The Exceptional items includes write off of inventory amounting to Rs 705.12 Lacs. The Inventory is written off as raw material pertaining to Covid related drugs and formulations which were assessed as unusable due to obsolescence by the company and recommended to be disposed and written off. Though the assessment of inventory obsolescence, excess and unmarketability is an ordinary business activity but as the value of inventory written off is of such size and amount it is separately disclosed under the head exceptional items under the profit and loss account.

12b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10 per share. Each 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 remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Vehicle Loans are secured by hypothecation of vehicles in favor of the Bank. Similarly, machinery term loans are secured by hypothecation of machinery in favor of the Bank.

Cash Credit, Term Loan, Pre-shipment, Post Shipment, FLC, PSL, PCFC and BG are secured by hypothecation of all types of stocks and other material at factory/godown or at other places as approved by the bank from time to time including goods in transit and receivables, i.e. stock and book debts; hypothecation of plant and machinery and FDR margin.

All the Loans and Advances from the bank, including Working Capital limits and other credit facilities from the Bank are collaterally secured by equitable mortgage of the following properties:

i) Industrial Property bearing killa no. 152/5 (6-17), 152 (8-0), Khewat Khatoni No. 368/435, 581/761, Rakba 14K, 17M situated at Nag Kalan Amritsar, owned by Mr. Ramesh Arora and Mr. Ajay Arora, directors of the Company

ii) Industrial Property at Wakia 6 Mile Stone Village Nag Kalan, Majitha Road, Amritsar -143001 owned by the Company.

iii) Industrial Property at Plot No. 1A, Raja Ka Bagh, Kangra, Himachal Pradesh on long term lease from government of Himachal Pradesh.

iv) Industrial property situated at Hadbast No. 334 , Situated at Rakba Village Nag-2, Tehsil Majitha , Near kwality pharmaceuticals , Amritsar , Punjab, 143601.

(i) Details of security for the secured short-term borrowings: Cash Credit, Preshipment, Post Shipment, FLC, PSL, PCFC and BG are secured by hypothecation of all types of stocks and other material at factory/godown or at other places as approved by the bank from time to time including goods in transit and receivables, i.e. stock and book debts; hypothecation of plant and machinery and FDR margin and collaterally secured by equitable mortgage of the properties mentioned in note no. 14.

> PENDING LITIGATIONS

The Company has certain other pending litigations against it with respect to marketing and quality of its products. The litigations are pending in various forums. As per management representation, the financial

impact of these litigations cannot be ascertained.

33. The Exceptional items includes write off of inventory amounting to Rs 705.12 Lacs and write off of Input Tax credit of Goods and services Tax Rs 947.82 Lacs. The company is carrying forward GST Input Tax Credit under the current assets as utilizable asset for payment of output GST Liabilities. The accumulated balance under input tax credit is rising every year even after utilization and refunds. So the company has assessed the prospects for utilization of availed Input Tax Credit based on its utilization requirement and also based on compliance record of purchase vendors under the Goods and Services Tax Act and has decided to write off the ITC to the extent of 947.82 Lacs.

34. FOREIGN EXCHANGE EXPOSURE:

The Company has booked Rs. 126.55 lacs (Previous year Rs. 166.22 lacs) in Statement of Profit & Loss on account of foreign currency exchange rate change.

*The previous year's figures have been regrouped wherever necessary to make it comparable with the current year.

36. FAIR VALUE DISCLOSURES:

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

The categories used are as follows:

• Level 1: This hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds, ETFs and mutual funds that have quoted price.;

• Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2; and

• Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3

The carrying value of all the financials assets and financial liabilities are a reasonable approximation of their fair values. Accordingly, the fair values of such financial assets and liabilities have not been disclosed separately.

36.1. Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk primarily from trade receivables, cash and cash equivalents, and financial assets measured at amortised cost.

A. Trade Receivables:

Trade receivables of the Company are generally unsecured. The Company performs ongoing credit evaluations of its customers' financial conditions and monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business through internal evaluation. The allowance for impairment of trade receivables is created to the extent and as and when required, based upon the expected collectability of accounts receivables. The Company has no concentration of credit risk as the customer base is geographically distributed in India.

B. Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

C. Other financial assets measured at amortised cost

Other financial assets measured at amortised cost includes loans and advances, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously and is based on the credit worthiness of those parties.

Provision for expected credit losses

a) Expected credit losses for financial assets other than trade receivables

The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk nature.

b) Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analyzing historical trend of default and such provision percentage determined have been considered to recognize life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for). Based on such simplified approach,no allowance has been recognised

36.2. Liquidity Risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected. Liquidity risk is managed by monitoring on a regular basis that sufficient funds are available to meet any future commitments. The Company manages its liquidity risk by maintaining sufficient working capital.

36.3. 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 three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. The Company is not exposed to other price risk whereas the exposure to currency risk is given as under:

a) Foreign Currency Risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. It arises mainly where receivables and payables exist due to transactions entered in foreign currencies.

b) Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. Relevant reports are submitted to Board of Directors on the

unhedged foreign currency exposures. The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

37. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS:

The Company operates a gratuity plan covering qualifying employees. Under the gratuity plan, the eligible employees are entitled to post retirement benefit at the rate of 15 days salary for each year of service until the retirement age of 58, subject to a payment ceiling of Rs. 20 lakhs. The benefit vests upon completion of five years of continuous service as per "The Payment of Gratuity Act" and once vested it is payable to the employee on retirement or on termination of employment. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

Gratuity is defined benefit plan and Company is exposed to following Risks:

Interest Rate Risk:

A fall in the discount rate which is linked to the Government Securities Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan's liability.

Investment Risk:

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Mortality Risk:

Since the benefits under the plan is not payable for the life time and payable till retirement age only, plan does not have any longevity risk.

The Valuation of the Gratuity has been made on the following assumptions:

39.a. The Company has complied with the number of layers prescribed under the Companies Act, 2013.

39.b. Utilisation of Borrowed funds: The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) 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 (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

39.c. Details of Benami Property held - 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.

39.d. Wilful Defaulter - The company is not declared wilful defaulter by any bank or financial Institution or other lender during the year.

39.e. Registration of charges or satisfaction with Registrar of Companies - During the year, the company has complied with the requirements for registration of charges on the assets of the Company with the Registrar of Companies.

39.g. There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

39.h. The Company does not have any transactions with struck-off companies.

39.i. The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

39.j. The previous year's figures have been regrouped wherever necessary to make it comparable with the current year.