E. Transaction with related parties

In accordance with the applicable provisions of the Income Tax Act, 1961, the Company is required to use certain specified methods in assessing that the transactions with the related parties, are carried out at the arm’s length price and is also required to maintain prescribed information and documents to support such assessment. The appropriate method to be adopted will depend on the nature of transactions / class of transactions, class of associated persons, functions performed and other factors as prescribed. Based on certain internal analysis carried out, management believes that transactions entered into with the related parties were carried out at arm’s length prices. The Company is in the process of updating the transfer pricing documentation for the financial year ended 31 March 2025. In the opinion of the management, the same would not have an impact on these financial statements. Accordingly, the financial statements do not include the effect of the transfer pricing implications, if any.

3.30 Segment Information

The Company is engaged in the manufacture and sale of products which form part of one product group which represents one operating segment, as the Chief Operating Decision Maker (CODM), reviews business performance at an overall company level. Entity-wide disclosure as required by Ind AS 108 “Operating Segment” are as follows:

3.31.1 (i) Central Excise authorities issued show cause notices proposing to withdraw CENVAT credit availed by the Company on hydrochloric acid used in the manufacture of ossein consumed for gelatin production amounting to ? 350.75 Lakhs in earlier years, which was disputed by the Company. As a matter of prudence, the Company had created a provision of ? 132.29 Lakhs and balance amount of ? 218.46 Lakhs was disclosed as a contingent liability during the prior years. During the previous year, the Central Excise department had issued an order in favour of the Company, based on which the provision carried in the books amounting to ? 132.29 lakhs was reversed in the previous year and the balance amount of ? 218.46 lakhs was removed from the list of contingent liabilities.

3.31.2(i) The Income tax authorities has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the appellate authority. In the opinion of the management, no provision is considered necessary for the same at this stage.

The Company has received tax orders from the Income tax authorities reducing brought forward losses (including unabsorbed depreciation) amounting to ? 930.16 Lakhs (31 March 2024: ? 930.16 Lakhs ), primarily on denial of certain expenditure upon completion of tax assessment for the assessment years 2006-07, 2007-08, 2008-09, 2012-13, 2013-14, 2014-15 and 2015-16. . The Company’s appeal against the said demands are pending before appellate authorities in various stages of litigation.

Further, the Company has received tax orders from the transfer pricing authorities reducing brought forward losses (including unabsorbed depreciation) amounting to ? 512.07 Lakhs (31 March 2024: ? 512.07 Lakhs), primarily on transfer pricing adjustments upon completion of tax assessment for assessment years 2006-07, 2007-08 and 2008-09. The Company’s appeal against the said demands are pending before appellate authorities in various stages of litigation.

The Company is contesting these litigations and the management believes that its position will be likely to be upheld in the appellate process and therefore will not impact these financial statements. Consequently, no provision has been created in the financial statements for the above.

Apart from the above, during the current year the Company has received show cause notice citing income escaping assessment and consequent penalty under section 271(1) of the Income-tax Act, 1961 amounting to ? 184 Lakhs for the assessment year 2012-13, to which the Company has filed its response. The Company does not expect an unfavourable outcome in respect of this matter.

3.31.2(ii) Includes demands raised by the Central Excise Authorities (including penalty thereon but excluding interest) for higher excise duties on a product of the Company and towards cenvat credits availed aggregating to ? 7.21 Lakhs (31 March 2024: ? 7.21 Lakhs ) which have been disputed by the Company before the appellate authorities; and show cause notices received from such authorities for service tax on certain deemed services and ineligible cenvat credit availed including interest aggregating to ? 88.72 Lakhs (31 March 2024: ? 88.72 Lakhs), which have been represented before adjudicating authorities and demand raised by the central excise for disputed cenvat credit amounts amounting to ? 123.13 Lakhs (31 March 2024: ? 123.13 Lakhs). In the opinion of the management these demands/ show cause notices issued are not sustainable, hence no provision is considered at this stage.

3.31.2(iii) During an earlier year, the Company had received a demand as water cess for extraction of river water for industrial use during the period from 01 April 1979 to 31 December 2010, in accordance with a Government order issued on 25 July 2009. The Company filed

a writ petition against such order with the Honourable High Court of Kerala. Honourable High Court of Kerala, by observing that Article 265 of the Constitution of India provide that no tax shall be levied or collected except by the authority of law, allowed the petition filed by the Company.

On a prudent basis, the Company had created a provision of ? 61.83 Lakhs towards disputed charges for the period from 25 July 2009 to 31 December 2010, being periods subsequent to issue of the Government order.

During the previous year, the Company had received an additional demand from the Executive Engineer, Additional Irrigation Division, Thrissur, amounting to ? 20.22 Lakhs towards additional cess on water charges for the period 1 April 2017 to 31 March 2024. During the year, the Company has filed its response with details of its water consumption during such period which was accepted by the Additional Irrigation Division, based on which the residual demand was settled.

3.31.2(iv) During an earlier year, the customs authorities had issued show cause notice-cum-demand proposing classify / reassess import of a certain item of raw materials, which was objected by the Company. During earlier years, the Commissioner of Customs had issued an order confirming demand of ? 877.15 Lakhs along with a penalty of ? 1,091.21 Lakhs. The Honourable Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore vide Order dated 31 March 2024 has set aside the demand of ? 1,819.66 Lakhs and confirmed the demand of ' 148.70 Lakhs. The Company provided for ' 148.70 Lakhs (31 March 2024: ' 148.70 Lakhs) being the applicable duty as per the CESTAT order. During the year, the customs department has filed an appeal before the honourable High Court of Kerala challenging the CESTAT order. Pending adjudication of this matter, the amount of ? 1819.66 Lakhs has been disclosed as contingent liability as on 31 March 2025 (31 March 2024: ? 1,819.66 Lakhs). The management has assessed and concluded that the position taken in this matter is tenable.

3.31.2(v) During the prior years, the Company had received demands from Goods and Service Tax Department, Gujarat and Goods and Tax Department, Kerala amounting to ? 66.74 Lakhs and ? 70.06 Lakhs (including interest and penalty) on account of availment of ineligible input tax credit and output tax payable on certain supplies. The Company received an expert opinion that the demands would not be sustainable and hence the aggregate amount of ? 136.80 Lakhs has been disclosed as contingent liability in the books as on 31 March 2025 (31 March 2024: ' 136.80 Lakhs).

3.32 Commitments

3.32.1 Estimated amount of contracts remaining to be executed on capital account ? 2,251.02 Lakhs (including ? 1,305.74 Lakhs for the expansion projects of collagen peptide and gelatin. (31 March 2024: ' 1,966.15 Lakhs )

3.32.2 In response to the Company’s application intended to regularise certain constructions in the land, at the Ossein Division, Koratty (which is classified as paddy land as per the Government records), the Company received a demand notice during the year from the Deputy Collector, Thrissur with fees of ? 269.82 Lakhs for change in classification of the aforementioned land to dry land as per the Kerala Conservation of Paddy Land and Wetland Act, 2008. The Company represented before the Revenue Department, Government of Kerala to reduce the said conversion fees as the same was calculated based on commercial land rates as against the actual status of the said land (residential land) as per Government records. The final decision on the conversion fees by the Revenue Department is awaited as on date.

3.33 In respect of raw materials imported during the financial year 2016-17 at concessional rate of duty under the Advance Authorisation Scheme, the Company has fulfilled the export obligation which is required to be fulfilled as per the Licensing Norms and has settled the differential duty along with interest for the portion of raw material which is used for domestic market requirements. However for certain portion of the material exported, the advance license number was not endorsed in the shipping bill due to oversight. The Company is in the process of getting the endorsement effected by Customs Department for the exports so made. The Company’s application for endorsement of Advance Authorisation Number in the shipping bill for exports is pending for disposal before the Customs Authorities at this stage. As a matter of prudence, the provision amounting to ? 68.28 Lakhs (31 March 2024: ' 68.28 Lakhs) created in earlier years is retained in the books of accounts.

3.33.1 The Company has export obligation of ? 979 Lakhs (31 March 2024: ? 444 Lakhs) on account of advance authorisation scheme laid down by the Government of India. The Company expects to fulfil the obligation in due course of time.

3.34 In the opinion of the management, current financial assets and other current assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

3.35 Leases

Rental expense recorded for short-term leases during the year ended 31 March 2025 is ' 36.06 Lakhs. (31 March 2024: ' 66.73 Lakhs) The Company’s significant leasing arrangements, other than land, are in respect of office premises and warehouses taken on lease for which rent expenses has been charged in the Statement of Profit and Loss. The arrangements generally range between 4 months to 11 months and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given.

The Company’s lease asset classes consist of leases for land, refer note 3.01 to the financial statements. The Company has not entered into any other material lease arrangements.

There are no leases not yet commenced to which the Company is committed.

3.37 A. Defined benefit plan

The Company has gratuity fund for its employees. The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity at the rate of 15 days basic salary for each year of service until the retirement age. As at 31 March 2025 and 31 March 2024 the plan assets were invested in insurer managed funds.

Risk exposure:

Valuation are based on certain assumptions, which are dynamic in nature and may vary over time. As such valuations of the company is exposed to the following risks:

a) Salary increase: higher than expected increase in salary, will increase the defined benefit obligation.

b) Discount rate: the defined benefit obligation calculated use a discount rate based on Government bonds. If bond yields fall, the defined benefit will increase.

c) Mortality and disability: if the actual deaths and disability cases are lower or higher than assumed in the valuation, it can impact the defined benefit obligation

d) Withdrawals: if the actual withdrawals are higher or lower than the assumed withdrawals or there is a change in withdrawal races at subsequent valuations, it can impact defined benefit obligation.

e) The plan assets of the Company is invested in insurer managed fund of LIC. Changes in market factors might affect the return on such fund which is futuristic.

3.37 B. Defined contribution plan

The Company provides benefits in the nature of defined contribution plans viz, provident fund, employee state insurance scheme and superannuation fund for qualifying employees. Under these schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ? 357.63 Lakhs (31 March 2024: ? 331.03 Lakhs) towards contribution for mentioned funds in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

C. Sensitivity analysis Description of Risk Exposures

Valuations are performed on certain basic set of pre-determined assumptions which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit which are as follows:

Interest rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of liability (as shown in financial statements).

Liquidity risk: This is the risk that the Company is not able to meet the short term benefit payouts. This may arise due to non availability of enough cash /cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary escalation risk: The present value of the above benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (for example, increase in the maximum liability on gratuity of ? 20,00,000).

Asset liability mismatching or market risk: The duration of the liability is longer compared to duration of assets exposing the Company to market risks for volatilities / fall in interest rate.

Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis are given below:

The management assessed that the fair value of cash and cash equivalents, trade receivables, loans, other financial assets, trade payables, working capital loans and other financial liabilities approximate the carrying amount largely due to short-term maturity of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

(ii) Fair value of financial assets and liabilities measured at amortised cost

The management assessed that for amortised cost instruments, fair value approximate largely to the carrying amount.

(iii) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for financial instruments.

Level 2: the fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(iv) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the fair value of quoted investments is determined using the market value for the investment. The fair value estimates are included in level 1.

- the fair value of foreign exchange forward contracts is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.

- the fair value of other equity instruments have been computed based on income approach using a discounted cash flow model, which discounts the estimated cash flows using the appropriate discount rates.

3.39 Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on it’s financial performance. The primary market risk to the Company is foreign exchange exposure risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer.

The Company’s risk management activity focuses on actively securing the Company’s short to medium-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below.

A1 Trade and other receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India, USA, Japan and Europe. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company is exposed to a concentration of customer risk with respect to its trade receivable balances. At the reporting date, trade receivable balance from five customer represented 68 % (2024 - four customers represented 68 %) of the total trade receivable balances, respectively.

On account of adoption of Ind AS 109, Financial instruments, the Company uses expected credit loss model to assess the impairment loss or gain. The provision for expected credit loss takes into account available external and internal credit risk factors and Company’s historical experience for customers. To enable users of the financial statement to assess the Company’s credit risk exposure and understand its significant credit risk concentrations, the Company has disclosed except for trade receivables, by credit risk rating grades, the gross carrying amount of financial assets and the exposure to credit risk.

A2 Cash and cash equivalents

The credit risk for cash and cash equivalents and derivative financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Financial assets that are neither past due nor impaired

Cash and cash equivalents, advances recoverable, loans and advances to employees, security deposit and other financial assets are neither past due nor impaired.

Financial assets that are past due but not impaired

There is no other class of financial assets that is past due but not impaired.

(B) Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, usually on a month on month basis. Long-term liquidity needs for a 360-day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Company’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.

The Company is exposed to market risk through its use of financial instruments and specifically to currency risk and interest rate risk, which result from both its operating and investing activities.

C1 Foreign currency Risk

The Company operates internationally and a significant portion of the business is transacted in USD, Japanese Yen JJPY) and EURO currencies and consequently the Company is exposed to foreign exchange risk through its sales and purchases from overseas suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Indian Rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are adversely affected as the Indian Rupee appreciates / depreciates against these currencies.

Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. These include outstanding derivatives contracts entered into by the Company and unhedged foreign currency exposures.

Sensitivity

The following table details the Company’s sensitivity to a 1% increase and decrease in the ? against the relevant foreign currencies. 1% is the sensitivity rate used when reporting foreign currency risk internally to Key Managerial Personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 1% change in foreign currency rates, with all other variables held constant. A positive number below indicates an increase in profit or equity where ? strengthens 1% against the relevant currency. For a 1% weakening of ? against the relevant currency, there would be a comparable impact on profit or equity, and the balances below would be negative.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

(ii) Assets

The Company’s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

C3 Equity price risk

The Company’s listed securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The investment in listed and unlisted equity securities are not significant.

3.40 Capital management

For the purpose of the Company’s capital management, capital includes issued capital, additional paid up capital and all other equity reserves attributable to the equity holders of the company. The primary objective of the Company’s capital management is to maximize the shareholder value.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade payables, less cash and bank balances.

3.41 Events after the Balance sheet date

The Board of Directors have recommended a final dividend of ? 8/- per equity share (80% of the face value of ? 10/- per share, including 20% special dividend to commemorate the golden jubilee year of operations of the Company). This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all shareholders on the Register of Members. Dividends will be taxed in the hands of receipient, hence there will be no liability in the hands of Company.

3.42 Disclosure pursuant to Securities (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 186 of the Companies Act, 2013

The details of loans, guarantees and investments under Section 186 of the Companies Act read with the Companies (Meeting of Board and its powers)rules 2014 are as follows:

i) Details of investments are given in note 3.03.

ii) Details of loans given are - Nil

iii) Details of guarantees given - Nil

3.43.1 a) As per the information available with the Company, the Company has no transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

b) There has been no charges or satisfaction yet to be registered with ROC beyond the statutory period.

c) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall

1) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or

2) provide any guarante, security or the like on behalf of the ultimate beneficiaries.

The Company has not received any fund from any persons or entities, including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the company shall

1) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or

2) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

d) The Company has not traded or invested in crypto currency or virtual currency during the financial year ended March 31, 2025.

e) The title deeds of all the immovable properties held by the Company disclosed in the financial statements are held in the name of the Company.

f) The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.

g) The Company has complied with the number of layers prescribed under the Section 2(87) of the Companies Act, 2013 read with Companies (Restriction on number of layers) Rules, 2017.

h) No loans or advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, that are repayable on demand or without specifying any terms or period of repayment.

Note: The difference arises from the fact that the stock statements submitted to banks were prepared on a provisional basis prior to the finalisation of the monthly accounts.

3.44 No proceeding has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

3.45 The Company has not been declared as a willful defaulter by any bank or financial institution or other lender during the period.

3.46 The Company does not have any surrendered or undisclosed income during the year in the tax assessments under the Income-tax Act, 1961.

3.47 The Ministry of Corporate Affairs (MCA) has prescribed proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses SAP as accounting software for maintaining its books of accounts. Since enabling the feature of recording audit trail at the database level to log any direct data changes results in significant reduction in the performance capabilities of the software, the same was not enabled. However, the audit trail (edit logs) at the application level of the accounting software has operated throughout the year for all relevant transactions recorded in the software. Furthermore, the audit trail has been preserved by the Company as per the statutory requirements for the record retention.

Further, the Company has used accounting software Zoho Books for recording the retail sales with effect from 1 March 2024. The said accounting software is operated by a third-party software service provider. The ‘Independent Service Auditor’s Assurance Report on the Description of Controls, their Design and Operating Effectiveness’ (‘Type 2 report’ issued in accordance with SAE 3402, Assurance Reports on Controls at a Service Organisation) is not available for the year ended 31 March 2025.

3.48 Prior year comparatives have been regrouped/reclassified where necessary to conform with the current period/year classification. The impact of such restatements / regroupings are not material to financial statements.