2.13 Provision, Contingent Liabilities and
Contingent Assets:

A provision is recognised if as a result of a past
event, the Company has a present obligation (legal
or constructive) that can be estimated reliably and it
is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are
recognised at the best estimate of the expenditure
required to settle the present obligation at the balance
sheet date. If the effect of time value of money is
material, provisions are discounted using a current
pre-tax rate that reflects, when appropriate, the risks
specific to the liability.

A contingent liability exists when there is a possible but
not probable obligation or a present obligation that may,
but probably will not, require an outflow of resources,
whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future
events beyond the control of the Company, or a present
obligation whose amount can not be estimated reliably.
Contingent liabilities do not warrant provisions but are
disclosed unless the possibility of outflow of resources
is remote. Contingent assets are not recognised but
only disclosed where an inflow of economic benefits
is probable. However, when the realisation of income

is virtually certain, then the related asset is not a
contingent asset and its recognition is appropriate.

P rovisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date.

2.14 Commitments:

P ommitments are future liabilities for contractual
expenditure, classified and disclosed as follows:

(i) p stimated amount of contracts remaining to be
executed on capital account and not provided for;

(ii) pncalled liability on shares and other investments
partly paid;

(iii) P unding related commitment to subsidiary,
associate and joint venture companies; and

(iv) other non-cancellable commitments, if any, to the
extent they are considered material and relevant in
the opinion of management.

P ther commitments related to sales/procurements
made in the normal course of business are not disclosed
to avoid excessive details.

2.15 Discontinued operations and assets held for
sale:

P discontinued operation is a component of the entity
that has been disposed off or is classified as held for
sale and:

• represents a separate major line of business or
geographical area of operations; and

• is part of a single coordinated plan to dispose of such
a line of business or area of operations.

P he results of discontinued operations are presented
separately as a single amount as standalone statement
of profit and loss after tax from discontinued operations
in the standalone statement of profit and loss.

P ssets are classified as held for sale if their carrying
amount will be recovered principally through a sale
transaction rather than through continuing use and a
sale is considered highly probable. They are measured
at the lower of their carrying amount and fair value
less costs to sell. Costs to sell are the incremental
costs directly attributable to the disposal of an asset
(disposal group), excluding finance costs and income
tax expense.

P he criteria for held for sale classification is regarded
as met only when the sale is highly probable, and the

asset or disposal group is available for immediate sale
in its present condition. Actions required to complete
the sale should indicate that it is unlikely that significant
changes to the sale will be made or that the decision to
sell will be withdrawn. Management must be committed
to the plan to sell the asset and the sale expected to
be completed within one year from the date of the
classification.

P or these purposes, sale transactions include
exchanges of non-current assets for other non-current
assets when the exchange has commercial substance.
The criteria for held for sale classification is regarded
met only when the assets or disposal group is available
for immediate sale in its present condition, subject only
to terms that are usual and customary for sales of such
assets (or disposal groups), its sale is highly probable;
and it will genuinely be sold, not abandoned. The group
treats sale of the asset or disposal group to be highly
probable when:

• The appropriate level of management is committed
to a plan to sell the asset (or disposal group),

• An active programme to locate a buyer and complete
the plan has been initiated (if applicable),

• The asset (or disposal group) is being actively
marketed for sale at a price that is reasonable in
relation to its current fair value,

• The sale is expected to qualify for recognition as
a completed sale within one year from the date of
classification, and

• Actions required to complete the plan indicate that it
is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn.

P n impairment loss is recognised for any initial or
subsequent write-down of the asset to fair value less
costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of an asset,
but not in excess of any cumulative impairment loss
previously recognised. A gain or loss not previously
recognised by the date of the sale of the asset is
recognised at the date of de-recognition.

P roperty, Plant and Equipment and intangible assets
are not depreciated or amortised while they are
classified as held for sale. Interest and other expenses
attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised.

P ssets classified as held for sale are presented
separately from the other assets in the Balance Sheet.
The liabilities of a disposal group classified as held for

sale are presented separately from other liabilities in
the financial statements.

D iscontinued operations are excluded from the results
of continuing operations and are presented as a single
amount as profit or loss after tax from discontinued
operations in the statement of profit and loss.

216 Statement of Cash Flows:

Dtatement of Cash Flows is prepared segregating the
cash flows into operating, investing and financing
activities. Cash flow from operating activities is
reported using indirect method, adjusting the profit
before tax excluding exceptional items for the effects
of:

(i) c hanges during the period in inventories and
operating receivables and payables;

(ii) c on-cash items such as depreciation, provisions,
unrealised foreign currency gains and losses; and

(iii) c ll other items for which the cash effects are
investing or financing cash flows.

D ash and cash equivalents comprise cash on hand
and cash at bank including fixed deposit with original
maturity period of three months or less and short-term
highly liquid investments with an original maturity of
three months or less.

2.17 Earnings per share (‘EPS')

D asic EPS is calculated by dividing the profit(or loss)
attributable to the owners of the Company by the
weighted average number of equity shares outstanding
during the period. Diluted EPS is computed using the
weighted average number of equity and dilutive equity
equivalent shares outstanding during the period except
where the results would be anti-dilutive.

2.18 Government Grants:

D overnment grants and subsidies are recognised when
there is reasonable assurance that the Company will
comply with the conditions attached to them and the
grants / subsidy will be received.

D rants related to depreciable assets are treated as
deferred income which is recognised in the Statement
of profit and loss on a systematic and rational basis over
the useful life of the asset. Such allocation to income is
usually made over the periods and in the proportions
in which depreciation on related assets is charged.
Government Grants of revenue nature is reduced from
related expenses in the statement of Profit and Loss

in the year of its receipt or when there is a reasonable
assurance of its being received.

2.19 Investments in subsidiaries:

I nvestments in subsidiaries are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount
of the investment is assessed and written down
immediately to its recoverable amount.

2.20 Exceptional items:

W hen items of income and expense within profit or
loss from ordinary activities are of such size, nature or
incidence that their disclosure is relevant to explain the
performance of the enterprise for the period, the nature
and amount of such items is disclosed separately as
Exceptional items.

2.21 Segment reporting:

A n operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expenses, whose operating
results are regularly reviewed by the Company's Chief
Operating Decision Maker (“CODM”) to make decisions
for which discrete financial information is available.
The Company operates in one reportable business
segment i.e. "Pharmaceuticals".

2B Key accounting estimates and
judgements

D he preparation of financial statements in conformity
with the Ind AS requires judgements, estimates and
assumptions to be made that affect the reported
amounts of assets and liabilities on the date of
the financial statements, the reported amounts of
revenues and expenses during the reporting period
and the disclosures relating to contingent liabilities
as of the date of the financial statements. Although
these estimates are based on the management's best
knowledge of current events and actions, uncertainty
about these assumptions and estimates could result
in outcomes different from the estimates. Difference
between actual results and estimates are recognised in
the period in which the results are known or materialise.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Any revision to accounting estimates
is recognised prospectively in the current and future
periods.

D anagement considers the accounting estimates
and assumptions discussed below to be its critical
accounting estimates and, accordingly, provide an

explanation of each below. The discussion below
should also be read in conjunction with the Company's
disclosure of material accounting policies which
are provided in Note 2A to the standalone financial
statements, ‘Material accounting policies'.

i) Judgements

a) T he Company uses significant judgement in
assessing the lease term (including anticipated
renewals) and the applicable discount rate. The
Company determines the lease term as the non¬
cancellable period of a lease, together with both
periods covered by an option to extend the lease
if the Company is reasonably certain to exercise
that option; and periods covered by an option to
terminate the lease if the Company is reasonably
certain not to exercise that option. In assessing
whether the Company is reasonably certain to
exercise an option to extend a lease, or not to
exercise an option to terminate a lease, it considers
all relevant facts and circumstances that create an
economic incentive for the Company to exercise
the option to extend the lease, or not to exercise
the option to terminate the lease. The Company
revises the lease term if there is a change in the
non-cancellable period of a lease.

ii) Estimates

a) Estimate of current and deferred tax:

T he Company's tax charge on ordinary activities
is the sum of the total current and deferred
tax charges. The calculation of the Company's
total tax charge necessarily involves a degree
of estimation and judgement in respect of
certain items whose tax treatment cannot be
finally determined until resolution has been
reached with the relevant tax authority or, as
appropriate, through a formal legal process.
The final resolution of some of these items may
give rise to material profits/losses and/or cash
flows. The complexity of the Company's structure
makes the degree of estimation and judgement
more challenging. The resolution of issues is not
always within the control of the Company and it
is often dependent on the efficiency of the legal
processes in the relevant taxing jurisdictions in
which the Company operates. Issues can, and
often do, take many years to resolve. Payments
in respect of tax liabilities for an accounting
period result from payments on account and on
the final resolution of open items. As a result there
can be substantial differences between the tax
charge in the Statement of Profit and Loss and tax
payments. The recognition of deferred tax assets

is based upon whether it is more likely than not
that sufficient and suitable taxable profits will be
available in the future against which the reversal
of temporary differences can be deducted. To
determine the future taxable profits, reference
is made to the latest available profit forecasts.
Where the temporary differences are related to
losses, relevant tax law is considered to determine
the availability of the losses to offset against the
future taxable profits.

b) Recognition of MAT credit:

T he credit availed under MAT is recognised
as an asset only when and to the extent there
is convincing evidence that the Company will
pay normal income tax during the period for
which the MAT credit can be carried forward
for set off against the normal tax liability. This
requires significant management judgement in
determining the expected availment of the credit
based on business plans and future cash flows of
the Company.

c) Estimation of useful life:

T he useful life used to amortise or depreciate
intangible assets or property, plant and
equipment respectively relates to the expected
future performance of the assets acquired and
management's judgement of the period over which
economic benefit will be derived from the asset
based on its technical expertise. The charge in
respect of periodic depreciation is derived after
determining an estimate of an asset's expected
useful life and the expected residual value at the
end of its life. Increasing an asset's expected life
or its residual value would result in a reduced
depreciation charge in the Statement of Profit
and Loss. The useful lives and residual values of
Company's assets are determined by management
at the time the asset is acquired and reviewed
annually for appropriateness. The lives are based
on historical experience with similar assets as well
as anticipation of future events which may impact
their life such as changes in technology.

d) Provisions and contingent liabilities:

T he Company exercises judgement in measuring
and recognising provisions and the exposures to
contingent liabilities related to pending litigation
or other outstanding claims subject to negotiated
settlement, mediation, arbitration or government
regulation, as well as other contingent liabilities.
Judgement is necessary in assessing the likelihood
that a pending claim will succeed, or a liability will

arise, and to quantify the possible range of the
financial settlement. Due to inherent uncertainty
in this evaluation process, actual losses may be
different from the originally estimated provision.

e) Impairment loss in investments carried at cost:

T he Company conducts impairment reviews of
investments in subsidiaries whenever events
or changes in circumstances indicate that their
carrying amounts may not be recoverable or tests
for impairment annually. Determining whether
an asset is impaired requires an estimation of the
recoverable amount, which requires the Company
to estimate the value in use which is based on
future cash flows and a suitable discount rate in
order to calculate the present value.

f) Fair value measurements and valuation
processes:

W hen the fair value of financial assets and
financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in
active markets, their fair value is measured using
valuation techniques including the Discounted
Cash Flow model. The inputs to these models
are taken from observable markets where
possible, but where this is not feasible, a degree of
judgement is required in establishing fair values.
Judgements include considerations of inputs such
as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect
the reported fair value of financial instruments.

g) Defined Benefit Plans:

T he cost of the defined benefit gratuity plan and
other post-employment benefits and present
value of the gratuity obligation are determined
using actuarial valuation. An actuarial valuation
involves making various assumptions that may
differ from actual development in the future.
These include the determination of the discount
rate, future salary increases, attrition rate and
mortality rates. Due to complexities involved in
the valuation and its long term nature, a defined
benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed
at each reporting date.

h) Liabilities towards anticipated sales return:

I n determining the provision for anticipated sales
returns, estimates for probable saleable and
nonsaleable returns of goods from the customers
are made on scientific basis after factoring in the
historical data of such returns and its trend.

i) Discount rate for Leases:

T he discount rate is generally based on the
incremental borrowing rate specific to the lease
being evaluated or for a portfolio of leases with
similar characteristics.

l) Expected credit loss:

I n accordance with Ind AS 109 - Financial
Instruments, the Company applies ECL model
for measurement and recognition of impairment
loss on the trade receivables from transactions
that are within the scope of Ind AS 115 - Revenue
from Contracts with Customers. For this purpose,
the Company follows ‘simplified approach' for
recognition of impairment loss allowance on the
trade receivable balances. The application of
simplified approach requires expected lifetime
losses to be recognised from initial recognition
of the receivables based on lifetime ECLs at each
reporting date.

T s a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life of
the trade receivables and is adjusted for forward¬
looking estimates. At every reporting date, the
historical observed default rates are updated and
changes in the forward-looking estimates are
analysed.

I n respect of other financial assets (e.g.: debt
securities, deposits, bank balances etc.), the
Company generally invests in instruments with
high credit rating and consequently low credit risk.
In the unlikely event that the credit risk increases
significantly from inception of investment, lifetime
ECL is used for recognising impairment loss on
such assets.

Notes:

1. Addition to Property, Plant and Equipment includes items aggregating 7 299.0 Million (For the year ended 31 March,
2025 7 630.2 Million) located at Research and Development Centres of the Company.

2. Aefer Note 3.26(b)(1) for contractual commitments with respect to property, plant and equipments and other intangible
assets.

3. A xclusive charge by way of hypothecation over the whole of the movable properties (save and except current assets)
including its movable plant and machinery, machinery spares, tools and accessories and other movable assets, both
present and future subject to a maximum value of 7 2,150 Million (31 March 2025 7 2,150 Million) - situated at Daman
and Sikkim in India against issuance of Stand by letter of credit required for loan of US $ 7.5 Million (31 March, 2025
- US $ 18.0 Million) advanced by Banco de Chile to Ascend Laboratories SpA, Chile, a wholly-owned subsidiary of the
Company and US $ 2.0 Million (31 March 2025 - US $ 5.0 Million) advanced to PharmaNetwork SpA, Chile, a
wholly-owned subsidiary of Ascend Laboratories SpA, Chile.

4. The title deeds of the immovable properties are held in the name of the Company.

5. A he Company has not revalued its property, plant and equipment during the financial year ended 31 March, 2026 and
31 March, 2025.

6. A onsidering internal and external sources of information, the Company has evaluated at the end of the reporting
period, whether there is any indication that any intangible asset (including intangible assets under development) may
be impaired if any such indication exists. The Company has estimated the recoverable amount of the intangible assets
(including intangible assets under development) based on 'value in use' method. The financial projections on the basis
of which the future cash flows have been estimated consider (a) reassessment of the discount rates, (b) revisiting the
growth rates factored while arriving at terminal value, and these variables have been subjected to a sensitivity analysis.
The carrying amount of the intangible assets (including intangible assets under development) represent the Company's
best estimate of the recoverable amounts.

Capital work-in-progress

Capital work in progress comprises expenditure in respect of various plants in the course of construction/expansion. Total

amount of Capital work in progress is 7 862.7 Million as at 31 March, 2026 (31 March, 2025: 7 458.2 Million).

Notes:

1. Secured: Loans repayable on demand from Banks include:

a. 0 verdrafts from banks ? 2,183.6 Million (31 March 2025: 2 628.8 Million) are secured against pledge of fixed
deposits with the banks.

b. 0 verdraft Facilities carry a rate of interest ranging between 6.80% to 8.30% p.a., computed on a monthly basis
on the actual amount utilized, and are repayable on demand.

2. 0 nsecured: Working capital loan from banks repayable on demand of ? 2,165.7 Million (31 March, 2025: ? 46.7 Million)
carries an average interest rate of 5.75% (31 March, 2025: 7.18%). Further, packing credit in foreign currencies amounts to
? 1,043.1 Million (31 March, 2025: ? 3,036.9 Million) and carries an average interest rate of 4.11% (31 March, 2025: 4.72%).

The above information regarding Micro and Small Enterprises has been determined on the basis of information available
with the Company basis the details provided by the enterprises.

3.28 Disclosure of Employee Benefits as per Indian Accounting Standard 19 is as under:

i) Defined contribution plans:

T he Company makes contributions towards provident fund. The Company is required to contribute a specified percentage
of salary cost to the Government Employee Provident Fund, Government Employee Pension Fund, Employee Deposit
Linked Insurance and Employee State Insurance, which are recognised in the Statement of Profit and Loss on accrual
basis. Eligible employees receive the benefits from the said funds. Both the employees and the Company make monthly
contribution to the said funds plan equal to a specific percentage of the covered employee's salary. The Company has
no obligations other than to make the specified contributions.

The Company has recognised the following amounts in the Statement of Profit and Loss

ii) Defined benefit plan:

The Company provides for payment of gratuity to vested employees as under:

a) On Normal retirement/ early retirement/ withdrawal/resignation:

As per the provisions of Code on Social Security, 2020 with vesting period of 5 years of service.

b) On death in service:

As per the provisions of Code on Social Security, 2020 without any vesting period.

T he most recent actuarial valuation of the present value of the defined benefit obligation for gratuity was carried out
as at 31 March, 2026 by an independent actuary. The present value of the defined benefit obligations and the related
current service cost and past service cost, were measured using the Projected Unit Credit Method.

T he following table sets out the status of the gratuity plan and the amounts recognised in the Company's financial
statements as at 31 March, 2026:

D iscount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance
sheet date for the estimated term of the obligations.

D alary Escalation Rate: The estimates of future salary increases, considered in actuarial valuation, takes into account
the inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Dttrition rate (10% to 20% for March 26 and March 25) considered is the management's estimate based on the past
long-term trend of employee turnover in the Company. The tenure has been considered taking into account the past long¬
term trend of employees' average remaining service life which reflects the average estimated term of post-employment
benefit obligation.

3.34 Segment Reporting

The Company has presented data relating to its segments in its consolidated financial statements. Accordingly, in terms of
paragraph 4 of the Indian Accounting Standard 108 (IND AS-108) “Segment Reporting”, no disclosures related to segments
are presented in the standalone financial statements.

3.35 Information on related party transactions as required by Indian Accounting Standard
24 (Ind AS 24) on related party disclosures.

The Company's prinicipal related parties consist of its subsidiaries and associate (Refer list below), Key Managerial Personnel
("KMP"), Close members of KMP and entities in which KMP and their Close members have significant influence ("Affiliates"). The
Company's material related party transactions and outstanding balances are with related parties with whom the Company
routinely enters into transactions in the ordinary course of business.

3.36 Discontinued operations

The Board of Directors of the Company at their meeting held on 10 December 2024 had approved the transfer of Generic
Business Undertaking to Alkem Wellness Limited, a wholly-owned subsidiary of the Company as a going concern, on a slump
sale basis. The Company has executed a Business Transfer Agreement (BTA), effective 01 October 2025, and transferred its
Generic business to Alkem Wellness Limited.

During the earlier periods, the transfer of the Generic Business had been disclosed as discontinued operations in accordance
with Ind AS 105 ""Non - current Assets Held for Sale and Discontinued Operations””. The figures for the previous periods have
been restated to give effect to the presentation requirement of Ind AS 105 ""Non - current Assets Held for Sale and Discontinued
Operations"".

3.37 Financial instruments - Fair values and risk management

A. Accounting classification and fair values

T he Company uses the following hierarchic structure of valuation methods to determine and disclose information about
the fair value of financial instruments:

Level 1: Observable prices in active markets for identical assets and liabilities;

Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities;

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets and liabilities

B. Measurement of fair values

The Management assessed that cash and bank balances, trade receivables, trade payables, cash credit and other

financial assets and liabilities approximate their carrying amounts due to short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair value :

a) L evel 1: The fair value of the quoted investments/units of mutual fund scheme are based on market price/net asset
value at the reporting date.

b) Level 2: The fair value of financial instruments that are not traded in an active market (i.e. venture capital funds)
is determined using valuation techniques which maximize the use of observable market data and rely as little as
possible on company specific estimates.

c) Level 3: The fair value of the remaining financial instrument is determined using discounted cash flow analysis.
The discount rates used are based on management estimates.

Risk management framework

T he Company's Board of Directors have overall responsibility for the establishment and oversight of the Company's risk
management framework. The Board of Directors have established a Risk Management Committee, which is responsible
for developing and monitoring the Company's risk management policies. The committee reports regularly to the Board
of Directors on its activities.

T he 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 the 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.

T he 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.

i. Credit risk

T redit 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. The Company is exposed to credit risk from its operating activites (primarily trade
receivables) and from its financing/investing activities, including investments in debt securities, deposits with banks,
equity securities, venture capital and mutual fund investments. The Company has no significant concentration of credit
risk with any counterparty.

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

Trade receivables

Trade receivables consists of a large number of customers. 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.

T he Company has established a credit policy under which each new customer is analysed individually for creditworthiness
before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes
external ratings, if they are available, and in some cases bank references. Payment terms with customers vary depending
upon the contractual terms of each contract. Sale limits are established for each customer and reviewed quarterly.

At 31 March 2026, the maximum exposure to credit risk for trade receivables by geographic region was as follows:

Impairment

A s per the simplified approach, the Company has used a practical expedient by computing the expected credit loss
allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit
loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing
of the days the receivable are due and the rates as given in the provision matrix.

Refer note 3.8 for ageing of trade receivables that were not impaired.

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Loans to subsidiaries

A he Company has an exposure of ? 99.2 Million as at 31 March, 2026 (31 March, 2025: 2 90.7 Million) for loans given
to subsidiaries. Such loans are classified as financial asset measured at amortised cost.

A he Company did not have any amounts that were past due but not impaired at 31 March 2026 or 31 March 2025. The
Company has no collateral in respect of these loans.

Investments, Cash and Cash Equivalents and Bank Deposits

A redit risk on cash and cash equivalents, deposits with banks is generally low as the said deposits have been made with
the banks who have been assigned high credit rating by international and domestic credit rating agencies.

I nvestments of surplus funds are made only with approved financial institutions. Investments primarily include
investments in subsidiaries, mutual funds, venture capital funds, investment in equity of other companies /LLP, quoted
bonds and non-convertible debentures. These mutual funds and counterparties have low credit risk.

Total non-current and current investments as at 31 March, 2026 is ? 97,854.2 Million (31 March, 2025: 2 71,235.0 Million)

Debt securities

A he Company has an exposure of ? 11,454.5 Million as at 31 March 2026 (31 March 2025: 2 6,424.7 Million) for debt
securities classified as financial asset measured at amortised cost. All the debt securities have been issued by companies
registered in India in Indian Rupees.

A here has been no allowance for impairment in respect of such debt securities - financial asset measured at amortised
cost till 31 March, 2026.

Credit Rating of debt securities is given below:

ii. Liquidity risk

L iquidity 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.

T he majority of the Company's trade receivables are due for maturity within 21 - 30 days from the date of billing to the
customer. Further, the general credit terms for trade payables are approximately 45 - 60 days. The difference between
the above mentioned credit period provides sufficient headroom to meet the short-term working capital needs for day-
to-day operations of the Company. Any short-term surplus cash generated, over and above the amount required for
working capital management and other operational requirements, are retained as Cash and Investment in short term
and long term deposits with banks. The said investments are made in instruments with appropriate maturities and
sufficient liquidity.

Exposure to liquidity risk

T he following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are
gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

iii. Market risk

IT arket 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. Market risk is attributable to all
market risk sensitive financial instruments including foreign currency receivables and payables and long term debt.
Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market
value of its investments. Thus, the 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

T he Company is exposed to currency risk on account of its borrowings, other payables, receivables and loans and
advances in foreign currency. The functional currency of the Company is Indian Rupee. The Company has exposure to
EUR, GBP, USD, AUD, SAR, CNY, CAD, JPY, PLN, NPR, AED, CHF and THB. The Company has formulated hedging policy for
monitoring its foreign currency exposure.

Other Price Risk

T he Company is mainly exposed to the price risk due to its investment in mutual funds. The price risk arises due to
uncertainties about the future market values of these investments. At 31 March 2026, the investments in mutual funds
amounts to ? 912.5 Million (31 March 2025: 7 5,017.4 Million). These are exposed to price risk. The Company has laid
policies and guidelines which it adheres to in order to minimise price risk arising from investments in mutual funds. A
1% increase/(decrease) in prices would increase/(decrease) the profit or loss by the amounts shown below.

Interest rate risk

I nterest 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, borrowings and loans 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,
borrowings and loans will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

T ompany's interest rate risk arises from borrowings and fixed income securities. Fixed income securities exposes the
Company to fair value interest rate risk. The interest rate profile of the Company's interest-bearing financial instruments
is as follows:

Interest rate sensitivity - fixed rate instruments

T he Company's fixed rate borrowings and fixed rate bank deposits are carried at amortised cost. They are therefore
not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flow will
fluctuate because of a change in market interest rates.

Interest rate sensitivity - variable rate instruments

T reasonably possible change of 5% in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency
exchange rates, remain constant.

3.38 Capital management

The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. Management monitors the return on capital as well as the level of dividends to
ordinary shareholders.

The Company monitors capital using a ratio of ‘net debt' to ‘total equity'. For this purpose, adjusted net debt is defined as total
liabilities, comprising interest-bearing loans and borrowings, less cash and cash equivalents. Adjusted equity comprises all
components of equity.

The Company's net debt to equity ratio was as follows.

3.40 The gross amount required to be spent by the Company on Corporate Social Responsibility (""CSR"") as per section
135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Amendment Rules,
2021 during the year is ? 340.8 Million (Total CSR Obligation ? 385.0 Million less previous year excess set-off of
? 44.2 Million) (31 March, 2025: ? 331.0 Million).

T he Company has incurred a CSR expenditure of ? 341.2 Million (31 March 2025: ? 359.1 Million), of which ? 281.4 Million
has been utilised during the current financial year. The balance amount of ? 59.8 Million (31 March 2025: ? 2.2 Million)
has been transferred to the Unspent CSR Account in respect of ongoing projects, in compliance with Section 135(6) of
the Companies Act, 2013, as amended. This includes ? 41.3 Million pertaining to unutilised amounts of FY 2025-26.

T bove spend includes a transfer of ? 308.4 Million (31 March 2025: ? 350.1 Million) to Alkem Foundation, a subsidiary of
the Company, which is a Section 8 registered company under Companies Act, 2013, with the main objectives of working
in the areas of social, economic and environmental issues such as healthcare, women empowerment, education,
sanitation, conservation of environment, rural development and enable the less privileged segments of the society to
improve their livelihood by enhancing their means and capabilities to meet the emerging opportunities.

3.41 Government Grant

The Company is eligible for government grants which are conditional upon construction of new factories in the Sikkim Region.
One of the grants, received in FY 2014-15 amounted to 7 72.4 Million with respect to the Kumrek facility. The factory has been
constructed and in operation since August 2007. The second grant is with respect to Samardung facility in Sikkim amounting
to 7 122.1 Million for which the Company has received the claim amount in FY 2018-19. The factory has been constructed
and in operation since October, 2012. The third grant is with respect to AHS-3 facility in Sikkim amounting to 7 30.6 Million
for which the Company has received the claim amount in the previous year. Further, during the previous year, Company has
received grant amounting to 7 398.7 Million with respect to AHS- 2 facility in Sikkim. These grants, recognised as deferred
income, are being amortised over the useful life of the plant and machinery in proportion to the related depreciation expense.
The unamortised grant as on 31 March 2026 amounts to ? 208.7 Million (Previous year: 7 245.6 Million), the breakup of
which is as below:

3.42 Additional disclosure with respect to Schedule III

i) T he Company does not have any Benami property, where any proceeding has been initiated or pending against them
for holding any Benami property.

ii) T he 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)

iii) T he Company has not been declared a wilful defaulter by any bank or financial institution or other lender (as defined
under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by
the Reserve Bank of India.

iv) T he Company does not have any changes or satisfaction which is yet to be registered with Registrar of Companies (ROC)
beyond the statutory period.

v) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year

vi) T o funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds) or provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries by

the Company to or in any other person or entity, 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 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.

vii) T he Company has not entered into any scheme of arrangement which has an accounting impact on the current or
previous financial year.

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

3.43 Assets held for sale

In respect of one of the manufacturing units located at Indore, where indicators of impairment were identified, the Company
identified the recoverable amount of the CGUs, being the higher of the value in use and fair value less costs of disposal, as
compared with the carrying value.

In the previous year; the Company as a part of its ongoing initiative of networking strategy and optimisation of manufacturing
facilities has identified divestment of its Indore facility. Consequently, related assets and liabilities are disclosed as held for
sale. These assets and liabilities have been carried at cost as the same are lower than the fair value expected out of sale.

3.44 Exceptional items

1) D uring the year ended 31 March 2026 year, the Company reviewed its investments in real estate; where recoverability
is subject to uncertainties. Accordingly, management has reassessed the carrying value of such investments and
recognised a provision for impairment amounting to ? 747 Million, which has been disclosed as an exceptional item for
the year ended 31 March, 2026.

2) D uring the year, pursuant to the notification and subsequent finalisation of the Central Rules under the Labour Codes by
the Government of India, the Company assessed the financial impact of the revised regulatory framework, including the
Code on Social Security, 2020, based on detailed evaluation of the notified provisions, professional advice, and actuarial
valuation.

D ased on this assessment, the Company recognised an estimated liability towards gratuity and leave encashment for
past service cost aggregating ? 826.8 Million for the year ended 31 March 2026. The total impact has been disclosed
as an exceptional item in the financial results. The Company will continue to evaluate any further clarifications or
implementation guidance issued in relation to the Labour Codes and account for the financial impact, if any, as
appropriate.

3) T he Company as part of its ongoing initiative of networking, strategy and optimisation of manufacturing facilities had
identified divestment of its Indore facility and had impaired the same during financial year 2024. The said facility has
been sold during the current year in accordance with the business transfer agreement entered with the buyer. The
resulting gain (arising out of reversal of impairment loss) amounting to ? 142.9 Million had been classified and disclosed
as an exceptional item in the results for the year ended 31 March, 2026.

3.45 Pursuant to Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations”), the Board of Directors ("Board") of Alkem Laboratories Limited
(the "Company"/"Transferee Company") at its meeting held on 13 February, 2026 has, inter alia, approved the
amalgamation of Adroit Biomed Limited ("ABL"/"Transferor Company") (a wholly-owned subsidiary the Company);
(the Company, and ABL are collectively referred to as the "Companies") with and into the Company by way of a
scheme of arrangement pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the
Companies Act, 2013 and the rules and / or regulations made thereunder (such scheme referred to as the "Scheme")
and in compliance with the provisions of the Income Tax Act, 1961. The Scheme has been approved by the requisite
majority of the Shareholders. The scheme is now subject to approvals of NCLT benches at Mumbai as well as other
regulatory authorities, as applicable.

3.46 Events after the reporting period

No significant adjusting event occurred between the balance sheet date and date of the approval of these standalone financial

statements by the Board of Directors of the Company requiring adjustment or disclosure.

Earnings available for debt service = Net Profit after taxes Non-cash operating expenses like depreciation and other
amortisations Interest other adjustments like loss on sale of Fixed assets etc.

Debt service = Interest & Lease Payments Principal Repayments
Net credit sales consist of gross credit sales minus sales return.

Net credit purchases consist of gross credit purchases minus purchase return
Capital Employed = Tangible Net Worth Total Debt Deferred Tax Liability