3.11 Provisions and contingent liabilities

A provision is recognised if, as a result of a past
event, the Company has a present legal or
constructive obligation that can be estimated
reliably, and it is probable that an outflow of
economic benefits will be required to settle
the obligation. Provisions are determined by
discounting the expected future cash flows
at a pre-tax rate that reflects current market
assessments of the time value of money and
the risks specific to the liability. The unwinding
of the discount is recognised as finance cost.
A disclosure for a contingent liability is made
when there is a possible obligation or a present
obligation that may, but will probably not, require
an outflow of resources. When there is a possible
obligation of a present obligation in respect of
which the likelihood of outflow of resources is
remote, or the amount of the obligation cannot
be measured with sufficient reliability no
provision or disclosure is made.

3.12 Leases

The Company assesses at contract inception
whether a contract is, or contains, a lease. That
is, if the contract conveys the right to control the
use of an identified asset for a period of time in
exchange for consideration.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low value
assets. The Company recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying assets.

i Right-of-use Assets

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the

date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments
made at or before the commencement date less
any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the
shorter of the lease term and the estimated useful
lives of the assets, as follows:

Leasehold Land 90 to 99 years

Buildings 9 years

If ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets
are also subject to impairment. Refer to the
accounting policies in Note 3.13 Impairment of
non-financial assets.

ii Lease Liabilities

At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by
the Company and payments of penalties for
terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on
an index or a rate are recognised as expenses
(unless they are incurred to produce inventories)
in the period in which the event or condition that
triggers the payment occurs. In calculating the
present value of lease payments, the Company
uses its incremental borrowing rate at the lease
commencement date because the interest rate
implicit in the lease is not readily determinable.
After the commencement date, the amount of
lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease
payments (e.g., changes to future payments
resulting from a change in an index or rate used
to determine such lease payments) or a change
in the assessment of an option to purchase the
underlying asset.

Lease liability and ROU assets have been
separately presented in the Balance Sheet and
lease payments have been classified as financing
cash flows.

iii Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term leases (i.e.,
those leases that have a non cancellable lease term
of 12 months or less from the commencement
date and do not contain a purchase option). It also
applies the lease of low-value assets recognition
exemption to leases of office equipment that are
considered to be low value. Lease payments on
short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis
over the lease term.

3.13 Impairment of non-financial assets

The Company's non-financial assets, other than
inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is
any indication of impairment. If any such indication
exists, then the asset's recoverable amount is
estimated. An impairment loss is recognised if the
carrying amount of an asset exceeds its estimated
recoverable amount. Impairment losses are
recognised in the statement of profit and loss.

The recoverable amount is the higher of its value
in use and its fair value less costs to sell. Value in
use is based on the estimated future cash flows,
discounted to their present value using a pre¬
tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset.

In respect of the assets for which impairment
loss has been recognised in prior periods, the
Company reviews at each reporting date whether
there is any indication that the loss has decreased
or no longer exists. When there is indication that
an impairment loss recognised for an asset (other
than a revalued asset) in earlier accounting periods
which no longer exists or may have decreased,
impairment loss is reversed to the extent to the
extent the amount was previously charged to the
Statement of Profit and Loss. In case of revalued
assets, such reversal is not recognised.

3.14 Cash and cash equivalents

Cash and cash equivalents in the balance
sheet comprise cash at banks and on hand and
short-term deposits with an original maturity
of three months or less, which are subject to an
insignificant risk of changes in value.

For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and
short-term deposits, as defined above, net
of outstanding bank overdrafts as they are
considered an integral part of the Company's
cash management.

3.15 Earnings per share (EPS)

Basic EPS is computed using the weighted
average number of equity shares outstanding
during the year.

Diluted EPS is computed using the weighted
average number of equity and dilutive equity
equivalent shares outstanding during the year
except where the results would be anti dilutive.

3.16 Dividend

The Company recognises a liability to pay
dividend to equity holders when the distribution is
authorised, and the distribution is no longer at the
discretion of the Company. As per the corporate
laws in India, a distribution is authorised when it
is approved by the shareholders. A corresponding
amount is recognised directly in equity.
The final dividend on shares is recorded as a liability
on the date of approval by the shareholders.
Interim dividend are recorded as a liability on
the date of declaration by the company's Board.
The Company declares and pay dividends in
Indian Rupees. Companies are required to pay
/ distribute dividend after deducting applicable
taxes. The remittance of dividends outside India is
governed by Indian law on foreign exchange and
is also subject to withholding tax at applicable
taxes. Further disclosure relating to dividend refer
Note No 20(c)-Dividends.

3.17 Current / non-current classification

An entity shall classify an asset as current when-

(a) it expects to realise the asset, or intends to sell
or consume it, in its normal operating cycle;

(b) it holds the asset primarily for the purpose
of trading;

(c) it expects to realise the asset within twelve
months after the reporting period; or

(d) the asset is cash or a cash equivalent unless
the asset is restricted from being exchanged
or used to settle a liability for at least twelve
months after the reporting period.

An entity shall classify a liability as current when-

(a) it expects to settle the liability in its normal
operating cycle;

(b) it holds the liability primarily for the purpose
of trading;

(c) the liability is due to be settled within twelve
months after the reporting period; or

(d) it does not have an unconditional right to
defer settlement of the liability for at least
twelve months after the reporting period.

Terms of a liability that could, at the option of
the counterparty, result in its settlement by
the issue of equity instruments do not affect
its classification.

An entity shall classify all other assets and liabilities
as non-current.

Deferred tax Assets and Liabilities are classified as
non-current assets and liabilities

Operating cycle

An operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash or cash equivalents.

Based on the nature of services and the time
between the acquisition of assets for processing
and their realisation in cash and cash equivalents,
the Company has identified its operating cycle
as 12 months for the purpose of current - non¬
current classification of assets and liabilities.

3.18 Climate related matters

The Company considers climate-related matters
in estimates and assumptions, where appropriate.
This assessment includes a wide range of possible
impacts on the Company due to both physical
and transition risks. Even though the Company
believes its business model and products will
still be viable after the transition to a low-carbon
economy, climate-related matters increase
the uncertainty in estimates and assumptions
underpinning several items in the financial
statements. Even though climate-related risks
might not currently have a significant impact on
measurement, the Company is closely monitoring
relevant changes and developments, such as new
climate-related legislation.

3.19 Recent accounting developments:

The Company applied for the first-time certain
standards and amendments, which are effective
for annual periods beginning on or after 1 April
2024. The Company has not early adopted any
standard, interpretation or amendment that has
been issued but is not yet effective.

(i) Ind AS 117 Insurance Contracts

The Ministry of corporate Affairs (MCA)
notified the Ind AS 117, Insurance Contracts,
vide notification dated 12 August 2024,
under the Companies (Indian Accounting
Standards) Amendment Rules, 2024,
which is effective from annual reporting
periods beginning on or after 1 April 2024.

Ind AS 117 Insurance Contracts is a
comprehensive new accounting standard for
insurance contracts covering recognition and
measurement, presentation and disclosure.
Ind AS 117 replaces Ind AS 104 Insurance
Contracts. Ind AS 117 applies to all types of
insurance contracts, regardless of the type of
entities that issue them as well as to certain
guarantees and financial instruments with
discretionary participation features; a few
scope exceptions will apply. Ind AS 117 is
based on a general model, supplemented by:

• A specific adaptation for contracts with
direct participation features (the variable
fee approach)

• A simplified approach (the premium
allocation approach) mainly for short-
duration contracts

(ii) Amendment to Ind AS 116 Leases - Lease
Liability in a Sale and Leaseback

The MCA notified the Companies
(Indian Accounting Standards) Second
Amendment Rules, 2024, which amend Ind
AS 116, Leases, with respect to Lease Liability
in a Sale and Leaseback.

The amendment specifies the requirements
that a seller-lessee uses in measuring the
lease liability arising in a sale and leaseback
transaction, to ensure the seller-lessee does
not recognise any amount of the gain or loss
that relates to the right of use it retains.

The amendment is effective for annual
reporting periods beginning on or after 1 April
2024 and must be applied retrospectively
to sale and leaseback transactions entered
into after the date of initial application of Ind
AS 116.

This has no impact on the standalone
financial statements of the Company.

B Nature and purpose of reserves

i. Capital reserve

Capital reserve is created on merger/amalgamation.

ii. Capital redemption reserve

Capital redemption reserve represents redemption of redeemable cumulative preference shares in
earlier years. The same can be used to issue fully paid bonus shares.

iii. Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only
for limited purposes such as issuance of bonus shares inaccordance with provisions of Companies
Act, 2013.

iv. State subsidy

State subsidy is created on receipt of government grants for setting up the factories in backward areas.
The same will be utilised for expansion of business.

v. Contingency reserve

Contingency reserve is created by transferring funds from retained earnings to meet future contingencies.

vi. General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer
of net income at a specified percentage in accordance with applicable regulations. The purpose of
these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the
paid-up capital of the Company for that year, then the total dividend distribution is less than the total
distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement
to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.
However, the amount previously transferred to the general reserve can be utilised only in accordance
with the specific requirements of Companies Act, 2013.

vii. Equity instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of certain investments in equity
securities in other comprehensive income. These changes are accumulated within the Equity
instruments through Other Comprehensive Income. The Company transfers amounts from this reserve
to retained earnings when the relevant equity securities are derecognised.

viii. Retained Earnings

Retained earnings are the profits/(loss) that the Company has earned/incurred till date, less any
transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings
include re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified
to Statement of Profit and Loss.

B. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

• Credit risk;

• Liquidity risk; and

• Market risk

i. Risk management framework

The Company's Board of Directors has overall responsibility for the establishment and oversight of 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 appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the
Company's activities. The Company, through its training and management standards and procedures, aims
to maintain a disciplined and constructive control environment in which all employees understand their
roles and obligations.

The audit committee oversees how management monitors compliance with the company's risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the
risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal
audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results
of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Company's receivables
from customers.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base,
including the default risk of the industry and country in which customers operate.

The Company establishes an allowance for impairment that represents its estimate of expected losses in
respect of trade and other receivables.

iii. 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, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company's reputation.

iv Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity
prices - will affect the Company's income or the value of its holdings of financial instruments. Marketrisk
is attributable to all market risk sensitive financial instruments including foreign currency receivables and
payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk,
interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of
investing and borrowing activities and revenue generating and operating activities in foreign currency. The
objective of market risk management is to avoid excessive exposure in our foreign currency revenues and
costs.

Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional
currency of the Company is Indian Rupee.

v. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest
rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in
the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing
investments will fluctuate because of fluctuations in the interest rates.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through
statement of profit and loss. Therefore, a change in interest rates at the reporting date would not affect
profit or loss.

47 Capital Management

As at 31 March 2025, the Company has only one class of equity shares. In order to maintain or achieve an optimal
capital structure, the Company allocates its capital for distribution as dividend or re-investment into business
based on its long term financial plans.

For the purpose of the Company's capital management, capital includes issued capital and other equity reserves.
The primary objective of the Company's capital management is to safeguard its ability to continue as going
concern and to maintain and optimal capital structure so as to maximise shareholders value. The Company
manages its capital structure and makes adjustments in the light of changes in economic environment and the
requirements of the financial covenants.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt
and adjusted net debt to equity ratio. For this purpose, adjusted net debt is defined as total debt less cash and
bank balances.

(ii) There are no material developments during the quarter in the matter relating to the alleged improper
disposal of by-products by the Company in January 2022, for which statutory authorities have
conducted investigations in relation to alleged non-compliance with certain environmental laws and
regulations, and the matter is pending before the Hon'ble Supreme Court of India.

In this connection, in March 2023, the National Green Tribunal, Principal Bench, New Delhi had passed
an order accepting the joint committee's reports, which includes recovery of compensation of ' 175
Millions from the Company for aforesaid non-compliance. Gujarat Pollution Control Board subsequently
issued a direction to the Company for payment thereof, which has been stayed by the Hon'ble Supreme
Court in an earlier quarter, upon the Company depositing ' 50 Millions with the Court. Of this amount,
' 10 Millions is released for payment to legal representatives of the deceased individuals, for which the
Company has recognised a provision in financial year 2023-2024 as a matter of prudence, and without
prejudice to its rights and contentions.

Based on the advice of external legal counsel, the Company believes it has a good case on merits in
these matters, and the Company is taking necessary steps, including legal measures, to defend itself.
Accordingly, no further provision is required in the financial results in this respect.

(iii) On 12 July 2023, Karnataka Pollution Control Board (KPCB) served a demand notice for ' 83 millions
as Environmental Compensation however notice does not give details of instance of grounds / non¬
compliances. Aggrieved by this, Company has approached Hon'ble Karnataka High Court. Based on
the advice of external legal counsel, the Company believes it has a good case on merits in this matter
and accordingly, no provision is required in the financial statement in this regard.

(iv) The Company is subject to legal proceedings, claims and GST audit, which have arisen in the ordinary
course of business. The Company has reviewed all its pending litigations and other matters and has
adequately provided for where provisions are required and disclosed as contingent liability, where
applicable in its financial statements. The Company's management does not reasonably expect that
these legal actions, when ultimately concluded and determined, will have a material and adverse effect
of the Company's results of operations or financial condition.

56 Segment information

For management purposes, the Company is organised into business units based on its products and services
and has two reportable segments, as follows:

Pharmaceuticals: Segment produces in Active Pharmaceutical Ingredients
Crop protection: Segment manufactures in pesticides, herbicides.

The Chief Operating Decision Maker (“CODM") evaluates the Company's performance and allocates resources
based on an analysis of various performance indicators by operating segments. The CODM reviews revenue and
profit as the performance indicator for all of the operating segments and review the total assets and liabilities of
an operating segment.

59 Contribution to Provident Fund as per Supreme Court Judgment

There are numerous interpretative issues relating to the Supreme Court (SC) judgement dated 28 February
2019 on Provident Fund (PF) on the inclusion of allowances for the purpose of PF contribution as well as
its applicability of effective date. The impact is not expected to be material as per the assessment made by
the company.

60 The Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which would impact the
contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and
Employment had released draft rules for the Code on Social Security, 2020 on 13 November 2020. The
Company will assess the impact and its evaluation once the subject rules are notified. The Company will give
appropriate impact in its financial statements in the period in which, the Code becomes effective and the
related rules to determine the financial impact are published.

61 The Company does not have any Benami property, where any proceedings have been initiated or pending
against the company for holding any Benami property.

62 The Company does not have any transactions with Companies struck off.

63 The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.

64 The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

65 The Company has not advanced or loaned or invested funds to any other person / entities, including foreign
entities (intermediaries) with the understanding 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 Funding party (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

66 The Company has not received funds to any other person / entities, including foreign entities (Funding
party) with the understanding (whether recorded in writing or otherwise) that the company shall:

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

67 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)

68 The Company has used accounting software 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 such software, except that audit trail feature is not enabled for changes made (if any)
by users with privileged/ administrative access rights for the period from 13 August 2024 to 21 February
2025 and for direct changes to data when using certain access rights in respect of Oracle application.

69 The quarterly returns or statements of Current assets filed by the Company with the banks or financial
institutions are in agreement with the books of accounts.

70 Other information

The figures for the previous year have been regrouped wherever necessary to conform to the current
year's presentation.

As per our report of even date attached

For S R B C & CO LLP For and on behalf of the Board of Directors of

Chartered Accountants Hikal Limited

ICAI Firm's Registration No: 324982E/E300003 CIN: L24200MH1988PTC048028

per Vinayak Pujare Jai Hiremath Sameer Hiremath

Partner Executive Chairman Vice Chairman and

Membership No: 101143 DIN: 00062203 Managing Director

DIN: 00062129

Ramachandra Kaundinya Vinnakota Kuldeep Jain Rajasekhar Reddy

Director Chief Financial Officer Company Secretary
DIN - 00043067

Mumbai Mumbai Mumbai Mumbai

14 May 2025 14 May 2025 14 May 2025 14 May 2025