2.10 Provisions, contingent liabilities, and contingent assets
Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the reporting period, taking into account the
risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated
to settle the present obligation, its' carrying amount is the present value of those cash flows (when the effect of
the time value of money is material).

Contingent liabilities

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote, when there is:

- A possible obligation arising from past events, the existence of which will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Company or

- A present obligation that arises from past events where it is either not probable that an outflow of resources
will be required to settle the obligation or reliable estimate of the amount cannot be made.

Contingent assets

A contingent asset is neither recognised nor disclosed in the financial statements.

2.11 Financial Instruments

a) Initial Recognition and Measurement

Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the instruments. At initial recognition, financial assets (other than trade receivables)
and financial liabilities are 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 profit or loss ("FVTPL")) are added to or deducted from the 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 at Fair Value through Profit or Loss
are recognised in the Statement of Profit and Loss.

i) Financial assets

All financial assets are initially measured at fair value, plus in the case of financial assets not recorded
at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition
of financial assets. Trade receivables that do not contain a significant financing component are
measured at transaction price.

After initial recognition all financial assets (other than derivative instruments) meeting the relevant
criteria, are subsequently measured at amortised cost using the effective interest method. The Company
has not designated any financial asset as FVTPL or Fair Value through Other Comprehensive Income
("FVTOCI").

Debt instruments that meet conditions based on purpose of holding assets and contractual terms of
instrument are subsequently measured at amortised cost using effective interest method. All other
financial assets are measured at fair value. Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as Fair Value Through Profit or Loss. Interest
income is recognised in the statement of profit or loss and is included in the "Other income" line
item.

Impairment of Financial Assets

The Company applies the expected credit loss model for recognising impairment loss on financial
assets measured at amortised cost, trade receivables and other contractual rights to receive cash or
another financial asset.

For trade receivables and any contractual right to receive cash or another financial asset that result
from transactions that are within the scope of Ind AS 115, 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. The expected credit loss allowance has been made taking
into the account historical credit loss experience and adjusted for forward looking information.

ii) Financial Liabilities and equity instruments

Classification of debt or equity

Debt or equity instruments issued by the Company are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and the definitions of
financial liability and equity instrument.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the
proceeds received, net of direct issue costs.

Financial Liabilities

All financial liabilities (other than derivative financial instruments) are measured at amortised cost
using effective interest method at the end of the reporting period.

b) Derecognition of Financial Assets and Liabilities

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire or when the Company transfers the contractual rights to receive the cash flows of the financial
asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or
in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset and does not retain control of the financial asset. The Company derecognises a financial
liability (or a part of financial liability) when the contractual obligation is discharged, cancelled or expires.

Derivative Financial Instruments

Whenever Company holds derivative financial instruments such as foreign exchange forward contracts
and principal swap to manage its exposure to foreign currency exchange rate risks. Derivatives are initially
recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these
contracts are remeasured at fair value at the end of each reporting period and changes are recognised in
the Statement of Profit and Loss.

Fair value measurement

'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the
most advantageous market to which the Company has access at that date. The fair value of a liability
reflects its non-performance risk. The Company's accounting policies and disclosures, in a few cases,
require the measurement of fair values, for both financial and non-financial assets and liabilities. Wherever
available, the Company measures the fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as active if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no
quoted price in an active market, then the Company uses valuation techniques that maximise the use of
relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into account in pricing a transaction.

2.12 Cash flow statement

The Cash Flow Statement is prepared by the indirect method set out in Ind AS 7 on Cash Flow Statements and
presents the cash flows by operating, investing and financing activities of the Company.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value,
net of outstanding bank overdrafts as they are considered an integral part of the Company's cash management.

2.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the
internal organisation and management structure. The operating segments are the segments for which separate
financial information is available and for which operating profit / loss amounts are evaluated regularly by the
Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance.
The Company identifies secondary segment on the basis of geographical location of the customers.

2.14 Employee benefits

Compensation to employees for services rendered is measured and accounted for in accordance with Ind AS 19
on Employee Benefits.

Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined
contribution plans such as provident and other funds, which fall due for payment within a period of twelve
months after rendering service, are charged as expense to profit or loss in the period in which the service is
rendered.

Employee Benefits under defined benefit plans such as gratuity which fall due for payment after completion of
employment are measured by the projected unit credit method, on the basis of actuarial valuations carried out
by third party actuaries at each balance sheet date. The Company's obligation recognised in the balance sheet
represents the present value of obligations as reduced by the fair value of plan assets.

Defined benefit costs are categorized as follows:

• Service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);

• Net interest expense or income; and

• Remeasurement

The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss in
the line item 'Employee benefits expense'.

Actuarial Gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan
assets (excluding net interest) are recognised immediately in other comprehensive income. Remeasurement
recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified
to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest
is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or
asset.

The retirement benefit obligation recognised in the balance sheet represents the deficit or surplus in the
Company's defined benefit plans.

2.15 Borrowing costs

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other
borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.16 Earnings per share

The Company reports basic and diluted Earnings Per Share (EPS) in accordance with Ind AS 33 on Earnings Per
Share. Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by
the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.

3 RECENT INDIAN ACCOUNTING STANDARDS (IND AS)

During the year the Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
March 31, 2025, MCA has notified Ind AS -117 Insurance Contracts and amendments to Ind AS 116- Leases,
relating to sale and leaseback transactions, applicable to the Company w.e.f April 2024. The Company has
reviewed the new pronouncements and based on its evaluation has determined it does not have any significant
impact in its Financial statements.

4 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In application of the Company's accounting policies, which are described in note 2, the directors of the Company
are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are based on various
factors including historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.

4.1 Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at
the end of the reporting period that may have a risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.

a) Useful lives of property, plant and equipment

The Company reviews the estimated useful lives of property, plant and equipment at the end of each
reporting period. During financial years ended March 31, 2024 and 2023, there were no changes in
useful lives of property, plant and equipment. The Company at the end of each reporting period, based
on external and internal sources of information, assesses indicators and mitigating factors of whether the
plant (cash generating unit) may have suffered an impairment loss. If it is determined that an impairment
loss has been suffered, it is recognised in the Statement of Profit and Loss.

b) Impairment of trade receivables

The Company estimates the probability of collection of accounts receivable by analysing historical
payment patterns, customer status, customer creditworthiness and current economic trends. If the financial
condition of a customer deteriorates, additional allowances may be required.

c) Contingencies

In the normal course of business, contingent liabilities may arise from litigations and other claims against
the company. There are certain obligations which management has concluded, which based on all
available facts and circumstances, are not probable of payment or difficult to quantify reliably and such
obligations are treated as contingent liabilities and disclosed in the notes but are not provided for in the
financial statements.

(i) The Board of Directors of the Company have recommended Final Dividend of ' 183.83 lakhs at ' 2.50 per share for the financial year ended
March 31, 2025 to be paid on fully paid Equity Shares. The Final dividend is subject to the approval of shareholders at the ensuing Annual
General Meeting and has not been included as liability in these financial statements.

(ii) Nature of reserves

(a) Capital reserve

Capital Reserves includes :

i) ' 26.06 lakhs of various capital incentive grants received from time to time from Government of Maharashtra on the basis of
investments made in plant and machinery as backward area incentives.

ii) ' 427.50 lakhs of reserves was created in an earlier year consequent to surrender of tenancy rights for redevelopment in exchange
for office premises. The office premises have since been disposed off.

Both the capital reserves are not available for distribution to the shareholders as dividend.

(b) Securities premium

Security premium account is created when shares are issued at premium. The Company can use this reserve in accordance with the
provisions of the Act.

The Company's principal financial liabilities comprise borrowings, trade payables and other financial liabilities. The main purpose of these
financial liabilities is to support its operations. The Company's principal financial assets include trade and other receivables and cash that are
derived directly from its operations.

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

• Credit risk ;

• Liquidity risk ; and

• Market risk

i. Risk management framework

The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's
primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company's
risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies
and processes are reviewed regularly to reflect changes in market conditions and the Company's activities. The Board of Directors and
the Audit Committee is responsible for overseeing the Company's risk assessment and management policies and processes.

ii. Credit risk management

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Company's receivables from customers. The Company is exposed to credit risk from its
operating activities (primarily trade receivables) and from its financing activities, including deposits with bank and other financial
instruments.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase
in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the
Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial
recognition.

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to
which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and
impairment that represents its estimate of incurred losses in respect of trade and other receivables.

(F) Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and
prices (such as interest rates, foreign currency exchange rates) or in the price of market risk-sensitive instruments as a result of such adverse
changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables
and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk,
interest rate risk. Thus, the Company's exposure to market risk is a function of investing and borrowing activities and revenue generating and
operating activities.

Currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account and equity, where any transaction
references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the entity.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from
fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar (USD) and Euro (EUR), against the
functional currencies of the Company.

Notes 40

As required under Rule 3(1) of the Companies (Accounts) Rules, 2014, the Company is required to use such accounting software for maintaining
its books of account which has a feature of recording audit trail (edit log) facility and the same has to be operated throughout the year for all
transactions recorded in the software and the audit trail feature should not be capable of being tampered.

The Company has used accounting software which has a feature of recording audit trail (edit log) facility and the same has operated throughout the
year for all relevant transactions recorded in the software at the application level, except that no audit trail was enabled at the database level for
accounting software SAP to log any direct data changes as the same is maintained at HANA Database which cannot be changed.

The Company has complied with the statutory requirements of preservation of the audit trail for transactions recorded in the software except for
audit trail at the database level for accounting software SAP to log in any direct changes which was not enabled till March 31, 2025.

Notes 41

On September 30, 2024, the Company has filed Draft Letter of Offer with Securities and Exchange Board of India (SEBI) in connection with the
proposed Right Issue of Equity shares. SEBI vide its letter dated March 12, 2025 intimated certain deficiencies / non confirmations which are
required to be rectified / complied. The Company has since submitted appropriate responses addressing the matter. The expenditure of ' 67.18
lakhs incurred till March 31, 2025 in connection with the proposed Right Issue is included under the head Other Current assets as Prepaid
expenses. The same will be charged to Securities premium account on completion of Right issue of Equity shares.

Notes 42

Additional Regulatory Information

1) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by
the Company to or in any other persons or entities, including foreign entities ("Intermediaries”) with the understanding that the Intermediary
shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from
any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or
entities identified by or on behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.

3) The Company did not have any charges or satisfaction which were yet to be registered with ROC beyond the statutory period.

4) The Company did not have any transaction which had not been recorded in the books of account that had been surrendered or disclosed as
income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of
the Income Tax Act, 1961).

5) The Company do not hold any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made
thereunder.

6) Monthly & Quarterly return (refer note 17) filed by the Company for borrowings from banks or financial institutions.

7) The Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined
under Companies Act, 2013,) either severally or jointly with any other person.

8) The Company has not revalued any of its Property, Plant and Equipment during the year.

9) Title deeds of Immovable Property (free hold land) are held in name of the Company.

10) The Company is not declared as wilful defaulter by any bank or financial Institution or other lender.

For and on behalf of the Board of Directors
Sunshield Chemicals Limited

Jeet Malhotra Dr. Maya Parihar Malhotra

Managing Director & CEO Director

DIN: 07208234 DIN: 00302976

Ashish Agarwal Amit Kumashi

Chief Financial Officer Company Secretary

Place: Mumbai

Date: May 05, 2025