2.16 Provisions, Contingent Liabilities and Contingent Assets
a. Provisions
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation. The expense relating to a
provision is recognised in the statement of profit and loss
or balance sheet as the case may be.
b. Contingent Liabilities
Contingent liability is disclosed for (i) Possible obligations
which will be confirmed only by the future events not
wholly within the control of the company or (ii) Present
obligations arising from past events where it is not
probable that an outflow of resources will be required to
settle the obligation or a reliable estimate of the amount
of the obligation cannot be made.
c. Contingent Assets
Contingent Assets are not recognised in the financial
statements. Contingent Assets if any, are disclosed in the
notes to the financial statements.
2.17 Earnings per share
Basic earnings per equity share are computed by dividing
the net profit attributable to the equity holders of the
company by the weighted average number of equity
shares outstanding during the period. Diluted earnings
per equity share is computed by dividing the net profit
attributable to the equity holders of the company by the
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). Dilutive potential
equity shares are deemed converted as of the beginning of
the period, unless issued at a later date. Dilutive potential
equity shares are determined independently for each
period presented.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods
presented for any share splits and bonus shares issues
including for changes effected prior to the approval of
the financial statements by the Board of Directors.
2.18 Segment Reporting:
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker of
the Company is responsible for allocating resources and
assessing performance of the operating segments.
2.19 Government Grant
Government grants are recognised when there is
reasonable assurance that the grant will be received
and the company will comply with conditions attached
to the grant. Accordingly, Government grants are
deducted to calculate the carrying amount of the
asset, and is recognised in profit or loss over the life of
a depreciable asset as a reduced depreciation expense.
Government grants, which are revenue in nature are either
recognised as income or deducted in reporting the related
expense based on the terms of the grant, as applicable.
2.20 Business Combinations
Business combinations (Common control transactions):
In accordance with Ind AS 103, Business combination
involving entities that are controlled by the group are
accounted for using the pooling of interest method.
It is accounted for at carrying value of the assets and
liabilities in the Group's consolidated financial statements.
The financial information in the financial statements in
respect of prior periods are restated as if the business
combination had occurred from the beginning of the
preceding period in the financial statements, irrespective
of the actual date of the combination.
The Business Combinations accounted considering Ind
As 103, company assesses acquired assets meets the
definition of a 'business', where the acquired asset does
not meet this definition, the transaction is accounted for
as an asset acquisition.
2.21 Recent Accounting Pronouncements
The following amendments to Indian Accounting
Standards (Ind AS) have been notified by the Ministry of
Corporate Affairs (MCA) and are relevant to the Group.
Ind AS 1, Presentation of Financial Statements, applicable
retrospectively w.e.f. 1st April 2026: If a covenant is
breached by the reporting date and the liability becomes
payable on demand, it is classified as current, as there is
no right to defer settlement for 12 months, even if the
lender later waives repayment. However, if a grace period
of at least 12 months is already granted by the reporting
date, it is classified as non current. Once effective, the
Company does not expect this amendment to have a
material impact on its operations or financial statements.
i Loss on write-down of asset held for sale (Refer Note 3(a))
During the year, the Company classified the assets relating to the Sikkim manufacturing facility as held for sale in
accordance with Ind AS 105. Accordingly, these assets were measured at the lower of their carrying amount and fair
value less costs to sell, resulting in a write-down of H18.35 crore. The write-down has been recognised as an exceptional
item in the Statement of Profit and Loss, and the assets have been presented under 'Assets held for sale' in the
Balance Sheet.
ii Impact of Labor Code
On 21 November 2025, the Government of India notified the provisions of the Labour Codes, which consolidate
twenty-nine existing labour laws into a unified framework governing employee benefits during and after employment.
The Codes, inter alia, introduces a uniform definition of wages. Based on the provisions notified and the position currently
ascertainable, the Company has evaluated the impact of the Labour Codes in accordance with the guidance issued by
the Institute of Chartered Accountants of India. Accordingly, an incremental impact of H48.64 crore, relating to gratuity
and long-term compensated absences primarily arising from revised definition of wages has been presented as an
exceptional item.
iii Sikkim Insurance claim
The Company's formulation manufacturing operations in Sikkim were disrupted by flash floods on October 4, 2023, got
fully resumed in February, 2024. The insurance company has approved total final claim of H83.61 Crores on reinstatement
value of Property, Plant & Equipment and loss of profit due to business interruption. The claims inter alia include H5.92
Crores for damages to Property, Plant and Equipment, H34.72 Crores for lost inventories and H30.10 Crores for restoration
and other expenditures. The company has received full approved insurance claim. As a result of above, net income
of H12.87 Crores has been recognised under Exceptional Items in the Statement of Profit and Loss for the year ended
March 31, 2025.
A description of methods used for sensitivity analysis and its limitations:
Sensitivity analysis is performed by varying single parameter while keeping all the other parameters unchanged.
Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if
two or more variables are changed simultaneously. The method used does not indicate anything about the likelihood
of change in any parameter and the extent of the change, if any.
Major risk to the plan
A. Actuarial Risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into
an increase in obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates
are higher than assumed mortality rate assumption then the Gratuity Benefits will be paid earlier than expected.
Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss
or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal
rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the Gratuity Benefits
will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the
resignation date.
B. Investment Risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the
insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is
independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status
if there are significant changes in the discount rate during the inter-valuation period.
C. Liquidity Risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant
level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.
D. Market Risk: It is a collective term for risks that are related to the changes and fluctuations of the financial markets.
One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value
of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice
versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of
liability is exposed to fluctuations in the yields as at the valuation date.
E. Legislative Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to
change in the legislation/regulation. The government may amend the Social Security Code, 2020 thus requiring
the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined
Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is
effective.
Description of any Amendments, Curtailments and Settlements: The benefit scheme has changed since the
previous valuation. The benefit is now governed by the provisions of the Code on Social Security, 2020.
6 Provident Fund
The Company is liable for any shortfall, as per terms of the Provident Fund Trust deed, in the fund assets based on the
Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in
the year of incurring the same, no such shortfall during the year & in previous year. Contribution to Provident fund trust and
ESIC H45.01 Crores (PY H40.74 Crores).
Notes:
i The Company directly and through Alembic CSR Foundation, Implementing Agency has spent the amount referred in (b) above on CSR
activities such as Healthcare including preventive healthcare, Education, Sanitation, Promotion and development of traditional arts and
handicrafts, Adoption of Schools in tribal/backward areas, Rural development projects, Livelihood Enhancement, Reducing Inequality
and Environmental Sustainability.
ii Refer Note 27 (7) for related party transactions.
* The Amount of H0.79 Crores related to an ongoing project of the Company was transferred to Unspent CSR Account opened with a
Scheduled Bank as per Section 135(6) of the Companies Act, 2013 on 28th April, 2026.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The following Table represent the changes in the Level 3 items (These are strategic investments and the Company considers
this classification to be more relevant.)
(i) The Fair value of unquoted investment in Limited liability partnerships is arrived by CCM under market Approach and Net Asset
Value ('NAV') method under Cost Approach by external valuation agency. The valuation is carried out based on provisional
financial statement of ABCD Technologies LLP as at 31st March, 2026.
*6% promissory note (including outstanding interest) is converted in 11,21,854 convertible Preference Shares in the previous year.
Note: On 20 March 2026, the Company acquired 18,75,974 securities and 321483 common stock in Rigimmune Inc. The Rigimmune Inc.
was subsequently acquired by Leyden Laboratories B.V. pursuant to a share purchase agreement dated 20 March 2026. The Company received
preferred shares 9,94,615 common shares 10,32,592 equivalent to USD 6,678,535 as a upfront consideration. Further, the Company is entitled
to receive contingent consideration upon achievement of specified milestones.
(iii) The Company has subscribed to 66,69,377 equity shares in Jamnagar Renewables One Pvt. Ltd., representing 15 % holding
for a total consideration of H6.67 Crores in financial year 2024-25. The Jamnagar Renewables One Pvt. Ltd has set up a solar
power plant in the State of Gujarat. The Company as a captive user is entitled to consume power at the Panelav & Kharkhadi
plants. Transaction price is considered as fair value.
14 Financial Risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk and
- Market risk
i) 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, Deposit, Cash and
cash equivalents and other receivables.
Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer,
demographics of the customer, default risk of the industry and country in which the customer operates. Credit risk
is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of
customers to which the Company grants credit terms in the normal course of business. The Company has used expected
Cash and cash equivalents
As at the year end, the Company held cash and cash equivalents of H22.67 Crores (PY H14.23 Crores). The cash and cash
equivalents, other bank balances are held with banks having good credit rating.
Loan given to subsidiaries
Credit risk related to loan given to subsidiaries is not expected to be material.
Other financial assets
Other financial assets are neither past over due nor impaired.
ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company
ensures that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed
conditions. The Company has sufficient unutilised fund and non fund based working capital credit limit duly sanctioned
by various banks.
The company is rated by leading credit agency CRISIL, the rating “CRISIL A1 " and “AA /Stable" has been assigned for
short term and long term facility respectively, indicating high degree of safety regarding timely payment and servicing
of financial obligation.
iii) Market risk
Currency Risk
The Company's foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses.
The Company uses foreign exchange option contracts, to mitigate the risk of changes in foreign currency exchange rates
in respect of its business transactions and recognized assets and liabilities. The Company enters into foreign currency
options contracts which are not intended for trading or speculative purposes but for mitigating currency risk.
The Company's exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows:
Sensitivity analysis
For the year ended 31st March, 2026 every 5% weakening of Indian Rupee as compare to the respective major currencies
for the above mentioned financial assets/liabilities would increase Company's profit and equity by approximately H64.78
Crores (PY H55.72 Crores). A 5% strengthening of the Indian Rupee as compare to the respective major currencies would
lead to an equal but opposite effect.
Interest rate risk and Exposure to interest rate risk
The Company has loan facilities on floating interest rate, which exposes the company to risk of changes in interest rates.
For the year ended 31st March, 2026 every 50 basis point decrease in the floating interest rate component applicable on its
closing balance of borrowings would decrease the Company's interest cost by approximately H4.25 Crores (PY H2.46 Crores)
on a yearly basis. A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.
Commodity rate risk
The Company's operating activities involve purchase and sale of Active Pharmaceutical Ingredients (API), whose prices are
exposed to the risk of fluctuation over short periods of time. Commodity price risk exposure is evaluated and managed through
procurement and other related operating policies.
Other Risk
Since company has been significantly dealing in regulatory market, continuous compliance of all manufacturing facilities
is pre requisite. Any adverse action by regulatory authority of the company's target market can adversely affect company's
operation.
15 Capital Management
The Company's capital management objectives are:
* to ensure the Company's ability to continue as a going concern and
* to provide an adequate return to shareholders through optimisation of debts and equity balance.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the
face of the financial statements. The Company's objective for capital management is to maintain an optimum overall financial
structure.
Dividend on equity shares
The Board has recommended dividend on equity shares of H12/- per equity share i.e. 600% for the financial year 2025-26 as
against dividend of H11/- per equity share i.e. 550% per equity share for financial year 2024-25.
17 Revenue From Contracts With Customers
a) Disaggregation of revenue
The Company is engaged in Pharmaceuticals business considering nature of products, revenue can be disaggregated as
API business and Formulation business H1,164.81 Crores (PY: H1,111.39 Crores) and H5,486.57 Crores (PY: H4,921.24 Crores)
respectively, and considering Geographical business, revenue can be disaggregated as in India H2,825.97 Crores (PY: H2,679.55
Crores) and out side India H3,825.41 Crores. (PY: H3,353.08 Crores).
22 The Company has working capital borrowing from banks on the basis of security of current assets and quarterly statements
filed by the Company with banks are in agreement with the books of account.
23 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 charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
iii The company has not traded or invested in Crypto currency or Virtual Currency during the period/year.
iv The company have 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.
v The company have 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.
vi The company has no such transaction which is not recorded in the books of account 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.
vii The company holds all the title deeds of immovable properties in its name.
viii The company is not declared as wilful defaulter by any bank or financial Institution or other lender.
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