2. MATERIAL ACCOUNTING POLICIES

a) Basis of Preparation

(i) Compliance with Indian Accounting Standards (Ind AS)

The financial statements comply in all material aspects with Indian Accounting Standards (“Ind AS”) notified under
Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015 and other
relevant provisions of the Act.

(ii) Historical Cost Convention

The financial statements have been prepared on the historical cost basis except for the following:

certain financial assets and liabilities (including derivative instruments) and contingent consideration are
measured at fair value.

defined benefit plans - plan assets are measured at fair value.
share-based payments are measured at fair value.

(iii) New and amended standards adopted by the Company

The Ministry of Corporate Affairs vide notification dated 9 September 2024 and 28 September 2024 notified the
Companies (Indian Accounting Standards) Second Amendment Rules, 2024 and Companies (Indian Accounting
Standards) Third Amendment Rules, 2024, respectively, which amended/ notified certain accounting standards (see
below), and are effective for annual reporting periods beginning on or after 1 April 2024:

Insurance contracts - Ind AS 117; and

Lease Liability in Sale and Leaseback - Amendments to Ind AS 116

These amendments did not have any material impact on the amounts recognised in prior periods and are not expected
to significantly affect the current or future periods.

b) Revenue recognition

(i) Sale of Goods

Revenue is generated primarily from sale of chemicals. Revenue is recognized at the point in time when the performance
obligation is satisfied and control of the goods is transferred to the customer in accordance with the terms of customer
contracts. In case of domestic customers, generally revenue recognition take place when goods are dispatched and
in case of export customers when goods are shipped onboard based on bill of lading as per the terms of contract.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of
variable consideration) allocated to that performance obligation. The transaction price of goods sold is net of variable
consideration on account of various discounts and schemes offered by the Company as part of the contract.

(ii) Sale of Services

Revenue is recognized from rendering of services when the performance obligation is satisfied and the services
are rendered in accordance with the terms of customer contracts. Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance
obligation. The transaction price of services rendered is net of variable consideration on account of various discounts
and schemes offered by the Company as part of the contract.

(iii) Contract liability

A contract liability is the obligation to transfer goods / render services to the customer for which the Company has
received consideration from the customer. Contract liabilities are recognized as revenue when the Company performs
under the contract.

The Company does not expect to have any contracts where the period between the transfer of the promised goods
/ rendering of promised services to the customer and payment by the customer exceed one year. As a consequence,
the Company does not adjust any of the transaction prices for the time value of money.

(iv) Export Incentives

Export incentives are recognised for based on the eligibility and when there is no uncertainty in receiving the same.

c) Leases

(i) As a lessee

The Company recognises 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 assets are 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 lease liability is initially measured at amortised cost 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, using the incremental borrowing rate.

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 that have
a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.

See note 57(d) for the other accounting policies relevant to Leases.

d) Income taxes

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions, wherever appropriate, on the basis
of amounts expected to be paid to the tax authorities. Current tax assets and tax liabilities are offset where the entity has
a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements at the balance sheet date. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority.

Current and deferred tax is recognized in the Standalone Statement of Profit and Loss, except to the extent that it relates
to items recognized in Other Comprehensive Income or directly in equity. In this case, the tax is also recognized in Other
Comprehensive Income or directly in equity, respectively.

e) Employee benefits

(i) Short-term obligations

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 liabilities in the balance sheet.

(ii) Other long-term employee benefit obligations
Leave Obligations

The Company has liabilities for earned leave that are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. These obligations are therefore measured as
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 on government bonds at the end of the reporting period that have terms approximating to the terms of the
related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are
recognised in the Standalone Statement of Profit and 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 obligations

The Company operates the following post-employment schemes:

Defined benefit plan -
Gratuity Obligations

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 actuary using the projected unit credit method.

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial
assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The present value
of the defined benefit obligation is determined by discounting the estimated future cash flows by reference to market
yields at the end of the reporting period on government bonds that have terms approximating to the terms of the
related obligation. Due to complexities involved in the valuation and its long-term nature, defined benefit obligation is
sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the Standalone Statement of Profit and Loss.

Remeasurement 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. They are included in the retained
earnings in the statement of changes in equity in the balance sheet.

Defined benefit plan -
Provident fund liability

The Company contributes towards, superannuation fund and provident fund which are defined contribution schemes.
Liability in respect thereof is determined on the basis of contribution required to be made under the statutes / rules. The
Company 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.

Provident Fund for certain employees is administered through a trust. The Provident Fund is administered by trustees
of an independently constituted common trust recognized by the Income Tax authorities where other entities are also
the participant. Periodic contributions to the Fund are charged to the Standalone Statement of Profit and Loss, and
when services are rendered by the employees. The Company has an obligation to make good the shortfall, if any,
between the return from the investment of the trust and notified interest rate by the Government.

f) Employee share-based payment arrangements

Eligible employees of the Company receives remuneration in the form of share based payments in consideration of the
services rendered.

Under the equity settled share-based payment, the fair value on the grant date of the awards given to eligible employees
is recognised as ‘employee benefit expenses’ with a corresponding increase in equity over the vesting period. The fair
value of the options at the grant date is calculated by an independent valuer basis Black Scholes model. Key assumptions
made with respect to expected volatility includes share price, expected dividends and discount rate, under this pricing
model. At the end of each reporting period, apart from the non-market vesting condition, the expense is reviewed and
adjusted to reflect changes to the level of options expected to vest. When the options are exercised, the Company issues
fresh equity shares.

g) 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
deprecation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the carrying amount of asset or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can
be measured reliably.

Property, plant and equipment which are not ready for the intended use on the date of the Balance Sheet are disclosed as
“Capital work-in-progress”.

Depreciation on property, plant and equipment has been provided on the straight-line method as per the estimated useful
life. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013
except in respect of the Contract Development and Manufacturing Organisation (CDMO) assets mentioned in table below,
where useful life is different than those prescribed in Schedule II. The estimated useful life of the CDMO assets, mentioned
in table below, has been assessed based on external technical evaluation which considered the nature of the assets,
estimated usage of the assets, the operating condition of the assets, anticipated technological changes, manufacturer
warranties, experience of the management and group companies, maintenance support, etc:

h) Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company,
is classified as investment property. Investment property is measured initially at its acquisition cost, including related
transaction costs and where applicable, borrowing costs.

I nvestment properties are depreciated using straight line method over their useful lives specified in Schedule II to the
Companies Act, 2013.

See note 57(g) for the other accounting policies relevant to Investment properties.

i) Inventories

I tems of inventory are valued at cost or net realizable value, whichever is lower. Cost for raw materials, traded goods and
stores and spares is determined on weighted average basis. Cost includes all charges in bringing the goods to their present
location and condition. The cost of process stock and finished goods comprises of materials, direct labour, other direct costs
and related production overheads and taxes as applicable. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and the estimated costs necessary to make the sale.

j) Cash and Cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in the current liabilities in the balance sheet.

k) Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business
and reflects unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are
recognized initially at the transaction price as they do not contain significant financing components. The Company holds the
trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method, less loss allowance.

The Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be
recognized from initial recognition of the receivables.

l) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year
which are unpaid. Trade and other payables are unsecured and presented as current liabilities unless payment is not due
within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at
amortised cost using the effective interest method.