2.2.17 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. When the Company
expects some or all of a provision to be reimbursed,
the reimbursement is recognised as a separate asset,
but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in the
statement of profit and loss, net of any reimbursement.

I f the effect of the 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. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.

These estimates are reviewed at each reporting date
and adjusted to reflect the current best estimates.

2.2.18 Contingent liabilities

A contingent liability is a possible obligation that arises
from past events 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 that is not
recognised because it is not probable that an outflow
of resources will be required to settle the obligation. A
contingent liability also arises in extremely rare cases
where there is a liability that cannot be recognised
because it cannot be measured reliably. The Company
does not recognise a contingent liability but discloses
its existence in the standalone financial statements.

2.2.19 Cash and cash equivalents

Cash and cash equivalents in the balance sheet and
cash flow statement comprise cash at banks and in
hand and short-term deposits with an original maturity
of three months or less, that are readily convertible to
a known amount of cash and which are subject to an
insignificant risk of changes in value.

2.2.20 Significant accounting judgements,
estimates and assumptions

The preparation of the standalone financial statement
requires management to make judgements, estimates
and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.

Other disclosures relating to the Company's exposure
to risks and uncertainties includes:

• Capital management (Note 39)

• Financial risk management objectives and policies
(Note 38)

• Sensitivity analysis disclosures (Notes 33 and 38)

The Company bases its assumptions and estimates on
parameters available when the Standalone Financial
Statements are prepared. Existing circumstances and
assumptions about future developments, however,
may change due to market changes or circumstances
arising that are beyond the control of the Company.
Such changes are reflected in the assumptions
when they occur. The judgements, estimates and
assumptions management has made which have the
most significant effect on the amounts recognised in
the financial statements are as below.

The Company uses the expected value method to
estimate the variable consideration given the large
number of contracts that have similar characteristics.
The Company then applies the requirements on
constraining estimates of variable consideration
in order to determine the amount of variable
consideration that can be included in the transaction
price. A refund liability is recognised for the goods
that are expected to be returned (i.e., the amount not
included in the transaction price). A right of return asset
(and corresponding adjustment to cost of sales) is also
recognised for the right to recover the goods from
a customer.

Revenue from contracts with customers

The Company determines and updates its assessment
of expected discounts and incentives periodically
and the accruals are adjusted accordingly. Estimates
of expected discount and incentives are sensitive to
changes in circumstances and the Company's past
experience regarding these amounts may not be
representative of actual amounts in the future.

Leases

The Company determines the lease term as non¬
cancellable term of the lease, together with any
periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease, if it is
reasonably certain not to be exercised. The Company
applies judgement and considers all relevant factors
that create an economic incentive in evaluating
whether it is reasonably certain to exercise the
option to renew or terminate the lease. After the
commencement date, the Company reassesses the
lease term if there is a significant event or change in
circumstances that is within its control and affects

its ability to exercise or not to exercise the option to
renew or terminate. In calculating the present value
of lease payments, the Company uses internal rate of
return for the assets which were earlier classified under
finance lease and incremental borrowing rate (IBR) for
Right of use assets at the lease commencement date.
The IBR is the rate of interest that the Company would
have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar
economic environment.

The IBR requires estimation when no observable
rates are available or when they need to be adjusted
to reflect the terms and conditions of the lease. The
Company estimates the IBR using observable inputs
(such as market interest rates), when available and
makes entity-specific estimates, wherever required.

Impairment of financial assets

The measurement of expected credit loss reflects a
probability-weighted outcome, the time value of money
and the best available forward-looking information. The
correlation between historical observed default rates,
forecast economic conditions and expected credit
loss is a significant estimate. The amount of expected
credit loss is sensitive to changes in circumstances
and forecasted economic conditions. The Company's
historical credit loss experience and forecast of
economic conditions may not be representative of the
actual default in the future.

Tax contingencies and provisions

Significant management judgement is required to
determine the amounts of tax contingencies and
provisions, including amount expected to be paid/
recovered for uncertain tax positions and the amount
of deferred tax assets that can be recognised, based
upon the likely timing and the level of future taxable
profits together with future tax planning strategies.

Defined benefit plans

The cost of the defined benefit plan and the present
value of the obligation are determined using actuarial
valuation. An actuarial valuation involves various
assumptions that may differ from actual developments
in the future. These include the determination of the
discount rate, expected return, future salary increases
and mortality rates. Due to the 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.

The parameter most subject to change is the discount
rate. In determining the appropriate discount rate for
plans operated in India, the management considers the

interest rates of government bonds where remaining
maturity of such bond correspond to expected term of
defined benefit obligation. The mortality rate is based
on publicly available mortality tables. Those mortality
tables tend to change only at interval in response to
demographic changes. Future salary increases are
based on expected future inflation rates.

Share-based payments

Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate
also requires determination of the most appropriate
inputs to the valuation model including the expected
life of the share option, volatility and dividend yield and
making assumptions about them. For cash-settled
share-based payment transactions, the liability needs
to be remeasured at the end of each reporting period
up to the date of settlement, with any changes in fair
value recognised in the profit or loss. This requires a
reassessment of the estimates used at the end of each
reporting period. The assumptions and models used
for estimating fair value for share-based payment
transactions are disclosed in Note 36.

Fair value measurement of financial
instruments

When the fair values of financial assets and financial
liabilities recorded in the Ind AS Standalone Financial
Statements cannot be measured based on quoted
prices in active markets, their fair value is measured
using internal valuation techniques. 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.

2.2.21 Business Combination

Business combinations are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred measured at acquisition date fair value
and the amount of any non-controlling interests in the
acquiree. For each business combination, the Company
elects whether to measure the non-controlling interests
in the acquiree at fair value or at the proportionate share
of the acquiree's identifiable net assets. Acquisition-
related costs are expensed as incurred.

The Company determines that it has acquired a
business when the acquired set of activities and
assets include an input and a substantive process
that together significantly contribute to the ability to

create outputs. The acquired process is considered
substantive if it is critical to the ability to continue
producing outputs, and the inputs acquired include
an organised workforce with the necessary skills,
knowledge, or experience to perform that process or
it significantly contributes to the ability to continue
producing outputs and is considered unique or scarce
or cannot be replaced without significant cost, effort,
or delay in the ability to continue producing outputs.

At the acquisition date, the identifiable assets
acquired, and the liabilities assumed are recognised
at their acquisition date fair values. For this purpose,
the liabilities assumed include contingent liabilities
representing present obligation and they are measured
at their acquisition fair values irrespective of the fact
that outflow of resources embodying economic
benefits is not probable. However, the following assets
and liabilities acquired in a business combination are
measured at the basis indicated below:

i) Deferred tax assets or liabilities, and the liabilities or
assets related to employee benefit arrangements
are recognised and measured in accordance
with Ind AS 12 Income Tax and Ind AS 19 Employee
Benefits respectively.

ii) Liabilities or equity instruments related to share
based payment arrangements of the acquiree
or share - based payments arrangements of the
Company entered into to replace share-based
payment arrangements of the acquiree are
measured in accordance with Ind AS 102 Share-
based Payments at the acquisition date.

2.2.22 Changes in accounting policies and
disclosures

New and amended standards

The Company applied for the first-time the following
standards and amendments, which are effective for
annual periods beginning on or after April 01, 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 August 12, 2024, under the Companies
(Indian Accounting Standards) Amendment Rules,
2024, which is effective from annual reporting
periods beginning on or after April 01, 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

The application of Ind AS 117 had no impact on the
Company's standalone financial statements as
the company has not entered any contracts in the
nature of insurance contracts covered under Ind
AS 117.

Standards notified but not yet effective

The new and amended standards and interpretations
that are issued, but not yet effective, up to the date
of issuance of the Company's standalone financial
statements are disclosed below. The Company will
adopt this new and amended standard, when it
become effective.

(i) Lack of exchangeability - Amendments to
Ind AS 21

The Ministry of Corporate Affairs notified
amendments to Ind AS 21 The Effects of Changes
in Foreign Exchange Rates to specify how an entity
should assess whether a currency is exchangeable
and how it should determine a spot exchange rate
when exchangeability is lacking. The amendments
also require disclosure of information that enables
users of its financial statements to understand
how the currency not being exchangeable into the
other currency affects, or is expected to affect, the
entity's financial performance, financial position
and cash flows.

The amendments are effective for annual
reporting periods beginning on or after April 01,
2025. When applying the amendments, an entity
cannot restate comparative information.

The amendments are not expected to have a
material impact on the Company's standalone
financial statements.

(iii) Terms/rights attached to NCCCPS

NCCCPS Class A, B, C, D, E & F shares carry a minimum preferential dividend @ 0.001% p.a. proportionately for the period
for which the shares are being held and it shall be paid in preference to any dividend or distribution payable upon
shares of any other class. Each holder of NCCCPS Class A, B, C, D, E & F shares is entitled to vote at each meeting of the
holders of the Equity shares to the extent of such proportion of the total voting rights, as they would have been entitled
assuming full conversion of the NCCCPS Class A, B, C, D, E & F shares.

The holders of the NCCCPS shall be entitled to exercise voting rights on an as if converted basis i.e., assuming conversion
of the NCCCPS in the manner set out in the shareholders agreement.

Each holder of NCCCPS Class A, B, C, D, E & F shares may convert the shares at the option of the holder into 1 equity share
(post bonus 12,900 equity shares) of the Company at the earlier of the following events:

1. Anytime at the option of the holder

2. Immediately upon the expiry of 20 years from the date of allotment; or

3. Qualified Initial Public Offering (IPO) as acceptable to the holder.

I n the event of liquidation of the Company before conversion, the holder of NCCCPS Class A, B, C, D, E & F shares
would be paid prior and in preference to any payment or distribution to equity share holders.

4) Refer Note 15(b)(iii) for details relating to conversion of NCCCPS into equity shares.

Employees Stock Option Plan 2021

Pursuant to the resolutions passed by the board of directors and the shareholders of the Company on December 15,
2022 and December 17, 2022, respectively, the share appreciation rights (SARs) Scheme was amended and rechristened
by the Company to Employee stock options plan 2021 (ESOP scheme 2021) ("December 2022 Amendment"). Except for
the ratio for conversion of the ESOPs into Equity Shares on account of the December 2022 Amendment and the bonus
shares issuance dated May 11, 2022, all other terms of the SARs granted under the SAR Scheme (now rechristened
as ESOP scheme 2021), including date of grant, vesting schedule, and the exercise price remained the same. The
contractual life (comprising the vesting period and the exercise period) of options granted is from the date of such
grant till the resignation of the employee. The other relevant terms of the grant are as below:

The carrying values of the financial assets and liabilities measured at amortised cost and FVTPL is equal to their fair
values. Accordingly, the fair values of such financial assets and liabilities have not been disclosed separately.

Notes:

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company categorises fair value measurements using a fair value hierarchy that is dependent on the valuation
inputs used as follows:

a. Level 1 - Quoted prices (unadjusted) in an active market for identical assets or liabilities that the Company can
assess at the measurement date.

b. Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly or indirectly.

c. Level 3 - Unobservable inputs for the assets or liabilities.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of
the fair value hierarchy as the lowest level input that is significant to the entire management.

The management assessed that cash and cash equivalent, trade receivables, trade payables, other financial assets-
others (current), other financial liability (current), lease liabilities (current) and loans to employees approximates their
fair value largely due to short-term maturities of these instruments.

The fair value of remaining financial instruments are determined on transaction date based on discounted cash flows
calculated using lending/borrowing rate. Subsequently, these are carried at amortised cost. There is no significant
change in fair value of such liabilities and assets.

38 Financial risk management, Objectives and Policies

The Company's principal financial liabilities comprise of lease obligation, trade and other payables. The main purpose of
these financial liabilities is to finance the Company's operations. The Company's principal financial assets include security
deposits, investments in mutual funds, bonds and commercial papers, cash and cash equivalents and bank balances and
trade and other receivables.

The Company's activities exposes it to market risk, credit risk and liquidity risk. The Company's senior management oversees
the management of these risks. The senior management ensures that the Company's financial risk activities are governed
by appropriate policies and procedures and that financials risks are identified, measured and managed in accordance
with Company's policies and risk objectives. The Company reviews and agrees on policies for managing each of these risks
which are summarised below:

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and price risk. Financial
instruments affected by market risk include investments, loans and borrowings, debt instrument, trade receivables,
trade payables and lease liabilities.

i. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. As the company does not have any floating interest rate borrowings or deposits,
it is not exposed to interest rate risk.

ii. Foreign Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because
of changes in foreign exchange rates. The Company's exchange risk arises from its foreign currency assets
and liabilities. The Company's exposure to the risk of changes in foreign exchange rates arises on account of
purchases from foreign countries and export sales. The Company has not taken any derivative instrument during
the year and there is no derivative instrument outstanding as at the year end.

41 Other statutory information

(i) No proceedings have been initiated or are pending against the Company for holding any Benami property under the
Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

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

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

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

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) 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.

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

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

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

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

(viii) The company has not been declared any wilfull defaulter by any bank or financial institution or other lender.

42. During the year ended March 31, 2025, the Board of Directors of the Company and its wholly owned subsidiaries
Fusion Cosmeceutics Private Limited ('Transferor Company-1') and Just4Kids Services Private Limited ('Transferor
Company-2'), had approved the Scheme of Amalgamation between the Company, Transferor Company-1, Transferor
Company-2 and their respective shareholders and creditors (hereinafter referred to as "the Scheme") in terms of the
provisions of Sections 230 to 232 of the Companies Act, 2013 to transfer the business of Transferor Company-1 and
Transfer Company-2 to the Company. The Company had filed the scheme with the regulatory authorities and received
approval on first motion application by National Company Law Tribunal ('NCLT') Delhi and NCLT Chandigarh via order
dated August 13, 2024 and August 22, 2024 respectively. The Company has subsequently filed the second motion
application and received the order granting approval of merger by NCLT Chandigarh on May 08, 2025. The Hearing for
second motion application was concluded on May 13, 2025 by NCLT Delhi and the order was reserved. The Company is
awaiting for the final merger order from NCLT Delhi.

43. As per the amended Rule 3 and 11(g) of the Companies (Accounts) Rules, 2014 (the "Accounts Rules"), Companies are
required to maintain daily back-up of the books of account and other relevant books and papers which are maintained
in electronic mode on servers physically located in India and accounting software used for maintaining its books of
account should have a feature of recording audit trail of each and every transaction, creating an edit log of each
change made in the books of account along with the date when such changes were made and ensuring that the audit
trail cannot be disabled. In addition, Companies are required to preserve audit trail as per the statutory requirements
of record retention.

The Company has used certain accounting softwares for maintaining its books of account which have a feature of
maintaining proper daily backup on servers physically located in India, except in case of two applications for inventory
management and distribution management, the backup of the books of account and other books and papers in
electronic mode has not been maintained on servers physically located in India on daily basis.

Further, the Company has used certain accounting softwares for maintaining its books of account which have a
feature of recording audit trail (edit log) facility and the same have operated throughout the year for all relevant
transactions recorded in the aforesaid softwares, except (i) in respect of two accounting software applications
pertaining to distribution management system and price master records, audit trail was not enabled throughout the
year for all relevant transactions recorded in the applications; (ii) in respect of two accounting software applications
for maintaining its books of account and price master records, audit trail feature is not enabled for certain changes
made, if any, using privileged/administrative access rights and; (iii) in respect of one software application which
is operated by a third-party software service provider, for maintaining inventory records, the Service Organisation
Controls report is not available. Further, audit trail feature has not been tampered with in respect of the accounting
software applications where audit trail has been enabled/Service Organisation Controls report is available and the
audit trail of prior year(s) has been preserved as per the statutory requirements for record retention to the extent it was
enabled and recorded in the respective years.

The management is in the process of taking steps to ensure that the books of account are maintained as required
under the applicable statute.

44. During the year ended March 31, 2024, the Company has completed its Initial Public Offer (IPO) of 52,515,692 equity
shares of face value of ?10 each at an issue price of ^324 per share (including a share premium of !f314 per share). A
discount of ?30 per share was offered to eligible employees bidding in the employee's reservation portion of 22,678
equity shares. The issue comprised of a fresh issue of 11,267,530 equity shares aggregating to ^3,650 Million and offer
for sale of 41,248,162 equity shares by selling shareholders aggregating to ^13,364.40 Million. Pursuant to the IPO, the
equity shares of the Holding Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited
(BSE) on November 07, 2023.

The utilisation of the IPO proceeds from fresh issue of ^3,504.92 million (net of IPO expenses of ^145.08 million) is
summarised below:

45. Absolute amounts less than U5,000 are appearing in the Standalone Financial Statements as "0.00" due to presentation
in millions.

As per our report of even date For and on behalf of the Board of Directors of

For S.R. Batliboi & Associates LLP Honasa Consumer Limited

Chartered Accountants

ICAI firm registration number: 101049W/E300004

per Rajeev Kumar Varun Alagh Ghazal Alagh

Partner Whole Time Director & Whole Time Director

Membership no.: 213803 Chief Executive Officer DIN: 07608292

DIN: 07597289

Raman Preet Sohi Dhanraj Dagar

Chief Financial Officer Company Secretary

Membership no.: ACS33308

Place: Bengaluru Place: Gurugram

Date: May 22, 2025 Date: May 22, 2025