5.1 The Company had invested ' 56.01 lakh (March 31, 2023 : ' 56.01 lakh) in the share capital of Solentus North America Inc., its wholly owned subsidiary company (“the subsidiary”). The Company has decided to close the said subsidiary and has initiated the process of closure, which is delayed due to technical reasons. Consequently, the Company has made full provision for impairment in the value of said investment.

5.2 Includes ' 115.31 (March 31, 2023: ' 115.31 lakh) towards fair value of financial guarantees issued to a Bank in relation to loan availed by Dresen Quimica S.A.P.I. de C.V. 50,820,277 Equity Shares of Dresen Quimica are pledged in respect of the aforesaid loan.

5.3 Recognition of Put Option

As per the amended shareholders agreement dated October 18, 2021 entered into by the Company with the non-controlling shareholder of Dresen Quimica S.A.P.I. de C.V. (Dresen Quimica), on November 17, 2021, the Company, through its wholly owned subsidiary CFS De Mexico Blends S.A.P.I. De C.V., had acquired 33.50% stake in Dresen Quimica (total stake of CFS group - 98.50%) for a total consideration of US$ 8.50 million equivalent to ' 6,344.80 lakh. The balance 1.50% non-controlling interest was to extinguish on payment of preferred dividend by Dresen Quimica over a period upto March 31, 2024 amounting to US$ 4.623 million as escalated by 3% per annum from January 1, 2021 till the date of respective payments with no other participating rights in profits to the non-controlling interest from January 1, 2021. The aforesaid preferred dividend has been paid to the tune of US$ 4.704 million (including escalated amount of US$ 0.073 million) before March 31, 2024, of which US$ 3.004 million was paid during the current financial year. Consequently, the balance stake of 1.5% was acquired for 8.385 million Mexican pesos (US$ 0.506 million), which has resulted in making Dresen Quimica a wholly owned step down subsidiary of the Company.

With acquisition of balance non-controlling interest on or before March 31, 2024, the put option with the non-controlling shareholder which was exercisable, if the payments of preferred dividend are inadequate, has extinguished.

5.4 Includes ' 125.33 lakh (March 31, 2023: ' 125.33 lakh) towards fair value of financial guarantees issued to a Bank in relation to loan availed by CFS Europe S.p.A.

5.5 ' 6.86 lakh (March 31, 2023: ' 6.84 lakh) is towards fair value of employee stock options under CFS Employee Stock Option Scheme, 2018 (ESOP 2018) given to an employee of Industrias Petrotec de Mexico S.A. de C.V. (Refer Note 19.4).

5.6 Includes ' 6.87 lakh (March 31, 2023: ' 6.84 lakh) towards fair value of employee stock options under CFS Employee Stock Option Scheme, 2018 (ESOP 2018) given to an employee of CFS Wanglong Flavours (Ningbo) Co. Ltd. (Refer Note 19.4).

5.7 The Company had participated in 50,000 shares of CFS De Mexico Blends S.A.P.I. DE C.V. (CFS Blends) its wholly owned subsidiary. The amount towards the aforesaid subscription has not been remitted as on March 31, 2024.

Includes ' 126.58 lakh (March 31, 2023: ' 126.58 lakh) towards fair value of financial guarantees issued to a Bank in relation to loan availed for acquisition of 33.5% stake in Dresen Quimica. 50,820,277 Equity Shares of Dresen Quimica held by the Company are pledged in respect of the loan. 50,000 Equity Shares of CFS Blends to be pledged in respect of the loan.

5.8 There are no operations in CFS PP(M) SDN.BHD till date. No amount towards subscription of shares has been remitted as on March 31, 2024.

5.9 During the year, Fine Renewable Energy Limited has made an application to the Registrar of Companies, under Section 248 of the Companies Act, 2013, for removal of its name from the Register of Companies ('Register'). The application is under process as of date.

6.1 The loans to subsidiaries have been made for general corporate purpose of each subsidiary. These loans are given at rates comparable to the average commercial rate of interest and in compliance with the provision of Companies Act, 2013.

6.2 No loans are due from Directors or other officers of the Company either severally or jointly with any other person or amount due by firms or private companies in which any director is a partner, a director or a member.

6.3 The Company had given loans of ' 189.18 lakh (' 242.27 lakh including interest of ' 53.09 lakh (Refer Note 15) to Solentus North America Inc., its wholly owned subsidiary company. The Company had also provided advances of ' 15.79 lakh to Solentus North America Inc. (Refer Note 15). The Company has decided to close the said subsidiary and has initiated the process of closure, which is delayed due to technical reasons. Consequently, the Company has made full provision for the said loans and advances. (Refer Note 5.1).

7.1 The derivative asset amounting to ' Nil (March 31, 2023: ' 369.74 lakh) represents the embedded derivative portion of compound financial instrument i.e Foreign Currency Convertible Bonds (FCCBs). The Company has measured the embedded derivative at FVTPL and the host contract has been accounted at amortised cost.

On May 11, 2023, the FCCB holder (International Finance Corporation) exercised its option to convert the FCCBs amounting to USD 15 million. 10,258,986 Equity shares were allotted by the Company on May 12, 2023. The change in the carrying amount of the embedded derivative asset during the year till May 12, 2023 amounting to ' 469.54 lakh (2022-2023: ' 29.66 lakh) has been recognised in the Statement of Profit and Loss (Refer Note 30(b)).

The derivative asset was extinguished on conversion of FCCBs into equity shares. The fair value of the derivative asset of ' 839.28 lakh as on May 12, 2023, has been recognised under 'Reserve on conversion of FCCBs' under Other Equity as per the provisions of IND AS 32 -Financial Instruments (Refer Note 19.7).

10.1 Refer Note 20.2.(a) - 20.2.(g) , 23.1 and 23.2 for information on inventories pledged as security for borrowings.

10.2 The above amounts are net of provision in respect of write down towards slow moving and non moving inventories amounting to ' 515.91 lakh (2022-2023: ' 445.82 lakh). These are recognised as an expense under Note 31, Note 32 and Note 36.

10.3 The above amounts are net of provision in respect of write down of inventories of Catechol and downstream products to net realisable value amounting to ' 3,681.08 lakh (2022-2023: ' Nil). These are recognised as an expense under Note 31 and Note 32.

11.3 Details of loss allowance

The Company has used practical expedient by computing expected credit loss allowance for trade receivables (excluding subsidiaries) by taking into consideration historical credit loss experience and adjusted for forward looking information. The expected credit loss is calculated on the basis of ageing of the days, the receivables are due and the expected credit loss rate.

11.4 The carrying amount of trade receivables include receivables discounted with banks, which are with re-course to the Company. Accordingly, the Company continues to recognise the transferred receivables in its Balance Sheet. The carrying amount of these receivables is ' 106.64 lakh (March 31, 2023: ' 754.80 lakh). The corresponding carrying amount of associated liabilities are recognised as short term borrowings. (Refer Note 23.2.b and Note 23.3)

17.1 The Company intends to dispose off freehold land situated at Pali in the next 12 months. This land was not utilised by the Company for its operations. No impairment loss was recognised neither on reclassification of the land as held for sale nor as at reporting date, as the management expects that the fair value (estimated based on the recent market prices of similar properties in similar locations) less costs to sell is higher than the carrying amount.

d) Rights, preferences and restrictions attached to Equity Shares

The Company has only one class of shares having par value of ' 1 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 are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

f) Shares reserved for issue under options outstanding as at the end of the year on un-issued share capital:

i) The Company has 4,500,000 (March 31, 2023: 4,500,000) Equity Shares reserved for issue under Employee Stock Option Plan, 2021 as at March 31, 2024. As at March 31, 2024, the Company has not issued grant letters to any eligible employees under the said plan.

ii) The Company has 4,400,000 (March 31, 2023: 4,400,000) Equity Shares reserved for issue under Employee Stock Option Plan, 2020 as at March 31, 2024. As at March 31, 2024, the Company has issued grant letters for 3,912,096 options under the said plan. 3,899,596 options (March 31, 2023: 3,912,096) are unexercised as at March 31, 2024 (Refer Note

33.2.1 for terms of employee stock options).

iii) The Company has 1,500,000 (March 31, 2023: 1,500,000) Equity Shares reserved for issue under Employee Stock Option Scheme, 2018 as at March 31, 2024. As at March 31, 2024, the Company has issued grant letters for 621,000 options under the said scheme. 181,275 options (March 31, 2023: 201,500) are unexercised as at March 31, 2024 (Refer Note 33.2.2 for terms of employee stock options).

g) Terms of any securities convertible / converted into equity shares issued along with earliest date of conversion

As at March 31, 2023, the Company had 10,258,986 Equity Shares reserved towards conversion of FCCBs (Refer Note 20.1 for terms of FCCBs) at a conversion price of ' 105 per share. The FCCBs were converted during the year on May 12, 2023 and 10,258,986 fully paid-up Equity Shares of face value of ' 1 per equity share were issued.

i) Open Offer under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SEBI (SAST) Regulations)

On April 17, 2023, Infinity Direct Holdings (“Acquirer 1”) and Infinity Direct Holdings Sidecar I (“Acquirer 2”) (collectively referred to as the “Acquirers”) along with Infinity Holdings (“PAC 1”), Anfima Nv (“PAC 2”) and one of the promoters of the Company, Mr. Ashish Dandekar (“PAC 3”), in the capacity of persons acting in concert (collectively referred to as “PACs”) have entered into the Voting and Cooperation Agreement which sets out the common objective of the Acquirers and PACs, on and from the completion of the Open Offer and payment of the Offer Price to the Eligible Public Shareholders who have tendered their Equity Shares in the Open Offer at a price of ' 160/- (Rupees One Hundred Sixty Only) per Offer Share (“Offer Price”) as per the SEBI (SAST) Regulations, of pooling their shares and voting rights in the Company together in order to jointly exercise control over the Company by:

(i) cooperating with each other in the acquisition of shares and voting rights in the Company,

(ii) consulting with each other in respect of any (intended) transfers of their equity shares of the Company,

(iii) consulting each other and coordinating the exercise of their respective voting rights in any shareholders' resolution or shareholders' meeting of the Company, and

(iv) consulting with each other regarding the composition of board of directors of the Company (“Board”) and the nomination of representatives on the Board.

As a result of this and pursuant to the Open Offer, the Acquirers and PAC 1 and PAC 2 were classified as persons acting in concert with PAC 3 and each of the Acquirers, PAC 1 and PAC 2 were classified as promoters of the Company and formed part of the promoter group of the Company, thereby exercising joint control over the Company.

Nature and Purpose of Reserves:19.1 Equity component of Foreign Currency Convertible Bonds (FCCBs)

At the time of initial recognition, FCCBs issued by the Company are split into equity and liability component and presented under other equity and non-current financial liabilities respectively.

19.2 Capital Reserve

Capital Reserve comprises of amount received pursuant to preferential share warrants forfeited by the Company on account of warrants not exercised by the allottees.

19.3 Securities Premium

The Securities premium account has been created to record the premium on issue of Equity Shares.

19.4 Employee Stock Option Outstanding

The Company has Employee Stock Option Scheme / Plan under which options to subscribe to the Company's shares have been given to certain employees of the Group. This reserve is used to recognise the value of equity settled share based payments provided to the employees, including Key Management Personnel, as a part of their remuneration.

The addition to Employee Stock Options Outstanding during the year is on account of CFS Employees' Stock Option Scheme, 2018.

19.5 General Reserve

General Reserve is created from time to time by way of transfer of profits from Retained Earnings.

19.6 Effective Portion of Cash Flow Hedges

The Company uses foreign exchange forward contracts as part of its risk management policy for managing foreign currency risk. The effective portion of change in the fair value of forward contracts classified as cash flow hedges is recognised in other comprehensive income and accumulated in other equity under cash flow hedge reserve.

19.7 Reserve on conversion of FCCBs

On May 11, 2023, International Finance Corporation exercised its option to convert the Foreign Currency Convertible Bonds (FCCBs) amounting to USD 15 million into 10,258,986 equity shares of face value of ' 1 each of the company at the conversion price of ' 105 per equity share which were allotted on May 12, 2023. As per the provisions of IND AS 32 - Financial Instruments, the amortised value of the FCCBs of ' 13,280.89 lakh and the fair value of the derivative of ' 839.28 lakh both as on May 12, 2023, have been recognised as follows:

a) ' 102.59 lakh being 10,258,986 equity shares of ' 1 each under 'Equity Share Capital',

b) ' 10,669.35 lakh being 10,258,986 equity shares of ' 104 each under 'Securities Premium Account' and

c) The balance amount of ' 1,669.67 lakh under 'Reserve on conversion of FCCBs' under Other Equity.

20.1 Foreign Currency Convertible Bonds -Unsecured

Foreign Currency Convertible Bonds (FCCBs) denominated in USD carried at ' 13,453.63 lakh as at March 31, 2023 represent 30 unsecured, unlisted and unrated FCCBs of US$ 5,00,000 each aggregating to US$ 15,000,000. FCCBs are convertible into Company's fully paid equity shares of ' 1 each at a conversion price of ' 105 per share at the option of the bond holder. If the conversion option is not exercised by the bond holder, the amount is payable in two equal instalments at the end of September 14, 2023 and September 14, 2024. The simple interest at the rate of 5.5% per annum from October 29, 2021 (4.5% per annum from inception upto October 28, 2021) is payable semi-annually on the outstanding amount of FCCBs, compound interest at the rate of 1% per annum from October 29, 2021 (2% per annum from inception upto October 28, 2021) and additional interest at the rate of 0.5% shall accrue on semi-annual basis and be payable in two equal instalments on the 5^th and 6^th anniversary of the FCCB subscription date. These Bonds were converted during the year and 10,258,986 Equity Shares were issued on May 12, 2023.

20.2 Term Loans from Banks in Rupees - Secured

(a) ' 747.35 lakh (March 31, 2023: ' 1,121.15 lakh) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company along with other working capital lenders. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in remaining 24 monthly instalments by March 2026. The current interest rate is at a spread of 60 basis points over 1 year EBLR.

(b) ' 317.81 lakh (March 31, 2023: ' 459.06 lakh) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company along with other working capital lenders. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in remaining 27 monthly instalments by June 2026. The current interest rate is at a spread of 100 basis points over 1 year MCLR.

(c) ' 773.78 lakh (March 31, 2023: ' 1,187.10 lakh) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in remaining 23 monthly instalments by February 2026. The current interest rate is at a spread of 100 basis points over 6 months MCLR.

(d) ' 160.42 lakh (March 31, 2023: ' 229.17 lakh) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in remaining 28 monthly instalments by July 2026. The current interest rate is at a spread of 100 basis points over 1 year MCLR.

(e) ' 317.00 lakh (March 31, 2023: ' Nil) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in 48 monthly instalments by April 2029 commencing after a moratorium period of two years from the date of first disbursement. The current interest rate is at a spread of 75 basis points over 1 year MCLR, subject to maximum 9.25% p.a.

(f) ' 1,104.06 lakh (March 31, 2023: ' Nil) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in 48 monthly instalments by February 2029 commencing after a moratorium period of two years from the date of first disbursement. The current interest rate is at a spread of 100 basis points over 6 months MCLR, subject to maximum 9.25% p.a.

(g) ' 978.00 lakh (March 31, 2023: ' Nil) secured by first pari passu charge by way of hypothecation of inventories and book debts of the Company. Further secured by first pari passu charge by an equitable mortgage on entire movable and immovable fixed assets of the Company, both present and future, excluding assets charged exclusively to other lenders. The loan is repayable in 48 monthly instalments by April 2029 commencing after a moratorium period of two years from the date of first disbursement. The current interest rate is at a spread of 100 basis points over 1 year MCLR, subject to maximum 9.25% p.a.

(h) ' 121.89 lakh (March 31, 2023: ' 150.70 lakh) secured by way of hypothecation of vehicle. The loan is repayable in remaining 42 monthly instalments by September 2027. The current interest rate is 8.05% p.a.

(i) ' 23.14 lakh (March 31, 2023: ' 29.41 lakh) secured by way of hypothecation of vehicle. The loan is repayable in remaining 38 monthly instalments by May 2027. The current interest rate is 7.25% p.a.

(j) ' 39.18 lakh (March 31, 2023: ' Nil) secured by way of hypothecation of vehicle. The loan is repayable in remaining 52 monthly instalments by July 2028. The current interest rate is 8.70% p.a.

20.3 Loan from others in Foreign Currency - Secured

(a) ' 11,352.57 lakh (March 31, 2023: ' 12,129.03 lakh) secured by first pari passu charge over entire movable and immovable fixed assets at Plot No. Z/96/D at Dahej SEZ. The loan is repayable in remaining 11 semi-annual instalments by July 2029. The current interest rate is at spread of 443 basis points over 6 months SOFR.

(b) ' 9,890.81 lakh (March 31, 2023: ' 9,706.46 lakh) secured by first pari passu charge over entire movable and immovable fixed assets at Plot No. Z/96/D at Dahej SEZ. The loan is repayable from April 2025 in 24 structured quarterly instalments by January 2031 commencing after moratorium period of 7 quarters. The current interest rate is at a spread of 400 basis points over SOFR.

20.4 The balances shown above include interest accrued amounting to ' 456.90 lakh (March 31, 2023: ' 1,142.31 lakh)

23.1 Loans repayable on demand - Secured

' 19,203.96 lakh (March 31, 2023: ' 20,401.14 lakh) on account of working capital facilities availed from banks and are secured by first pari passu charge over Company's current assets, both present and future. Further, secured by first pari passu charge by an equitable mortgage on the entire movable and immovable fixed assets of the Company, both present and future, excluding assets exclusively charged to other lenders. The said working capital facilities are additionally guaranteed by Mr. Ashish Dandekar, Promoter, Chairman & Managing Director of the Company. The current interest rates range from 8.95% to 10.75% p.a.

23.2 Other Short Term Borrowings from banks - Secured

(a) ' 703.16 lakh (March 31, 2023: ' 812.27 lakh) towards buyers credit availed from banks and is secured by security stated against Note 23.1.

(b) ' 106.64 lakh (March 31, 2023: ' 442.61 lakh) towards export bill discounting availed from banks and is secured by security stated against Note 23.1.

23.3 Other Short Term Borrowings from banks- Unsecured

' Nil (March 31, 2023: ' 312.19 lakh) towards export bill discounting availed from banks.

23.4 Other Short Term Borrowings from others- Unsecured

(a) ' 2,161.79 lakh (March 31, 2023: ' Nil) towards purchase bill discounting availed from a financial institution. The current interest rate is in the range of 8.75% p.a. to 10.50% p.a.

(b) ' 745.89 lakh (March 31, 2023: ' Nil) towards purchase and service bill discounting from various banks registered under TReDS platform of Mynd Online National Exchange. The current interest rates are in the range of 7.99% p.a. to 8.50% p.a.

(c) ' 414.94 lakh (March 31, 2023: ' Nil) towards purchase and service bill discounting from various banks registered under TReDS platform of Receivable Exchange of India Limited (RXIL). The current interest rate is 8.50% p.a.

23.5 The Company does not have any charges which are yet to be registered with the Registrar of Companies (ROC) beyond the statutory period. Further, no certification in relation to the satisfaction of charge received from the banks are pending for submission with ROC.

23.6 The Company has submitted stock statements, debtors statements and other information / returns as required by the banks on a monthly as well as quarterly basis. Such monthly / quarterly statements and returns are generally in agreement with the books of account except for differences in some cases on account of valuation, provisions etc, the impact of which is not material.

24.3 Due to Micro and Small Enterprises

The amount due to Micro and Small Enterprises as defined in "The Micro, Small and Medium Enterprises Development Act, 2006" has been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors. The credit period varies as per the contractual terms with suppliers. No interest is generally charged by the suppliers. The disclosure relating to Micro and Small Enterprises is as under:

29.1 Revenue from contracts with customers disaggregated based on geography

The revenue from contracts with customers are disaggregated based on geography to comply with Ind AS 115, although it is not reviewed for evaluating financial performance for the purpose of segment reporting.

29.2 The amounts receivable from customers become due after expiry of credit period which ranges between 15 to 120 days. There is no significant financing component in any transaction with the customers.

29.3 The Company does not have any remaining performance obligation as contracts entered for sale of goods are for a short duration.

29.4 Revenue from sale of products includes gain of ' 75.15 lakh (2022-23: Loss ' 167.55 lakh) pertaining to effective portion of changes in fair value of foreign exchange forward contracts classified as cash flow hedges.

33.1 Employee Benefit Plans

(a) Other long term employee benefits

Leave encashment is payable to the employees of the Company due to death, retirement, superannuation or resignation. Employees are entitled to encash leave while in service. The leave encashment benefit is payable to all the eligible employees of the Company at the rate of daily salary as per current accumulation of leave days.

(b) Defined Contribution Plans:

The contributions to the Provident Fund of eligible employees are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. Under the plan, the Company has contributed ' 338.77 lakh during the year (20222023: ' 296.44 lakh).

(c) Defined Benefit Plans:

The Company makes contributions to the Group Gratuity cum Life Assurance Scheme administered by the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. On retirement / resignation, the Scheme provides for payment as per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service. On death / permanent disablement in service, vesting period is not applicable.

The most recent actuarial valuation of plan assets and present value of defined benefit obligation of gratuity was carried out as at March 31, 2024. The present value of defined benefit obligation and the related current service cost and past service cost were measured using the Projected Unit Credit Method. The following table summaries the net benefit expense recognised in the Statement of Profit and Loss, the details of the defined benefit obligation and the funded status of the Company's gratuity plan:

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting year, which is the same method as applied in calculating the defined benefit obligation as recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

38 CORPORATE SOCIAL RESPONSIBILITY

The Company has spent ' 88 lakh during the financial year (2022-2023: ' 58 lakh) as per the provisions of Section 135 of the Companies Act, 2013 read with Schedule VII thereof, towards Corporate Social Responsibility (CSR) activities.

a) Gross amount required to be spent by the Company during the year - ' 88.00 lakh (2022-2023: ' 58.00 lakh)

c) Nature of CSR activities during the year

The Company operates CSR Policy in the areas of promoting healthcare, education including special education and employment enhancing vocation skills especially among children, the differently abled, tribal communities and measures for reducing inequalities faced by socially and economically backward classes. The projects identified and adopted are as per the activities included and amended from time to time in Schedule VII of the Companies Act, 2013.

During the year, the Company has spent ' 88 lakh towards CSR activities through NGOs operating in the said areas.

39 EXCEPTIONAL ITEM

Our JV Partner, Ningbo Wanglong Tech Co.,Ltd. (WLT) has informed that they have arrived at an out of Court Settlement with the litigant in the Supreme Court Order regarding the infringement of intellectual property whereby the manufacturing facility of our 51% subsidiary CFS Wanglong Flavors (Ningbo) Co., Ltd. (CFSWL) was stopped from manufacturing of Methyl Vanillin. The said settlement, inter alia, :

(a) Precludes any punitive action against CFSWL and also absolves it from payment of any penalty under the original judgement,

(b) Precludes CFSWL from manufacturing any Methyl Vanillin in China, and

(c) Allows CFSWL to manufacture, market and sell any product other than Methyl Vanillin, in China at the facility owned by CFSWL.

Pursuant to the above settlement, it has been decided to utilise the aforesaid facility to manufacture Heliotropin, an aromatic product which is a downstream of Catechol. The Management has initated the process of re-purposing of the said plant.

Based on the above circumstances, during the year ended March 31, 2024, the Company considered indicators of impairment with respect to the Investments in and Assets of CFSWL such as manufacture of alternate product, cost and time requirement for re-purposing the plant, current and forecasted economic scenario and market of the alternate product, outlook of future profitability and recoverability of intergroup outstanding.

The computation of impairment uses cash flow forecasts which cover a period of five years and future projections taking the analysis out into perpetuity based on a steady state. Key assumptions for the computation of the value in use are those regarding the discount rates, exchange rates, market demand, sales volume and price, cost of manufacture and conversion. For the purpose of computation of impairment, a post-tax discount rate of 13.68% is considered while a growth rate of 1% is used to extrapolate the cash flows beyond those considered for the forecast period.

The outcome of impairment assessment as on March 31, 2024 resulted in recognition of provision for impairment of investment in CFSWL amounting to ' 192.84 lakh.

40 EARNINGS PER SHARE

a) Basic Earnings Per Share

The calculation of basic earnings per share is based on the (loss) / profit attributable to ordinary

shareholders and weighted average number of ordinary shares outstanding.

b) Diluted Earnings Per Share

The calculation of diluted earnings per share is based on the (loss) / profit attributable to ordinary shareholders and weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

41 SEGMENT REPORTING

As per the requirements of Ind AS 108 on "Operating Segments", segment information has been provided in Note 43 to the Consolidated Financial Statements.

42.1 Pursuant to the directions of the Honorable Supreme Court dated December 14, 2020, National Green Tribunal had reheard the matter and vide its direction dated January 24, 2022 had enhanced the portion of compensation attributable to the Company for alleged violations of environmental norms by manufacturers at Tarapur MIDC for an amount of ' 1,712.31 lakh from ' 515.56 lakh. The Honourable Supreme Court vide its order dated April 27, 2022 has stayed the proceedings of the aforesaid directions until the matter is heard. Further the Honourable Supreme Court has directed to deposit ' 515.56 lakh until the matter is heard. The Company has deposited ' 154.97 lakh which is disclosed as recoverable advance (Refer Note 16). Based on the assessment of the management, the Company believes that it has strong grounds to defend its position against these directions and hence no provision for the compensation is considered necessary in the financial statements.

42.2 There are numerous interpretative issues relating to the Supreme Court judgements on Provident Fund dated February 28, 2019. As a matter of caution, the Company has made a provision on a prospective basis from the date of the Supreme Court Order and the provisions will be updated on receiving further clarity on the subject.

44.a.1 The above table excludes investments in subsidiaries amounting to ' 7,986.77 lakh (March 31, 2023: ' 8,179.55 lakh) measured at amortised cost net of provision for impairment in the value of investments.

44.a.2 The put option liability as at March 31, 2023 has extinguished during the year consequent to full payment of preferred dividend to the non-controlling shareholder of Dresen Quimica (Refer Note 5.3)

44.a.3 The above table excludes investments in subsidiaries amounting to ' 8,179.55 lakh (March 31, 2022: ' 8,177.73 lakh) measured at amortised cost net of provision for impairment in the value of investments.

44.a.4 The value of put option liability as on March 31, 2023 is immaterial (Refer Note 5.3). The fair value hierarchy for put option liability is Level 3.

b) Fair value hierarchy (Refer Note B to material accounting policies)c) Measurement of Fair Value

The fair values of financial assets or liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent in both years. The following methods and assumptions are used to estimate the fair values:

(i) The Management assesses that fair values of trade receivables, cash and cash equivalents, other bank balances, loans, trade payables, current borrowings and other financial liabilities (current), approximate to their carrying amounts largely due to the short-term maturities of these instruments. The Company does not anticipate that the carrying amount would be significantly different from the values that would eventually be received or settled.

(ii) The embedded derivative in FCCB is fair valued by an external independent valuer by computing the average cash flows determined through the Monte Carlo Simulation technique based on the market observable rates and published price.

(iii) The fair value of forward contracts for the remaining maturity period of the contracts is determined using Mark-to-Market report provided by the Company's bankers.

Unobservable inputs used in Level 3 of fair value hierarchy for the year ended March 31, 2023

The fair value of put option was calculated by an independent expert based on the shareholders agreement using 'Income Approach'. The unobservable inputs used in fair valuation under level 3 are determined by considering historical financial statements, management's estimates of probability of put option being exercised by the non-controlling shareholders, Share Holders' Agreement, discount rate and the review of projected revenue and profits after tax.

d) Risk Management Framework

The Company's business activities expose it to a variety of financial risks, namely credit risk, liquidity risk and market risks. Market risks comprise of currency risk and interest rate risk. The Company's Senior Management and Key Management Personnel have the ultimate responsibility for managing these risks. The Company has a process to identify and analyse the risks faced by the Company, to set appropriate risk limits, to control and monitor risks and adherence to these limits. Risk Management policies and systems are reviewed regularly to reflect changes in market conditions and Company's activities. Further, Audit Committee undertakes regular reviews of Risk Management Controls and Procedures.

(i) Credit Risk

Credit risk is the risk that a customer or counterparty fails to meet its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (trade receivables) and from its financing activities including investments in mutual funds, deposits with banks and financial institutions and financial instruments.

Trade Receivables

Credit risk from trade receivables is managed by establishing credit limits, credit approvals and monitoring creditworthiness of the customers. Outstanding customer receivables are regularly monitored. The Company has computed credit loss allowances based on Expected Credit Loss Model, which excludes transactions with subsidiaries.

Term Deposits and Bank Balances

The Company's exposure in term deposits with banks is limited, as the counterparties are highly rated banks.

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses.

Tabulated below are the Company's remaining contractual maturities of financial liabilities as at the reporting date with agreed repayment periods. The tables have been drawn up considering the undiscounted contractual cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

#FCCBs have been converted into equity shares of the Company on May 12, 2023, i.e. after the end of the financial year . The cash flows shown above represent interest payable till the date of conversion.

*The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the arrangement.

The Company's operations result in it being exposed to foreign currency risk on account of trade receivables, trade payables, borrowings and lendings. The foreign currency risk may affect the Company's income and expenses, or its financial position and cash flows. The objective of the Company's Management of foreign currency risk is to maintain this risk within acceptable parameters, while optimising returns.

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. The Company's exposure to risk of change in market interest rates relates primarily to its borrowings. The Company's borrowings are at floating rates and its future cash flows will fluctuate due to changes in market interest rates.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rate with other conditions remaining unchanged would have the following effect on Company's profit or loss before tax and equity for the year ended March 31, 2024 and March 31, 2023. This calculation assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The year end balances are not necessarily representative of the average debt outstanding during the period. The analysis assumes that all other variables, in particular foreign currency exchange rates remains constant.

45 CAPITAL MANAGEMENT

The primary objective of the Company's capital management is to maintain an efficient capital structure and to maximise shareholder's value. The Management seeks to maintain a balance between higher returns that is achieved by raising funds through equity and the advantages by a sound capital position.

The Company monitors capital using a ratio of 'Net Debt to Equity'. For this purpose, Capital includes issued capital and all other equity reserves. Net Debt is defined as total borrowings less cash & bank balances and other current investments.

46 DISCLOSURES U/S 186(4) OF THE COMPANIES ACT, 2013

a Details of investments made are disclosed in Note 5.

b Details of Loans given to subsidiaries, associates, firms/companies in which directors are interested are disclosed in Note:14.1, 14.2 and 14.3. c Details of Guarantee given on behalf are disclosed in Note: 42(I)(c).

47 DISCLOSURES MADE IN TERMS OF SCHEDULE V OF THE SEBI (LISTING OBLIGATION AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

For disclosure of loans, investments and Guarantee- 'Refer Note 46'. Further, there is no investment in shares of the Company by the parties to whom loan have been given.

49 ADDITIONAL REGULATORY INFORMATION

a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

b) The Company has not been declared as wilful defaulter by any lender who has the powers to declare a company as wilful defaulter at any time during the financial year or after the end of the reporting period but before the date when financial statements are approved.

c) The Company has complied with the number of layers prescribed under clause 87 of section 2 of Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

d) The Company does not have any approved scheme of Arrangement during the year.

e) 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 that the Intermediary shall;

(i) 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

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

f) The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding that the Company shall;

(i) 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

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

g) The Company does not have any transaction not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

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

50 Previous year's figures have been regrouped / reclassified wherever necessary to conform to current year's classification and are considered to be not material..