m) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed in the Notes. Contingent liabilities are disclosed for (1) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (2) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are not recognised in these financial statements as this may result in the recognition of income that may never be realised. Contingent assets (if any) are disclosed in the notes to the standalone financial statements.

n) Borrowing costs

Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate applicable to the respective borrowing. Borrowing costs include interest costs measured at EIR and exchange differences arising from foreign currency borrowings (other than long term foreign currency borrowings outstanding as of March 31, 2016) to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs, allocated to qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

All other borrowing costs are recognised as an expense in the period which they are incurred.

o) Government Grants

Government grants are initially recognised as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant;

- In case of capital grants, they are then recognised in Statement of Profit and Loss as other income on a systematic basis over the useful life of the asset.

- I n case of grants that compensate the Company for expenses incurred are recognised in Statement of Profit and Loss on a systematic basis in the periods in which the expenses are recognised.

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and there is no uncertainty in receiving the same.

p) Non-current assets held for sale

Non-current assets are classified as held for sale, if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable and sale is expected to be completed within one year from date of classification.

Non-current assets held for sale are presented separately in the current section of the standalone balance sheet. Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, unless these items presented in the disposal group are deferred tax assets, assets arising from employee benefits and financial assets that are specifically exempt from the requirements.

Non-current assets are not depreciated or amortised while they are classified as held for sale.

q) Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax available to equity share holders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for the events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.

r) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

s) Cash Flow statement

Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the Indian Accounting Standard (Ind AS 7) -Statement of Cash Flows.

t) Operating cycle

All assets and liabilities have been classified as current or non-current as per Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company's normal operating cycle is twelve months.

Notes:

i) The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Minimum Alternative Tax (MAT credit) balance as on March 31, 2024 amounts to ' 196 crore (Previous year - ' 196 crore). Based on the current business prospects and, actions taken to implement Company's business strategies including expected monetisation of assets, it is probable that the said MAT credit and business loss will be availed in future years against the normal tax expected to be paid in those years.

ii) Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

iii) Given that the Company does not have any intention to dispose investments in subsidiaries in the foreseeable future, deferred tax asset on indexation benefit in relation to such investments has not been recognised. Further, the Company does not have any intention to dispose the land on an individual basis, hence deferred tax asset on the indexation benefit on land has not been recognised.

iv) Aggregate temporary differences and carried forward tax losses for which no deferred tax has been created amounted to ' 889 crore (Previous year - ' 455 crore). These tax losses are available for set off against future taxable profits over next 8 years.

Note 16.1

During the year, the Company has repaid its term loan taken Bank of Baroda ('BOB') in entirety . The Company is in the process of releasing the charge created on the current assets and fixed assets (present and future, located at all locations other than plants at Kadaiya, Daman) based on the "No Dues certificate' received.

Note 16.2

During the previous year, the Company has repaid its entire loan from IDBI Bank and Bank of Maharashtra ('BOM') and charge created on the assets have been released.

Note 16.3

25,000 (Previous year - 25,000), 13.75% (Previous year- 13.75%) Secured Non-Convertible Debentures of '38, 600 (Previous year- '90,000) each aggregating 97 crore (Previous year- 225 crore) are repayable at par as per below repayment schedule:

Put/Call option:

Put/Call option for 5,000 debentures (alloted in October 2021) has vest in June 15, 2023, and each date falling at the expiry of 6 months thereafter. For the balance 20,000 debentures (alloted in April/May 2021), the Put/Call option has vested in December 15, 2022, and each date falling at the expiry of 6 months thereafter.

Further, the above Non-Convertible Debentures are secured against pledge of 7,875,000 (Previous year- 19,875,000) equity shares of Company held by Themisto Trustee Company Private Limited which holds these shares in its capacity as the trustee of Habil Khorakiwala Trust which in turn holds these shares in its capacity as the partner of the partnership firm Humuza Consultants.

Also these debentures are also secured by way of

a) first ranking charge/hypothecation of movable assets (all present and future rights) and paripassu with the exisitng lenders/charge holders of movable assets

b) first ranking and exclusive charge/hypothecation of escrow accounts and Cash top -Up account, and monies lying therein including DSRA (all present and future rights)

Note 16.4

Loans from GOI carry interest rate of 3% p.a. Loan amounting to ' 2 crore (Previous year- ' 2 crore) is repayable in equal annual instalments by March 2029.

Note 16.5

Loan others consisting of loan from Arka Fincap Limited has been repaid and the charges/hypothecation created on the moveable assets, and fixed deposit - ISRA accounts , Cash top -Up account, and monies lying therein have been released.

Also the pledge created on the equity shares of Themisto Trustee Company Private Limited which holds these shares in its capacity as the trustee of Habil Khorakiwala Trust which in turn holds these shares in its capacity as the partner of the partnership firm Humuza Consultants have been released.

Note 16.6

Loan from STCI Finance Limited (Interest rate 13%) is secured by way of first paripassu charge on movable and immovable fixed assets of the Company and, pledge of shares of Company held by Themisto Trustee Company Private Limited which holds these shares in its capacity as the trustee of Habil Khorakiwala Trust which in turn holds these shares in its capacity as the partner of the partnership firm Humuza Consultants.

The above loan shall be repaid at the end of 36 months with a call/put option every 12 months Note 16.7

Current maturities of the above borrowings have been disclosed under Note 18 Note 16.8

Borrowings from related parties amounting ' 889 crore had a repayment date of May 25, 2025. Subsequent to the year end, these loans have been further extended to May 25, 2027 with an option to the Company to further renew the loan basis Company's assessment of the cash flows and liquidity position on that date

Loans from related parties carry interest rate in the range of 6.05 % p.a. to 17.60 % p.a.

Note 18.1

Working capital facilities from Banks are secured by way of:

(i) First charge on pari passu basis on present and future stock of raw materials, consumables, spares, semi-finished goods, finished goods, book debts and other current assets.

(ii) Second charge on pari passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets, both present and future, located at all locations (other than Units at Kadaiya in Daman).

Note 18.2

Buyers' Credit are secured by way of first pari passu charge on the entire current assets and second pari passu charge on all fixed assets located at all locations other than Units at Kadaiya in Daman.

Note 18.3

Purchase financing from financial institution is secured against unconditional and irrevocable Bank Guarantees that stands as guarantee under this facility.

Note 18.4

Refer note 11 to 13 for carrying amount of current financial assets on which charge has been created.

The weighted average incremental borrowing rate used for discounting is in the range of 7.30% to 9.65%

Refer Note 27 for Interest on lease Liabilities

Also refer Note 4 for details of Right-of-Use Assets and depreciation thereon.

The summary of practical expedients elected on initial application are as follows :

The Company has availed the exemption of not recognising right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.

The Company's lease asset classes primarily consist of leases for land and buildings. The leases for land/buildings are generally for a period ranging 10 years to 99 years. These leases can be extended for further 10 years to 99 years by mutual consent. Office premises are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements or contingent rent payable. Certain portion of the land has been subleased.

In case of land that have been leased out for 95 years to 99 years, there are no material annual payments for the aforesaid leases

Rental expenses on leases for a period of less than 12 months amounting to Nil (Previous year- Nil) and rent for low value assets amounting to ' 0.18 crore (Previous year- ' 0.14 crore) have been included under "Note 28 - Other expenses” under Rent.

Further, Refer Note 42 for maturity profile of lease liabilities.

34. EXCEPTIONAL ITEMS:

i) The Company had accounted for a contract asset of ' 50 crores pursuant to a contract manufacturing agreement. The Customer is yet to fulfil its contractual obligations and commitments. Though, the Company is pursuing various options and taking necessary actions related to this matter, given the uncertainty, Company had provided for this contract asset and had disclosed it as 'Exceptional items' during previous year.

Company had also purchased certain specific inventory amounting to ' 48 crores for this contract which has not been used. During the current period, the Company has made a provision of ' 14 crores for such inventory basis the current assessment and information available as on date. This expenditure is also reported as an 'Exceptional item'.

ii) Further, during previous year, the Company had received the approval from concerned Authorised dealer (AD) for adjusting the receivables booked against services/assignment of new chemical entities to Wockhardt Bio AG (the Company's foreign subsidiary) against the advances received from the aforesaid subsidiary, resulting in foreign exchange loss of ' 185 crore. This was disclosed as 'Exceptional items'. Also refer note 42 - Financial risk management- Exposure to currency risk

(a) Amount recognised as an expense in the Statement of Profit and Loss and included in Note 26 under Salaries and wages:

Gratuity ' 4 Crore (Previous year - ' 4 crore) and Leave encashment ' 4 crore (Previous year - ' 3 crore).

The above amount includes amount pertaining to Key Managerial personnel ' 1 crore (Previous year- ' 1 crore)

(b) The plan above is typically exposed to actuarial risk such as Mortality risk, withdrawal rate risk and salary risk

- Mortality risk: The present value of the Defined benefit plan liability is calculated by reference to the best estimate of the mortality plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

- Withdrawal rate risk: The plan faces the withdrawal rate risk. If the actual withdrawal rate is higher, the benefits would be paid earlier than expected.

- Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.

(c) Expected Employers contribution for the next year is Nil

The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The fair value of the financial assets and liabilities is 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 following methods and assumptions were used to estimate the fair values:

- The fair values of the loans taken from banks and other parties is estimated by discounting cash flows using rates currently available for debt/instruments on similar terms, credit risks and remaining maturities. Management regularly assesses a range of reasonably possible alternatives for those significant observable inputs and determines their impact on the total fair value.

- The change in the unobservable inputs for unquoted investments of Narmada Clean Tech Limited (formerly known as Bharuch Eco-Aqua Infrastructure Limited) and Bharuch Enviro Infrastructure Limited instruments does not have a significant impact in its value.

42. FINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks arising from financial instruments:

• Credit risk;

• Liquidity risk; and

• Market risk

Risk management framework

The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework.

The Company's Risk Management Framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks in achieving key business objectives.

The Company has laid down the procedure for risk assessment and their mitigation through an internal Risk Committee. Key risks and their mitigation arising out of periodic reviews by the Committee are assessed and reported to the Audit Committee, on a periodic basis.

The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to policies and procedures.

The Company has a co-sourced model of independent Internal Audit and assurance function. There is a practice of reviewing various key select risks and report to Audit Committee from time to time. The co-sourced internal audit function carry out internal audit reviews in accordance with the approved internal audit plan and reviews the status of implementation of internal audit and assurance recommendations. Summary of Critical observations, if any, and recommendations under implementation are reported to the Audit Committee.

i. 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, and arises principally from the Company's receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred and expected losses in respect of trade and other receivables and investments.

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

As at March 31, 2024 and March 31, 2023, the Company did not have any significant concentration of credit risk with any external customers except Wockhardt Bio AG that accounts for 57% of total trade receivables during current year (Previous year: 62%)

Expected credit loss assessment for customers as at March 31,2024 and March 31,2023:

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available information etc.) and applying experienced credit judgement.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities. The Company monitors the net liquidity position through forecasts on the basis of expected cash flows.

The Company has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets to manage short of current assets to current liabilities. The Company invests its surplus funds in bank fixed deposit. Of the current liabilities, ' 218 crore (Previous year- ' 788 crore) pertains to loan received from Related parties. These parties have reaffirmed their commitment and confirmed that they will not recall the loans provided to the Company, unless the Company confirms that it has adequate surplus liquidity available and the related parties have confirmed to provide required financial support to the Company to repay the liabilities of the Company.

Further, the terms for borrowings from related parties of ' 889 crore which was fully due for repayment on May 25, 2025 has been extended upto May 25, 2027, with an option to the Company to further renew the loan basis Company's assessment of cash flows and liquidity position on that date.

The following are the remaining contractual maturities of financial liabilities and financial assets at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

44. Contingent liabilities and commitments (to the extent not provided for)

(a) Demand by Income tax authorities ' 546 crore (Previous year - ' 416 crore) disputed by the Company.

(b) Demands by Central Excise authorities in respect of Classification/ Valuation/ Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands ' 45 crore (Previous year - ' 45 crore).¹

(c) Demand by Sales Tax (including GST) authorities ' 129 crore (Previous year - ' 96 crore) disputed by the Company.¹¹¹

(d) Demand by Service tax authorities in respect of non-payment of Service Tax on Import of certain services disputed by the Company ' 5 crore (Previous year - ' 3 crore).¹

(e) Demand by Municipal Corporation, Local body Tax on inputs used for manufacture of exported goods ' 3 crore (Previous year: 3 crore)

(f) Differential custom duty for misclassification/ penalty disputed by the Company ' 0.26 crore (Previous year - 0.26 crore)

(g) Differential MEIS for misclassification disputed by the Company ' 9 crore (Previous year- ' 9 crore)

(h) Other matters:

- electricity expense ' 9 crore (Previous year - ' 8 crore)

- remediation against the pollution of ground water ' 1 crore (Previous year - ' 1 crore)

- compensation for products ordered and not purchased, under dispute ' 20 crore (Previous year - ' 19 crore)

- Other matters not acknowledged as debts ' 0.20 crore (Previous year- Nil)

(i) Demand from National Pharmaceutical Pricing Authority (NPPA) in respect of overcharging of certain products disputed by the Company ' 108 crore (Previous year - ' 103 crore).

(j) Pursuant to a settlement agreement entered with the State of Texas on February 8, 2022 in regards to Civil Investigative Demand ('CID') with respect to submission of price information and updates to Texas Medicaid programme in US, Wockhardt USA LLC (WUSA) and Company had agreed to pay USD 36 million and interest over nine instalments between 2022 and 2025 for the aforesaid matter relating to WUSA and Morton Grove Pharmaceuticals. During the current year, WUSA has agreed revised payment terms with State of Texas for the settlement claim, whereby WUSA has agreed to prepay the outstanding amount by December 24 basis an agreed schedule.

Further ' 138 crore (USD 16.67 million) has been paid by WUSA during the current year and ' 53 crore (USD 6.3 million) is outstanding as on March 31, 2024

(k) The Company is involved in other disputes, lawsuits, claims, inquiries and proceedings including commercial matters that arise from time to time in the ordinary course of business. The Company believes that there are no such pending matters that are expected to have any material adverse effect on its financial statements in any given accounting period.

(l) Estimated amount of contracts remaining to be executed on capital account and not provided for ' 7 crore (Previous year - ' 18 crore) after deducting advance on capital account of ' 2 crore (Previous year - ' 9 crore).

Note: The above ratios are calculated on basis of continuing operations figures.

(1) Total debt = Non- current Borrowings Current Borrowings

(2) Earnings available for debt service = Net Loss after tax depreciation and other amortizations and other Non-cash operating expenses Interest (Finance cost); Debt Service = Interest and Lease payments Principal Repayments made during the period for long term loans

(3) Cost of goods sold = Cost of materials consumed Purchase of Stock-in-Trade Changes in inventories of finished goods, work-in-progress and Stock-in-Trade

(4) Working capital = Current asset - Current liability

(5) Capital Employed = Tangible Net Worth* Total Debt

(6) Cost of Investment = Total equity - Other comprehensive income

* Tangible net worth = Total equity - Intangible asset - Intangible asset under development

# Not applicable as the Company has incurred a loss and working capital is negative Reasons for more than 25% increase/(decrease):

a) Current ratio has increased mainly due to increase in cash and equivalents on accounts proceeds received from allotment under QIP and also due to extension of related party loan

b) Debt Service Coverage Ratio has increased mainly due to impact in earnings

c) Inventory Turnover has increased due to increase in Cost of goods sold

d) Trade Receivables turnover ratio have increased due to increase in sales and decrease in receivables

e) Return on equity , Net capital turnover ratio, Net profit ratio and Return on capital employed have not been computed due to loss

51. There are no other significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.

52. Previous year figures have been regrouped wherever necessary to conform to current year classification.

As per our attached report of even date

For B S R & Co. LLP

Chartered Accountants

Firm's Registration No: 101248W/W-100022

Koosai Lehery

Partner

Membership No. 112399 Place : Mumbai

Date : May 28, 2024

For and on behalf of the Board of Directors

Habil Khorakiwala

Chairman

DIN:00045608

Murtaza Khorakiwala

Managing Director

DIN: 00102650

Deepak Madnani

Chief Financial Officer

Rashmi Mamtura

Company Secretary

1

Note: Amounts mentioned excludes interest after the date of the order, if any.