xxi. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions (excluding gratuity and compensated absences) are determined based on management's estimate required to settle the obligation at the Balance Sheet date. In case the time value of money is material, provisions are discounted using a current pretax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

The Company recognises a provision in respect of an onerous contract when the expected benefits to be derived from a contract is lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating the contract and the expected net cost of fulfilling the contract. Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. A contingent liability also arises, in rare cases, where a liability cannot be recognised because it cannot be measured reliably. Contingent assets are disclosed where an inflow of economic benefits is probable.

xxii. Earnings per share

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares).

xxiii. Foreign currency transactions and balances

(a) Initial Recognition

Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion

Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Treatment of Exchange Difference

Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss

xxiv. Earnings Before Interest, Tax, Depreciation and amortisation (EBIDTA)

Earnings Before Interest, Tax, Depreciation and amortization (EBIDTA) is computed by adding interest (finance cost), tax expenses and depreciation and amortization expense to net profit for the period/year.

Note 2.2 Recent accounting pronouncements

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind AS which are effective for annual periods beginning on or after 1 April 2023. The Company applied for the first-time these amendments.

(i) Definition of Accounting Estimates - Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.

The amendments had no impact on the Company's standalone financial statements.

(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their

'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments have had an impact on the Company's disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company's financial statements.

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.

The Company previously recognised for deferred tax on leases on a net basis. As a result of these amendments, the Company has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12,there is no impact in the balance sheet. There was also no impact on the opening retained earnings as at 1 April 2022.

d. Shares reserved for issue under Employee Stock Options Scheme:

As at 31 March 2024, the Company has 659,400 (31 March 2023: 155,757) employee stock options issued under the Employee stock option scheme of the Company to its employees. [Refer note 42]

e. Bonus shares / buy back / shares for consideration other than cash issued during past five years including current year:

(i) Aggregate number and class of shares allotted as fully paid up pursuant to contracts without payment being received in cash FY 2020-21: 2,012 equity shares (of face value INR 10 per share) at a premium of INR 716.93 per share

FY 2019-20 : 2,746 equity shares (of face value INR 10 per share) at a premium of INR 921.76 per share

FY 2018-19 : 2,441 and 2,118 equity shares (of face value INR 10 per share) at a premium of INR 750 and INR 840 per share, respectively.

(ii) Aggregate number and class of shares allotted as fully paid-up by way of bonus shares - Nil

(iii) Aggregate number and class of shares bought back - Nil

Note 14 Other Equity (Contd..)

ii. Share option outstanding account

The share option outstanding account represents reserve in respect of equity settled share options granted to the Company's employees in pursuance of the Employee Stock Option Plans. The amounts recorded in this account are transferred to the securities premium account upon exercise of stock options, as applicable. In case of forfeiture, corresponding balance is transferred to general reserve.

iii. General reserve

Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn.

iv. Retained earnings

Retained earnings represents the profits / losses that the Company has earned / incurred till date including gain / (loss) on remeasurement of defined benefits plans as adjusted for distributions to owners, transfer to other reserves etc.

v. Money received against share warrants

Money received against share warrants represents the subscription amount received at the time of issue of share warrants less utilised for conversion of warrants into equity shares.

vi. Share Application money pending allotment

Represents share application money received towards equity shares of the Company for which allotment is yet to be done.

Note 35(C)(i) : The Company had completed its Initial Public Offer (IPO) of 26,900,530 equity shares of face value of INR 2 each at an issue price of INR 357 per share (including a share premium of INR 355 per share) that was listed on National Stock Exchange of India Limited (NSE) and Bombay Stock exchange Limited (BSE) on 22 December 2022. Entire IPO comprised of offer to sale of 26,900,530 equity shares by selling shareholders.

During the previous year ended 31 March 2023, the Company had incurred expenses aggregating to INR 52 crore towards various services availed in connection with aforesaid IPO under the terms of agreement executed between the Company and respective service providers. Such expenses have been recovered from the selling shareholders during the year ended 31 March 2023 and the balance recoverable amount of INR 2.81 crore from selling shareholders has been presented under other current financial assets in these financial statements as at 31 March 2023. The aforesaid balance has been recovered during the current year.

Note 35(C)(ii) : Compensation to key managerial personnel does not include (i) provisional gratuity liability and compensated absences valued by an actuary, as separate figures are not available and (ii) reimbursement of expenses related to business.

Note 36 Financial risk management objectives and policies

The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

i 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 and currency risk. Major financial instruments affected by market risk includes loans and borrowings.

a. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's total debt obligations with floating interest rates.

Notes:

i) Expected volatility reflects assumption that the historical volatility over a year similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome

ii) Above mentioned schemes existed as at 31 March 2023, except for ESOS 2021 (4), ESOS 2021 (5) and ESOS 2023 and consequently disclosure for previous year have not been given separately.

Note 43 As at 31 March 2024, the Company has non-current investments and non-current loans amounting to INR 27.69 crore and INR 24.66 crore, respectively, in its wholly owned subsidiary Artisan Spirits Private Limited ('ASPL'). As at 31 March 2024, ASPL has accumulated losses and its net-worth has been substantially eroded. However, the net-worth of this subsidiary does not represent its true market value as the value of the entity on a going concern basis, based on valuation report of an independent valuer, is higher. Therefore, based on certain estimates like future business plans, growth prospects as well as considering the valuation report from an independent valuer, the management believes that the realizable amount of the subsidiary is higher than the carrying value of the non-current investments and loans due to which these are considered as good and recoverable.

Note 44 The Company had a disputed excise duty demand of INR 115.90 crore in respect of which the Company had preferred an appeal and stay was granted by Hon'ble Minister for State Excise, Maharashtra ('Minister') in earlier years. On 7 March 2024, the Minister has passed an order wherein the aforementioned demand of INR 115.90 crore has been set aside and matter now stands disposed off in favor of the Company.

Government Grants relate to Wine Incentive Promotion Subsidy (WIPS) scheme launched by the state of Maharashtra. Under the WIPS scheme, Value Added Tax (VAT) paid by Company on wine manufactured from grapes produced in Maharashtra including blending of wine manufactured from grapes purchased within the state of Maharashtra and subsequently sold in Maharashtra is eligible for 80% refund. The Company being involved in the business of manufacturing and sale of wine, avails WIPS incentive. There are no unfulfilled conditions or contingencies attached to these grants.

Government grants relating to Electric Vehicle

The government grants relates to asset i.e., purchase of electric vehicles and accordingly will be recognised on straight line basis over the period of 5 years. There are no unfulfilled conditions or contingencies attached to these grants.

Government grants relating to CEFPPC scheme received from MOFPI

Government Grants relate to Creation / Expansion of Food processing and preservation capacities (CEFPPC scheme) under Ministry of Food processing Industries. Under this scheme, expenses incurred on purchase of plant, property and equipment by Company towards expansion of cellar door facility are reimbursed to Company by way of grant in aid as per scheme document. There are no unfulfilled conditions or contingencies attached to these grants. As the grant relates to assets, the same will be treated as deferred income and will be recognized in the Stadalone Statement of Profit and Loss on a systematic and rational basis over the useful life of the related PPE.

Government Grants relating to Electricity for Industries in Vidarbha, Marathwada, Uttar Maharashtra & D, D area

This government grant relate to region based subsidy for industries in Vidarbha, Marathwada, Uttar Maharashtra & D, D area declared by Government of Maharashtra and is recognised in the year in which it is earned.

Note 48 During the current year, Principal Commission of Income Tax ('PCIT') has filed a Writ Petition in the Bombay High Court challenging the legality of the order dated 27 September 2019 passed by the Income Settlement Commissioner ('ITSC') under Sec 245D(4) of Income Tax Act. For the grounds stated in the Writ Petition, PCIT has sought for the ITSC order dated 27 September 2019 to be quashed and set aside. Management believes that the aforemention petition is not likely to have any material impact on the financial statements.

Note 49 The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses accounting software (SAP ECC 6.0 and HROne) for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software.

The Company also uses accounting software (OnePos and IDS) for maintaining sales records of the hospitality services which does not have a feature of recording audit trail (edit log) facility. Based on management assessment, the non-availability of audit trail functions will not have any impact on the performance of the accounting software, as management has all other necessary controls in place which are operating effectively.

Note 50 Events after the reporting year

Acquisition of N D Wines Private Limited :

The Company has entered into a Share Purchase Agreement dated 12 April 2024 with existing shareholders to acquire 100% shareholding of N.D. Wines Private Limited for a consideration of INR 13.10 crore. Pursuant to the above, effective 12 April 2024, N.D. Wines Private Limited becomes the wholly owned subsidiary of the Company.

Note 51 Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with struck off companies.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the

statutory year.

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities

(Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

Note 51 Other Statutory Information (Contd..)

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

(vii) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(viii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(x) The Company has not entered into any scheme of arrangement which has an accounting impact on the current or previous financial year.

(xi) The standalone financial statements until the year ended 31 March 2023 were presented in INR million. Effective 1 April 2023, the Company has presented the financial statements in INR crore. Consequently, the financial statements for the comparative periods have also been presented in INR crore.

This is a summary of material accounting policies

and other explanatory information referred to in our audit report of even date

For Walker Chandiok & Co LLP For and on behalf of Board of Directors of

Chartered Accountants Sula Vineyards Limited

Firm Registration No. 001076N / N500013

Rakesh R. Agarwal Rajeev Samant Chetan Desai

Partner CEO and Managing Director Chairman and Director

Membership No.109632 DIN: 00020675 DIN: 03595319

Abhishek Kapoor Ruchi Sathe

Chief Financial Officer Company Secretary

ACA: 98459 Membership No. A33566

Place: Mumbai Place: Mumbai

Date: 8 May 2024 Date: 8 May 2024