Auditor Report of Aarti Pharmalabs Ltd.

Mar 31, 2025

We have audited the accompanying standalone financial
statements of Aarti Pharmalabs Limited (the "Company"),
which comprise the Balance Sheet as at 31 March 2025, the
Statement of Profit and Loss (including the statement on Other
Comprehensive Income), the Statement of Changes in Equity
and the Statement of Cash Flows for the year ended on that
date and notes to the financial statements (including summary
of the material accounting policies and other explanatory
information (hereinafter referred to as the "standalone
financial statements").

In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone
financial statements give the information required by the
Companies Act, 2013 (the "Act") in the manner so required
and give a true and fair view in conformity with the Indian
Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended, ("Ind AS") and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at 31 March 2025 and its profit, and total
comprehensive income, changes in equity and its cash flows
for the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the standalone financial statements
in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Act. Our responsibilities under
those standards are further described in the Auditor''s
Responsibilities for the audit of the standalone financial
statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India ("ICAI") together
with the independence requirements that are relevant to
our audit of the standalone financial statements under the
provisions of the Act and the Rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements and the ICAI''s Code of Ethics. We
believe that the audit evidence obtained by us is sufficient
and appropriate to provide a basis for our audit opinion on
the standalone financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
standalone financial statements of the current period. These
matters were addressed in the context of our audit of the
standalone financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion
on these matters. We have determined the matters described
below to be the key audit matters to be communicated in our
report.

Sr. Key Audit Matter No.	Auditor''s Response
1 Accuracy, Completeness, and disclosure with reference	Our audit procedures, amongst others, include the following -
to Ind AS-16 of Property, Plant and Equipment (including Capital Work-in-Progress	Obtaining an understanding of operating effectiveness of management''s internal control over capital expenditure.
The carrying value of property, plant and equipment (including capital work in progress) as on 31 March 2025 of ''1,31,438.90 Lakhs (as on 31 March 2024 of '' 99,449.95 Lakhs) includes ''16,904.86 Lakhs capitalised /transferred from capital work in progress during the year (''12,942.03 Lakhs for FY 2024).	We assessed Company''s process regarding maintenance of records, valuation and accounting of transactions pertaining to Property, Plant and Equipment including Capital Work in Progress with reference to Indian Accounting Standard 16: Property, Plant and Equipment.
Cost Recognition of Property, Plant and Equipment as specified in Ind AS 16 is based on completion of asset construction activities and management assessment and judgement that the asset is capable of operating in the manner intended.	We have reviewed management judgment pertaining to estimation of useful life and depreciation of the Property, Plant and Equipment as well as its assessment that the asset is ready for its intended use.

Sr. Key Audit Matter No.	Auditor''s Response
The asset capitalisation is the outcome of various procurements, approvals from operations experts in the Company and judgements by the management and therefore, required significant audit attention. Refer Note 4: Property, Plant and Equipment in Notes to the Standalone Financial Statements.	We have verified the capitalization of borrowing cost incurred on qualifying asset in accordance with the Indian Accounting Standard 23: Borrowing Costs. Ensuring adequacy of disclosures in the standalone financial statements.

INFORMATION OTHER THAN THE STANDALONE
FINANCIAL STATEMENTS AND AUDITOR''S REPORT
THEREON

The Company''s Board of Directors is responsible for the
preparation of the other information. The other information
comprises information included in the Management
Discussion and Analysis, Board''s Report including annexures
thereto, Business Responsibility and Sustainability Report,
Corporate Governance Report, and Shareholder Information,
but does not include the standalone financial statements
and our auditor''s report thereon, which is expected to be
made available to us after the date of this auditor''s report.
Our opinion on the standalone financial statements does not
cover the other information, and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the standalone financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the standalone
financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated.

When we read the additional information mentioned above
that will be included in the Annual Report, if we conclude that
there is a material misstatement therein, we are required to
communicate the matter to those charged with governance
and take appropriate action as applicable under the relevant
laws and regulations.

If, based on the work we have performed on the other
information obtained prior to the date of this auditor''s report,
we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report in this regard.

RESPONSIBILITIES OF THE MANAGEMENT AND
THOSE CHARGED WITH GOVERNANCE FOR THE
STANDALONE FINANCIAL STATEMENTS

The Company''s Board of Directors is responsible for the
matters stated in section 134(5) of the Act with respect to
the preparation of these standalone financial statements that
give a true and fair view of the financial position, financial

performance, including other comprehensive income, changes
in equity and cash flows of the Company in accordance with
the Ind AS and other accounting principles generally accepted
in India. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions
of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies;
making judgements and estimates that are reasonable and
prudent; and design, implementation and maintenance of
adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness
of the accounting records, relevant to the preparation and
presentation of the standalone financial statements that give
a true and fair view and are free from material misstatement,
whether due to fraud or error.

In preparing the standalone financial statements, management
is responsible for assessing the Company''s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative
but to do so.

The Board of Directors are also responsible for overseeing the
Company''s financial reporting process.

AUDITORS'' RESPONSIBILITIES FOR THE AUDIT OF
THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about
whether the standalone financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor''s report that includes our
opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone
financial statements.

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement
of the standalone financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.

• Obtain an understanding of internal financial control
relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under
section 143(3)(i) of the Act, we are also responsible
for expressing our opinion on whether the Company
has adequate internal financial controls with reference
to standalone financial statements in place and the
operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the management.

• Conclude on the appropriateness of management''s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Company''s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention
in our auditor''s report to the related disclosures in the
standalone financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of
our auditor''s report. However, future events or conditions
may cause the Company to cease to continue as a going
concern.

• Evaluate the overall presentation, structure and content
of the standalone financial statements, including the
disclosures, and whether the standalone financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the
standalone financial statements that, individually or in
aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the standalone Ind
AS financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i) planning

the scope of our audit work and in evaluating the results
of our work; and (ii) to evaluate the effect of any identified
misstatements in the standalone financial statements.

We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.

We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where
applicable, related safeguards.

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the standalone financial statements
of the current period and are therefore the key audit matters.
We describe these matters in our auditor''s report unless law
or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.

REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order,
2020 (the "Order") issued by the Central Government in
terms of Section 143(11) of the Act, we give in "Annexure
A" a statement on the matters specified in paragraphs 3
and 4 of the Order.

2. As required by Section 143(3) of the Act, based on our
audit we report that:

a) We have sought and obtained all the information and
explanations which to the best of our knowledge
and belief were necessary for the purposes of our
audit.

b) In our opinion, proper books of account as required
by law have been kept by the Company so far as
it appears from our examination of those books.
Insofar as the modification on maintaining an audit
trail in the accounting software is concerned, refer
paragraph (i) (vi) below;

c) The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, Statement
of Changes in Equity and the Statement of Cash

Flows dealt with by this Report are in agreement
with the books of accounts.

d) In our opinion, the aforesaid financial statements
comply with the Ind AS specified under Section
133 of the Act read with Rule 7 of the Companies
(Accounts) Rules, 2014.

e) On the basis of the written representations received
from the directors taken on record by the Board of
Directors, none of the directors is disqualified as on
31 March 2025 from being appointed as a director
in terms of Section 164(2) of the Act.

f) The modification arising from the maintenance
of the audit trail on the accounting software,
comprising the application and database are as
stated in the paragraph (i) (vi) below on reporting
under Rule 11(g);

g) With respect to the adequacy of the internal
financial controls over financial reporting of the
Company and the operating effectiveness of such
controls, refer to our separate Report in "Annexure
B". Our report expresses an unmodified opinion on
the adequacy and operating effectiveness of the
Company''s internal financial controls with reference
to standalone financial statements.

h) In our opinion and to the best of our information
and according to the explanations given to us, the
remuneration paid by the Company to its directors
during the year is in accordance with the provisions
of Section 197 of the Act.

i) With respect to the other matters to be included in
the Auditor''s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014,
as amended, in our opinion and to the best of our
information and according to the explanations given
to us:

i. The Company has disclosed the impact of
pending litigations on its financial position in
its standalone financial statements - Refer
note 35 to the standalone financial statements.

ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses.

iii. There were no amounts, required to be
transferred to the Investor Education and
Protection Fund by the Company.

iv. (a) The Management has represented that,

to the best of its knowledge and belief as
disclosed in note no. 41 to the standalone
financial statements, no funds (which
are material either individually or in the
aggregate) 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 or entity, including
foreign entity ("Intermediaries"), with
the understanding, whether recorded in
writing or otherwise, that the Intermediary
shall, whether, 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 on behalf of the
Ultimate Beneficiaries;

(b) The Management has represented,
that, to the best of its knowledge and
belief, as disclosed in note no. 41 to the
standalone financial statements, no funds
(which are material either individually or
in the aggregate) have been received
by the Company from any person or
entity, including foreign entity ("Funding
Parties"), with the understanding, whether
recorded in writing or otherwise, that
the Company shall, whether, 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;

(c) Based on the audit procedures that
have been considered reasonable and
appropriate in the circumstances, nothing
has come to our notice that has caused us
to believe that the representations under
sub-clause (i) and (ii) of Rule 11(e), as
provided under (a) and (b) above, contain
any material misstatement.

v. As stated in note no 14 to the standalone

financial statements

(a) The Interim dividend and final dividend
proposed in the previous year, declared
and paid by the Company during the year

is in accordance with Section 123 of the
Act, as applicable.

(b) The Board of Directors of the Company
have proposed final dividend for the
year which is subject to the approval
of the members at the ensuing Annual
General Meeting. The amount of dividend
proposed is in accordance with section
123 of the Act, as applicable.

vi. Based on our examination which included test
checks, the Company has used the accounting
software for maintaining its books of account
which has a feature of recording audit trail (edit
log) facility in respect of the application and
the same has operated throughout the year
for all relevant transactions. We did not come
across any instance of the audit trail feature
being tampered with in respect of accounting
software. Normal/Regular users are not
granted direct database or super user level
access.

However, unauthorised changes to the
database by a super user specifically does not
carry the feature of a concurrent real time audit
trail.

With the exception of audit trail functionality
at the database level as mentioned above,
we confirm that the Company has preserved
the audit trail in accordance with statutory
requirements for record retention.

For Gokhale & Sathe

Chartered Accountants
FRN: - 103264W

Uday Girjapure

Partner

Membership No. 161776
UDIN: 25161776BMOHSG1657

Place: Mumbai
Date: May 10, 2025

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Mar 31, 2024

We have audited the accompanying financial statements of Aarti Pharmalabs Limited ("the Company"), which comprise the Balance Sheet as at 31 March, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "standalone financial statements")

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its profit (including total comprehensive income), its cash flows and the changes in equity for the year ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (the Act). Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Results section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statement under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters	Auditors'' Response
1 Accuracy, Completeness, and disclosure with reference	Our audit procedures, amongst others, include the following -
to Ind AS-16 of Property, Plant and Equipment (including Capital Work-in-Progress	a)	Obtaining an understanding of operating effectiveness of management''s internal control over capital expenditure.
The carrying value of property, plant and equipment (including capital work in progress) as on 31 March	b)	We assessed Company''s process regarding maintenance
2024 is of '' 99,449.95 Lakhs and as on 31 March 2023 of		of records, valuation and accounting of transactions
'' 90,930.81 Lakhs, includes '' 12,942.03 lakhs capitalised/		pertaining to Property, Plant and Equipment including
transferred from capital work in progress during the year		Capital Work in Progress with reference to Indian
2023-24 (''20,305.00 lakh for FY 2022-23).		Accounting Standard 16: Property, Plant and Equipment.
Cost Recognition of Property, Plant and Equipment as	c)	We have reviewed management judgment pertaining to
specified in IndAS 16 is based on completion of asset		estimation of useful life and depreciation of the Property,
construction activities and management assessment		Plant and Equipment as well as its assessment that the
and judgement that the asset is capable of operating in the manner intended.		asset is ready for its intended use.

Key Audit Matters	Auditors'' Response
The asset capitalisation is the outcome of various	d)	We have verified the capitalization of borrowing cost
procurements, approvals from operations experts in		incurred on qualifying asset in accordance with the Indian
the Company and judgements by the management and		Accounting Standard 23: Borrowing Costs.
therefore, required significant audit attention.	e)	Ensuring adequacy of disclosures in the standalone
Refer Note 4: Property, Plant and Equipment in Notes to the standalone financial statements.		financial statements.

INFORMATION OTHER THAN FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON

The Company''s Board of Directors Is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including annexures to Board''s report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder''s information but does not include the standalone financial statements, consolidated financial statements and our auditor''s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information to the extent made available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

MANAGEMENT''S RESPONSIBILITIES FOR THE STANDALONE FINANCIAL RESULTS

The Company''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give

a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the financial reporting of the Company.

AUDITOR''S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL RESULTS

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, Under Section 143(3)

(i) of the Act, we are also responsible for expressing our

opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

• Conclude on the appropriateness of the use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor''s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial results represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our Auditor''s Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a

matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2020 (the Order), issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, based on our audit, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements.

b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d. I n our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on 31 March, 2024, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2024, from being appointed as a director in terms of section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer our separate report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting of the Company.

g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its Directors during the year is in accordance with the provisions of Section 197 of the Act read with Schedule V of the Act

h. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements. (Refer Note no 35 to Standalone Financial Statements)

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31^st March, 2024.

(iii) There were no amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

(iv) (a) The management has represented that,

to the best of its knowledge and belief, as disclosed in Note no. 41 to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 on behalf of the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief, as disclosed in Note no. 41 to the Standalone financial statements, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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; and

(c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) above contain any material misstatement.

(v) As stated in Note no. 14 to the standalone financial statements

a) The Interim dividend declared and paid by the company during the year is in accordance with Section 123 of the Act, as applicable.

b) The Borad of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting, The dividend declared is in accordance with Section 123 of the Act, to the extent it is applies to declaration of dividend.

(vi) Reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, and proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1^st April 2023.

Based on our examination which included test checks, the Company has used accounting software for maintaining books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1 April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31 March, 2024.

For Gokhale & Sathe Chartered Accountants FRN: - 103264W

Tejas Parikh Partner

Membership No. 123215 UDIN: 24123215BKBOAB2972

Place: - Mumbai Date: - 13 May 2024

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Mar 31, 2023

Aarti Pharmalabs Limited

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the accompanying standalone financial statements of Aarti Pharmalabs Limited ("the Company"), which comprise the Balance Sheet as at March 31,2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended on that date and a summary of significant accounting policies and other explanatory information (hereinafter referred as "standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

BASIS OF OPINION

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters	Auditors'' Response
Valuation, Accuracy, Completeness and disclosures pertaining to Inventories with reference to Ind AS 2. The Company inventories consists of raw materials and components, work in progress, finished goods, stores and spares, fuel and packing materials.	Our audit approach consisted of the following:- • We assessed the Company''s process regarding maintenance of records, valuation and accounting of transactions relating to inventories as per the Indian Accounting Standard.
Refer Note no: 5 of the standalone financial statements: Inventories of Rs 53,768 lakhs constitute 56.07% of the current assets of the company as at March 31, 2023. Correctness, completeness and valuation are critical for reflecting true and fair financial results of operations and hence identified as key audit matter.	• We have evaluated the design of internal controls relating to recording and valuation of Inventory. • We have carried out substantive audit procedures at financial and assertion level to verify the allocation of overheads to inventory. • We have undertaken physical verification of inventories on test check basis.
	• We have verified management process of physical verification of inventories and reconciling differences with the books of accounts.

INFORMATION OTHER THAN FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including annexures to Board''s report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder''s information but does not include the standalone financial statements, consolidated financial statements and our auditor''s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

MANAGEMENT''S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern

basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the financial reporting process of the Company.

AUDITORS'' RESPONSIBILITY FOR THE AUDIT OF STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an Auditor''s Report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

• Conclude on the appropriateness of use of the going concern basis of accounting by the Management and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor''s Report to the related disclosures in the

Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor''s Report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our Auditor''s Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

OTHER MATTERS

I. Comparative Audited Standalone Financial Statements

a) The comparative audited standalone financial statements for the year ended March 31, 2022 includes numbers for the period July 1, 2021 (Appointed date) to March 31, 2022 of pharma business undertaking were audited by erstwhile

statutory auditors, Kirtane & Pandit, LLP (FRN: 105215W/W100057), Chartered Accountants of Aarti Industries Limited (demerged company) whose annual auditors report dated May 27, 2022 had expressed an unmodified opinion on financial statements.

b) The comparative audited financial statements of the Company for the year ended 31 March, 2022 (prior to giving effect to scheme of arrangement) were audited by erstwhile statutory auditors of the Company, Jatin Vora & Associates, Chartered Accountants (FRN: 118024W) of Aarti Pharmalabs whose annual auditors report dated 20 May 2022 had expressed an unmodified opinion on financial statements.

II. Effect of Scheme of Arrangement

a) The Scheme of Arrangement for the demerger of Pharma Business Undertaking from Aarti Industries Limited ("the demerged company") to its wholly owned subsidiary Aarti Pharmalabs Limited ("the resulting company" or "the Company") between the two companies and their respective shareholders under Sections 230 to 232 of the Companies Act, 2013 (‘Act'') and all other applicable provisions of the Companies Act, 2013 ("the Scheme") was approved by Honourable National Company Law Tribunal (NCLT), Ahmedabad Bench on September 21,2022. Accordingly, all the assets and liabilities pertaining to the Pharma Business Undertaking, including supporting manufacturing units, employees, cash and cash equivalents and investments (including investments in subsidiaries and joint ventures), as defined in the Scheme, stand transferred and vested into the resulting company from its Appointed Date i.e., from July 1, 2021.

b) Pending receipt of the NCLT Order approving scheme of arrangement, financial statements of the Demerged Company (before giving effect to scheme of arrangement) for the year ended March 31, 2022 were approved by the Board of Directors of Demerged Company in their meeting held on May 27, 2022 and audited by erstwhile statutory auditors (refer para I (a) above). Subsequently, the same were approved by their shareholders in the general meeting held on September 26, 2022.

c) We, Gokhale & Sathe, Chartered Accountants (FRN: 103264W) were appointed as statutory auditors of the Company to fill casual vacancy caused due to resignation of Jatin Vora & Associates, Chartered Accountants, through resolution passed by

shareholders of the Company through postal ballot on January 10, 2023.

d) The management approached us to perform agreed upon procedures on standalone financial statements prepared to give effect to scheme of arrangement. Accordingly, we have performed agreed upon procedures as per Standard on Related Services (SRS) 4400, "Engagements to Perform Agreed-upon Procedures regarding Financial Information", issued by the Institute of Chartered Accountants of India and we report that as follows:

• standalone financial statements of pharma business undertaking prepared by the management of the Company for period from July 1, 2021 to March 31, 2022 is as per accounting treatment and information mentioned in the scheme.

• It is drawn from standalone financial statements prepared and audited by erstwhile statutory auditors of Demerged Company as mentioned in I (a) above.

• It is extracted from the books of accounts maintained by the Company having records/ information maintained for pharma business and speciality chemical business.

REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2020 (the Order), issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, based on our audit, we report that:

a. Wa. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on March 31, 2023, taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2023, from being appointed as a director in terms of section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer our separate report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting of the Company.

g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its Directors during the year is in accordance with the provisions of Section 197 of the Act read with Schedule V of the Act

h. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements. (Refer Note no 31 to Standalone Financial Statements)

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

(iii) There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

(iv) (a) The management has represented that,

to the best of its knowledge and belief, as disclosed in Note no. 44 to the standalone financial statements, 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 person or entity, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 on behalf of the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief, as disclosed in Note no. 44 to the Standalone financial statements, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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; and

(c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) above contain any material misstatement.

(v) The Interim dividend declared and paid by the Company during the year and until the date of this report is in accordance with section 123 of the Act. The Board of Directors of the Company has not proposed final dividend for the FY 2022-2023.

(vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023 and accordingly reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For Gokhale & Sathe

Chartered Accountants Firm Registration Number: 103264W

Chinmaya Deval

Partner

Membership Number: 148652 UDIN: 23148652BGSVBX8895

Place: Mumbai Date: May 12, 2023