Notes to Accounts of Gem Aromatics Ltd.

Mar 31, 2026

(2.13) Provisions and Contingent Liabilities
Provisions:

Provisions are recognised when there is a present legal
or constructive obligation as a result of a past events,
it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate
of the expenditure required to settle the present obligation
at the Balance sheet date. Provisions are not recognised
for future operating losses. Where there are a number of
similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one
item included in the same class of obligations may be small.

If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due
to the passage of time is recognised as a finance cost.

Contingent Liabilities:

Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which
will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the
control of the company or a present obligation that arises
from past events where it is either not probable that an
outflow of resources will be required to settle or a reliable
estimate of the amount cannot be made. The company
does not recognise a contingent liability but discloses its
existence in the Standalone financial statements.

(2.14) Financial Instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value
through profit or loss.

The classification of financial assets at initial recognition
depends on the financial asset''s contractual cash flow
characteristics and the company''s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component, the
company initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs that are attributable to the
acquisition of financial asset. Trade receivables that do not
contain a significant financing component are measured at
the transaction price determined under Ind AS 115. Refer
to the accounting policies in section 2.09 for Revenue from
contracts with customers.

In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and
interest (SPPI)'' on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed
at an instrument level. Financial assets with cash flows
that are not SPPI are classified and measured at fair value
through profit or loss, irrespective of the business model.

The company''s business model for managing financial
assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial
assets classified and measured at amortised cost are
held within a business model with the objective to hold
financial assets in order to collect contractual cash flows

while financial assets classified and measured at fair value
through OCI are held within a business model with the
objective of both holding to collect contractual cash flows
and selling.

Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the company
commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets
are classified in following categories:

- Financial assets at amortised cost

- Financial assets at fair value through profit or loss

- Financial assets at fair value through other
comprehensive income (FVTOCI) with recycling of
cumulative gains and losses

- Financial assets designated at fair value through
OCI with no recycling of cumulative gains and losses
upon derecognition

A ‘financial asset'' is measured at amortised cost if both the
following conditions are met:

a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost is
calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortisation is included in finance income
in the profit or loss. The losses arising from impairment
are recognised in the profit or loss. The company''s
financial assets at amortised cost includes loans and other
financial assets.

A ‘financial asset'' is measured at FVOCI if both the following
conditions are met:

a) The objective of the business model is achieved both
by collecting contractual cash flows and selling the
financial assets, and

b) The asset''s contractual cash flows represent SPPI.

Upon initial recognition, the company can elect to classify
irrevocably its equity investments as equity instruments

designated at fair value through OCI when they meet the
definition of equity under Ind AS 32 Financial Instruments:
Presentation and are not held for trading. The classification
is determined on an instrument-by-instrument basis. Equity
instruments which are held for trading and contingent
consideration recognised by an acquirer in a business
combination to which Ind AS 103 applies are classified as
at FVTPL.

Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised as other
income in the statement of profit and loss when the right of
payment has been established, except when the company
benefits from such proceeds as a recovery of part of the cost
of the financial asset, in which case, such gains are recorded
in OCI. Equity instruments designated at fair value through
OCI are not subject to impairment assessment.

Financial assets at fair value through profit or loss are
carried in the balance sheet at fair value with net changes
in fair value recognised in the statement of profit and
loss. This category includes investments in mutual funds.
Dividends on such investments are recognised in the
statement of profit and loss when the right of payment has
been established.

(2.14) Financial Instruments ( continued )
Derecognition

A financial asset (or, where applicable, a part of a financial
asset or part of a company of similar financial assets) is
primarily derecognised (i.e. removed from a company''s
balance sheet) when:

- The rights to receive cash flows from the asset have
expired, or

- The company has transferred its rights to receive cash
flows from the asset and either

(a) the company has transferred substantially all the
risks and rewards of the asset,

(b) the company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.

Impairment of financial assets

A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it
is impaired. A financial asset is considered to be impaired, if
objective evidence indicates that one or more events have
had a negative effect on the estimated future cash flows of
that asset.

For trade receivables, the company applies a simplified
approach in calculating ECLs. Therefore, the company does

not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.

Subsequent measurement

For purposes of subsequent measurement, financial
liabilities are classified in two categories:

• Financial liabilities at fair value through profit or loss

• Financial liabilities at amortised cost (loans and
borrowings)

Derecognition

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the
net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities simultaneously.

Derivative financial instruments

Derivatives are initially recognized at fair value on the date
a derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting
period. The accounting for subsequent changes in fair
value depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being
hedged and the type of hedge relationship designated.

The Company enters into forward exchange contracts to
manage its exposure to foreign currency risks arising from
forecast transactions and other anticipated foreign currency
exposures. These contracts are not designated as hedging
instruments for accounting purposes under Ind AS 109.
Accordingly, forward contracts are measured at fair value
at each reporting date, and all resulting gains or losses,
including mark-to-market adjustments, are recognized
in the Statement of Profit and Loss in the period in which

they arise. The fair value of such contracts is determined
using prevailing forward exchange rates and other market-
observable inputs

(2.15) Leases

The company''s lease asset class consist of leases for office
premises and establishments. The company assesses
whether a contract contains a lease, at inception of the
contract. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of
an identified asset, the company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the company has substantially all of the economic
benefits from use of the asset through the period of
the lease and

(iii) the company has the right to direct the use of the asset.
The company as a lessee

At the date of commencement of the lease, the company
recognizes a right-of-use asset (ROU)and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months or
less (short-term leases) and low value leases. For these
short-term and low value leases, the company recognizes
the lease payments as an operating expense on a straight¬
line basis over the term of the lease.

The company recognises right-of-use asset representing
its right to use the underlying asset for the lease term at
the lease commencement date. The cost of the right -of-use
asset measured at inception shall comprise of the amount
of the initial measurement of the lease liability adjusted for
any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate
of costs to be incurred by the lessee in dismantling and
removing the underlying asset or restoring the underlying
asset or site on which it is located. The right-of-use assets
is subsequently measured at cost less any accumulated
depreciation, accumulated impairment losses, if any and
adjusted for any remeasurement of the lease liability. The
right-of-use assets is depreciated using the straight -line
method from the commencement date over the lease term.

The company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are
discounted using the interest rate implicit in the lease. Lease
liabilities are remeasured with a corresponding adjustment
to the related right of use asset if the company changes its
assessment as to whether it will exercise an extension or a
termination option.

Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.

The company does not have any lease contracts wherein it
acts as a lessor.

Ind AS 116 will result in an increase in cash inflows from
operating activities and an increase in cash outflows from
financing activities on account of lease payments.

(2.16) Cash and Cash Equivalents

Cash and cash equivalent in the balance sheet comprise of
cash balances at banks, on hand cash balances and demand
deposits with an original maturity of three months or less,
that are readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value.

In the statement of cash flows, cash and cash equivalents
includes cash on hand, cash at bank, demand deposits with
banks, other short-term highly liquid investments with
original maturities of three months or less.

(2.17) Earnings Per Share

Basic earnings per share is calculated by dividing the
net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the year. Earnings considered in
ascertaining the company''s earnings per share is the net
profit for the period after deducting any attributable tax
thereto for the period. For the purpose of calculating diluted
earnings per share, the net profit for the period attributable
to equity shareholders and the weighted average number
of shares outstanding during the year is adjusted for the
effects of all dilutive potential equity shares.

(2.18) Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Interest
income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation. All other borrowing costs are recognised in
profit or loss in the period in which they are incurred.

(2.19) Segment Reporting

Based on Management Approach as defined in Ind AS 108
- Operating Segments, the chief operating decision maker
i.e. Mr. Yash Parekh (Managing Director & CEO) evaluates
the company''s performance and allocates the resources
based on an analysis of various performance indicators
by business segments. Inter segment sales and transfers

are reflected at market prices. Unallocable items includes
general corporate income and expense items which are not
allocated to any business segment.

Segment Policies

The company prepares its segment information in conformity
with the accounting policies adopted for preparing and
presenting the standalone financial statements of the
company as a whole. Common allocable costs are allocated
to each segment on an appropriate basis.

(2.20) Recent accounting pronouncements

Ministry of Corporate Affairs (MCA) notifies new standards
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time
to time. In May 2025, MCA notified amendments to I nd
AS 21 - The Effects of Changes in Foreign Exchange
Rates, applicable w.e.f. April 1, 2025. The Company has
reviewed the amendment and based on its evaluation has
determined that it does not have any significant impact in
its financial statements.

In August 2025, MCA notified the following
amendments to:

a. Ind AS 1, Presentation of Financial Statements,
applicable w.e.f. 1^st April, 2025 - The amendment
relates to classification of liabilities as current or non¬
current and non-current liabilities with covenants.

In the context of classifying a liability as current, it
removes the requirement of existence of a right to defer
settlement for at least 12 months after the reporting
date and instead requires that the said right should
exist on the reporting date and have substance. The
amendment also introduces guidance on classification
of liabilities with covenants. The Company has no
impact of these amendments in its classification
criteria of current and non-current liabilities

b. Ind AS 7, Statement of Cash Flows and Ind AS 107,
Financial Instruments: Disclosures, applicable w.e.f. 1^st
April, 2025 - The amendment in Ind AS 7 requires to
inform users of financial statements of the existence of
supplier finance arrangements and explain the nature
of the arrangements, the carrying amount of liabilities
and the range of payment due dates. Ind AS 107 has
been amended to add supplier finance arrangements
as a factor that may cause concentration of liquidity
risk. The Company has reviewed the amendment and
ensured appropriate disclosures which are disclosed in
note 18.3.

c. Ind AS 12, International Tax Reform - Pillar Two Model
Rules applicable immediately - The Company has
reviewed the amendment and based on its evaluation
has determined that it does not have any significant
impact on its financial statements

(e) Except as stated above in note under 13(a), in the preceding 5 years, there were no shares allotted pursuant to
contract without payment being received in cash or as fully paid up by way of bonus shares or any shares bought back.

(f) There are no unpaid calls from any director or officer.

(g) No dividend was declared by the Company during the year ended March 31, 2026 and March 31, 2025.

(h) No shares are reserved for issue under options and contracts or commitments.

(v) Unsatisfied Performance Obligations

The Company applies the practical expedient in Paragraph 121 of Ind AS 115 and does not disclose information
about remaining performance obligations.

(vi) Significant revenue from single external customer

The Company received 10% or more of its revenues from transactions with one external customer that account for
10.73% of total revenue (March 31, 2025: one external customer accounting for 17.22%).

(b) Defined benefit plans

(i) Gratuity:

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 / wages per month computed proportionately
for 15 days wages multiplied for the number of years of service. The gratuity plan is funded plan and the
Company makes contribution to recognised funds in India.

For the purpose of computation of gratuity, wages have been considered in line with the provisions of the
Code on Wages, 2019, read together with the Code on Social Security, 2020 and other related labour codes
(collectively referred to as the “New Labour Codes”), including amendments issued thereunder.

(32) Fair value measurement

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the
carrying amount is a reasonable approximation of fair value those include cash and cash equivalents, other bank balances,
trade receivables and trade payables.

(33) Financial risk management framework

The Company''s business activities are exposed to a variety of financial risks, namely liquidity risk, credit risk, currency
risk, interest rate risk and other risks. The Company''s Board of Directors has overall responsibility for the establishment
and oversight of the Company''s risk management framework. The Board is responsible for developing and monitoring
the Company''s risk management policies. The Board holds regular meetings on its activities. 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 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 Board 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.

a). Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Company''s receivables from customers.

Trade and other 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.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This
definition of default is determined by considering the business environment in which Company operates and other
macro-economic factors.

Credit quality of a customer is assessed based on its credit worthiness and historical dealings with the Company,
market intelligence and goodwill. Outstanding customer receivables are regularly monitored. The management
uses a simplified approach for the purpose of computation of expected credit loss for trade receivables and other
receivables.

Cash and cash equivalents and other bank balances

The Company held cash and cash equivalents and other bank balances of ^ 135.03 million as at March 31, 2026 (March
31, 2025 - ^ 6.09 million) . The credit worthiness of banks and financial institutions is evaluated by management on
an ongoing basis and is considered to be good.

Loans

Loan is given to related parties for which credit risk is managed by monitoring the recoveries of such amounts on
regular basis. The Company does not perceive any credit risk related to such loans given to subsidiary companies.

Other financial assets

Other financial assets measured at amortised cost includes deposits and other receivables etc. Credit risk related to
these financial assets are managed by monitoring the recoveries of such amounts on regular basis and the Company
does not perceive any credit risk related to these financial assets. Other than trade and other receivables, the Company
has no other financial assets that are past due but not impaired.

b). 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.
The Company has access to unused credit facility as at March 31, 2026 amounting to ^ 1259.61 million (March 31,
2025 - ^ 370.15 million) towards working capital needs as and when required.

Maturities of financial assets and liabilities

The following table shows the maturity analysis of the Company''s financial assets and financial liabilities based on
contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

(c). Market risk

Market risk is the risk arising from changes in market prices - such as foreign exchange rates and interest rates - that
will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to
all market risk sensitive financial instruments including foreign currency receivables and payables and long term
debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the
market value of the investments. Thus, the exposure to market risk is a function of investing and borrowing activities
and revenue generating and operating activities in foreign currency.

(i) Currency risk

The Company is exposed to currency risk on account of foreign currency transactions including recognized assets
and liabilities denominated in a currency that is not the Company''s functional currency (^), primarily in respect of
United States Dollar. The Company ensures that the net exposure is kept to an acceptable level.

Exposure to currency risk

The Company''s exposure to foreign currency risk at the end of the reporting period expressed in INR, are as
follows:

Outstanding Derivative contracts

The Company enters into forward exchange contracts to manage its exposure to fluctuations in foreign currency
exchange rates. The counterparty to these contracts is a bank. These derivative financial instruments are
measured at fair value through profit or loss.

(ii) Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest
rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in
the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing
investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

The Companies exposure to interest rate risks relates primarily to the Companies interest obligations on its
borrowings. Borrowings taken at variable rates are exposed to fair value interest rate risk. The Company
carries excellent credit ratings, due to which it has assessed that there are no material interest rate risk and any
exposure thereof.

(iii) Capital management

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern
and to optimise returns to its shareholders. The capital structure of the Company is based on management''s
judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The
Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain
investor, creditors and market confidence and to sustain future development and growth of its business.

The Company monitors its capital by using gearing ratio, which is net debt divided to total equity. Net debt
includes borrowings net of cash and bank balances and total equity comprises of equity share capital, general
reserve, securities premium, other comprehensive income and retained earnings.

A. Security

1 ALL borrowings (except vehicle loans) are secured by a first pari passu charge on current assets (inventories and book
debts) and entire movable fixed assets of the Company, both present & future.

2 Collateral Security:

Following Immovable properties are shared in first pari passu charge:

i) Land & Building at Plot 2, Survey No 16/4/2, Near Alok Industries, Village Rakholi, Silvassa - 396230
(D&NH), India.

ii) Land & Building at Plot 126,8,9,10, Village Gathona Tehsil & District Badaun of the company.

3 Term loans pertains to vehicles purchased by the Company and are issued against hypothecation of the Vehicles.

B The Company has borrowings from banks or financial institutions on the basis of security of book debts, inventory and
other time deposits. The statements of current assets filed by the Company with banks are primarily in agreement
with the books of account.

C. The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

(37) Income tax expense

This note provides analysis of Company''s income tax expense, amounts that are recognised directly in equity and how the
tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates in relation to
the Company''s tax position.

(39) Segment reporting

The Company is engaged into business as manufacturers, importer, exporters of essential oils viz. Peppermint Oil,
Spearmint Oil, Co-products and other related products which is single reportable business segment. Hence the Company''s
financial statements reflect the position for a reportable segment and no separate disclosure is required. The company has
its manufacturing operations in India and sales products across various geographies in the world.

(40) Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off.

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

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the period.

(v) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies
Act read with the companies (Restriction on number of layers) Rules 2017.

(vi) The Company 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:

(a) 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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(vii) 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) that the Company shall:

(a) 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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

(41) These standalone financial statements were authorised for issue by the Company''s Board of directors on 23 June
2026 and there are no material subsequent events which have occurred between the reporting date and adoption of
these standalone financial statements.

(42) Figures for the previous year have been regrouped/rearranged, wherever considered necessary, to conform to current
period''s classification. The impact of such reclassification/ regrouping is not material to the financial statements