2 (ii) Leases

Company as a lessee

The Company has lease contracts for lands and buildings used In Its operations. The Company's obligations under Its leases are secured by the lessor's title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased asset.

The Company also has certain leases with lease terms of 12 months or less and with low value of lease rent. The Company applies the shortterm lease' and 'lease of low-value assets' recognition exemptions for these leases.

The Company has single class of equity shares having a par value of Rs. 10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the company's residual assets on winding up. The equity shares are entitled to receive dividend as declared from time to time. Dividend, if any, proposed by the Board of Directors is subject to approval of shareholders in an annual general meeting except in the case of interim dividend. The voting rights of equity shareholders on a poll (not on show of hands) are in proportion to their share of the paid-up equity share capital of the Company.

The Company has issued 5,82,500, 0.01°/o Redeemable non cumulative preference shares of Rs. 100 each at a premium of Rs. 100 each and are redeemable at a premium of Rs. 100 each upon expiry of 20 years from the date of allotement i.e. 4th July, 2019. These preference share holders have priority over equity share holders on dividend payment and capital repayment in case of winding up of the Company. The voting rights of the persons holding the Preference Shares shall be in accordance with the provisions of Section 47 and other applicable provisions, if any, of the Companies Act, 2013.

(a) Working capital facilities from bank is secured by first charge by way of hypothecation of inventories, receivables, bills, and other chargeable current assets of the Company (both present and future) and extension of first mortgage / hypothecation charge on the entire Property, Plant and Equipment of the Company except certain Property, Plant and Equipment financed by bodies corporate . The same is also personally guaranteed by Chairman cum Managing director and a relative and carries interest rate of 9.26% - 11.15% per annum linked with 1 year MCLR (previous year -11.15% per annum linked with 1 year MCLR).

(b) Unsecured loan of Rs. 100.00 Lakhs (31st March, 2023: Rs. Nil lakhs) from a body corporate is repayable in the year 2024-25 and carries interest rate 14.00% per annum.

As per the terms of the contract with its customers, all performance obligations are completed at point of time since the Company has a right to receive consideration from its customers for all completed performance obligations. Accordingly, the Company has availed the practical expedient available under paragraph 121 of Ind AS 115 and dispensed with the additional disclosures with respect to performance obligations that remained unsatisfied (or partially unsatisfied} at the balance sheet date. Further, since the terms of the contracts directly identify the transaction price for each of the completed performance obligations, in all material respects, there are no elements of transaction price which have not been included in the revenue recognised in the Financial Statement. Also, there is no difference between the contract price and the revenue from contract with customers.

a} For Unsatisfied performance obligation (contract liabilities}, refer note no.22.

b) The above revenues have been recongnised at point of time.

c) Payment terms with customers generally ranges between 0 to 150 days from the completion of performance obligation. Considering the same, the Company elects to use practical expedient as given in IND AS 115 "Revenue from contracts with customers”, hence there are no significant financing component in any transaction with the customers.

d) Sale of the products within india Rs. 7,231.26 lakhs (Previous Year Rs. 8,446.72 lakhs) and outside india Rs. 1,737.49 lakhs (Previous Year Rs. 2,736.23 lakhs) are mainly through intermediaries.

e) For contract assets and balances, refer note no. 7.

33 Earning per Share (EPS)

Basic EPS amounts are calculated by dividing the profit/(loss) for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit/(loss) attributable to equity holders (after adjusting impact on profit of dilutive potential equity shares) by the aggregate of weighted average number of equity shares outstanding during the year and the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

C Others, not considered as Contingent liability

(i) The Company has procured certain capital goods in earlier years under EPCG Scheme at concessional rate of duty against commitment to fulfil export obligation. As on 31st March, 2024 the Company is contingently liable to pay differential custom duty Rs. 123.55 lakhs (31 March 2023: Rs. 123.55 lakhs) on balance fulfilment of export obligation. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time and expect no cash outflow on this account.

(ii) The Company has procured certain raw materials under advance license scheme without payment of custom duty against commitment to fulfil export obligation. As on 31st March, 2024 the Company is contingently liable to pay custom duty Rs. 183.02 Lakhs (31 March 2023-Rs.24.86 lakhs) on balance fulfilment of export obligation. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time, and expect no cash outflow this account.

(ii) Defined Benefit Plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability is being partially contributed to the scheme formed and administrated by LIC.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2024. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

F. Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks

as follow -

A) Salary Increases- Higher than expected increase in salary will increase the defined benefit obligation.

B) Investment Risk - Assets / liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability / Assets.

C) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan's liability.

D) Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawals, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the employee benefit of a short career employee typically costs less per year as compared to a long service employee.

B. Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial Instruments by valuation technique: Level 1 inputs are quoted prices /net asset value (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices (unadjusted) included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

The Company has assessed that the fair value of trade receivables, cash and cash equivalents, other bank balances, other current financial assets, trade payables and other current financial liabilities approximate to their carrying amounts largely due to the short-term maturities of these instruments. Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined present value. Similarly, unquoted equity instruments in subsidiaries company have been considered at cost less impairment, if any, and has been excluded in the fair value measurement disclosed below.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

- Borrowings are evaluated by the Company based on parameters such as interest rates.

- The fair value of other financial liabilities, is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

- The fair values of the Company's interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. No own non- performance risk as at 31st March 2024 was assessed. The following table provides the fair value measurement hierarchy of the Company's assets and liabilities.

Significant unobservable inputs considered in Level 3 Fair valuation are as under:-

(I) Valuation of lease hold Land (right of use Assets) was carried out by Market Approach uses prices and other relevant Information generated by market transactions involving comparable assets and considers qualitative and quantitative factors (Comparable companies valuation method) by using market multiples or matrix pricing (compare with Benchmarks) in financial year 2023-24. It reveals that similar properties are available for sale in nearby area in the range of Rs 20,500 to Rs 22,000 per Square Yard depending upon various attributes such as size, shape, location, frontage, frontage to depth ration, marketability, demand & supply of similar properties in the said locality.

(ii) (a) In the year of issuance, valuation of preference shares was carried out by independent valuer using NPV of projected cash flows based on discounted cash flow method, wherein NPV of the preference shares measured based on security available, statement of credit rating of instruments, trading in stock exchange, etc.

The estimated fair value of RPS is Rs 67.98 Lakhs as on allotment date i.e. 4th July 2019 considering repayment period of 20 years and market interest rate of 14.20%.

(b) Rate of return considered 14.20% which includes risk free return of 7.20% based on 20 years bond rate and Risk premium of 7.00%. Risk premium has been considered due to the reasons like lack of liquidity due to unquoted instruments, declining operations since March 2019, customer concentration Risk, other business risk as per credit rating which has also downgraded.

II. Financial risk management objectives and policies

The Company's principal financial liabilities, comprise borrowings, trade and other payables and lease liabilities. The main purpose of these financial liabilities is to finance and support the Company's operations. The Company's principal financial assets include loans, trade and other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds investment in subsidiary companies measured at cost , unless otherwise as stated.

i. Risk management framework

The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of properly defined framework.

The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company's Audit Committee oversees compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including Loans, deposits with banks and a financial institution and other financial instruments.

Trade receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The Company Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the President of the Company. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties.

The Company establishes a provision for expected credit losses that represents its expected credit losses in respect of trade receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.

The Company has taken the credit insurance policy for its domestic customers to mitigate the financial loss in case default in payment. Risk on export customers is covered through the ECGC Ltd.

The gross carrying amount of trade receivables is Rs. 4,923.18 Lakhs (31 March 2023: Rs.3,717.82 Lakhs ).

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. In addition, the Company's liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

iv. Market risk

Market risk Is the risk that the fair value of future cash flows of a financial Instrument will fluctuate because of changes In market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits. The Company is not effected by equity price risk.

a. Currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency (Rs.). The risk is measured through a forecast of highly probable foreign currency cash flows. Currency risks related to the principal amounts of the Company's foreign currency payables, have been naturally hedged.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

Interest rate risk

interest rate risk Is the risk that the fair value or future cash flows of a financial Instrument will fluctuate because of changes In market Interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the loan given and borrowings taken. Currently the Company's borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

41 Segment information

Information about geographical areas

The board of directors of the Company which have been identified as being the chief operating decision maker (CODM), evaluate the Company's performance. Based on identical products the Company deals in, which have similar risks and rewards, the entire business has been considered as a single segment i.e. Empty Capsules, in terms of Ind AS-108 on segment reporting.

The Empty Capsules segment is managed on a worldwide basis, but manufacturing facilities and sales offices are primarily in India.

The geographic information analyses, the Company's revenue and non-current assets by the Company's country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.

Major Customer

One major customer (Previous year: Two major customers) have individually contributed more than 10% of the revenue from operation of the Company.

42 Capital management

For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maximise the shareholder value.

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 debt divided by total capital plus debt. The Company includes within debt, interest bearing loans and borrowings.

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 year and previous year.

⁴⁷ Additional regulatory information required by Schedule III to be disclosed in the financial statements:

I) The Company has no transaction and/or outstanding balance with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 as Identified to the extent of struck off companies details available on the public domain.

II) No proceedings have been Initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Amendment Act, 2016 and rules made thereunder.

III) The Company has not been declared wilful defaulter by any bank or financial Institution or government or any government authority.

Iv) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

v) There Is no undisclosed Income under the tax assessments under the Income Tax Act, 1961 for the year ending March 31,2024 and March 31,2023 which needs to be recorded In the books of account.

vi) The Company has not traded or Invested In crypto currency or virtual currency during the current or previous year.

vII) Utilisation of borrowed funds and share premium:-

a) The Company during the year has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

b) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) during the year, that the Company shall 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 provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

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

Ix) All charges creation and satisfaction thereof are registered with ROC within the statutory period.

48 The Company having borrowing facility from banks on the basis of security of current assets, the amount shown in quarterly returns or statement were derived from the unaudited and provisional books of account. As regards the disclosure of discrepancies, if any, envisaged to be disclosed as part of additional information were not made due to unfinished summary of reconciliation in this regards. However, the management of company do not foresee any reasons for material discrepancies nevertheless figures submitted in quarterly returns or statement were provisional and unaudited in nature and subject to reconciliation.

49 Accruals to employees were earlier classified under Other Current Liabilities. Since Accruals to employees are settled in cash, these are financial Instruments, accordingly, in order to give more appropriate presentation, the Company has reclassified previous year figures, amounting Rs. 102.63 lakhs, to Other Current Financial Liabilities to conform current year classification.

The Accompanying notes are an Integral part of these standalone financial statements