2.11 Provisions and contingent liabilities

Provisions are recognised when there is a present
obligation as a result of a past event, it is probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation
and there is a reliable estimate of the amount of
the obligation. Provisions are measured at the best
estimate of the expenditure required to settle the
present obligation at the Balance sheet date.

I f the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in
the provision due to the passage of time is recognised
as a finance cost.

Contingent liabilities are disclosed when there is
a possible obligation arising from past events, the
existence of which will be confirmed only by the
occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises
from past events where it is either not probable that
an outflow of resources will be required to settle or a
reliable estimate of the amount cannot be made.

2.12 Corporate social responsibility (CSR)

Provisions are recognised for all CSR activity
undertaken by the Company for which an obligation
has arisen during the year and are recognised in
Statement of profit on loss on accrual basis. Provision
is made against unspent amount of CSR.

2.13 Cash and cash equivalents

Cash and cash equivalent in the balance sheet
comprise cash at banks, cash on hand and short¬
term deposits net of bank overdraft with an original
maturity of three months or less, which are subject to
an insignificant risk of changes in value.

For the purposes of the cash flow statement, cash
and cash equivalents include cash on hand, cash in
banks and short-term deposits net of bank overdraft.

at amortised cost. Interest income from
these financial assets is included in finance
income using the effective interest rate
method (EIR).

Fair value through other comprehensive
income (FVOCI): Assets that are held for
collection of contractual cash flows and for
selling the financial assets, where the assets'
cash flows represent solely payments of
principal and interest, are measured at
fair value through other comprehensive
income (FVOCI). Movements in the carrying
amount are taken through OCI, except
for the recognition of impairment gains
or losses, interest revenue and foreign
exchange gains and losses which are
recognised in Statement of Profit and Loss.
When the financial asset is derecognised,
the cumulative gain or loss previously
recognised in OCI is reclassified from
equity to Statement of Profit and Loss and
recognised in other gains/(losses). Interest
income from these financial assets is
included in other income using the effective
interest rate method.

Fair value through profit or loss: Assets that
do not meet the criteria for amortised cost
or FVOCI are measured at fair value through
profit or loss. Interest income from these
financial assets is included in other income

Equity instruments: All equity investments
in scope of Ind AS 109 are measured at fair
value. Equity instruments which are held
for trading and contingent consideration
recognised by an acquirer in a business
combination to which Ind AS103 applies
are classified as at FVTPL. For all other
equity instruments, the Company may
make an irrevocable election to present in
other comprehensive income subsequent
changes in the fair value. The Company
makes such election on an instrument- by¬
instrument basis. The classification is made
on initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
P&L, even on sale of investment. However,
the Company may transfer the cumulative
gain or loss within equity.

Equity instruments included within the
FVTPL category are measured at fair value
with all changes recognised in the profit and
loss.

Impairment of financial assets

In accordance with Ind AS 109, Financial
Instruments, the Company applies expected
credit loss (ECL) model for measurement
and recognition of impairment loss on
financial assets that are measured at
amortised cost and FVOCI.

For recognition of impairment loss on
financial assets and risk exposure, the
Company determines that whether there
has been a significant increase in the credit
risk since initial recognition. If credit risk
has not increased significantly, 12-month
ECL is used to provide for impairment
loss. However, if credit risk has increased
significantly, lifetime ECL is used. If in
subsequent years, credit quality of the
instrument improves such that there is no
longer a significant increase in credit risk
since initial recognition, then the entity
reverts to recognising impairment loss
allowance based on 12-month ECL.

Life time ECLs are the expected credit
losses resulting from all possible default
events over the expected life of a financial
instrument. The 12 month ECL is a portion
of the lifetime ECL which results from
default events that are possible within 12
months after the year end.

ECL is the difference between all contractual
cash flows that are due to the Company in

accordance with the contract and all the
cash flows that the entity expects to receive
(i.e. all shortfalls), discounted at the original
EIR. When estimating the cash flows, an
entity is required to consider all contractual
terms of the financial instrument (including
prepayment, extension etc.) over the
expected life of the financial instrument.
However, in rare cases when the expected
life of the financial instrument cannot be
estimated reliably, then the entity is required
to use the remaining contractual term of
the financial instrument.

ECL impairment loss allowance (or reversal)
recognise during the year is recognised
as income/expense in the statement of
profit and loss. In balance sheet ECL for
financial assets measured at amortised
cost is presented as an allowance, i.e. as an
integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the
asset meets write off criteria, the Company
does not reduce impairment allowance
from the gross carrying amount.

iii. Derecognition of financial assets

A financial asset is derecognised only when

a) the rights to receive cash flows from
the financial asset is transferred or

b) retains the contractual rights to receive
the cash flows of the financial asset
but assumes a contractual obligation
to pay the cash flows to one or more
recipients.

Where the financial asset is transferred then
in that case financial asset is derecognised
only if substantially all risks and rewards
of ownership of the financial asset is
transferred. Where the entity has not
transferred substantially all risks and rewards
of ownership of the financial asset, the
financial asset is not derecognised.

b) Financial liabilitiesi. Initial recognition and measurement

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair
value through profit or loss and at amortised
cost, as appropriate.

All financial liabilities are recognised initially
at fair value and, in the case of borrowings
and payables, net of directly attributable
transaction costs.

Supplier finance arrangements

The Company also classifies financial
liabilities from supplier finance arrangements
as trade payables if they are of the same
nature and has terms comparable to regular
trade payables. This applies when the
arrangement is part of the normal operating
cycle and has similar security levels. The
related cash flows are included in operating
activities in the consolidated statement of
cash flows.

ii. Subsequent measurement

The measurement of financial liabilities
depends on their classification, as described
below:

Financial liabilities at fair value through profit
or loss

Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at
fair value through profit or loss. Separated
embedded derivatives are also classified as
held for trading unless they are designated
as effective hedging instruments. Gains
or losses on liabilities held for trading are
recognised in the Statement of Profit and
Loss.

Loans and borrowings

After initial recognition, interest-bearing
loans and borrowings are subsequently

measured at amortised cost using the EIR
method. Gains and losses are recognised
in Statement of Profit and Loss when the
liabilities are derecognised as well as through
the EIR amortisation process. Amortised
cost is calculated by taking into account
any discount or premium on acquisition
and fees or costs that are an integral part of
the EIR. The EIR amortisation is included as
finance costs in the Statement of Profit and
Loss.

iii. Non-cumulative redeemable non¬
cumulative non-convertible preference
shares

Redeemable non-cumulative non¬

convertible preference shares where
payment of dividend is discretionary and
which are mandatorily redeemable on a
specific date, are classified as compounded
Instruments. The fair value of the liabilities
portion is determined by discounting
amount repayable at maturity using
market rate of interest. Difference between
proceed receive and fair value of liability on
initial recognition is included in shareholder
equity, net off income tax effect and not
subsequently re-measured. Subsequently
liability component of preference share is
measured at amortised cost.

iv. Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as the derecognition
of the original liability and the recognition
of a new liability. The difference in the
respective carrying amounts is recognised
in the Statement of Profit and Loss as
finance costs.

c) Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the balance sheet
where there is a legally enforceable right to
offset the recognised amounts and there is an
intention to settle on a net basis or realise the
asset and settle the liability simultaneously. The
legally enforceable right must not be contingent
on future events and must be enforceable in
the normal course of business and in the event
of default, insolvency or bankruptcy of the
Company or the counterparty.

2.16 Employee benefitsa) 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 year
in which the employees render the related service
are recognised in respect of employees' services
up to the end of the year and are measured
at the amounts expected to be paid when the
liabilities are settled. The liabilities are presented
as current employee benefit obligations in the
balance sheet.

b) Other long-term employee benefit obligationsi. Defined contribution plan

Provident Fund: Contribution towards
provident fund is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions
made on a monthly basis which are charged
to the Statement of Profit and Loss.

Employee's State Insurance Scheme:
Contribution towards employees' state
insurance scheme is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions

made on a monthly basis which are charged
to the Statement of Profit and Loss.

ii. Defined benefit plans

Gratuity: The Company provides for gratuity,
a defined benefit plan (the 'Gratuity Plan")
covering eligible employees in accordance
with the Payment of Gratuity Act, 1972.
The Gratuity Plan provides a lump sum
payment to vested employees at retirement,
death, incapacitation or termination of
employment, of an amount based on
the respective employee's salary. The
Company's liability is actuarially determined
(using the Projected Unit Credit method) at
the end of each year. Actuarial losses/gains
are recognised in the other comprehensive
income in the year in which they arise.

iii. Other long- term employee benefit
obligations

Compensated Absences: Accumulated
compensated absences, which are
expected to be availed or encashed within
12 months from the end of the year are
treated as short term employee benefits. The
obligation towards the same is measured
at the expected cost of accumulating
compensated absences as the additional
amount expected to be paid as a result of
the unused entitlement as at the year end.

Accumulated compensated absences,
which are expected to be availed or
encashed beyond 12 months from the end
of the year end are treated as other long
term employee benefits. The Company's
liability is actuarially determined (using the
Projected Unit Credit method) at the end
of each year. Actuarial losses/gains are
recognised in the statement of profit and
loss in the year in which they arise.

iv. Share-based payments

Equity-settled transactions:- The cost of
equity-settled transactions is determined by
the fair value at the date when the grant is

made using an appropriate valuation model.
That cost is recognised, together with a
corresponding increase in share options
outstanding account in equity, over the
period in which the performance and/or
service conditions are fulfilled in employee
benefits expense. The cumulative expense
recognised for equity-settled transactions
at each reporting date until the vesting date
reflects the extent to which the vesting
period has expired and the best estimate
of the number of equity instruments that
will ultimately vest. The expense or credit in
the statement of profit and loss for a period
represents the movement in cumulative
expense recognised as at beginning and
end of that period and is recognised in
employee benefits expense.

Service and non-market performance
conditions are not taken into account
when determining the grant date fair
value of awards, but the likelihood of
the conditions being met is assessed as
part of the best estimate of the number
of equity instruments that will ultimately
vest. Market performance conditions are
reflected within the grant date fair value.
Any other conditions attached to an
award, but without an associated service
requirement, are considered to be non¬
vesting conditions. Non-vesting conditions
are reflected in the fair value of an award
and lead to an immediate expensing of an
award unless there are also service and/or
performance conditions.

2.17 Contributed equity

Equity shares are classified as equity share capital.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.

2.18 Earnings per share

Basic earnings per share is calculated by dividing the
net profit or loss for the year attributable to equity
shareholders by the weighted average number of
equity shares outstanding during the year. Earnings
considered in ascertaining the Company's earnings
per share is the net profit or loss for the year after
deducting preference dividends and any attributable
tax thereto for the year. The weighted average number
of equity shares outstanding during the year and for
all the years 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 or loss for the year attributable
to equity shareholders and the weighted average
number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity
shares.

2.19 Segment reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker. The Chief Operating
Decision Maker (CODM) reviews the operations of the
Company as contract manufacturing. Consequently,
no separate segment information has been furnished.

2.20 Business Combination

Business Combinations are accounted for using the
acquisition accounting method as at the date of
the acquisition, which is the date at which control
is transferred to the Company. The consideration
transferred in the acquisition and the identifiable
assets acquired and liabilities assumed are recognised
at fair values on their acquisition date. Goodwill
is initially measured at cost, being the excess of
the aggregate of the consideration transferred
and the amount recognised for non-controlling
interests, and any previous interest held, over the net
identifiable assets acquired and liabilities assumed.
Consideration transferred does not include amounts
related to settlement of pre-existing relationships.
Such amounts are recognised in the Statement of
Profit and Loss. Transaction costs are expensed as
incurred, other than those incurred in relation to the
issue of debt or equity securities. Any contingent
consideration payable is measured at fair value at the

acquisition date. Subsequent changes in the fair value
of contingent consideration are recognised in the
Statement of profit and loss.

Business Combinations under common control are
accounted as per Appendix C in Ind AS 103 - Business
combinations, at carrying amount of assets and
liabilities acquired and any excess of consideration
issued over the net assets acquired is recognised
as capital reserve on common control business
combination.

3(A) SIGNIFICANT ACCOUNTING JUDGMENTS,
ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires
management to make judgments, estimates and
assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future years.

(i) Estimates and assumptions

The key assumptions concerning the future
and other key sources of estimation uncertainty
at the year-end date, that have a significant
risk of causing a material adjustment to the
carrying amounts of assets and liabilities within
the next financial year, are described below.
The Company based its assumptions and
estimates on parameters available when the
financial statements were prepared. Existing
circumstances and assumptions about future
developments, however, may change due to
market changes or circumstances arising that
are beyond the control of the Company. Such
changes are reflected in the assumptions when
they occur.

a) Taxes

Deferred tax assets are recognised for
unused tax losses to the extent that it
is probable that taxable profit will be
available against which the losses can be
utilised. Significant management judgment

is required to determine the amount of
deferred tax assets that can be recognised,
based upon the likely timing and the level
of future taxable profits together with future
tax planning strategies.

b) Defined benefit plans and other long¬
term benefits (gratuity benefits and leave
encashment)

The cost of the defined benefit plans
such as gratuity and leave encashment
are determined using actuarial valuations.
An actuarial valuation involves making
various assumptions that may differ from
actual developments in the future. These
include the determination of the discount
rate, future salary increases and mortality
rates. Due to the complexities involved in
the valuation and its long-term nature, a
defined benefit obligation is highly sensitive
to changes in these assumptions. All
assumptions are reviewed at each year end.

The principal assumptions are the discount
and salary growth rate. The discount rate is
based upon the market yields available on
government bonds at the accounting date
with a term that matches that of liabilities.
Salary increase rate takes into account of
inflation, seniority, promotion and other
relevant factors on long term basis.

c) Impairment of non-financial assets

In assessing impairment, management
estimates the recoverable amount of each
asset or cash-generating units based on
expected future cash flows and uses an
interest rate to discount them. Estimation
uncertainty relates to assumptions
about future operating results and the
determination of a suitable discount rate.

d) Provision against obsolete and slow-
moving inventories

The Company reviews the condition of its
inventories and makes provision against
obsolete and slow-moving inventory items

which are identified as no longer suitable
for sale or use. Company estimates the net
realisable value for such inventories based
primarily on the latest invoice prices and
current market conditions. The Company
carries out an inventory review at each
balance sheet date and makes provision
against obsolete and slow-moving items if
any.

e) Impairment of financial assets

The Company assesses impairment based
on expected credit losses (ECL) model on
trade receivables. The Company uses a
provision matrix to determine impairment
loss allowance on the portfolio of trade
receivables. The provision matrix is based
on its historically observed default rates over
the expected life of the trade receivable and
is adjusted for forward looking estimates. At
every reporting date, the historical observed
default rates are updated and changes in
the forward-looking estimates are analysed.

3(B) RECENT PRONOUNCEMENTS

Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time.

I n May 2025, MCA notified amendments to Ind AS 21
- The Effects of Changes in Foreign Exchange Rates,
applicable w.e.f. April 01, 2025. The Company has
reviewed the amendment and based on its evaluation
has determined that it does not have any significant
impact in its financial statements.

In August 2025, MCA notified the following

amendments to:

1. I nd AS 1, Presentation of Financial Statements,
applicable w.e.f. April 01, 2025 - The amendment
relates to classification of liabilities as current
or noncurrent and non-current liabilities with
covenants. In the context of classifying a
liability as current, it removes the requirement
of existence of a right to defer settlement for
at least 12 months after the reporting date and
instead requires that the said right should exist
on the reporting date and have substance.
The amendment also introduces guidance on
classification of liabilities with covenants. The
Company has no impact of these amendments
in its classification criteria of current and non¬
current liabilities.

2. Ind AS 7, Statement of Cash Flows and Ind AS 107,
Financial Instruments: Disclosures, applicable
w.e.f. April 01, 2025 - The amendment in Ind AS
7 requires to inform users of financial statements
of the existence of supplier finance arrangements
and explain the nature of the arrangements,
the carrying amount of liabilities and the range
of payment due dates. Ind AS 107 has been
amended to add supplier finance arrangements
as a factor that may cause concentration of
liquidity risk. For details refer note 45(b).

3. I nd AS 12, International Tax Reform - Pillar Two
Model Rules applicable immediately - The
amendments provide a temporary mandatory
relief from deferred tax accounting for top-up tax
and disclose that they have applied the relief.

B) Nature of security:For term loan from banks

i. Has been secured by charge on the current and future land and building and Plant and machinery of
Hyderabad factory, by exclusive charge on the movable fixed assets and intangible assets including insurance
assets and land and building of the Baddi factory of the Company and Exclusive charge on entire plant and
machinery located at Nasik Plant.

ii. Has been secured by exclusive charge over the current assets of the Baddi factory of the Company.

iii. Has been secured by personal guarantee of Mr Sameer Kothari on Hyderabad, Baddi and Nashik Factory

For term loan from others

i. Term loan from has been secured by charge on the entire movable and immovable fixed assets of the
HFL Healthcare and Wellness Private Limited and Company and current assets of the HFL Healthcare and
Wellness Private Limited.

For vehicle loan

i. Vehicle loan has been secured by charge on the vehicle.

C) Period and amount of default:

The Company has made no defaults in the payment of principal or interest during the year ended 31st March
2026.

D) The Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, current
ratio, net Borrowings to EBITDA ratio and debt service coverage ratio. The limitation on indebtedness covenant
gets suspended if the Company meets certain prescribed criteria.The Company has also satisfied all other debt
covenants prescribed in the terms of bank loan.

E) The Company have not pledged any financial and non financial assets as security for current or non-current
borrowings.

(C) Other long term employee benefit obligation
Leave entitlement

Employee Benefit expenses for the year include Rs. 2.57 cr (includes past service cost of Rs. 1.10 cr (refer note 48))
(Previous year Rs. 1.05 cr) towards leave entitlement.

The liability for leave entitlement is recognised in the same manner as gratuity aggregating Rs. 5.30 cr as at March 31,
2026 (March 31, 2025: Rs. 3.09 cr).

35 LEASES

(i) For changes in the carrying value of Right-of-use Assets refer note 4 (a)

(ii) Changes in the Lease liabilities

36 BUSINESS COMBINATIONS DURING CURRENT YEAR36 (a) Merger Information - Nashik Manufacturing Unit of Avalon Cosmetics Private Limited

(i) The Scheme of Arrangement ('the Scheme'), presented under Section 230 to 232 and other applicable
provisions of the Companies Act, 2013 read with the rules prescribed thereunder, for the business combination
of Nashik Manufacturing Unit of Avalon Cosmetics Private Limited ('Avalon Cosmetics') with the Company
was approved by the Hon'ble National Company Law Tribunal (Mumbai Bench) vide its order dated February
25, 2026 (""the NCLT Order""). The Certified copy of the NCLT Order was filed with Registrar of Companies
on March 31, 2026. Consequently, the Scheme become operative from closing of business hours on March
31, 2026 and effective from April 01, 2024 i.e. appointed date.

The said business combination has been accounted under the 'pooling of interests' method in accordance
with Appendix C of Ind AS 103 'Business Combination' and the previously issued financial statements of
the Company for the year ended March 31, 2025 included in this statement have been restated to give
effect to the Scheme. All the assets and liabilities of Nashik Manufacturing unit of Avalon Cosmetics have
been transferred to and vested in the Company at it's carrying value w.e.f. April 01, 2024 and amount Rs.
0.34 cr is recorded as debit to the capital reserve on account of the Scheme. In consideration of business
combination, the Company will allot 16,80,939 equity shares Rs. 2 each credited as fully paid-up shares of
the Company to the shareholders of Avalon Cosmetics for each equity share held in Avalon Cosmetics. The
same is presented as "Share Pending Issuance" under "Other Equity" as at April 01, 2024.

Pursuant to the business combination between Nashik Manufacturing Unit of Avalon Cosmetics and the
Company with effect from April 01, 2024, the profit attributable to the equity shareholders for the comparative
year has been restated to include the figures of Nashik Manufacturing unit of Avalon Cosmetics. Accordingly,
as per the requirement of the IND AS 33 'Earnings Share', the Basic and Diluted earnings per share of the
comparative year has been restated taking into consideration the equity shares issued to the shareholders
of Avalon Cosmetics. Further, the current tax and deferred tax amounts in the comparative year has been
restated owing to the said business combination"

(b) Amalgamation Information - Vanity Case India Private Limited ('VCIPL')

(i) The Scheme of Arrangement ('the Scheme'), presented under Section 230 to 232 and other applicable
provisions of the Companies Act, 2013 read with the rules prescribed thereunder, for the amalgamation of
Vanity Case India Private Limited ('VCIPL') with the Company was approved by the Hon'ble National Company
Law Tribunal (Mumbai Bench) vide its order dated February 25, 2026 ("the NCLT Order"). The Certified copy
of the NCLT Order was filed with Registrar of Companies on March 31, 2026. Consequently, the Scheme
become operative from Closing of business hours on March 31, 2026 and effective from the appointed date.
The said business combination has been accounted in accordance with the above scheme and previously
issued financial statements of the Company for the year ended March 31, 2025 included in this statement
have been restated to give effect to the Scheme. W.e.f. April 01, 2024 all the assets and liabilities of Vanity
Case India Private Limited ('VCIPL') have been transferred to and vested in the Company at it's carrying value
which is approximately the fair value and amount Rs. 1.21 cr is recorded as retained earnings on account
of the Scheme. In consideration of amalgamation, the Company will allot 46,458,145 equity shares Rs. 2
each credited as fully paid up shares of the Company to the shareholders of VCIPL for each equity share in
proportion to their holding in VCIPL.

Pursuant to the amalgamation between VCIPL and the Company with effect from April 01, 2024, the profit
attributable to the equity shareholders for the comparative year has been restated to include the figures of
VCIPL. Accordingly, the current tax and deferred tax amounts in the comparative year has been restated
owing to the said amalgamation.

(D) Terms and conditions of transactions with related parties

The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured and interest free except for borrowings and settlement occurs in cash.
The Company, during the year ended March 31, 2026, has provided corporate guarantee to the bank of subsidiaries
amounting upto Rs. 141.97 cr (March 31, 2025: 188.59 cr). The Company has not recorded any impairment of receivables
relating to amounts owed by related parties (March 31, 2025: Nil). This assessment is undertaken each financial year
through examining the financial position of the related parties and the market in which the related parties operates.

38 SHARE - BASED PAYMENTS(A) Equity settled options - Hindustan Foods Limited employee stock option scheme 2025 (HFL ESOS 2025
scheme)

The Company has established Hindustan Foods Limited employee stock option scheme 2025 (HFL ESOS 2025
scheme) with effect from April 10, 2025.

The objective of the HFL ESOS 2025 is to reward the eligible and potential Employees of Hindustan Foods Limited
(""the Company"") or its Subsidiary' Company(ies) (whether now or hereafter existing, whether incorporated in
India or overseas, whether working in India or outside India) for their performance and to motivate them to
contribute to the growth and profitability of the Company. The Company also intends to use this scheme to retain
the talent.

39 SEGMENT REPORTING

The Company's operations predominantly relate to contract manufacturing. The Chief Operating Decision Maker
(CODM) reviews the operations of the Company as contract manufacturing. Consequently, no separate segment
information has been furnished herewith.

The Company has disclosed in the consolidated financial statement, the revenue contribution from major external
customer.

40 FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial Instrument measured at Amortised cost:

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The amortised cost using effective interest rate (EIR) of non-current financial assets/liabilities are not significantly
different from the carrying amount and therefore the impact of fair value is not considered for above disclosure.

Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits and other
financial assets.

42 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various financial risks. These risks are categorised into market risk, credit risk and liquidity
risk. The Company's risk management is coordinated by the Board of Directors and focuses on securing long term and
short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price
risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings
and derivative financial instruments.

(i) Interest rate risk

I nterest 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 exposure to the risk of changes in market interest
rates relates primarily to the Company's long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and
borrowings.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that
portion of loans and borrowings. With all other variables held constant, the Company's profit before tax is
affected through the impact on floating rate borrowings, as follows:

(ii) Foreign currency risk

Foreign currency risk is 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's exposure to the risk of changes in foreign
exchange rates relates primarily to the Company's operating activities (when revenue or expense is
denominated in a different currency from the Company's functional currency).

(B) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. Credit risk arises principally from the Company's receivables from customers
and other statutory deposits with regulatory agencies and also arises from cash held with banks. The maximum
exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty
credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties,
taking into account their financial position, past experience and other factors.

The Company measures the expected credit loss of trade receivables from individual customers based on
historical trend, industry practices and the business environment in which the entity operates. Loss rates are based
on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is
not material hence no additional provision considered.

43 CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at
least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility
(CSR) activities. The areas for CSR activities are in the field of promoting healthcare and education. A CSR committee
has been formed by the Company as per the Act. The funds are utilised through the year on these activities which are
specified in Schedule VII of the Companies Act, 2013.

During the year ended March 31, 2026, the Company has spent Rs. 2.22 cr on activities for promoting preventive health
care, poverty and malnutrition, promoting education, supporting homeless young women.

During the year ended March 31, 2026, the Company has not incurred any CSR Expenditure with related Party/
contribution made to related party.

44 CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity capital, equity component of
redeemable non cumulative non convertible preference shares, share premium and all other equity reserves attributable
to the equity holders. The primary objective of the Company's capital management is to maximise the shareholder
value and to ensure the Company's ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors gearing ratio i.e. total debt
in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of non-current borrowing,
current borrowings which represents borrowings from bank and others, lease liabilities and liability component of
redeemable non cumulative non convertible preference shares. The Company manages the capital structure and
makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying
assets.

(C) No proceedings have been initiated on or are pending against the Company for holding benami property under the
Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(D) The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.

(E) The Company does not have any transactions or balance outstanding with companies struck off under section 248 of
the Companies Act, 2013 or section 560 of Companies Act, 1956.

(F) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.

(G) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies
Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017 (as amended).

(H) The Company does not have any undisclosed income which is not recorded in the books of account that has been
surrendered or disclosed as income during the year (previous year) in the tax assessments under the Income Tax Act,
1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)

(I) The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended March 31, 2026.

(J) Utilisation of Borrowed funds and share premium

(i) 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:

(a) 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

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

(ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) 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

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

(K) During the year the Company has not entered into scheme of arrangement and amalgamation having an accounting
impact except as mentioned in note 36.

(L) The Company has not revalued its property, plant and equipment during the year ended March 31, 2026 and March 31,
2025.

(M) The Company has not given loans and advances to promoters and directors.

48 Pursuant to the notification issued by Ministry of Labour and Employment, multiple existing labour legislations have been
consolidated into a unified framework comprising four labour codes collectively referred to as the "New Labour Codes"
which became effective from November 21, 2025. The Company has reassessed its employee benefit obligations in
accordance with the new definition of wages. Accordingly, an incremental liability of Rs. 4.37 (Gratuity of Rs. 3.27 cr and
Leave enchashment of Rs. 1.10 cr) has been recognised as an "Exceptional item" for the year ended March 31, 2026.

49 (i) During the current year, the Company has received balance 75% amount towards 19,79,349 warrants from two of

the allottee towards the conversion of Warrants into Equity Shares as approved by the shareholders in the Extra
Ordinary General Meeting held on October 20, 2023. The Share Allotment Committee of Board of Directors of
the Company at their Meeting held on June 18, 2025, has allotted 9,15,331 Equity Shares having face value of Rs.
2/- each at a premium of Rs. 544.25 per share and 10,64,018 Equity Shares having face value of Rs. 2/- each at
a premium of Rs. 561.90 per share. Further, one of the warrant holder, has not exercised the option to convert
5,32,009 warrants into Equity share, hence these warrants has been lapsed/cancelled and initial amount paid i.e.,
25% upfront application money amounting to Rs. 7.50 cr at the time of allotment of warrants, have been forfeited
in accordance with the terms of the issue/allotment and accordingly the upfront application money transferred
to capital reserves in financial statements.

(ii) During the previous year, the Company has received balance 75% amount towards 29,29,060 warrants from two
of the allottee towards the conversion of Warrants into Equity Shares as approved by the shareholders in the Extra
Ordinary General Meeting held on October 20, 2023. The Share Allotment Committee of Board of Directors of the
Company at their Meeting held on December 28, 2024, has allotted 29,29,060 Equity Shares having face value of
Rs. 2/- each at a premium of Rs. 544.25 per share.

50 No significant subsequent events have been observed which may require an adjustments to the financial statements.

51 The Company has executed a Business Transfer agreement with Ultra Beauty Care Private Limited for acquisition of it's
manufacturing facilities situated at Aurangabad, Maharashtra for a purchase consideration of Rs. 19.90 cr on slump sale
and going concern basis effective from April 01, 2026. During the year ended March 31, 2026, Rs. 19.75 cr has been
paid as advance for the said acquisition.

52 These financial statements were authorised for issue by the Board of Directors on May 21, 2026.