March, 2023 and the same has been fully spent during the year. Further, actual spent on CSR activities for the period from 14^th October, 2022 to 31^st March, 2023 amounts to '0.53 crores which has been included in the Corporate social responsibility expenditure of the Company under other expenses in the standalone statement of profit and loss.

44 Relationship with Struckoff Companies

The Company has balances of '0.03 crores as of 31^st March, 2023 (Previous year '0.03 crores) with respect to four companies, which are struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.

45 Non-Current Assets Held for Sale

During the year, the company has disposed off its Land at Shilaj, Ahmedabad and recognised gain of '22.53 crores.

46 Registration of Charges

All the charges created or satisfied during the current year and previous year were registered with Registrar of Companies within statutory period.

47 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. The Company has not received any funds from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Parties (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

48 Proposed Dividend

The Board of Directors in their meeting held on 30^th May, 2023, recommended a final equity dividend of '8/- per equity share.

49 The financial statements for the year ended 31^st March, 2023 were approved for issue by the Board of Directors on 30^th May, 2023.