1.1 Company overview

The Andhra Petrochemicals Limited (APL) is a leading manufacturer of Oxo Alcohols employing the state-
of-the-art technology "Selector-30" provided by M/s Davy Process Technology, London, United Kingdom.
The Government of Andhra Pradesh with an investment through Andhra Pradesh Industrial Development
Corporation Limited (APIDC) along with The Andhra Sugars Limited (ASL) promoted APL, under Joint
Sector Project and at present is under Assisted Sector Project.

The Company is a public limited company incorporated and domiciled in India and has its registered
office at Venkatarayapuram P.O., Tanuku Mandal, West Godavari District, Andhra Pradesh. The Company
has its primary listings on the BSE Limited. The Company is having its manufacturing facilities at opposite
to Naval Dockyard, Naval Base P.O., Visakhapatnam.

The financial statements for the year ended March 31, 2025 were approved by the Board of Directors and
authorized for issue on May 24, 2025.

1.2 Basis of preparation of financial statements

1.2.1 Statement of Compliance with Ind AS

These financial statements prepared by the Company comply in all material aspects with the Indian
Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (Act) read with
Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto.

1.2.2 Basis of Preparation

These financial statements are prepared under historical cost convention on accrual basis except for the
following -

• Certain financial instruments which are measured at fair values,

• Assets held for sale measured at fair value less cost to be incurred to sell, and

• Defined benefit plans - plan assets measured at fair value.

Accounting policies have been consistently applied except where a newly issued Accounting Standard is
initially adopted or a revision to an existing Accounting Standard requires a change in the accounting
policy hitherto in use.

1.3 Use of Estimates:

The preparation of financial statements in conformity with Ind AS requires management to make estimates,
judgments and assumptions. These estimates, judgments and assumptions affect the application of
accounting policies, the reported amount of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements and reported amount of revenues and expenses during the
reporting period. 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. Application
of accounting policies that require critical accounting estimates involving complex and subjective judgments
and the use of assumptions in these financial statements have been disclosed below. Accounting estimates
could change from period to period. Actual results could differ from the estimates. Appropriate changes in
estimates are made as management becomes aware of changes in circumstances surrounding the estimates.
Changes in estimates are reflected in the financial statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the financial statements.

The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year:

The company based its assumptions and estimates on parameters available when the financial statements
were 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.

1.3.1 Property, Plant and Equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. 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. The useful lives and residual values of
company's assets are determined by management at the time the asset is acquired and reviewed periodically,
including at each financial year end. 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.

1.3.2 Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less
costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's
length, for similar assets or observable market prices less incremental costs for disposing of the asset. The
value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next
five years and do not include restructuring activities that the company is not yet committed to or significant
future investments that will enhance the asset's performance of the CGU being tested. The recoverable
amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows
and the growth rate used for extrapolation purposes.

1.3.3 Impairment of Financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected
loss rates. The company uses judgement in making these assumptions and selecting the inputs to the
impairment calculation based on the company's past history, existing market conditions as well as forward
looking estimates at the end of each reporting period.

1.3.4 Leases

The Company has taken the commercial properties under contractual agreements for its business operations.
Its accounting involves significant management judgement for identification, classification and measurement
of lease transactions at the time of lease commencement. The assessment of the lease liability and Right of
Use asset under lease arrangements are based on the assumptions and estimates of the discount rate, lease
term including judgement for exercise of options to extend or terminate the contract, dismantling and
restoration costs, escalation in rentals etc. Further, these will be continuously monitored at each reporting
period to reflect the changes in the agreements and management estimates.

1.3.5 Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilized. Significant management judgment is required to
determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the
level of future taxable profits together with future tax planning strategies.

1.3.6 Employee benefits (gratuity and compensated absences)

The cost of the defined benefit plans and the present value of the gratuity/compensated absences obligation
are determined using actuarial valuations. An actuarial valuation involves making various assumptions
that may differ from actual developments in the future. These include the determination of the discount
rate, 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. The mortality
rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to
change only at interval in response to demographic changes. Future salary increases and gratuity increases
are based on expected future inflation rates.

1.3.7 Fair value measurement of financial instruments

When the fair values 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 DCF model. The inputs to these models are taken from observable markets where possible,
but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments
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.

1.3.8 Provision for decommissioning

The company has recognized a provision for decommissioning obligations associated with the leased
premises on which the plant is super structured. In determining the fair value of the provision, assumptions
and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant
from the site and the expected timing of those costs.

1.3.9 Contingencies

Management judgment is required for estimating the possible inflow/ outflow of resources, if any, in
respect of contingencies/ claims/ litigations against the Company/ by the Company as it is not possible to
predict the outcome of pending matters with accuracy.

1.4 Current versus Non-current classification

All assets and liabilities in the balance sheet are presented based on current/ non-current classification.
An asset is treated as current when it is:

• expected to be realised or intended to be sold or consumed in normal operating cycle

• held primarily for the purpose of trading

• expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is treated as current when it is:

• expected to be settled in normal operating cycle

• held primarily for the purpose of trading

• due to be settled within twelve months after the reporting period, or

• there is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash
and cash equivalents. The company has identified twelve months as its operating cycle.

Material Accounting Policies

1.5 Revenue recognition:

Revenue is recognised as and when the entity satisfies a performance obligation by transferring a promised
goods or services (i. e an asset) to a customer. An asset is transferred when (or as) the customer obtains
control of that asset. Revenue is measured at the transaction price which is determined based on the terms
of contract and entity's customary practice. Amounts disclosed as revenue are inclusive of excise and duties,
but exclusive of Goods and Service tax (GST), which the company pays as principal and net of returns,
trade allowances, rebates, and taxes collected on behalf of the government.

1.6 Property, Plant and Equipment:

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at
historical cost less accumulated depreciation and impairment loss, if any. Historical cost includes all costs
directly attributable to bringing the asset to the location and condition necessary for its intended use
and initial estimation of dismantling and site restoration costs. Subsequent costs relating to property,
plant and equipment is capitalized only when it is probable that future economic benefits associated with
these will flow to the company and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced.
Expenditure during construction/erection period is included under Capital Work-in-Progress and allocated to
the respective fixed assets on completion of construction / erection.

Property, Plant and Equipment are componentized and are depreciated separately over their estimated
useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

Depreciation on buildings and plant and machinery is charged under straight line method and on the
remaining assets under the diminishing balance method. The residual values, useful lives and methods
of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate. In case of low value assets of Rs. 10000/- or less, depreciation is charged at
the rate of 100% in the year of purchase itself.

An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the income statement when the asset is derecognised.

1.7 Inventories:

Inventories are valued at the lower of the cost (net of eligible input tax credits) or net realisable value (except by¬
products, waste and scrap which are valued at estimated net realisable value).

Costs incurred in bringing each product to its present location and condition, are accounted for as follows:

• Raw materials: Cost includes cost of purchase and other costs incurred in bringing the inventories
to their present location and condition. Cost is determined on first in, first out basis.

• Finished goods and work in progress: Cost includes cost of direct materials and labour and a
proportion of manufacturing overheads based on the normal operating capacity but excluding
borrowing costs. Cost is determined on monthly weighted average basis.

• Stores and spares: Cost includes cost of purchase and other costs incurred in bringing the inventories
to their present location and condition. Cost is determined on moving weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.

1.8 Non-Derivative Financial Instruments:

The Company recognizes financial assets and financial liabilities when it becomes a party to the
contractual provisions of the instrument.

1.8.1 Initial Recognition-

All financial assets and liabilities are recognized at fair value on initial recognition, except for trade
receivables which are initially measured at transaction price. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair
value through profit or loss, are added/ deducted to/from the fair value on initial recognition. Regular
way purchase and sale of financial assets are accounted for at trade date.

1.8.2 Subsequent measurement-

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI)

(i) Debt instruments at amortised cost

A debt instrument is subsequently measured at amortised cost if it is held within a business model
whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms
of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using
the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral part of the EIR. The amortisation of
EIR is included in finance income in the profit or loss. The impairment losses and gain/loss on
derecognition are recognised in the profit or loss.

(ii) Debt instruments at fair value through other comprehensive income

A debt instrument is subsequently measured at fair value through other comprehensive income, if it
is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments under this category are measured at fair value at each reporting date. Fair value movements
are recognized in the other comprehensive income (OCI). However, the company recognizes interest income,
impairment losses & reversals and foreign exchange gain or loss in the profit & loss. On derecognition,
cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned
whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

(iii) Debt instruments, derivatives and equity instruments at fair value through profit or loss
Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI,
is classified as at FVTPL (residual category).

In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost
or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates
a measurement or recognition inconsistency (referred to as 'accounting mismatch'). The company has not
designated any debt instrument as at FVTPL.

All equity instruments in scope of Ind AS 109 are measured at fair value by the Company. Equity investments
which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides
to classify the same either as at FVTOCI or FVTPL. The classification is made on initial recognition and is
irrecoverable.

Financial instruments included within the FVTPL category are measured at fair value with all changes
recognized in the P&L.

(iv) Equity instruments measured at fair value through other comprehensive income

The Company has made an irrevocable election to present the subsequent fair value changes in 'other
comprehensive income' for its investments in equity instruments that are not held for trading. Fair value
changes on the instrument, impairment losses & reversals and foreign exchange gain or loss are recognized
in the OCI. Dividends are recognised in the Profit &Loss. There is no recycling of the amounts from OCI to
Profit & Loss, even on sale of investment. However, the company may transfer the cumulative gain or loss
within equity.

Financial liabilities are classified in two measurement categories:

• Financial liability measured at amortised cost

• Financial liability measured at fair value through profit or loss

(i) Financial liabilities measured at fair value through profit or loss include financial liabilities
held for trading and financial liabilities designated upon initial recognition as at fair value through profit
or loss. The company has not designated any financial liability as at fair value through profit and loss.

(ii) Financial liability measured at amortised cost

All other financial liabilities are subsequently carried at amortized cost using effective interest rate
(EIR) method, thereby resulting in amortisation of transaction costs and interest expenses through
Profit & Loss over the life of the instrument. The EIR amortisation is included as finance costs in the
statement of profit and loss.

1.8.3 Reclassification of financial assets-

The company reclassifies its financial assets only when there is a change in entity's business model for managing
its financial assets.

1.8.4 Derecognition of financial instruments-

The company derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under Ind. AS 109. A financial liability (or a part of a financial liability) is derecognized when the
obligation specified in the contract is discharged or cancelled or expires.

1.8.5 Impairment of financial assets-

The Company applies expected credit losses (ECL) model for measurement and recognition of loss
allowance on the following:

a. Trade receivables

b. Financial assets measured at amortized cost (other than trade receivables)

c. Financial assets measured at fair value through other comprehensive income.

In case of trade receivables, the Company follows a simplified approach wherein an amount equal
to lifetime ECL is measured and recognized as loss allowance.

In case of other assets, the Company determines if there has been a significant increase in credit risk
of the financial asset since initial recognition. If the credit risk of such assets has not increased
significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance.
However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and
recognized as loss allowance.

ECL is the difference between all contractual cash flows that are due to the Company in accordance
with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls),
discounted at the original effective interest rate.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/
expense in the Statement of Profit and Loss under the head "Other expenses".

1.8.6 Offsetting of financial instruments-

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention
either to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

1.8.7 Fair Value of Financial instruments-

In determining the fair value of its financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each reporting date. The methods
used to determine fair value include discounted cash flow analysis, available quoted market prices and
dealer quotes. All methods of assessing fair value result in general approximation of value, and such
value may never actually be realized. For trade and other receivables maturing within one year from
the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these
instruments.

1.9 Employee Benefits include:

(i) Short term employee benefits-

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognised
in respect of employees' services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit
obligations in the balance sheet.

The company recognises a liability and an expense for bonus only when it has a present legal or constructive
obligation to make such payments as a result of past events and a reliable estimate of obligation can be
made.

(ii) Long term employee benefits -

Liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. They are therefore measured at the
present value of expected future payments to be made in respect of services provided by employees up to
the end of the reporting period using the projected unit credit method. The benefits are discounted using
the market yields at the end of the reporting period that have terms approximating to the terms of the
related obligation. Re-measurements as a result of experience adjustments and changes in actuarial
assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.

(iii) Post employment benefits-

The company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity: and

(b) Defined contribution plans such as provident and pension funds.

Defined Benefit Plans -The liability or asset recognised in the balance sheet in respect of defined benefit
gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the
fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected
unit credit method. Re-measurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive
income.

Defined Contribution Plans- The Company pays provident fund contributions to publicly administered
provident funds as per local regulations. It has no further payment obligations once the contributions have
been paid. The contributions are accounted for as defined contribution plans and the contributions are
recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments is available.

1.10Leases

The company has applied Ind AS 116 using the modified retrospective approach and therefore the
comparative information has not been restated and continues to be reported under Ind AS 17.

As a lessee

The company recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of right-of-use assets are determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, company's incremental borrowing rate. Generally, the company uses its incremental borrowing
rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• Fixed payments, including in-substance fixed payments.

• Variable lease payments that depend on an index or a rate, initially measured using the index or
rate as at the commencement date.

• Amounts expected to be payable under a residual value guarantee; and

• The exercise price under a purchase option that the company is reasonably certain to exercise,
lease payments in an optional renewal period if the company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease unless the company is reasonably
certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in
the company's estimate of the amount expected to be payable under a residual value guarantee, or if company
changes its assessment of whether it will exercise a purchase, extension or termination option. When the
lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.

Short-term leases and leases of low-value assets

The company has elected not to recognise right-of-use assets and lease liabilities for short term leases of
real estate properties that have a lease term of 12 months. The company recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.

Under Ind AS 17

In the comparative period, leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating
leases. Payments made under operating leases were recognised in profit or loss on a straight-line basis over
the term of the lease unless the payments are structured to increase in line with the expected general
inflation to compensate for the lessors expected inflationary cost increases.

1.11 Foreign Currency Transactions:

The functional currency of the company is the Indian rupee and the financial statements are presented in
Indian rupee rounded off to the nearest lakhs except where otherwise indicated.

Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the
transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt /
payment during the year.

At each Balance Sheet date

i. Foreign currency denominated monetary items are translated into the relevant functional currency at
exchange rate at the balance sheet date. The gains and losses resulting from such translations are included
in net profit in the statement of profit and loss.

ii. Foreign currency denominated non-monetary items are reported using the exchange rate at which they
were initially recognized.

Transaction gains or losses realized upon settlement of foreign currency transactions are included in
statement of profit and loss.