Note:

a) Additions include ' 1.63 crores (31 March 2021: ' 0.01 crores) towards assets located at research and development facilities.

b) Contractual obligation

Refer note 40 (B) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

c) Property, plant and equipment pledged as security

Refer note 21 and 26 for information on property, plant and equipment pledged as security by the Company.

d) During year ended 31 March 2020, the Company had executed an agreement for transfer of ' 5.145 acres (sellable area 16664.05 Sq Mtr) of land (classified under right of use assets) at B-14/10 MIDC Area, Waluj, Aurangabad, Maharashtra for a consideration of ' 15.43 crores and classified it as non current asset held for sale. Out of the aforesaid land, the Company had executed assignment deeds to the extent of 10,673.04 Sq. Mtr and completed the transfer during the financial year ended 31 March 2021. The Company had received advance amounting to ' 4.67 crores pursuant to the remaining 5,991.01 Sq. Mtr of land till 31 March 2021. The Company has executed assignment deeds for the remaining sellable area and completed the transfer process during the financial year ended 31 March 2022

ii) Leasing arrangements

Investment property comprises of land and building which is leased to subsidiary companies under long-term operating leases with rentals payable monthly. Refer note 42 for details on future minimum lease rentals.

iii) Fair value of the investment property as at 31 March 2022 is ' 8.84 crores. The Company has obtained independent valuation for its investment property from a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

Notes:

(i) Of the above 242,051 shares have been allotted to erstwhile shareholders of Gujarat Propack Limited on amalgamation in the financial year 2002-03. No shares has been issued for consideration other than cash in the current reporting year and in last five years immediately preceding the current reporting year.

(ii) Of the above 8,486,705 shares have been allotted as fully paid bonus shares by capitalisation of capital reserves and share premium account in the financial year 2002-03. No shares have been issued as bonus shares in the current reporting year and in last five years immediately preceding the current reporting year.

(iii) The Board of Directors of the Company at their meeting held on 26 October 2020 had approved Buyback of 12,67,361 equity shares (6.52% of equity capital) of the Company, through the “Tender Offer” route for an aggregate amount of upto ' 73 crores at a price of 576 per equity share. The said equity shares bought back were extinguished on 24 December 2020. An amount of ' 90.55 crores (including income tax and direct buyback costs) had been utilized from the other equity for the aforesaid buyback including creation of capital redemption reserve account of ' 1.27 crores (representing the nominal value of the equity shares bought back). Consequent to the buyback, the paid-up equity share capital has reduced from ' 19.44 crores to ' 18.17 crores consisting of 1,81,72,715 equity shares of ' 10 each.

(iv) During the year, the Board of Directors declared an first interim dividend of ' 25 per equity share and second interim dividend of ' 10 per equity share (31 March 2021: ' 25 per equity shares)

During the year ended 31 March 2022 the amount of per share dividend recognised as distributions to equity shareholders was ' 35 per share (31 March 2021: ' 25 per share).

(v) Terms and rights attached to equity shares:

The Company has only one class of equity shares having the par value of ' 10 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors, if any, is subject to approval of shareholders in Annual General Meeting except in case of interim dividend.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of reserves

(i) Capital reserve

Capital reserve was created under financial statements prepared in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (‘previous GAAP') out of the profit earned from a specific transaction of capital nature.

(ii) Securities premium account

Securities premium reserve represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act 2013.

(iii) General reserve

The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

(iv) Share options outstanding account

The reserve is used to recognize the grant date fair value of the options issued to employees under Company's employee stock option plan.

(v) Treasury shares

This reserve represents Company's own equity shares held by the Cosmo ESOP Trust which is created under the Employee Stock Option Plan, 2015.

(vi) Effective portion of cash flow hedges

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged transaction occurs.

(vii) Debt instruments through other comprehensive income

The Company has classified investments in perpetual bonds as at fair value through other comprehensive income (FVOCI) since:(a) perpetual bonds are held within a business model whose objective is achieved by both collecting contractual cash flows and selling those bonds; and (b) the contractual terms of perpetual bonds give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.This reserve represents changes in fair value of perpetual bonds from the date of such classification to the reporting date. When the perpetual bonds are derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

(viii) Equity instruments through other comprehensive income

The Company had classified certain investments in unquoted equity shares as at fair value through other comprehensive income (FVOCI) since these investments were held for long term value accretion and not being actively traded. This reserve represents the cumulative gains (net of losses) arising on revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified, if any, to retained earnings when those instruments are disposed of.

(ix) Capital redemption reserve

This reserve represents a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares.

IFF COSMO FILMS

IBar Engineered to Enhance _

NOTES OF THE FINANCIAL STATEMENTS for the year ended 31 March, 2022

(All amounts in ' crores, unless otherwise stated)

(C) Disclosure as per Section 186(4) of the Companies Act, 2013 :

Corporate guarantee was given for working capital facility obtained by the subsidiary.

41 RESEARCH AND DEVELOPMENT EXPENDITURE

Research and development expenditures incurred by the Company during the financial year are mentioned below:

Assets purchased/capitalised for research and development centres

42 1. EMPLOYEE STOCK OPTION PLAN

Pursuant to the approval of the shareholders, the Company has introduced Cosmo Films Share Based Employee Benefit Scheme 2021 (CF SBEB Scheme, 2021) which supersedes earlier Cosmo Films Employees Stock Option Plan 2015 (CF ESOP 2015) to provide share based incentive to the eligible employees of the Company and its subsidiaries. However, Options already granted under CF ESOP 2015 will continue to be governed in accordance with the said Plan. The plan is implemented via trust route which will acquire the equity shares of the Company by secondary market acquisition, however, in case of any shortfall the Company will issue new shares as required. When exercisable, each option is convertible into one equity share.

The weighted average remaining contractual life outstanding as of 31 March 2021 was 3.84 years (31 March 2021: Nil years). The weighted average exercise price of options outstanding as of 31 March 2022 was ' 1800.00 (31 March 2021: ' Nil).

C) Market value of SARs as at the reporting date is used to determine the fair value amortised in the profit and loss account.

43 EMPLOYEE BENEFIT OBLIGATIONS 1) Gratuity

The Company makes contribution towards gratuity to a defined retirement benefits plan for qualifying employees. The Company has taken policy with Life Insurance Corporation of India to provide for payment of retirement benefits to vested employees. The present value of obligation is determined based on actuarial valuation. The expected contribution to the plan for next annual reporting period amounts to ' 3.22 crores (31 March 2021: ' 2.84 crores).

The weighted average duration of the defined benefit obligation as at 31 March 2022 is 4 years (31 March 2021: 4 years).

44 LEASES

A The Company has taken residential/commercial premises on lease. There are no restrictions placed upon the Company by entering into these leases and there are no subleases. The Company is prohibited from selling or pledging the underlying leased assets as security. The Company also has certain leases of various assets with lease terms of 12 months or less. The Company applies the ‘short-term lease' recognition exemptions for these leases.

B) Fair value hierarchy

The different levels of fair value have been defined below:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

Level 3: Inputs which are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a net asset value or valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Valuation process and technique used to determine fair values

(i) All financial instruments are initially recognised at cost and subsequently re-measured at fair value as described below:

a) The fair value of investment in quoted Equity Shares is measured at quoted price as at reporting date.

b) The fair value of investment in quoted Bonds and Debentures is measured based on the last traded price on stock exchange as at the reporting date.

c) The fair value of investments in Alternative Investment Funds and Mutual Funds is based on the net asset value (NAV) as stated by the issuers of these funds in the published statements as at the balance sheet date.

d) The fair value for unquoted instruments where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques used in determining the fair value of various assets is as follows:

i. Asset Approach : Net Assets Value Method

ii. Income Approach : Discounted Cash Flows Method

iii. Market Approach : Comparable Companies Multiples Method

(ii) Fair value for derivatives contracts is determined using observable forward and option exchange rates and yield curves as at the balance sheet date.

B) (ii) Fair value of financial assets and liabilities measured at amortised cost

The fair values of loans are not materially different from the amortised cost thereof. Further, the management assessed that fair values of trade receivables, cash and cash equivalents, other bank balances, other current financial assets (excluding derivative assets), current borrowings, trade payables and other current financial liabilities (excluding derivative liabilities) approximate their respective carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

All the long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Company's creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

The fair value measurements disclosed in respect of financial assets and liabilities measured at amortised cost fall within Level 3 of fair value hierarchy.

A. Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

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.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit, from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become one year past due. Company obtains the credit insurance for export debtors from Export Credit Guarantee Corporation (ECGC) of India and for domestic debtors from insurance company.

Investments

This risk refers to a situation where a particular bond issuer is unable to make the expected principal payments, interest rate payments, or both.

The Company's deployment in debt instruments are primarily in bonds and debentures issued by highly rated banks, financial institutions and public sector undertakings. With respect to the Company's investing activities, counter parties are shortlisted and exposure limits are determined on the basis of their credit rating (by independent agencies), financial statements and other relevant information. As these counter parties are Banks/ Financial Institutions /public sector undertakings with investment grade credit ratings and taking into account the experience of the Company over time, the counter party risk attached to such assets is considered to be insignificant.

Furthermore, with respect to the company's investments in Equity and Preference instruments, Mutual Funds and AIF's, since these investments are not exposed to counterparty risks, therefore they have been considered under low credit risk instruments.

Derivative instruments

Credit risk related to derivative instruments is managed by the Company by doing transactions with highly rated banks. Further, management has established limits for use of derivative instruments to minimise the concentration of risks and therefore mitigate financial loss through counterparties potential failure to make payments.

Other financial assets measured at amortised cost

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

Provision for expected credit losses

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

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses. Since, the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low. In respect of loans, comprising of security deposits, credit risk is considered low because the Company is in possession of the underlying asset. In respect of other financial assets, credit risk is evaluated based on Company's knowledge of the credit worthiness of those parties. 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 financial assets under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default and such provision percentage determined have been considered to recognise 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). Customer advances amounting to ' 29.82 crores (31 March 2021 : ' 34.16 crores) were not considered for the purpose of computation of expected credit

B. Liquidity risk

Liquidity risk is 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 Company's approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

Management monitors rolling forecasts of the liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

(ii) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, GBP, Euro and JPY. Fluctuations in foreign currency exchange rates may have an impact on profit or loss and the statement of change in 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.

Exposures on foreign currency loans are managed through a hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company's policy is to hedge material foreign exchange risk associated with borrowings, highly probable forecast sales and purchases transactions denominated in foreign currencies. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.

The Company uses forward exchange contracts, currency swaps, other derivatives and non-derivative instruments to hedge the effects of movements in exchange rates on foreign currency denominated assets, liabilities and highly probable forecast transactions. The sources of foreign exchange risk are outstanding

amounts payable for imported raw materials, capital goods and other supplies and as well as financing transactions and loans denominated in foreign currencies. The Company is also exposed to foreign exchange risk on its highly probable forecasted sales and purchases. The policy of the Company is to determine on a regular basis what portion of the foreign exchange risk on financing transactions and loans are to be hedged through forward exchange contracts and other instruments. Short-term net exposures are hedged progressively based on their maturity. The hedge mechanisms are reviewed periodically to ensure that the risk from fluctuating currency exchange rates is appropriately managed. The following analysis is based on the gross exposure as at the reporting date which could affect the profit or loss or other comprehensive income. Instruments designated in hedging relationship and hedge accounting disclosures are include in section “Derivative financial instruments and hedge accounting”.

Sensitivity analysis

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts and non-derivative financial instruments designated as cash flow hedges.

b) The Company uses foreign currency forward contracts, foreign currency options contracts and non-derivative financial instruments (i.e. foreign currency borrowings) to mitigate exchange rate exposure arising from forecast sales and purchase in USD, EUR and GBP Also, the Company uses foreign currency options contracts, cross currency swap contracts and interest rate swap contracts to mitigate exchange rate exposure and interest rate exposure arising from foreign currency borrowings.

Hedge effectiveness is determined at inception of the hedge relationship and at every reporting period end through the assessment of the hedged items and hedging instrument to determine whether there is still an economic relationship between the two.

The critical terms of the foreign currency forwards and cross currency swaps entered into exactly match the terms of the hedged item. As such the economic relationship and hedge effectiveness are based on the qualitative factors and the use of a hypothetical derivative where appropriate.

In hedges of foreign currency borrowings and forecast transaction, ineffectiveness mainly arises because of Change in timing of hedged item from that of the hedging instrument and cost of hedging. The ineffectiveness in the hedges have been disclosed.

All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position.

To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss. At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income.

If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued, and the related gain or loss is held in the equity reserve until the forecast transaction occurs.

Other derivatives, which have not been designated in hedging relationship, are considered by management to be part of economic hedge arrangements but have not been formally designated.

48 CAPITAL MANAGEMENT

The Company's capital management objectives are to ensure the Company's ability to continue as a going concern as well as to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Company monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised in other comprehensive income.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The amounts managed as capital by the Company are summarised as follows:

52 Per transfer pricing legislation under Sections 92-92F of the Income-tax Act, 1961, the Company is required to use certain specific methods in computing arm's length prices of international transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company has appointed independent consultants for conducting a Transfer Pricing Study (the ‘Study') to determine whether the transactions with associate enterprises undertaken during the financial year are on an “arms length basis”. Management is of the opinion that the Company's international transactions are at arm's length and that the results of the on-going study will not have any impact on the financial statements and the independent consultants appointed have also preliminarily confirmed that they do not expect any transfer pricing adjustments.

53 The Company continues to closely monitor the impact of the Covid-19 pandemic on all aspects of its business. The Company is engaged in the business of flexible packaging films which is part of essential commodities, and therefore, the pandemic had marginal impact on the business operations of the Company. The management has exercised due care in concluding significant accounting judgements and estimates, inter-alia, recoverability of receivables, impairment assessment of financial and non-financial assets, realisability of Inventory and accordingly noted no significant impact on its financial results. Further, management believes that the Company will be able to discharge the liabilities as and when falling due. The Company will continue to monitor current and future conditions and impact thereof on Company's operations.