* Depreciation on Plant & Machinery includes accelerated depreciation of ? 41.9 Million. (Refer Note 41)

* The immovable properties disclosed above comprise properties where the title deeds have been transferred from the former name of the Company i.e. Huhtamaki PPL Limited to Huhtamaki India Limited as well as those where the Company has made applications to the respective authorities intimating the name change from Huhtamaki PPL Limited to Huhtamaki India Limited.

** Includes Electrical fittings and Air conditioning equipments.

Effective January 1, 2023, the Company has revised the useful life of certain Property, Plant and Equipment (PPE) based on technical evaluation conducted by management to reflect a realistic useful life of the assets. Accordingly, change in useful life of PPE is being applied prospectively in accordance with Ind AS 8 - Accounting policies, change in accounting Estimates and Errors. In addition, the Company has revised the method of charging depreciation on Building from Written Down Value Method to Straight-Line Method. Had the Company continued with the previous estimated useful life for PPE and Written Down Value Method for charging depreciation on Buildings, charge for depreciation year ended December 31, 2023 would have been higher by ? 273.3 Million and consequentially deferred tax charge on the same would have been lower by ? 68.8 Million for year ended December 31, 2023.

Considering the nature of business and operations of the Company, the Management has identified the whole entity as single Cash Generating unit (CGU) for the purpose of impairment testing. Based on the impairment analysis performed, the management has not identified any indicators of impairment were identified for the years ended December 31, 2023 and 2022. Following key assumptions were considered while performing impairment testing:

a) Long-term sustainable growth rates - 5% (Previous Year: 5%)

b) Weighted Average Cost of Capital % before Tax (discount rate) - 11% (Previous Year: 11%)

The recoverable amount is based on fair value less costs to sell, estimated using discounted cash flows. The fair value measurement has been categorised as Level 3 fair value.

The Projections cover a period of five years, which is considered to be an appropriate timescale over which to review and consider annual performances before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on past performance and current developments. Value in use has been determined by discounting the future cash flows generated from the continuing use. A sensitivity analysis around the base assumptions has been performed and it has been concluded that no reasonable changes in key assumptions would cause the recoverable amount to be less than the carrying value.

The Company did not identify any impairment charge in respect of intangible assets during the year December 31, 2023 (December 31, 2022 C Nil).

a) In line with Circular No. 04/2015 issued by Ministry of Corporate Affairs dated 10/03/2015, loans given to employees as per the Company’s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.

b) There are no loans or advances in the nature of loans granted to Promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severally or jointly with any other person.

a) In line with Circular No. 04/2015 issued by Ministry of Corporate Affairs dated 10/03/2015, loans given to employees as per the Company’s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.

b) There are no loans or advances in the nature of loans granted to Promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severally or jointly with any other person.

Company has not given any advances to Directors or other Officers of the Company or any of them either severally or jointly with any other persons or advances to firms of private companies respectively in which any Director is a partner or a Director or a Member.

NOTE 20: ASSETS HELD FOR SALE

Non-current assets or disposal groups comprising of assets and liabilities are classified as ‘held for sale’ when all the following criteria are met: (i) decision has been made to sell, (ii) the assets are available for immediate sale in its present condition, (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.

Subsequently, such non-current assets and disposal groups classified as ‘held for sale’ are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.

The Board of Directors approved the sale of the Company’s land at Thane in favour of Sparkle Two Mall Developers Private Limited, for a consideration of C4,290.0 Million. The Company has executed four conveyance deeds and has received C4,009.0 Million under two conveyance deeds. Profits accruing and to be reported as Exceptional item in respect of these two conveyance deeds amounts to C3,916.0 Million and consequently Capital Gains Tax on the same is C836.0 Million. Out of an amount of C281.0 Million due under the other two conveyance deeds, an amount of C59.5 Million has been received and has disclosed this advance under the head “Other Current Liabilities” in Note 30. and the balance is receivable subject to satisfaction of conditions precedent.

The Board of Directors approved for assignment of the leasehold rights of the Company in the Land situated at Ambernath, Maharashtra, the Company has executed a Deed of Assignment in favour of FSPL Specialities Private Limited (formerly known as Fineotex Specialities Private Limited), for a consideration of C300.0 Million. Profits accruing and to be reported as Exceptional item amounts to C170.9 Million and consequently Capital Gain tax reversal on the same is C16.7 Million.

Total gain from both the properties is C4,086.9 Million Government Grants and net Capital Gain tax/charge on same is C819.5 Million. (Refer Note 41)

D. Terms/rights attached to equity shares:

The Company has only one class of Issued, Subscribed and Paid-up Equity Capital having a par value of C2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the 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.

ii. General reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to the Statement of Profit and Loss. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

iii. Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve and dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to statement of profit and loss. Retained earnings is a free reserve available to the Company.

iv. Items of other comprehensive income

Fair value of cash flow hedges through other comprehensive income: The effective portion of the fair value change of the cash flow hedges measured at fair value through other comprehensive income is recognised in Cash flow hedges through Other Comprehensive Income. Upon derecognition, if the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the standalone statement of profit and loss at the same time as the related cash flow.

a) The Company has availed External Commercial Borrowings from Huhtamaki Finance Company V B.V., Netherlands (fellow subsidiary) through issuance of Rupee Denominated Bonds in two tranches. This loan is carrying an interest @6.5% p.a. and is due for repayment on December 15, 2025 (first tranche of C1,000.0 Million) and February 9, 2026 (second tranche of C1,000.0 Million).

a) Retention Money represents: C29.8 Million (December 31, 2022: C29.8 Million), being money payable to erstwhile shareholders of Positive Packaging Industries Limited for purchase of shares.

b) There is no amount due and outstanding to be credited to Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as on December 31, 2023 (December 31, 2022 C Nil Million).

Provision for litigation represents provision made by the Company in respect of disputed Tax matters. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the utilisation of provision and cash outflows, if any, pending resolution.

b) Details of CSR expenditure:

The CSR activities of the Company includes any or all of the sectors/activities as prescribed by Schedule VII of the Companies Act, 2013 amended from time to time. The Company periodically reviews the sectors/activities relating to the CSR expenditure and if necessary makes changes to those sectors/activities.

The Company has incurred and paid C22.7 Million (Previous Year: C20.8 Million) towards Corporate Social Responsibility activities. Further, no amount has been spent on construction/acquisition of an asset of the Company.

The amount required to be spent under Section 135 of the Companies Act, 2013 for the year 2023 is C10.9 Million (Previous Year: C20.2 Million) i.e. 2% of average net profits for last three financial years, calculated as per Section 198 of the Companies Act, 2013.

(vi) Nature of CSR activities include

- Promotion of healthcare activities which include providing covid care equipments, protection kit to frontline worker, sanitation system to houses, toilet modification, safe drinking water, oxygen concentrators, distribution of battery operated hand sprayers and hydrochloride liquid, supply of medical oxygen cylinders and pipelines, free vaccination camps.

- Promotion of Education activities which include making library setup, school building repairs, distribution of school bags, shoes.

- Environment sustainability activities which include green cover through plantation.

- Communication and societal development which include distribution of Ration bags.

(vii) Above includes a contribution of C21.2 Million (2022: C20.2 Million) to Huhtamaki Foundation which is a Trust registered under Maharashtra Public Trust Act, 1950. The primary Objective of the Trust is to work in the area of environmental sustainability and recyclability. The Actual payment towards CSR spend done during the current year is C14.6 Million (2022: C10.6 Million) of which contribution made to Huhtamaki Foundation trust is C13.0 Million (2022: C10.0 Million).

(viii) The Company does not wish to carry forward excess amount of C11.8 Million spent during earlier years (previous year: C0.6 Million) against amount required to be spent under Section 135 of the Companies Act, 2013 for the year 2023 is C10.9 Million (Previous Year: C20.2 Million).

(ix) The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

a) With the objective to achieve economies of scale, optimise production processes and reduce overall operating expenses, the Company, during the previous quarter ended June 30, 2023, relocated its Labels manufacturing capacities at three sites to other existing Label manufacturing sites. Pursuant thereto, the Company has charged accelerated depreciation of C12.8 Million in respect of property plant and equipment that are not useable at other locations. Further, the Company has paid C6.6 Million towards settlement package for the employees in the above three locations and disposal cost of C2.0 Million. The aforementioned expenses, which aggregate to C21.4 Million have been disclosed as an “Exceptional Item”.

b) Consequent to circular resolution dated October 31, 2023, the Company announced a Voluntary Retirement Scheme (VRS) for its eligible employees at the Hyderabad plant and approved by the Board of Directors of the Company on the same date. In response to the scheme, 93 employees opted for the VRS which involved a pay-out cost of C287.5 Million. Also the Company rolled out a Voluntary Retirement Scheme (VRS) for certain category of its employees working at its Khopoli Plant. Pursuant thereto, 39 employees opted for Voluntary Retirement involving a pay-out of approximately C53.5 Million to the employees. The results for the year ended December 31, 2023 include the impact of the VRS schemes and same has been disclosed as “Exceptional Item”.

c) The Company has stopped production at the Hyderabad plant with no material impact to the business and the Company has charged accelerated depreciation of C29.2 Million in respect of property plant and equipment that are not useable at other locations.

Notes:

i. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above, pending resolution of the respective proceedings as it is determinable only on receipt of judgements/ decisions pending with various forums/ authorities.

ii. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.

iii. I n February 2019, the Honourable Supreme Court of India in its judgement opined on the applicability of allowances that should be considered to measure obligations under Employees Provident Fund Act, 1952. The Company has been legally advised that there are interpretative challenges on the application of judgement retrospectively and therefore has currently not considered any probable obligations for past periods.

B. Commitmentsi. Lease commitments

Rent expenses incurred on short-term lease commitment for the years C19.0 Million (December 31, 2022: C26.2 Million).

Lease Commitments are the future cash out flows from the lease contracts on an undiscounted basis which are not recorded in the measurement of lease liabilities. These include potential future payments related to leases of low value assets and leases with term less than twelve months.

Note: Out of the total export obligation of C3,055.7 Million, (December 31, 2022 C1,784.0 Million) the Company has completed exports obligation of C88.7 Million.(December 31, 2022 C812.8 Million). However, the Export obligation discharge certificate is awaited.

iv. The Company had entered into Lease-cum-Sale Agreement with Karnataka Industrial Area Development Board (“KIADB”) on October 29, 2010. As per this agreement land of 40,473 sq mtr was allotted to the Company. The Company was required to complete civil constructions works, erect machineries and commence production within 24 months from the date of October 14, 2010 ensuring minimum 50% utilisation of land for manufacturing of flexible packaging material.

The Company had applied for extension of deadline from time to time and paid the fees to concerned authorities. All payment including charges for delay has been paid and or provided and last extension application filed by the Company has been approved by KIADB and extension of two years have been granted (up to February 2025). The Board of the Company has approved capital expenditure plan which will ensure the compliance of minimum utilisation of land specified in this agreement.

NOTE 45: EMPLOYEE BENEFIT PLANI. Defined benefit plans Description of the plan

The Company has a defined benefit gratuity plan (funded). Gratuity is payable to all eligible employees of the Company on superannuation, death and resignation, in terms of the provisions of the Payment of Gratuity Act or as per the Company’s Scheme whichever is more beneficial.

Governance

The Fund is in the form of a Company managed Trust (Refer Note 47). The Trustees of the Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.

Investment strategy

The Company's investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has allocated assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to the Company of the benefits provided.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Sensitivity analysis is performed by varying a single parameter while keeping all the other parameters unchanged. Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if two or more variables are changed simultaneously. The method used does not indicate anything about the likelihood of change in any parameter and the extent of the change if any.

H. Expected Employer Contribution for the next year is C32.3 Million (December 31, 2022: C76.9 Million).

I. The average duration of the defined benefit obligation at the end of reporting period is 12 years (December 31, 2022: 11 years).

J. Gratuity is a defined benefit plan and entity is exposed to the following Risks:

Interest rate risk: A fall in the discount rate which is linked to the G.Sec. 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.

Asset liability matching risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

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

II. Defined contribution plans

The Company's contribution for Provident Fund, employees’ state insurance, labour welfare fund, superannuation scheme etc. a aggregating C111.2 Million (2022: C113.1 Million) has been recognised in the Profit or Loss under the head ‘Employee Benefits Expense’.

III. Compensated absences (Long-term employment benefit)

The liability towards compensated absences for the year ended December 31, 2023 based on actuarial valuation carried out by an independent Actuary using Projected Accrued Benefit Method aggregating to C141.7 Million (December 31, 2022: C142.1 Million). Principal assumptions are in line with those used for Gratuity, as applicable.

IV. Service award:

The Company recognises and celebrates those employees who have invested in building a long-term relationship under common service award policy for specified group of employees of specific locations of the Company. The liability towards service awards for the year ended December 31, 2023 based on actuarial valuation carried out by an independent actuary resulted in liability of C13.5 Million (December 31, 2022: C13.6 Million).

V. Pension:

The liability towards pension for the year ended December 31, 2023 based on actuarial valuation carried out by an independent Actuary using Projected unit credit Method aggregating to C0.7 Million (December 31, 2022: C0.8 Million). Principal assumptions are in line with those used for Gratuity, as applicable.

NOTE 46: SHARE-BASED PAYMENTS a) Performance share plans

On March 12, 2010 the Board of Directors of the Parent Company decided on establishing a Performance Share Arrangement to form a part of the long-term incentive and retention programme for the key personnel of the Parent Company and its subsidiaries. The Performance Share Arrangement offers a possibility to earn the Parent Company shares as remuneration for achieving established targets. The arrangement includes annually commencing three-year performance share plans. A possible reward shall be paid during the calendar year following each three-year plan. Commencement of each three-year plan will be separately decided by the Board of Directors of Parent Company.

Participants to the plan shall hold at least 50% of the shares received until he/she holds shares received from the Performance Share Plans corresponding in aggregate to the value of his/her 6 months base salary. The aforementioned ownership requirements apply until termination of employment or service.

Restricted share plan 2021-2023

The Restricted Share Plan 2021-2023 commenced in year 2021 and the possible reward will be based on continuous employment. The reward, if any, will be paid during 2024.

Restricted share plan 2022-2024

The Restricted Share Plan 2022-2024 commenced in year 2022 and the possible reward will be based on continuous employment. The reward, if any, will be paid during 2025.

Performance share plan 2023-2025

The Performance Share Plan 2023-2025 commenced in year 2023 and the possible reward will be based on the Group’s Earnings Per Share (EPS) in 2025. The reward, if any, will be paid during 2026.

Performance share plan 2022-2024

The Performance Share Plan 2022-2024 commenced in year 2022 and the possible reward will be based on the Group’s Earnings Per Share (EPS) in 2024. The reward, if any, will be paid during 2025.

Performance share plan 2021-2023

The Performance Share Plan 2021-2023 commenced in year 2021 and the possible reward will be based on the Group’s Earnings Per Share (EPS) in 2023. The reward, if any, will be paid during 2024.

Performance share plan 2020-2022

The Performance Share Plan 2020-2022 commenced in year 2020 and the possible reward will be based on the Group’s Earnings Per Share (EPS) in 2022. The reward, if any, will be paid during 2023.

Performance share plan 2019-2021

The Performance Share Plan 2019-2021 commenced in year 2019 and the possible reward will be based on the Group’s Earnings Per Share (EPS) in 2021 and since employees holding shares resigned during the year 2021, the shares were forfeited.

In the previous year ended December 31, 2022, the Company had recognised employee stock option costs using equity method. During the current year, Huhtamaki Oyj recharged the Company the cost of acquiring such shares for settlement to the employees. Consequent to this, the Company has recognised the compensation cost for ESOP plans vested during the year and to be vested as liability of C19.1 Million. As at December 31, 2023, an amount of C31.1 Million continues to be recognised as liability (including C16.8 Million transferred from Share Options Outstanding Account as at January 1, 2023) payable to Huhtamaki Oyj.

4. Huhtamaki Oyj has given a Corporate Guarantee to Standard Chartered Bank as security in respect of Fund and Non-fund based facilities of C1,026.5 Million availed by the Company. (December 31, 2022: C1,026.5 Million)

5. Huhtamaki Oyj has given a Corporate Guarantee to JP Morgan as security in respect of Fund based facilities of C1,500.0 Million availed by the Company. (December 31, 2022: C1,500.0 Million)

6. Huhtamaki Oyj has given a Corporate Guarantee to Kotak Mahindra Bank as security in respect of Fund and Non-fund based facilities of C500.0 Million availed by the Company. (December 31, 2022: C500.0 Million)

9. Terms and Conditions:

i) All outstanding balances are unsecured and are repayable as per terms of credit and settlement occurs in cash.

ii) All related party transactions entered during the year were in ordinary course of business and on arms length basis, which has been approved by the Audit Committee.

iii) The Company has not recorded any impairment of receivables related to amounts owed by related parties.

NOTE 48: SEGMENT INFORMATION

Based on the guiding principles given in IND AS 108 on ‘Operating Segments’, the Company’s business activity falls within a single operating segment, namely Consumer Packaging. Accordingly, disclosure requirements of IND AS 108 are not applicable.

The Company's business in South Africa and United Kingdom represented 18.6% and 13.0% respectively, (December 31, 2022: South Africa and United Kingdom represented 15.3% and 12.1% respectively), of its net revenues during the year ended December 31, 2023. No other country individually comprised 10% or more of the Company’s net revenues during these periods.

ii. Entire Non-current Assets of the Company are situated in Indiaiii. Major customer

Revenue from a major customer of the Company is C2,213.6 Million (December 31,2022: C3,189.4 Million) which is 8.9% (December 31, 2022: 11.1% of the Company’s total revenue.

The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, Loans, Other Financial Assets, Trade Payables, Other Financial Liabilities at carrying value since, their carrying amounts are a reasonable approximation of the fair values due to their short-term nature.

B. Calculation of fair values

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended December 31, 2022.

Financial assets and liabilities measured at fair value as at Balance sheet date:

1. The fair values of investments in mutual fund units is based on the net asset value (‘NAV’) as stated by the issuers of these mutual fund units in the published statements as at Balance sheet date.

2. The fair values of the forward contracts used for expected future sale has been determined using forward pricing, which employ the use of market observable inputs (closing rates of foreign currency).

3. Derivatives are held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives are classified as being part of cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair

value of derivatives are recognised in other comprehensive income. Any ineffective elements of the hedge are recognised in the consolidated statement of profit and loss.

If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the consolidated statement of profit and loss at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, the cumulative gain or loss is taken to the consolidated statement of profit and loss. If the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of profit and loss immediately.

4. Derivative financial instruments for which hedge accounting is not applied are initially recognised at fair value on the date on which a derivative contract is entered and are subsequently measured at FVTPL.

5. For financial liabilities that are measured at fair value under Level 3, the carrying amounts are equal to the fair values.

C. Fair value hierarchy

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

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

- Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

- Level 3: Inputs which are not based on observable market data

NOTE 50: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, 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, current investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions.

The Company's business activities are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. The Company's senior management has the overall responsibility for establishing and governing the Company’s risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor controls, periodically review changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Board of Directors and Audit Committee of the Company.

A. Management of liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company's approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout most of the year ended December 31, 2023 and December 31, 2022. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in other highly marketable debt investments to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities. The Company has access to undrawn borrowing facilities from banks for C6,877.8 Million (Previous Year: C5,181.0 Million) as on December 31, 2023.

The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

B. Management of market risk

The Company's size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

1. Currency risk

2. Price risk

3. Interest rate risk

The above risks may affect the Company’s income and expenses, or the value of its financial instruments. The Company's exposure to and management of these risks are explained below.

i. Currency risk

The Company is subject to the risk that changes in foreign currency values impact the Company’s exports revenue and imports of raw material and property, plant and equipment. The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollar and Euro.

The Company manages currency exposures within prescribed limits, through use of forward exchange contracts. The aim of the Company’s approach to management of currency risk is to leave the Company with no material residual risk.

ii) Price risk:

The Company is mainly exposed to the price risk due to its investment in debt mutual funds. The price risk arises due to uncertainties about the future market values of these investments.

The Company has laid policies and guidelines which it adheres to in order to minimise price risk arising from investments in debt mutual funds.

At December 31, 2023, the investments in debt mutual funds amounts to C797.3 Million (December 31, 2022: C Nil). These are exposed to price risk.

A 1% increase in prices would have led to approximately an additional C7.96 Million gain in the Statement of Profit and Loss (2022: C Nil gain). A 1% decrease in prices would have led to an equal but opposite effect.

iii) Interest rate risk

Interest rate risk results from changes in prevailing market interest rates, which can cause a change in the fair value of fixed-rate instruments and changes in the interest payments of the variable-rate instruments. To hedge interest rate risk, a mix of variable and fixed instruments is judiciously applied for financing the Company’s requirement.

C) Management of credit risk Trade receivables

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Concentration of credit risk with respect to trade receivables are limited, due to the Company’s customer base being large and diverse. Further majority of the Company’s customers are Companies with strong financial stability. All trade receivables are reviewed and assessed for default on a quarterly basis, through detailed review with the business teams. A trade receivable without a significant financing component is initially measured at the transaction price.

Credit to be given to a customer is assessed based on credit quality of the customer and individual credit limits are defined in accordance with this assessment.

Our historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to be a single class of financial assets.

Refer Note 3 Accounting policies - 3(d) on financial instruments

Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, liquid mutual funds and derivative instrument. The Company has set counter-parties limits based on multiple factors including financial position, credit rating, etc. The Company's maximum exposure to credit risk as at December 31, 2023, December 31, 2022 is the carrying value of each class of financial assets.

There is no major change as compared to previous year w.r.t. to risk management and policies.

Reason for variation:

Current ratio (in times): The current ratio is healthier at 2.2 in current year as against 1.4 in previous year primarily due to reduction in current borrowings and increase in bank balance and investments.

Debt - Equity ratio (in times): Debt equity ratio is healthier at 0.2 in current year as against 0.5 in previous year primarily due to reduction in total borrowings.

Debt Service Coverage Ratio (times): The debt service coverage ratio is healthier at 1.1 in current year as against 7.3 in previous year primarily due to reduction in total borrowings.

Return on equity (%): Return on Equity in the current year has improved from 6.7% in previous year to 43.0% in current year on the base of higher profit and on account of exceptional item (Refer Note 41).

Net capital turnover ratio (in times): Net capital turnover ratio has reduced from 9.9 in previous year to 3.8 in current year due to reduction in revenue from operation and reduction in current borrowings and increase in bank balance and investments.

Net profit ratio (in %): The net profit margin (including exceptional items) has improved from 1.7% in the previous year to 16.1% in current year on the base of higher profit and on account of exceptional item (Refer Note 41).

Return on capital employed (in %): Return on capital employed has improved from 7.9% in the previous year to 11.9% in the current year on the base of higher profit for the year.

Return on investment (in %): Return on investment in current year has improved from 1.6% to 5.5% due to higher yield from investment.

Definitions:

(a) Earning for available for debt service = Profit before exceptional items and tax Non-cash operating expenses like depreciation and other amortisations Interest other adjustments like loss on sale of Fixed assets etc.

(b) Debt service = Interest & Lease Payments Net Principal Repayments

(c) Average inventory = (Opening inventory balance Closing inventory balance)/2

(d) Average trade receivables = (Opening trade receivables balance Closing trade receivables balance)/2

(e) Average trade payables = (Opening trade payables balance Closing trade payables balance)/2

(f) Working capital = Current assets - Current liabilities.

(g) Earning before interest and taxes = Profit before exceptional items and tax Finance costs - Other Income

(h) Capital employed = Tangible Net Worth Total Debt Deferred Tax Liability

(i) Return on investment = Income earned on Investment/Average investment for the period

NOTE 52: OTHER REGULATORY REQUIREMENT

a) 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 lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company 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.

The Company's capital management objective is to ensure that a sound capital base is maintained to support long-term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.

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 the debt-equity ratio, which is net debt divided by total equity. Net debt is computed as the sum total of all outstanding balances of loans and borrowings net of cash and cash equivalents, bank balance other than cash and cash equivalents and investment in liquid mutual funds.

Debt equity ratio - Net debt divided by total equity Total debt = Long-term borrowing Short-term borrowing

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets the defined financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2023 and December 31, 2022.

NOTE 54: DISCLOSURE OF TRANSACTIONS WITH STRUCK OFF COMPANIES

The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.

NOTE 55:

During the current and previous year, the Company has received whistle blowing complaints regarding possible irregularities and potential non-adherence to the Policies of the Company in certain locations, pursuant to which the Company undertook detailed and thorough reviews of these complaints, identified root causes and took corrective, remedial and preventive actions, basis which these matters are now closed. Basis these diligent investigations, the Management assessed and concluded that there are no material adverse findings and there is no material impact on the financial statements for the respective reporting periods. The Company is committed to upholding the highest standards of corporate governance and to strengthen the compliance and control environment wherever deemed necessary.

No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:

(a) Crypto Currency or Virtual Currency

(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder

(c) Registration of charges or satisfaction with Registrar of Companies

(d) Relating to borrowed funds:

i. Wilful defaulter

ii. Utilisation of borrowed funds & share premium

iii. Borrowings obtained on the basis of security of current assets

iv. Discrepancy in utilisation of borrowings

v. Compliance with scheme of arrangement.