1. The Board of Directors of the company at its meeting held on June 17, 2022 approved investment in GLS Pharma Limited (GLS) through subscription of 204,819 equity shares for an aggregate consideration of '93.5 (constituting 17% of the equity share capital of GLS) and acquisition of 409,339 equity shares from the selling shareholders for an aggregate consideration of '187 (constituting 34% of the equity share capital of GLS).

During the Quarter ended June 30, 2022 the company subscribed to 204,819 equity shares of GLS consequent to execution of share subscription and purchase agreement. During the year on satisfaction of the closing conditions, the company acquired the additional 409,339 equity shares. As at March 31, 2023 the company holds 51% of the equity shares in GLS.

2. Investment of '4.1 (March 31, 2022 ' Nil) on account of fair valuation of corporate guarantee given by the Company on behalf of Lyfius Pharma Private Limited, a wholly - owned subsidiary of Aurobindo Antibiotics Private Limited

Provision for impairment

I nvestments are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable amount of the investment is less than its carrying amount, an impairment loss is recognised.

The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the company has based its determinations of value-in-use include :

a. ) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth

rate thereafter.

b. ) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term

growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

c. ) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the discount

rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.

c) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of '1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

For the year ended March 31, 2023, the amount of interim dividend per share declared as distributions to equity shareholders was '3.0 (March 31,2022: '4.5).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(C) Terms of borrowings

(i) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of 4% to 755% (March 31, 2022: interest of 4%).

(ii) All unsecured working capital demand loans carry interest rate in the range of 4.25% to 7.75% (March 31,2022:4.25%).

(iii) All secured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 15 basis points (March 31, 2022: respective LIBOR plus 10 to 25 basis points) with maturity within 6 months.

(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 160 basis points and respective EURIBOR plus 0 to 150 basis points for EURO and 4.7% linked to 3Month SONIA for GBP (March 31, 2022: respective LIBOR Minus (-5) to Plus 25 basis points) with maturity within 6 months.

(v) All unsecured bills discounted carry interest rate in the range of respective EURIBOR Plus 40 to 75 basis points (31 March 2022: respective LIBOR plus 0 to 2 basis points).

(vi) All secured bills discounted carry interest rate in the range of respective EURIBOR Plus 5 basis points.

(vii) Due to phasing out of LIBOR during the year ended 31 March 2022, Reserve Bank of India has replaced LIBOR with Secured Overnight Finance Rate (SOFR). This change does not have a material impact on carrying value of working capital loans.

Corporate guarantee given by the Company are in relation to its subsidiaries which aggregate to '4,140 (March 31,2022 '3,590). Subsidiaries have availed loan against the said corporate guarantee which have been considered as contingent liabilities (refer note 37).

In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to allotment of certain lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honorable Appellate Tribunal, land belonging to APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of '131.6 with a bank as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the Central Bureau of Investigation (CBI) Special Court, in the assessment of the Management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.

38 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.

39 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. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company monitors capital using ‘adjusted net debt to total equity ratio’. For this purpose, adjusted net debt is defined as total borrowings, less cash and cash equivalents and other bank balances.

C. 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 Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports to the board of directors on its activities.

The Company’s risk management policies are established to identify and analyse the risks being 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 regularly 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 how management monitors 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 result of which are reported to the audit committee.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including fluctuations in foreign currency exchange rates , interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.

i. 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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

Trade receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Company’s standard payment and delivery terms are offered. The Company’s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.

The Company’s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Loan given to subsidiaries

Credit risk related to loan given to subsidiaries is not expected to be material.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to '25,958.8 (31 March 2022 : '8,229.4 ).

The Company’s maximum exposure to credit risk as at 31 March 2023 and 31 March 2022 is the carrying value of each class of financial assets.

ii. Liquidity risk

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

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. 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, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

c) Commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Company’s purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company’s raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Company’s business are generally more volatile. Cost of raw materials forms the largest portion of the Company’s cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2020, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

42 TRANSFER OF BUSINESS OF UNIT-10, UNIT-16, UNIT-4 AND UNIT-18

The Board of Aurobindo Pharma Limited on February 27, 2021 had approved the transfer of its oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh to its wholly-owned subsidiary APL Healthcare Limited through a slump sale. Undertaking was transferred for consideration of '13,152.7 million.

The Board of Aurobindo Pharma Limited in their meeting held on May 31, 2021 approved Transfer of business undertaking comprised in Unit-16 of the Company located at TSIIC, SEZ, Polepally Village, Jadcherla Mandal, Mahbubnagar district, Telangana, to Eugia Sez Private Limited, India ( formerly known as Wytells Pharma Private Limited), a wholly owned step-down subsidiary of the Company and 100% subsidiary of Eugia Pharma Specialities Limited. Undertaking was transferred for consideration of '2,941.2 million.

The Board of Aurobindo Pharma Limited in their meeting held on July 1, 2021 approved the transfer of business undertaking comprised in Unit-4 of the Company located at Pashamylaram, Pattancheru Mandal, Sangareddy district, Telangana, to Eugia Pharma Specialities Limited, a wholly owned subsidiary of the Company. Undertaking was transferred for consideration of '9,383.2 million.

Due to the above transfers the Company has recorded a capital gain tax of '251.7 million and a reversal of deferred tax amounting to '610.7 million.

The Board of Directors of the Company as part of Company’s Verticalization of Vaccines Business, in its meeting held on December 31, 2021 approved the sale and transfer of Unit 18 of the Company located at Survey No.69, 70, 71 & 72, Indrakaran Village, Kandi Mandal, Sangareddy District - 502203, Telangana, to Auro Vaccines Private Limited, a wholly owned subsidiary of the Company. This transfer is aimed at segregation of the vaccines business and subsidiarization of vaccines business in an special purpose vehicle. The slump sale of Unit 18 is effective from January 1, 2022 for a lumpsum consideration of '3,275.5 million (on a cash free basis). Unit 18 is yet to commence commercial operations.

51 ADDITIONAL REGULATORY INFORMATION

The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act. 2013 in respect of certain disclosures.

Amendments are applicable from April 1, 2021. The Company has incorporated the changes as per the said amendment in

the financial statements and has also changed comparative numbers wherever applicable.

Other Statutory Information:

(i) There are no proceeding initiated or pending against the Company as at March 31, 2023, under Benami Property Transactions Act, 1988 (as amended in 2016).

(ii) The Company is not declared a willful defaulter by any bank or financial Institution or other lender.

(iii) The Company has recorded all transactions in the books of account that has been surrendered. There are no previously unrecorded incomes and related assets that were considered during the year, no unrecorded incomes were identified as income for tax assessments.

(iv) The Company has not entered into any transaction with the companies struck off as per Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.

(v) The details of funds that 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 person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

(vi) The Company has not received any fund from any party(s) (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.

(vii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(viii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions and are in agreement with the books of account.

(ix) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(x) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.

(xi) No scheme of arrangement has been approved by the competent authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.

53 The standalone financial statements of the Company for the year ended March 31,2022, were audited by the M/s BSR & Associates LLP, Chartered Accountants, the predecessor auditor, who have expressed an unmodified opinion vide their report dated May 30, 2022.

54 In connection with the preparation of the standalone financial statements for the year ended March 31,2023, the Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels of authorisation and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these standalone financial statements in its meeting held on May 27, 2023 in accordance with the provisions of Companies Act, 2013.