Accounting Policies of Neogen Chemicals Ltd. Company

Mar 31, 2025

1. General corporate information

Neogen Chemicals Limited is a Public Limited Company
domiciled in India and incorporated under the provisions
of the Companies Act, 1956 having Corporate Identity
Number L24200MH1989PLC050919. Company
has its registered office at Thane, Maharashtra. The
Company is engaged in the business of manufacturing
of eco - friendly speciality chemicals which are used
in Pharmaceutical, Engineering & Agro-Chemical
industries. Neogen has developed significant expertise in
highly demanding field of Bromine Compounds, Lithium
compounds & more recently advance intermediates for
pharmaceutical industries & pesticides industries of
world class standards. The principal place of business
of the company are at Thane (HO), first Factory at
Mahape in Navi Mumbai, second Factory at Karakhadi
in District Vadodara, Gujarat, third factory at Dahej SEZ,
Gujarat & fourth factory at Patancheru, Telangana. The
Company caters to both domestic and international
markets. The Manufacturing facility is also having well
equipped R & D and analytical labs. Neogen’s Karakhadi,
Vadodara Facility is ISO 9001:2015, ISO 14001:2015,
and ISO 45001:2018 certified by Bureau Veritas
Certification Holding SAS; Its Mahape, Navi Mumbai
Facility is ISO 9001:2015 certified by Bureau Veritas
Certification Holding SAS; Dahej SEZ, Gujarat Facility
is ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018
Certified by Bureau Veritas Certification Holding SAS
and GMP Certified by SGS and Patancheru facility is
ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018
certifications from Bureau Veritas.

2. Summary of basis of compliance, basis
of preparation and presentation, key
accounting estimates, assumptions and
material accounting policies

I. Basis of compliance

The standalone financial statements have been
prepared in accordance with Indian Accounting
Standards (“Ind AS”) as notified by Ministry of Corporate
Affairs pursuant to Section 133 of the Companies Act,
2013 (‘Act’) read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to
time and presentation and disclosures requirement of
Division II of revised Schedule III of the Companies Act
2013, (Ind AS Compliant Schedule III), as applicable to

standalone financial statement. The accounting policies
are applied consistently to all the years presented in the
standalone financial statements.

The standalone financial statements of the Company
for the year ended March 31,2025 were authorized for
issue in accordance with a resolution of the Board of
Directors on May 17 2025.

II. Basis of preparation and presentation

The Company adopted Disclosure of Accounting
Policies (Amendments to Ind AS 1) from 1 April 2023.
Although the amendments did not result in any changes
in the accounting policies themselves, they impacted the
accounting policy information disclosed in the financial
statements. The amendments require the disclosure of
‘material’ rather than ‘significant’ accounting policies. The
amendments also provide guidance on the application of
materiality to disclosure of accounting policies, assisting
entities to provide useful, entity-specific accounting
policy information that users need to understand other
information in the financial statements.

• Current versus non-current classification

All assets and liabilities have been classified as per
the Company’s normal operating cycle and other
criteria set out in Schedule III to the Companies
Act, 2013. Based on the nature of the products and
the time taken between acquisition of assets for
processing and their realization in cash and cash
equivalents, the Company has ascertained its
operating cycle as twelve months for the purpose
of the classification of assets and liabilities into
current and non-current.

• Basis of measurement

The financial statements have been prepared on a
historical cost basis, except for the following:

- certain financial assets and liabilities
(including derivative instruments) that is
measured at fair value;

- defined benefit plans - plan assets measured
at fair value less present value of defined
benefit obligation;

• Functional and presentation currency

These standalone financial statements are
presented in Indian rupees, which is the Company’s
functional currency. All amounts have been
rounded off to the nearest Crore, unless otherwise
indicated.

III. Key estimates and assumptions

While preparing financial statements in conformity with
Ind AS, the management has made certain estimates
and assumptions that require subjective and complex
judgments. These judgments affect the application
of accounting policies and the reported amount of
assets, liabilities, income and expenses, disclosure
of contingent liabilities at the balance sheet date and
the reported amount of income and expenses for the
reporting period. Future events rarely develop exactly as
forecasted and the best estimates require adjustments,
as actual results may differ from these estimates under
different assumptions or conditions. Estimates and
underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized
prospectively. Judgement, estimates and assumptions
are required in particular for:

• Determination of the estimated useful lives

Useful lives of property, plant and equipment are
based on the life prescribed in Schedule II of the
Companies Act, 2013. In cases, where the useful lives
are different from that prescribed in Schedule II and in
case of intangible assets, they are based on technical
advice, taking into account the nature of the asset, the
estimated usage of the asset, the operating conditions
of the asset, past history of replacement, anticipated
technological changes, manufacturers’ warranties and
maintenance support.

• Recognition and measurement of defined benefit
obligations

The obligation arising from defined benefit plan is
determined on the basis of actuarial assumptions. Key
actuarial assumptions include discount rate, trends in
salary escalation, actuarial rates and life expectancy.
The discount rate is determined by reference to market
yields at the end of the reporting period on government
bonds. The period to maturity of the underlying bonds
correspond to the probable maturity of the post¬
employment benefit obligations. Due to complexities

involved in the valuation and its long term nature,
defined benefit obligation is sensitive to changes in
these assumptions. All assumptions are reviewed at
each reporting period.

• Recognition of deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized for
the future tax consequences of temporary differences
between the carrying values of assets and liabilities
and their respective tax bases. Deferred tax assets are
recognized to the extent that it is probable that future
taxable income will be available against which the
deductible temporary differences.

• Recognition and measurement of other provisions
The recognition and measurement of other provisions
are based on the assessment of the probability of
an outflow of resources, and on past experience and
circumstances known at the balance sheet date. The
actual outflow of resources at a future date may therefore,
vary from the amount included in other provisions.

• Discounting of long-term financial assets / liabilities

All financial assets / liabilities are required to be
measured at fair value on initial recognition. In case
of financial liabilities/assets which are required to
subsequently be measured at amortised cost, interest
is accrued using the effective interest method.

• Determining whether an arrangement contains a lease
Ind AS 116 requires lessee to determine the lease term
as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use
of such option is reasonably certain. The Company
makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or
terminate the contract will be exercised. In evaluating the
lease term, the Company considers factors such as any
significant leasehold improvements undertaken over the
lease term, costs relating to the termination of the lease
and the importance of the underlying asset taking into
account the location of the underlying asset and the
availability of suitable alternatives. The lease term in
future periods is reassessed to ensure that the lease
term reflects the current economic circumstances. After
considering current and future economic conditions, the

Company has concluded that no changes are required
to lease period relating to the existing lease contracts.

• Fair value of financial instruments

Derivatives are carried at fair value. Derivatives includes
foreign currency forward contracts. Fair value of foreign
currency forward contracts are determined using the fair
value reports provided by respective bankers.

• Provisions and contingent liabilities and assets

A provision is recognised when the Company has
a present obligation because of past event and 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. These are reviewed at each
balance sheet date and adjusted to reflect the current
best estimates.

I n the normal course of business, contingent liabilities
may arise from litigation and other claims against
the Company. Potential liabilities that are possible
but not probable of crystalising or are very difficult to
quantify reliably are treated as contingent liabilities.
Such liabilities are disclosed in the notes but are not
recognised. The cases which have been determined as
remote by the Company are not disclosed.

Contingent assets are neither recognised nor disclosed
in the standalone financial statements.

IV. Measurement of fair values

The Company’s accounting policies and disclosures
require the measurement of fair values for, both financial
and non-financial assets and liabilities. The Company
has an established control framework with respect to the
measurement of fair values. The management regularly
reviews significant unobservable inputs and valuation
adjustments. If third party information, such as broker
quotes or pricing services, is used to measure fair
values, then the management assesses the evidence
obtained from the third parties to support the conclusion
that such valuations meet the requirements of Ind AS,
including the level in the fair value hierarchy in which
such valuations should be classified.

When measuring the fair value of a financial asset or a
financial liability, the Company uses observable market
data as far as possible. Fair values are categorised into

different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows.

a. Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.

b. Level 2: inputs other than quoted prices included
in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices)

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

If the inputs used to measure the fair value of an asset
or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the entire
measurement.

The Company recognises transfers between levels of
the fair value hierarchy at the end of the reporting period
during which the change has occurred.

V. Material accounting policies

A. Revenue recognition and Other income

• Sale of goods

The company manufactures and sells a range of
products to various customers. In case of contracts
with customers, revenue is recognised when the
significant risk and rewards of ownership have
been transferred to the customer, recovery of the
consideration is probable, the associated costs and
possible return of goods can be estimated reliably,
there is no continuing management involvement
with the goods to the degree usually associated
with the ownership, and the amount of revenue
can be measured reliably, regardless of when the
payment is being made. Revenue is measured
at the fair value of the consideration received or
receivable. Revenue recognised in relation to
these contracts in excess of billing is recognised
as a Contract Asset. In remaining cases revenue
is recognised over Company’s performance does
not create an asset with alternative use to the
Company and the entity has an enforceable right

to payment for performance completed till date.
Accumulated experience is used to estimate
and provide for the discounts and returns and
revenue is only recognised to the extent that it is
highly probable that a significant reversal will not
occur. A refund liability (included in other current
liabilities) is recognised for expected returns from
the customer. Liability (included in other financial
liabilities) is recognised for expected volume
discounts payable to customers in relation to sales
made until the end of the reporting period. Amounts
disclosed as revenue are net of returns, discounts,
volume rebates and net of goods and service tax.
Incentives on exports are recognised in books after
due consideration of certainty of utilisation / receipt

of such incentives.

• Interest income

I nterest income is recognized on time proportion

basis considering the amount outstanding and rate
applicable. For all financial assets measured at
amortized cost, interest income is recorded using
the effective interest rate (EIR) i.e. the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset to
the net carrying amount of the financial assets.
Interest income is included in other income in the
Statement of Profit and Loss.

• Government grant

Grants and subsidies from the government are
recognised when there is reasonable assurance
that (i) the company will comply with the condition
attached to them and (ii) the grant /subsidy will be
received. Government grants are recognised in the
Statement of Profit and Loss on a systematic basis
over the years in which the Company recognises
the related costs for which the grants are intended
to compensate or when performance obligations
are made. Where the grant relates to an asset, it
is recognized as deferred income and credited to
income in equal amounts over the expected useful
life of the related asset.

B. Foreign currency

• Transaction and balances

Transactions in foreign currencies are translated
into the respective functional currencies of the

Company at the exchange rates at the dates of
the transactions or an average rate if the average
rate approximates the actual rate at the date of
the transaction. Foreign currency transactions are
recorded on initial recognition in the functional
currency, using the exchange rate at the date of the
transaction. At each balance sheet date, foreign
currency monetary items are reported using the
closing exchange rate. Exchange differences
that arise on settlement of monetary items or
on reporting at each balance sheet date of the
Company’s monetary items at the closing rate are
recognized as income and expenses in the period
in which they arise.

Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of transactions. Non-monetary items that are
measured at fair value in a foreign currency shall
be translated using the exchange rates at the date
when the fair value was measured.

Exchange differences are generally recognised in
the Statement of Profit and Loss.

C. Employment Benefits

• Short-term obligations

All employee benefits payable wholly within
twelve months of rendering services are classified
as short-term employee benefits. Short-term
employee benefits are expensed as the related
service is provided. A liability is recognized for the
amount expected to be paid if the Company has
a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably. Short-term benefits such as salaries,
wages, short-term compensation absences, etc.,
are determined on an undiscounted basis and
recognized in the period in which the employee
renders the related service.

• Other long-term employee benefit obligations
ability toward Long-term Compensated Absences
is provided for on the basis of an actuarial
valuation, using the Projected Unit Credit Method,
as at the date of the Balance Sheet. Actuarial gains

/ losses comprising of experience adjustments and
the effects of changes in actuarial assumptions are
immediately recognised in the Statement of Profit
and Loss. The obligations are presented as current
liabilities in the balance sheet if the entity does
not have an unconditional right to defer settlement
for at least twelve months after the reporting
period, regardless of when the actual settlement is
expected to occur.

• Post-employment obligations

The Company operates the following post¬
employment schemes:

(a) Defined benefit plans such as gratuity, and

(b) Defined contribution plans such as provident
fund.

(a) Defined benefit plans: The following post -
employment benefit plans are covered under
the defined benefit plans:

Gratuity: The Company’s net obligation in
respect of defined benefit plans is calculated
by estimating the amount of future benefit that
employees have earned in the current and
prior periods, discounting that amount and
deducting the fair value of any plan assets.

The calculation of defined benefit obligations
is performed annually by a qualified actuary
using the projected unit credit method. When
the calculation results in a potential asset for
the Company, the recognised asset is limited
to the present value of economic benefits
available in the form of any future refunds from
the plan or reductions in future contributions
to the plan.

Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognized in the
period in which they occur, directly in other
comprehensive income. They are included in
retained earnings in the statement of changes
in equity and in the balance sheet.

(b) Defined contribution plans

The Company pays provident fund
contributions to publicly administered
provident funds as per local regulations. The
Company has no further payment obligations
once the contributions have been paid. The
contributions are accounted for as defined
contribution plans and the contributions are
recognised as employee benefit expense
when they are due.

D. Income-tax

Income tax expense comprises current and
deferred tax. It is recognised in the Statement of
Profit and Loss except to the extent that it relates
to a business combination, or items recognised
directly in equity or in the OCI.

• Current tax

Current tax is the amount of tax payable
(recoverable) in respect of the taxable
profit / (tax loss) for the year determined in
accordance with the provisions of the Income-
Tax Act, 1961. Current income tax for current
and prior periods is recognized at the amount
expected to be paid to or recovered from the
tax authorities, using tax rates and tax laws
that have been enacted or substantively
enacted at the reporting date. Current tax
assets and liabilities are offset only if, the
Company:

(a) has a legally enforceable right to set off
the recognised amounts; and

(b) i ntends either to settle on a net basis, or
to realise the asset and settle the liability
simultaneously.

• Deferred tax

Deferred tax is recognised in respect of
temporary differences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes. Deferred tax is not
recognised for:

a) temporary differences on the initial
recognition of assets or liabilities in
a transaction that is not a business
combination and that affects neither
accounting nor taxable profit or loss;

b) temporary differences related to
investments in subsidiaries and
associates to the extent that the
Company is able to control the timing of
the reversal of the temporary differences
and it is probable that they will not
reverse in the foreseeable future; and

c) taxable temporary differences arising on
the initial recognition of goodwill

Deferred tax assets are recognised for
deductible temporary differences to the extent
that it is probable that future taxable profits will
be available against which they can be used.
Deferred tax assets are reviewed at each
reporting date and are reduced to the extent
that it is no longer probable that the related tax
benefit will be realised; such reductions are
reversed when the probability of future taxable
profits improves. Unrecognized deferred tax
assets are reassessed at each reporting
date and recognised to the extent that it has
become probable that future taxable profits will
be available against which they can be used.

Deferred tax assets and liabilities are
measured at the tax rates that are expected
to apply in the year when the asset is realized
or the liability is settled, based on tax rates
(and tax laws) that have been enacted or
substantively enacted at the reporting date.

The measurement of deferred tax reflects the
tax consequences that would follow from the
manner in which the Company expects, at the
reporting date, to recover or settle the carrying
amount of its assets and liabilities. Deferred
tax assets and liabilities are offset only if:

a) the entity has a legally enforceable right
to set off current tax assets against
current tax liabilities; and

b) the deferred tax assets and the deferred
tax liabilities relate to income taxes
levied by the same taxation authority on
the same taxable entity.

E. Inventories

Inventories are carried in the balance sheet as
follows:

(a) Raw materials, Packing materials and Stores
& Spares: Cost of purchases and other costs
incurred in bringing the inventories to their
present location and condition

(b) Work-in-progress / project in progress: At
lower of cost of materials, plus appropriate
manufacturing overheads and net realizable
value.

(c) Finished Goods: At lower of cost of materials,
plus appropriate manufacturing overheads
and net realizable value.

Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and the estimated costs
necessary to make the sale. The net realizable
value of work-in-progress is determined with
reference to the selling prices of related finished
products. Raw materials and other supplies held
for use in the production of finished products are
not written down below cost, except in cases where
material prices have declined, and it is estimated
that the cost of the finished products will exceed
their net realizable value.

F. Property, plant and equipment (including
Capital work in progress)

• Recognition and initial measurement

Items of property, plant and equipment
are measured at cost less accumulated
depreciation and any accumulated impairment
losses, if any. The cost of an item of property,
plant and equipment comprises:

a) its purchase price, including import duties
and non-refundable purchase taxes, after
deducting trade discounts and rebates.

b) any costs directly attributable to bringing the
asset to the location and condition necessary
for it to be capable of operating in the manner
intended by management.

c) the initial estimate of the costs of dismantling
and removing the item and restoring the
site on which it is located, the obligation for
which an entity incurs either when the item
is acquired or as a consequence of having
used the item during a particular period for
purposes other than to produce inventories
during that period.

d) Items of property, plant and equipment
(including capital-work-in progress) are
measured at cost, which includes capitalised
borrowing costs, less accumulated
depreciation and any accumulated impairment
losses Income and expenses related to
the incidental operations, not necessary to
bring the item to the location and condition
necessary for it to be capable of operating
in the manner intended by management,
are recognised in the Statement of Profit and
Loss.

If significant parts of an item of property, plant
and equipment have different useful lives,
then they are accounted and depreciated
for as separate items (major components) of
property, plant and equipment.

Any gain or loss on disposal of an item of
property, plant and equipment is recognised
in the Statement of Profit and Loss.

• De-recognition

An item of property, plant and equipment
and any significant part initially recognized
is derecognized upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the standalone statement of profit
and loss when the asset is derecognized.

• Subsequent expenditure

Subsequent expenditure is capitalised only if
it is probable that the future economic benefits
associated with the expenditure will flow to the
Company

• Depreciation/ Amortizations
Depreciation is calculated using the straight¬
line method to allocate their cost, net of their
residual values, over their estimated useful
lives specified in schedule II to the Companies
Act, 2013 except for the following:

(a) Building - 30 years

(b) Plant and Machinery- 20 years

(c) M.S. Structure & FRP Gratings- 20 years

(d) Effluent Treatment Plant- 20 years

(e) Safety Equipment’s- 20 years

(f) Quality Control Instruments & R & D
Equipment’s- 10 years

(g) Office equipment’s- 5 years

(h) I T Equipment’s- 3 years

(i) Furniture and fixtures- 10 years

(j) Vehicles- 8 years

(k) Leasehold land - 60 years

Depreciation methods, useful lives and
residual values are reviewed at each reporting
date and adjusted if appropriate. An asset’s
carrying amount is written down immediately
to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount Gains and losses on
disposals are determined by comparing
proceeds with carrying amount. These are
included in profit or loss within other gains/
(losses).

G. Intangible assets:

• Recognition and initial measurement
Intangible assets with finite useful lives
that are acquired separately are carried at
cost less accumulated amortisation and
accumulated impairment losses. Amortisation
is recognised on a straight-line basis over
their estimated useful lives. The estimated
useful life and amortisation method are
reviewed at the end of each reporting year,
with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives
that are acquired separately are carried at
cost less accumulated impairment losses.

• Useful life and amortisation

I ntangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and impairment
losses. Amortisation is recognised on a
straight-line basis over the useful lives of the
asset from the date of capitalisation as below:

Computer software 3-5 years

The estimated useful life is reviewed at the
end of each reporting period and the effect
of any changes in estimate is accounted for
prospectively.

Intangible assets acquired in a business
combination viz. Goodwill, Patents, Copyrights
and Brands do not have definite useful life
and thus, are not amortised. However, these
assets are tested for impairment on an annual
basis. These are further tested for impairment
upon any indication of impairment subsequent
to annual testing.

• De recognition

Intangible assets are derecognised on
disposal, or when no future economic
benefits are expected from use or disposal.
Gains or losses arising from de-recognition
of an intangible asset are measured as the
difference between the net disposal proceeds
and the carrying amount of the asset and are

recognized in the statement of profit and loss
when the asset is derecognized.

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Mar 31, 2024

2.6 Significant accounting policies

A summary of the significant accounting policies applied in the preparation of the financial statements is as given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.

a) Investments in subsidiaries, associates and joint ventures

The investments in subsidiaries, associates and joint ventures are carried in these financial statements at historical ''cost'', except when the investment or a portion thereof, is classified as held for sale, in which case it is accounted for as Non-current assets held for sale and discontinued operations.

Where the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is transferred to the Statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to P & L.

b) Property, plant and equipment

Recognition and initial measurement

The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Major shut down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset. It includes professional fees and for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy based on Ind AS 23 - Borrowing costs. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of item can be measured reliably. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.

I n case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognized as interest expense and not included in cost of asset.

Depreciation and amortization estimated useful life and residual value

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than free hold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of assets, in which case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.

The property, plant and equipment acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term, if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term. Leasehold improvements are amortized over the period of lease which ranges from 1 to 99 years.

The company reviews the residual value, useful lives and depreciation method annually and if, expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis. An asset’s

carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

De-recognition

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the restated standalone statement of profit and loss when the asset is derecognized.

c) Intangible assets

Recognition and initial measurement

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Where intangible asset is acquired in a business combination, it is measured at its acquisition date fair value.

“Internally generated intangible asset is recognised as an asset in the books only and only when the company develops an identifiable intangible asset and the following criteria are satisfied:

It is technically feasible to complete the software so that it will be available for use

Management intends to complete the software and use or sell it

There is an ability to use or sell the software

It can be demonstrated how the software will generate probable future economic benefits

Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and

The expenditure attributable to the software during its development can be reliably measured”

Directly attributable costs that are capitalised as part of the intangible asset include employee costs and an appropriate portion of relevant overheads. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.

Useful life and amortisation

“Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and impairment losses. Amortisation is recognised on a straight-line basis over the useful lives of the asset from the date of capitalisation as below:

Computer software 3-5 years Non-compete fees 1-3 year(s)

The estimated useful life is reviewed at the end of each reporting period and the effect of any changes in estimate is accounted for prospectively.

Intangible assets acquired in a business combination viz. Goodwill, Patents, Copyrights and Brands do not have definite useful life and thus, are not amortised. However, these assets are tested for impairment on an annual basis. These are further tested for impairment upon any indication of impairment subsequent to annual testing.

De recognition

Intangible assets are derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. The Company has elected to continue with carrying value of all its intangible assets recognised as on transition date,

measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.

Impairment

At the end of each reporting year, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

I f the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss

G oodwill and intangible assets that do not have definite useful life are not amortised and are tested at least annually for impairment. If events or changes in circumstances indicate that they might

be impaired, they are tested for impairment once again.

d) Inventory

Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:

Raw material cost includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

Stores and spares cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

I n case of work in progress at raw material cost plus direct conversion and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs.

In case of finished goods-cost includes cost of direct material, labour, other direct cost and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs.

In case of scrap of goods, the same are valued at net realizable value.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost, except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value.

e) Cash and cash equivalents

Cash and cash equivalent comprise cash at banks and on hand and short-term deposits with original

maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

f) Share Capital

Ordinary Shares are classified as an equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buy back of ordinary shares are recognised as a deduction from equity, net of any tax effects.

g) Foreign currency transactions

The financial information is presented in Indian Rupee (T) which is also the functional currency of the Company, rounded off to nearest crores up to two decimals.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case may be.

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Mar 31, 2023

1. Corporate information

Neogen Chemicals Limited is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956 having Corporate Identity Number L24200MH1989PLC050919. Company has its registered office at Thane, Maharashtra. The Company is engaged in the business of manufacturing of eco - friendly speciality chemicals which are used in Pharmaceutical, Engineering & Agro-Chemical industries. Neogen has developed significant expertise in highly demanding field of Bromine Compounds, Lithium compounds & more recently advance intermediates for pharmaceutical industries & pesticides industries of world class standards. The principal place of business of the company are at Thane (HO), one unit of Factory at Mahape in Navi Mumbai and another unit of Factory at Karakhadi in District Vadodara, Gujarat & third site at Dahej SEZ, Gujarat is now operational for further expansion of business of Organic Chemistry & Lithium chemistry. The Company caters to both domestic and international markets. The Manufacturing facility is also having well equipped R & D and analytical labs. Neogen''s Karakhadi, Vadodara Facility is ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certified by Bureau Veritas Certification Holding SAS; Its Mahape, Navi Mumbai Facility is ISO 9001:2015 certified by Bureau Veritas Certification Holding SAS; and Dahej SEZ, Gujarat Facility is ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018 Certified by Bureau Veritas Certification Holding SAS and GMP Certified by SGS.

These financial statements are approved for issue by the Board of Director on May 13, 2023

2. Basis of preparation and Significant accounting policies

2.1 Basis of compliance

The accompanying standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India, including Indian Accounting Standards (Ind AS) prescribed under the Section 133 of the Companies Act,2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended and relevant provisions of the Companies Act ,2013.

2.2 Basis of preparation and presentation

The financial statements have been prepared on a historical cost basis, except for the following:

Certain financial assets and liabilities that are measured at fair value;

assets held for sale - measured at lower of carrying amount or fair value less cost to sell;

defined benefit plans - plan assets measured at fair value;

Current and non-current classification

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle (not exceeding twelve months) and other criteria set out in the Schedule III to the Act. Deferred tax assets and liabilities are classified as non- current only. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules,2015 and relevant amendment rules issued thereafter. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest crores as per the requirement of Schedule III of the Companies Act 2013, unless otherwise stated.

2.3 Functional and presentation currency

These standalone Financial Statements are presented in Indian rupees, which is also the Company''s functional currency. All amounts have been reported in INR, unless otherwise indicated.

2.4 Basis of measurement

The standalone Financial Statements have been prepared on a historical cost basis, except for the following:

Certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and

Net defined benefit (assets) / liabilities that are measured at fair value of plan assets less present value of defined benefit obligations

2.5 Use of estimates and judgements

The preparation of the standalone Financial Statements in accordance with Ind AS requires use of judgements, estimates and assumptions, which affects the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised prospectively.

This note provides an overview of the areas where there is a higher degree of judgement or complexity. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation. The areas involving critical estimates or judgements are :

• Useful life of intangible asset - Note 2.6 (c)

Defined Benefit obligation - Note 2.6 (q) (iii)

• Current Tax expense and current tax payable -Note 2.6 (m)

Deferred tax assets for carried forward tax losses -Note 2.6 (m)

Impairment of financial assets - Note 2..6 (b)

Estimates and judgements are regularly revisited

Estimates are based on historical experience and other factors, including futuristic reasonable information that may have a financial impact on the company.

2.6 Significant accounting policies

A summary of the significant accounting policies applied in the preparation of the financial statements is as given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.

a) Investments in subsidiaries , associates and joint ventures

The investments in subsidiaries, associates andjoint ventures are carried in these financial statements at historical ‘cost'', except when the investment or a portion thereof, is classified as held for sale, in

which case it is accounted for as Non-current assets held for sale and discontinued operations. Where the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is transferred to the Statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to P & L.

b) Property, plant and equipment

Recognition and initial measurement

The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes ( other than those subsequently recoverable from the tax authorities ), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Major shut down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset. It includes professional fees and for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy based on Ind AS 23 - Borrowing costs. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of item can be measured reliably. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.

I n case an item of property, plan t an d equ ipmen t is acquired on deferred payment basis, interest expenses included in deferred payment is

recognized as interest expense and not included in cost of asset.

Depreciation and amortization estimated useful life and residual value

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets ( other than free hold land and properties under construction ) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of assets, in which case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.

Description of Asset Class	Useful life as per Schedule II
Buildings	30 years
Plant and machinery	20 years
M.S. Structure & FRP Gratings	20 years
Effluent Treatment Plant	20 years
Safety Equipment''s	20 years
Quality Control Instruments & R & D Equipment''s	10 years
Office equipment''s	5 years
I T Equipment''s	3 years
Furniture and fixtures	10 years
Vehicles	8 years

The property, plant and equipment acquired under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term, if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term. Leasehold improvements are amortized over the period of lease which ranges from 1 to 99 years.

The company reviews the residual value, useful lives and depreciation method annually and if, expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis. An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.

De-recognition

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the restated standalone statement of profit and loss when the asset is derecognized.

c) Intangible assets

Recognition and initial measurement

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Where intangible asset is acquired in a business combination, it is measured at its acquisition date fair value.

Internally generated intangible asset is recognised as an asset in the books only and only when the company develops an identifiable intangible asset and the following criteria are satisfied:

It is technically feasible to complete the

software so that it will be available for use

Management intends to complete the

software and use or sell it

There is an ability to use or sell the software

It can be demonstrated how the software will generate probable future economic benefits

Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and

The expenditure attributable to the software during its development can be reliably measured”

Directly attributable costs that are capitalised as part of the intangible asset include employee costs and an appropriate portion of relevant overheads. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.

Useful life and amortisation

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and impairment losses. Amortisation is recognised on a straight-line basis over the useful lives of the asset from the date of capitalisation as below:

Computer software 3-5 years

Non-compete fees 1-3 year(s)

The estimated useful life is reviewed at the end of each reporting period and the effect of any changes in estimate is accounted for prospectively.

Intangible assets acquired in a business combination viz. Goodwill, Patents, Copyrights and Brands do not have definite useful life and thus, are not amortised. However, these assets are tested for impairment on an annual basis. These are further tested for impairment upon any indication of impairment subsequent to annual testing.

De recognition

Intangible assets are derecognised on disposal, or when no future economic benefits are expected from use or disposal .Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. The Company has elected to continue with carrying value of all its

intangible assets recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.

Impairment

At the end of each reporting year, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss

Goodwill and intangible assets that do not have definite useful life are not amortised and are tested at least annually for impairment. If events or

changes in circumstances indicate that they might be impaired, they are tested for impairment once again.

d) Inventory

Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:

Raw material cost includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

Stores and spares cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

I n case of work in progress at raw material cost plus direct conversion and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs.

In case of finished goods-cost includes cost of direct material, labour, other direct cost and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs.

In case of scrap of goods, the same are valued at net realizable value.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost, except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value.

e) Cash and cash equivalents

Cash and cash equivalent comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily

convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

f) Share Capital

Ordinary Shares are classified as an equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buy back of ordinary shares are recognised as a deduction from equity, net of any tax effects.

g) Foreign currency transactions

The financial information is presented in Indian Rupee (T) which is also the functional currency of the Company, rounded off to nearest crores up to two decimals.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case may be.

h) Provisions and contingent liabilities

Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognized for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence

available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.

Contingent liability is disclosed for:

Possible obligations which will be confirmed only by future events not wholly within the control of the Company or

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.

i) Revenue Recognition

The company manufactures and sells a range of products to various customers. In case of contracts with customers, revenue is recognised when the significant risk and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods to the degree usually associated with the ownership, and the amount of revenue can be measured reliably, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Revenue recognised in relation to these contracts in excess of billing is recognised as a Contract Asset. In remaining cases revenue is recognised over Company''s performance does not create an asset with alternative use to the Company and the entity has an enforceable right to payment for performance completed till date. Accumulated experience is used to estimate and provide for the discounts and returns and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability (included in other current liabilities)is recognised for expected returns from the customer. Liability (included in other financial liabilities) is recognised for expected volume

discounts payable to customers in relation to sales made until the end of the reporting period. Amounts disclosed as revenue are net of returns, discounts , volume rebates and net of goods and service tax. Incentives on exports are recognised in books after due consideration of certainty of utilisation / receipt of such incentives

j) Other income

a. Interest Income

Interest income is recognized on time proportion basis considering the amount outstanding and rate applicable. For all financial assets measured at amortized cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets.

b. Government grant

Grants and subsidies from the government are recognised when there is reasonable assurance that (i) the company will comply with the condition attached to them and (ii) the grant /subsidy will be received

Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises the related costs for which the grants are intended to compensate or when performance obligations are made.

Where the grant relates to an asset, it is recognized as deferred income and credited to income in equal amounts over the expected useful life of the related asset.

k) Employee benefits

Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.

l) Borrowing costs

Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the

asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalization of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.

m) Income taxes

The income tax expense recognized in the financial statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items is recognized outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).

Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside statement of profit and loss

(in OCI or equity depending upon the treatment of underlying item).

Minimum Alternate Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The Company reviews the same at each financial statement of assets and liabilities date and writes down the carrying amount of MAT credit entitlement to the extent it is not reasonably certain that the Company will pay normal income-tax during the specified period.

The Company has benefited from certain income tax incentives that the Government of India had provided for export of good or services from the units registered under the Special Economic Zones Act (SEZs), 2005. SEZ units which began the manufacturing of goods or provision of services on or after April 1, 2005 are eligible for a deduction of 100% of profits or gains derived from the export of goods or services for the first five years from the financial year in which the unit commenced the manufacturing of goods or provision of services and 50% of such profits or gains for further five years. Upto 50% of such profits or gains is also available for a further five years subject to creation of a Special Economic Zone Re-investment Reserve out of the profit for the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business as per the provisions of the Income tax Act, 1961

n) Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the financial year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the financial year. The weighted average number of

equity shares outstanding during the financial year is adjusted for events including a bonus issue.

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 period are adjusted for the effects of all dilutive potential equity shares.

o) Lease

The company has applied Ind AS 116 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under Ind AS 17.

As a lessee

The company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The company presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment'' and lease liabilities under financial liability in statement of financial position. (Refer Note 19)

Subsequently, the assets were accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases were classified as operating leases and were not recognised in the company''s statement of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received were recognised as an integral part of the total lease expense, over the term of the lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments”

The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Land under perpetual lease is accounted as finance lease which is recognised at upfront premium paid for the lease and the present value of the lease rent obligation. The corresponding liability is recognised as a finance lease obligation. Land under non-perpetual lease is treated as operating lease.

Operating lease payments for land are recognised as prepayments and amortised on a straightline basis over the term of the lease. Contingent rentals, if any, arising under operating leases are recognised as an expense in the period in which they are incurred.

p) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting done to the Chief Operating Decision Maker. The Company

operates in a single operating segment . The board of directors is collectively the company''s ‘Chief Operating Decision maker'' or ‘CODM'' within the meaning of -Ind AS 108.

Information about Major Customers

During the year ended 31 March 2023 and 31 March 2022 respectively, there was (one customer FY2022) who has contributed to 10% or more of the company''s revenue. The company is not reliant on revenue from transactions with any single external customer.

q) Significant accounting judgements, estimates and assumptions

When preparing the financial information management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.

Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:

Significant judgements:

(i) Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. The recognition of deferred tax assets and reversal thereof is also dependent upon management decision relating to timing of availment of tax holiday benefits available under the Income Tax Act, 1961 which in turn is based on estimates of future taxable profits.

(ii) Contingent liabilities

The Company is the subject of certain legal proceedings which are pending in various jurisdictions. Due to the uncertainty inherent

in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable, and the amount of the loss can be reasonably estimated.

(iii) Defined benefit obligation (DBO)

Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

(iv) Allowance for doubtful debts

The allowance for doubtful debts reflects management''s estimate of losses inherent in its credit portfolio. This allowance is based on Company''s estimate of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, dealer termination rates, write-offs and collections, the careful monitoring of portfolio credit quality and current and projected economic and market conditions. Should the present economic and financial situation persist or even worsen, there could be a further deterioration in the financial situation of the Company''s debtors compared to that already taken into consideration in calculating the allowances recognized in the financial statements.

(v) Litigation

From time to time, the Company might be subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties inherent in litigation. A provision

for litigation is made when it is considered probable that a payment will be made, and the amount of the loss can be reasonably estimated. Significant judgement is made when evaluating, among other factors, the probability of unfavorable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting period and revisions made for the changes in facts and circumstances

Sources of estimation uncertainty:

(i) Provisions

At each standalone statement of assets and liabilities date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from management''s estimates.

(ii) Recoverability of advances/receivables

At each standalone statement of assets and liabilities date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.

r) Business combination

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree if any. Acquisition-related costs are expensed as incurred.

At the acquisition date , the identifiable assets acquired and the liabilities assumed if any are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable. However, the following assets and

liabilities acquired in a business combination are measured at the basis indicated below:

Deferred tax assets or liabilities, and the assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with Ind AS 12 Income Tax and Ind AS 19 Employee Benefits respectively.

When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for noncontrolling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed.

If the fair value of the net assets acquired is in excess of the aggregate consideration transferred (bargain purchase), the company re-assesses whether it has correctly identified all of the assets acquired an all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) an accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in equity as capital reserve, without routing the same through OCI.

s) Investments is subsidiaries, joint ventures and associates

Investments in subsidiaries, joint ventures and associates are recognized at cost as per Ind AS 27. Except where investment accounted for at cost shall be accounted for in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, when they are classified as held for sale.

t) Investment and other financial assets

a. Classification

The Company classifies its financial assets in the following measurement categories:

i. those to be measured subsequently at fair value (either through other comprehensive income, or through the Statement of Profit and Loss), and

ii. those measured at amortised cost.

The classification depends on the Company''s business model for managing the financial assets and the contractual terms of the cash flows.

b. Measurement

At initial recognition, the Company measures a financial asset at its fair value. Transaction cost of financial assets carried at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.

u) Debt instruments:

Subsequent measurement of debt instruments depends on the Company''s business model for managing the assets and the cash flow characteristics of the assets. The Company classifies it''s debt instruments into following categories:

i. Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent safety payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method.

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

v) Short - term employee obligation

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the

period in which the employees render the related services are recognised in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled

w) Other long - term employee benefit obligations

The liabilities for earned leave and sick leave that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees upto the end of the reporting period using the projected unit credit method. The benefits are discounted using the discount rates for Government Securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurement as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.

a. Post - employment obligations

The company operates the following post employment schemes

(a) defined benefits plans such as gratuity and leave encashment, and

(b) defined contribution plans such as provident fund etc.

b. Leave and gratuity obligations

The liability or asset recognised in the balance sheet in the respect of defined benefit pension and gratuity plans in the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan asset. The define benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to the market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligations.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retain earnings in the statement of changes in equity and in the balance sheet.

c. defined contribution plans

Defined contribution plans such as provident fund etc., are charged to the Statement of Profit and Loss as and when incurred.

d. Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for this benefits. The Company recognises termination benefits at the earlier of the following dates: (a) when the company can no longer withdraw the offer of those benefits; and (b) when the Company recognises cost for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

x) Financial instruments

Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial

assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.

y) Financial assets

a) Recognition and initial measurement

The Company initially recognises loans and advances, deposits and debt securities purchased on the date on which they originate. Purchases and sale of financial assets are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value. In the case of financial assets not recorded at FVTPL, transaction costs that are directly attributable to its acquisition of financial assets are included therein.

b) Classification of financial assets and Subsequent Measurement

On initial recognition, a financial asset is classified to be measured at -

- Amortised cost; or

- Fair Value through Other Comprehensive Income (FVTOCI) - debt investment; or

- Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or

- Fair Value through Profit or Loss (FVTPL)

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:

The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL:

The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

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 AS 103 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 Statement of Profit and Loss, even on sale of investment. However, on sale/ disposal 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 Statement of Profit and Loss.

All other financial assets are classified as measured at FVTPL.

In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains and losses arising on remeasurement recognised in statement of profit or loss. The net gain or loss recognised in statement of profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other income'' line item. Dividend on financial assets at FVTPL is recognised when:

The Company''s right to receive the dividends is established,

It is probable that the economic benefits associated with the dividends will flow to the entity,

The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

Impairment

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss 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 Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months. If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous year, but determines at the end of a reporting year that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous year, the Company again measures the loss allowance based on 12-month expected credit losses.

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.

Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.

The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL and Interest income is recognised in profit or loss.

Recla