1) Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.The above Statement of Cash Flows has been prepared under the ‘Indirect Method’ as set out in Ind AS 7, ‘Statement of Cash Flows’ as noted under Companies Act, 2013.

2) Fixed deposits with original maturity of more than 3 months are grouped under 'other bank balances' and is not considered as part of cash and cash equivalents in the statement of cash flows.

3) Components of cash and cash equivalents:

Cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions/banks, 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.

Terms / rights attached to equity shares

Equity shares have a par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts.

d. Dividend distribution to equity holders:

Dividends paid / payable along with applicable taxes are recognised when it is approved by the shareholders. In case of interim dividend it is recognised when it is approved by the Board of Directors. A corresponding amount is accordingly recognised directly in equity.

In respect of the year ended 31st March, 2024, the Board of Directors has proposed a dividend of Rs.2.00(20 percent) (Previous year Rs.1.50 (15 percent)) per Equity share, subject to approval by the shareholders at the ensuing Annual GeneralMeeting after which dividend would be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act.

The Andhra Petrochemicals Limited Notes to Financial Statements Nature of reserves:

a) Capital Reserve : Capital reserve represents incentives given by the FFIs for onetime settlement of the foreign currency loan.

b) Securities premium : Securities premium represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of Companies Act, 2013.

c) General reserve : The general reserve is created by way of tranfer of part of the profits before declaring dividend pursuant to the provisions of Companies Act, 1956/2013.

d) Retained earnings : Retained earnings generally represents the undistributed profit amount of accumulated earnings of the company.

e) Other Comprehensive Income:

Other Comprehensive Income (OCI) represents the balance in equity for items to be accounted under OCI and comprises of: items that will not be reclassified to profit and loss

a. The Company has made an irrevocable selection to present the subsequent fair value changes of investments in OCI. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value including tax effects. The company transfers restated fair value amounts from this reserve to retained earnings when the relevant financial instruments are disposed.

b. The actuarial gains and losses along with tax effects arising on defined benefit obligations are recognised in OCI.

Note 2.20 (a) The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrwings are disclosed in note 2.36

(b) The company has not been declared as a wilful defaulter by any bank or financial institution or other lender.

(c) The quarterly returns /statements of current assets filed by the Company with banks are in agreement with the books of accounts .

Note 2.27a Government Grants

Government grants related to revenue nature are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate and are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income and presented under

“Other Income”. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the company with no future related costs are recognized in profit or loss in the period in which they become receivable.

The Company is eligible to receive Government grant by way of subsidy under Pradhan Mantri Rozgar Y ojana (PMRY). Accordingly, the Company has recognised these Government grant as separate line item as "Government grants received" under Other Income.

Defined Benefit Plans:

A. The company provides for gratuity to the employees as per Payment of Gratuity Act,1972. Employees who are in continous service for a period of 5 years are eligible for gratuity. The amount of gratuity is payable on retirement/resignation. The gratuity plan is a funded plan and the company makes contributions to recognised funds in India.

The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using "Projected Unit Credit Method” on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

B. The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the "Projected Unit Credit Method” which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.

Note 2 J5A Contingent Asset: Fire Loss of Profit (FLOP) Insurance Arbitration Award

Oriental Insurance Co. Ltd has filed under section 34 of the Arbitration Act, 1996 "a challenge petition" before the Hon'ble Commercial Court (C.C.C.) against the arbitration award given in favour of the company on 09.10.2020. Since the arbitration award is under judicial review, income in respect of the same has not been recognised in the books of account.

Provision for decommissioning liability:

Decommissioning Liability: This provision has been created for estimated costs of dismantling and removing the movable assets and restoring the site in respect of leased premises on which the plant is super structured. The lease agreement is for a period of 30 years which was valid upto 26th June, 2019. The company has initiated the process of renewal of lease and estimated the decommisioning liability for a further period of 30 years, i.e., upto 27th June, 2049.

Note 2.38 Segment information

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

Note 2.40 Earnings Per Share:

Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects all dilutive potential equity shares.

Note:2.41 Leases As Lessee

During the Financial Year 2019-20, the Company (APL) has initiated the process of renewal of the Land Lease on which the plant is located with Visakhapatnam Port Trust (VPT) for a further period of 30 years with effect from 27.06.2019. APL has submitted its Technical & Financial Bid against the tender floated by VPT. As APL was the sole bidder for the Tender, VPT accepted both Technical Bid & Financial Bid. Later -on, VPT has cancelled the tender and issued re-tender. Aggrieved by the action of VPT, APL has filed a writ petition under Article 226 before the Hon’ble High Court of Andhra Pradesh.

The Hon’ble High Court of Andhra Pradesh has allowed the writ Petition filed by the APL seeking the cancellation of the order dated 18.08.2020 cancelling the tender notification dated 07.08.2019 and fresh tender notification dated 24.08.2020 issued by VPT towards the lease of the land and directed VPT to execute the lease deed, vide its order dated 25th February 2022. Further, on 19th March 2022, APL has written a letter to the Chief Engineer, VPT requesting him to kindly finalise the land lease deed and fix-up the date for execution of the said lease deed. VPT has preferred an appeal against the Honble High Court of Andhra Pradesh order dated 25.02.2022 before division bench of Hon’ble High Court of Andhra Pradesh and the same is pending.

Pending execution of the lease deed, APL has considered provisionally its bid amount for accounting of “Leases” in accordance with Ind AS 116, till the lease

Note 2.47 Other additional Regulatory information

a) The company has no transactions with struck off companies undersection 248 of the Companies Act, 2013 or section 560 of Companies Act,1956.

b) in respect of various loans charges/ satisfaction of charges have been registered with Registrar of Companies within the statutory period prescribed under the Act.

c) The Company has no subsidiary companies and accordingly, the provisions of clause (87) of the section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017 are not applicable.

d) There is no Scheme of Arrangements that has been approved in terms of sections 230 to 237 of the Companies Act, 2013.

e) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

f) The company has not granted any Loans or advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointhly with any other person that are repayable on demand or without specifying any terms or period of repayment.

g) There are no transactions that are not recorded in the books of account and have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

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

Note 2.48 Recent Accounting Pronouncements

Ministry of Corporate Affairs (“MCA”) has not issued any notifications for new standards or amendments to the the existing standards which will be effective from the reporting periods beginning on or after 1st April 2024.

Note 2.49 Previous year’s figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

3.2 Fair Valuation Techniques

The fair values of the financial assets and liabilities are included at the amount that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A) The following methods and assumptions were used to estimate the fair values

The fair value of cash and cash equivalents, trade receivables and payables, financial liabilities and assets approximate their carrying amount largely due to the short-term maturities of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values. The fair value of unquoted equity investments designated and recognised through Other Comprehensive Income has been determined by using the Income approach through the present value techniques.

B) Fair value hierarchy

The fair value of financial instruments as referred to above note have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements].

The categories used are as follows:

Level 1: Level 1 hierarchy includes 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 that are observable either directly or indirectly for the asset or liability, other than quoted prices included within level 1.

Level 3: Inputs for the asset or liability which are not based on observable market data (unobservable inputs).

D) Management's approach and the key assumptions used to determine the fair value under Level 3 hierarchy:

Income approach is the valuation technique used for determination of the fair value of the unquoted equity instruments in APGPCL. It converts the future expected cashflows (savings in costs) to a single discounted amount by using the Present value techniques.

The management of APGPCL has declared "Layoff’ with effect from 01.11.2022 due to cancellation of allocation of Natural Gas under Advance Price Mechanism to the Company with effect from 01.09.2022. Accordingly, there is no supply of power to the APL since October, 2022 and also there is no certainty of supply of power by APGPCL in future. Based on the available unobservable inputs i.e. zero supply of units of power resulting in nil savings in the power cost, the fair market value as on 31.03.2023 is determined as Nil.

3.4 Financial risk management framework

A) The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors monitors the compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The risk management framework aims at,

i) Improve financial risk awareness and risk transparency

ii) Identify, control and monitor key risks

iii) Identify risk accumulations

iv) Provide management with reliable information on the Company’srisk situation

v) Improve financial returns

B) The company's activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

a) Credit risk:

i) Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), from cash and cash equivalents, deposits with banks. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis

ii) Financial assets that are neither past due nor impaired

Cash and cash equivalents, deposits with banks, security deposits, investments in securities & mutual funds are neither past due nor impaired.

Cash and cash equivalents, deposits are held with banks which are reputed and credit worthy banking institutions. Hence the expected credit loss is negligible.

Investments in securities & mutual funds are actively traded in the stock markets and there is no collateral held against these because the counterparties are entities with high credit ratings assigned by the various credit rating agencies. Hence the expected credit loss is negligible

iii) Financial assets that are past due but not impaired

Credit risk arising from trade receivables is managed in accordance with the Company’s established policy, procedures and control relating to customer credit risk management. The average credit period on sales of products is less than 45 days. All trade receivables are reviewed and assessed for default on a quarterly basis. For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. The provision matrix at the end of the reporting period is as follows:

b) Liquidity risk:

i) Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's objective is to maintain optimum level of liquidity to meet it's cash and collateral requirements at all times.Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit line to meet obligations . Due to the dynamic nature of underlying bussiness, company maintains flexibility in funding by maintaining availability under committed credit lines.

The company's objectives when managing capital is to safeguard their ability to continue as a going concern, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximise the shareholders value. The company sets the amount of capital required on the basis of annual business and long term operating plans which include capital and other strategic investments.The funding requirements are met through a mixture of equity, internal fund generation and borrowed funds. The company tries to maintain an optimal capital structure to reduce cost of capital and monitors capital on the basis of debt-equity ratio.