Significant estimate: key assumptions used for value-in-use calculations

The Company tests whether Goodwill and other indefinite life intangible asset has suffered any impairment on an annual basis. The recoverable amount has been determined based on value in use. Value in use has been determined based on future cash flows, after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions.

The estimated cash flows for a period of 5 years were developed using internal forecasts, and a pre-tax discount rate. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.

Weighted Average Cost of Capital % (WACC) for the Company = Risk free return (Market risk premium x Beta) Additional risk premium.

(d) Rights and restrictions attached to the shares

Equity shares: The Company has only one class of equity shares having a par value of ' 5/- each. Each shareholder is eligible for one vote per share held. The shareholders have rights in proportion to their shareholding for dividend as well as for assets, in case of liquidation.

(e) There are no shares reserved for issue under options and contracts or commitment for the sale of shares or disinvestments.

(f) During the period of five years immediately preceding the date as at which the balance sheet is prepared:

- The Company has not allotted any shares as fully paid up pursuant to contracts without payment being received in cash.

- The Company has not allotted the fully paid up bonus shares.

- The Company has not bought back any of its equity shares.

Nature and purpose of reserves:

(i) Securities premium

Securities premium is used to record the premium on issue of shares. This premium is to be utilised in accordance with the provisions of the Act.

(ii) General reserve

The General reserve is a free reserve, retained from Company's profits. The reserve can be utilised as per the provisions of the Act.

(iii) Equity instruments through Other Comprehensive Income

The Company has elected to recognize changes in the Fair Value of certain Equity investments in Other Comprehensive Income. These changes are accumalated in the 'Equity instruments through Other Comprehensive Income' within equity. The Company transfers the amounts from this reserve to retained earnings when the relevant equity securities are de-recognised.

(iv) Share based payment plan account

The above reserve relates to share options granted by the Ultimate Holding Company to specific employees of its subsidiaries under its employee stock option plan. Further information about share-based payments to employees is set out in Note 47.

(v) Revaluation surplus

Revaluation surplus was created under the erstwhile Indian GAAP to recognize the gain due to increase in value of certain tangible assets as on June 30, 1988. The surplus can be utilised as per the provisions of the Act.

The Company had been sanctioned a secured term loan in the earlier years amounting to ? 25,00.00 lakhs from Axis Bank for purchase of capital assets. The sanctioned loan has been modified during the year to unsecured term loan. The loan is repayable in 60 equal monthly installments from the date of first disbursement and carries interest linked to 6 M MCLR of the bank (presently 9.05% p.a.) (7% p.a. as at March 31, 2023). The Company has taken an disbursement amounting to ? 21,38.21 lakhs as at March 31, 2024 (? 13,96.07 lakhs as at March 31, 2023) for stated purpose.

(a) The Company has transferred the amounts required to be transferred to the Investor Education and Protection Fund (IEPF) within due date, except ? 1.68 lakhs (? 1.43 lakhs as at March 31, 2023), which is held in abeyance, for cases where disputes relating to ownership of the underlying shares have remained unresolved.

The Company has made provisions towards probable liabilities arising out of pending indirect tax claims/disputes with various authorities. The timing of the outflow with regard to the said matters depends on the exhaustion of remedies available to the Company under the law and hence the Company is not able to reasonably ascertain the timing of the outflow resulting in they being disclosed at their potential undiscounted values.

The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India and HDFC Group Term Plan Scheme of the HDFC Life Insurance Company Limited, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy, whichever is beneficial to the employees.

Usefulness and Methodology adopted for Sensitivity analysis:

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 projected 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.

x) Risk exposure:

The Company's Defined Benefit Plan is Funded with Life Insurance Corporation of India and HDFC Life Insurance Company Limited. Company's Benefit Plan is exposed to risk such as investment risk, interest rate risk, salary escalation risk and demographic risk. Any change in these factors would impact the contribution to the fund.

xi) Expected contribution:

The Company expects to make a contribution of ' 9,77.51 lakhs (March 31, 2023: ' 8,38.60 lakhs) to the defined benefit plans during the next financial year.

The Company has executed a share sale and purchase agreement with Shinagawa Refractories Co. Ltd. (Japan), and SG Shinagawa Refractories India Private Limited for the sale of 49% of its equity stake held in SG Shinagawa Refractories India Private Limited on October 26, 2023, for a consideration of ' 8,07.42 lakhs. The closing transfer procedures have been completed on November 30, 2023. The Company has accounted for the loss on sale of investment of ' 3,19.58 lakhs as an exceptional item.

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

There are no transfers between levels 1 and 2 during the year.

The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments or published NAV by fund house.

- the fair value of forward foreign exchange contracts is determined using forward exchange rate at the balance sheet

date.

- the fair value of employee stock option plans are determined using Black and Scholes valuation model.

- the fair value of the certain financial instruments is determined using discounted cash flow analysis.

- the fair value of one equity instrument is based on Net Asset value Method.

All of the resulting fair value estimates are included in level 1 or 2 except for unlisted equity securities where the fair values have been determined based on present values and the discount rates used were adjusted for counter party or own credit risk.

(iii) Fair value measurements using significant unobservable inputs (level 3)

The following table represents the changes in level 3 items for the period ended March 31, 2024 & March 31, 2023.

(v) Valuation processes

The Company has outsourced the valuation process of unquoted equity instruments for financial reporting purposes.

The main level 3 inputs for unlisted equity securities used by the Company are derived and evaluated as follows:

For valuation of Saint-Gobain India Pvt. Ltd. discounted cash flow method is used and discount rates are determined using Weighted Average Cost of Capital (WACC) to calculate a post-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

Growth rate is estimated based on overall economic growth expected, our understanding of the industry and expected long-term inflation.

The carrying amounts of trade receivables, employee advances, cash and cash equivalents and other short term receivables, trade payables, unclaimed dividend, capital creditors, loan to a related party, borrowings and other current financial liabilities are considered to be the same as their fair values, due to their short-term nature.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

43 FINANCIAL RISK MANAGEMENT

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.

The Company's risk management is carried out by a central Treasury department under policies approved by the Board of Directors. The Treasury department identifies, evaluates and hedges financial risks in close co-operation with the Company's operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(A) Credit risk

Credit risk is the risk of incurring a loss that may arise from a borrower or debtor failing to make required payments. Credit risk arises mainly from outstanding receivables from free market dealers, cash and cash equivalents, employee advances, security deposits and investments. The Company manages and analyses the credit risk for each of its new clients before standard payment and delivery terms and conditions are offered.

Credit risk on cash and cash equivalents and investment is limited as Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units.

(i) Credit risk management

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instrument, which requires expected lifetime losses to be recognised from initial recognition of the receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward looking information.

The Company believes that there are no customers or group of customers that would be subjected to any significant credit risks in the collection of the trade receivable.

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company ensures sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, the Treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities below), cash and cash equivalents and investments on the basis of expected cash flows.

(ii) Maturities of financial liabilities

The tables below analyse the Company's financial liabilities into relevant maturity groupings based on their contractual maturities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(i) Foreign currency risk

Currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency sales and purchases, primarily with respect to EUR and USD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency (?) The risk is measured through a forecast of highly probable foreign currency cash flows.

The risk is measured through a forecast of foreign currency sales and purchases for the Company's operations. The Company uses foreign exchange forward contracts to manage its exposure in foreign currency risk. Entire foreign currency receivables and payables have been hedged.

44 CAPITAL MANAGEMENT

(a) Risk management

The Company's objectives when managing capital are to

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital.

Currently, there are limited borrowings and operations are being funded through internal accruals.

(ii) Dividends not recognised at the end of the reporting period

In addition to the above dividends, since year end the directors have recommended the payment of a dividend of ' 17.00 each per fully paid equity share (March 31,2023 - ' 14.50). This proposed dividend is subject to the approval of shareholders at the ensuing annual general meeting.

46 The segment information is presented under the Notes forming part of the Consolidated Financial Statements as required under the Indian Accounting Standard - 108 on “Operating Segment.

47 SHARE BASED PAYMENTS (a) Performance Share Plan

Certain employees of the Company in India are allotted Performance shares of the Ultimate Holding Company. These plans are subject to eligibility criteria based on the employee's period of service (service conditions) with the Group as well as performance criteria (performance conditions). The Ultimate Holding Company does not charge any cost for this benefit, the cost of this benefit has been arrived at using Black and Scholes method.

There is no allowance account for impaired receivables in relation to any outstanding balances, and no expense has been recognised in respect of impaired receivables due from related parties.

(g) Terms and conditions

(i) Transactions relating to dividends were on the same terms and conditions that applied to other shareholders.

(ii) The terms and conditions of the loans to Key Managerial Personnel were as per the policy of the Company.

(iii) All other transactions were made on normal commercial terms and conditions and at market rates.

(iv) All outstanding balances are unsecured and are repayable in cash.

51 Business Combination - PRS Permacel Private Limited

The Company had acquired 100% equity shares of PRS Permacel Private Limited (PRS) for a consideration of ' 121,12.89 lakhs. Subsequently, pursuant to a Scheme of Amalgamation of PRS (“the scheme”) with the Company, duly approved by the National Company Law Tribunal (NCLT), vide its order dated June 22, 2023, all the assets and liabilities of PRS at fair value were transferred to and vested in the Company with effect from May 27, 2022, being the appointed date. The excess of consideration paid over and above the fair value of the assets and liabilities taken over amounting to ' 46,29.86 lakhs have been accounted as Goodwill.

Pursuant to the approval of the Scheme of Amalgamation of PRS with the Company, being approved by the NCLT these Standalone Financial Statements (restated to give effect to the merger of PRS with the company with effect from May 27,2022) incorporate the unaudited Financial Statements of PRS.

53 (a) There are no subsequent events that would require adjustments or disclosure in the financial statements as on the balance sheet date.

(b) The other matters as required under paragraph “L - Additional Regulatory Information” under part I of Division II of Schedule III of the Companies Act,2013 and Paragraph 7(l) and 7 (n) of Part II of Division II and Schedule III to Companies Act 2013, are either not applicable or there are no reportable matters.

(c) The Company is using accounting software for maintaining its books of account which have feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled, throughout the year as required by proviso to sub rule (1) of Rule 3 of The Companies (Accounts) Rules, 2014 known as the Companies (Accounts) Amendment Rules, 2021. However, the audit trail feature is not enabled for direct changes to data in the underlying database. There was no instance of audit trail feature being tampered with in respect of the accounting software.

Presently, privileged access to database of accounting software mentioned above continues to be restricted to limited set of users who necessarily require this access for maintenance and administration of the database.