Notes to Accounts of HP Adhesives Ltd.

Mar 31, 2025

2.11 Provisions, contingent assets and contingent
liabilities

(a) Provisions

Provisions are recognised when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation. The amount recognised as a provision
is the best estimate of the consideration required

to settle the present obligation at the end of
the reporting period, considering the risk and
uncertainties surrounding the obligation.

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.

(b) Contingent liabilities

A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation
that may, but probably will not require an outflow
of resources embodying economic benefits or the
amount of such obligation cannot be measured
reliably. When there is a possible obligation or a
present obligation in respect of which likelihood
of outflow of resources embodying economic
benefits is remote, no provision or disclosure is
made.

These are reviewed at each financial reporting date
and adjusted to reflect the current best estimates.

(c) Contingent assets

Contingent assets are not recognised though are
disclosed, where an inflow of economic benefits is
probable.

2.12 Employee Benefits

(a) Short-term obligations

Employee benefits such as salaries and other
benefits along with any other non-monetary
benefits falling due wholly within twelve months of
rendering the service are classified as short-term
employee benefits and undiscounted amount
of such benefits are expensed in the Statement
of Profit and Loss in in the period in which the
employee renders the related services.

(b) Other long-term employee benefit obligations :
Post Employment Benefits

(i) Defined contribution plan

Provident Fund: The Company’s contributions
to statutory provident fund in accordance
with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 which
is a defined contribution plan, are charged to
the Statement of Profit and Loss in the period
of accrual. The Company has no obligation,
other than the contribution payable to the
provident fund.

(ii) Defined benefit plans

The Company provides for gratuity, a
defined benefit retirement plan covering
eligible employees of HP Adhesives Limited.
The Gratuity plan provides a lump-sum
payment to vested employees at retirement,
death, incapacitation or termination of
employment, of an amount based on the
respective employees’ salary and the tenure
of employment with the Company. The
Company contributes gratuity liabilities
directly to HDFC Trust Group through HP
Adhesives Limited Employees Group Gratuity
Trust. Trustees administer contributions
made to the Trusts and contributions are
invested in a scheme with the HDFC Group
as permitted by Indian Law.

The calculation is performed by a qualified
Actuary using the projected unit credit
method. When the calculation results in a
liability to the Company, the present value
of liability is recognised as provision for
employee benefit. Any actuarial gains or
losses in respect of gratuity are recognised
in OCI in the period in which they arise.

The Company’s net obligation is measured
at the present value of the estimated future
cash flows using a discount rate based on
the market yield on government securities of
a maturity period equivalent to the weighted
average maturity profile of the defined benefit
obligations at each reporting date.

Re-measurement, comprising actuarial
gains and losses, is recognised in other
comprehensive income and is reflected in
retained earnings and the same is not eligible
to be reclassified to Statement of Profit and
Loss.

The Company recognises the net obligation
of a defined plan in its Balance Sheet. Defined
benefit costs comprising current service cost,
past service cost, interest cost and gains or
losses on settlements are recognised in the
Statement of Profit and Loss as employee
benefits expense. Gains or losses on
settlement of any defined benefit plan are
recognised when the settlement occurs. Past
service cost is recognised as expense at the
earlier of the plan amendment or curtailment
and when the Company recognises related
restructuring costs or termination benefits.

(iii) Other employee benefits

Compensated absences, if any, which
accrue to employees and which can be
carried to future periods but are expected
to be encashed/ availed within twelve
months immediately following the year end
are reported as expenses during the year
in which employees perform the services
that the benefit covers and the liabilities are
reported at the undiscounted amount of the
benefits. Where the availment or encashment
is otherwise not expected to wholly occur
within the next twelve months, the liability
on account of the benefit is actuarially
determined using the projected unit credit
method.

2.13 Financial Instruments

Financial assets and financial liabilities are recognised
when a Company becomes a party to the contractual
provisions of the instruments.

Initial Recognition

Financial assets and financial liabilities are initially
measured at fair value, plus in the case of Financial
assets not recorded at fair value through Profit or Loss
(FVTPL), transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss
and ancillary costs related to borrowings) are added to
or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in
Statement of Profit and Loss. However, those financial
assets & liabilities that do not contain significant
financial component are measured at transaction price.

Classification and Subsequent Measurement:
Financial Assets

The Company classifies financial assets as
subsequently measured at amortised cost, fair value
through other comprehensive income ("FVOCI") or fair
value through profit or loss ("FVTPL") on the basis of
following:

(i) the entity’s business model for managing the
financial assets and

(ii) the contractual cash flow characteristics of the
financial asset.

Amortised Cost

A financial asset shall be classified and measured at
amortised cost if both of the following conditions are
met:

(i) the financial asset is held within a business model
whose objective is to hold financial assets in order
to collect contractual cash flows and

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

In case of financial asset classified and measured at
amortised cost, any interest income, foreign exchange
gains/losses and impairment are recognised in the
Statement of Profit and Loss.

Fair Value through OCI

A financial asset shall be classified and measured at
fair value through OCI if both of the following conditions
are met:

(i) the financial asset is held within a business model
whose objective is achieved by both collecting
contractual cash flows and selling financial assets
and

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

Where the Company has elected to present the fair value
gain on equity instruments in other comprehensive
income, there is no subsequent classification of fair
value gain or losses to profit and loss account. Dividend
from such instruments is recognised in profit and loss
account as other income where right to receive is
established.

Fair Value through Profit or Loss

A financial asset shall be classified and measured at
fair value through profit or loss unless it is measured
at amortised cost or at fair value through OCI. All
recognised financial assets are subsequently measured
in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
For financial assets at fair value through profit or loss,
net gain or losses, including any interest or dividend
income are recognised in the Statement of Profit and
Loss.

Equity Investments in subsidiaries

Equity investments in Subsidiaries are carried at
Cost, in accordance with option available in Ind AS 27
"Separate Financial Statements". Investment carried at
cost are subject to impairment test as per Ind AS 36
when indication of potential impairment exists.

Classification and Subsequent Measurement:
Financial Liabilities

Financial liabilities are classified as either financial
liabilities at FVTPL or ''other financial liabilities’.

Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is held for trading or are designated
upon initial recognition as FVTPL. Gains or Losses
on liabilities held for trading are recognised in the
Statement of Profit and Loss.

Other Financial Liabilities

Other financial liabilities (including borrowings and
trade and other payables) are subsequently measured
at amortised cost using the effective interest method.
Interest expense (based on effective interest method),
foreign exchange gains and losses and any gain or
loss on derecognition is recognised in the Statement
of Profit and Loss.

Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments,
the Company applies Expected credit loss (ECL) model
for measurement and recognition of impairment loss
on financial assets.

For recognition of impairment loss on financial assets
and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, no impairment is recognised.
However, if credit risk has increased significantly,
lifetime ECL is used. If in subsequent period, the credit
quality of the instrument improves then the entity
reverts to recognising impairment loss allowance
based on 12 month ECL.

Life time ECLs are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the entity

expects to receive (i.e. all shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity
is required to consider all contractual terms of the
financial instrument (including prepayment, extension
etc.) over the expected life of the financial instrument.
However, in rare cases when the expected life of the
financial instrument cannot be estimated reliably, then
the entity is required to use the remaining contractual
term of the financial instrument.

ECL impairment loss allowance (or reversal) recognised
during the year is recognised as income/expense in
the statement of profit and loss. In balance sheet ECL
for financial assets measured at amortised cost is
presented as an allowance, i.e. as an integral part of the
measurement of those assets in the balance sheet. The
allowance reduces the net carrying amount. Until the
asset meets write off criteria, the Company does not
reduce impairment allowance from the gross carrying
amount. Company measures the loss allowance at
an amount equal to lifetime expected credit losses for
Trade receivables (i.e. ''simplified approach’).

Financial assets, other than those at FVTPL, are
assessed for indicators of impairment at the end of
each reporting period. The Company recognises a loss
allowance for expected credit losses on financial asset.
In case of trade receivables, the Company follows
the simplified approach permitted by Ind AS 109 -
Financial Instruments for recognition of impairment
loss allowance. The application of simplified approach
does not require the Company to track changes in
credit risk. The Company calculates the expected credit
losses on trade receivables using a provision matrix on
the basis of its historical credit loss experience.

(iv) Derecognition of financial assets

The Company derecognises a financial asset
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards
of the asset or if, the Company has neither
transferred nor retained substantially all risk and
reward of the asset, but has transferred control of
the asset to another party.

On derecognition of a financial asset, other than
investments classified as FVOCI, in its entirety, the
difference between the asset’s carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognised in other comprehensive income
and accumulated in equity is recognised in profit
or loss if such gain or loss would have otherwise

been recognised in profit or loss on disposal of
that financial asset.

On derecognition of equity investments classified
as FVOCI, accumulated gains or loss recognised
in OCI is transferred to retained earnings.

(b) Financial liabilities and equity instruments:
Classification as debt or equity

Debt and equity instruments issued by the
Company are classified as either financial liabilities
or as equity in accordance with the substance of
the contractual arrangements and the definitions
of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity
instruments issued by a Company are recognised
at the proceeds received.

(c) Reclassification of financial assets and liabilities

The Company determines classification of
financial assets and liabilities on initial recognition.
After initial recognition, no reclassification is made
for financial assets which are equity instruments
and financial liabilities. For financial assets which
are debt instruments, a reclassification is made
only if there is a change in the business model for
managing those assets.

(d) Offsetting financial instrument

Financial assets and liabilities are offset and
the net amount is reported in the balance sheet
where there is a legally enforceable right to offset
the recognised amounts and there is an intention
to settle financial asset and liability on a net
basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must
not be contingent on future events and must be
enforceable in the normal course of business and
in the event of default, insolvency or bankruptcy of
the Company or the counterparty.

2.14 Cash & cash equivalents

Cash and cash equivalent in the Balance Sheet
comprises Cash at Banks, Cash on Hand and Short¬
Term Deposits with an original maturity of three
months or less, which are subject to insignificant risk
of change in value.

For the purpose of the Statement of cash flows, cash
and cash equivalents consist of unrestricted cash

and short-term deposits, as defined above as they are
considered an integral part of the Company’s cash
management.

2.15 Segment reporting

The business of the Company falls within a single line of
business i.e. business of Adhesives & Solvent products.
All other activities of the Company revolve around its
main business. Hence no separate reportable primary
segment

Operating segments are reported in a manner
consistent with the internal reporting provided to the
management. Management assesses the financial
performance and position of the Company and makes
strategic decisions.

2.16 Statement of cash flows

Statement of cash flows is made using the indirect
method, whereby profit before tax is adjusted for the
effects of transactions of non-cash nature, any deferral
accruals of past or future cash receipts or payments
and item of income or expense associated with
investing or financing of cash flows. The cash flows
from operating, financing and investing activities of the
Company are segregated.

2.17 Corporate Social Responsibility (“CSR") expenditure

CSR expenditure incurred by the Company is charged
to the Statement of the Profit and Loss.

2.18 Share capital

Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new
ordinary shares and share options and buyback of
ordinary shares, if any are recognised as a deduction
from equity, net of any tax effects.

Share issue expense

The share issue expenses incurred by the Company on
account of new shares issued if any are netted off from
securities premium account.

2.19 Earnings per share
Basic earnings per share

Basic earnings per share is computed by dividing
the net profit after tax by weighted average number
of equity shares outstanding during the period. The
weighted average number of equity shares outstanding
during the year, if any, is adjusted for treasury shares,
bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split
(consolidation of shares).

Diluted earnings per share

Diluted earnings per share is computed by dividing the
profit after tax after considering the effect of interest
and other financing costs or income (net of attributable
taxes) associated with dilutive potential equity shares
by the weighted average number of equity shares
considered for deriving basic earnings per share and
also the weighted average number of equity shares
that could have been issued upon conversion of all
dilutive potential equity shares including the treasury
shares held by the Company to satisfy the exercise of
the share options by the employees.

The number of shares and potentially dilutive equity
shares are adjusted retrospectively for all periods for
any share split and bonus share issues including for
changes effected prior to the approval of the standalone
financial statements by the Board of Directors.

2.20 Measurement of EBITDA

During the year under review company has opted NOT
to present earnings before interest (finance cost), tax,
depreciation and Amortisation (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss
for the period, same has been applied for presentation
of previous year’s figures.

2.21 Dividend

The Company recognises a liability to pay dividend to
equity holders of the Company when the distribution
is authorised, and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is
recognised directly in equity.

3 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES

AND ASSUMPTIONS

The estimates used in the preparation of the Standalone
financial statements of each year presented are
continuously evaluated by the Company and are based
on historical experience and various other assumptions
and factors (including expectations of future events),
that the Company believes to be reasonable under
the existing circumstances. The said estimates are
based on the facts and events, that existed as at the
reporting date, or that occurred after that date but
provide additional evidence about conditions existing
as at the reporting date. Although the Company
regularly assesses these estimates, actual results
could differ materially from these estimates - even
if the assumptions underlying such estimates were
reasonable when made, if these results differ from

historical experience or other assumptions do not
turn out to be substantially accurate. The changes in
estimates are recognised in the Standalone financial
statements in the period in which they become
known.

The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are
described below. Actual results could differ from these
estimates.

3.1 Significant Judgments

Impairment of Trade Receivables

As per Ind AS 109 impairment allowance has been
determined based on expected credit loss method.
Trade receivables do not carry interest and are stated
at their nominal values as reduced by appropriate
allowances for estimated irrecoverable amount are
based on ageing of the receivable balances and
historical experiences. Individual trade receivables are
written off when management deems not be collectible.

Impairment of other financial assets

The impairment provision for financial assets are based
on assumptions about risk of default and expected
loss rates. The Company uses judgment in making
these assumptions and selecting the inputs to the
impairment calculation., based on the Company’s past
history, existing market conditions as well as forward
looking estimates at the end of each reporting period

Contingencies

Contingent liability is a possible obligation arising from
past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of
the entity or a present obligation that arises from past
events but is not recognised because it is not probable
that an out flow of resources embodying economic
benefits will be required to settle the obligation or the
amount of the obligation cannot be measured with
sufficient reliability.

Taxes

Uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income. Given
the nature of business differences arising between the
actual results and the assumptions made, or future
changes to such assumptions, could necessitate
future adjustments to tax income and expense already
recorded. The Company establishes current tax
payable, based on reasonable estimates. The amount
of such current tax payable is based on various factors,

such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity
and the responsible tax authority. Such differences of
interpretation may arise on a wide variety of issues
depending on the conditions prevailing in the respective
domicile of the companies.

Recoverability of deferred taxes

In assessing the recoverability of deferred tax assets,
management considers whether it is probable that
taxable profit will be available against which the losses
can be utilised. The ultimate realisation of deferred
tax assets is dependent upon the generation of future
taxable income during the year in which the temporary
differences become deductible.

Deferred tax assets are recognised for unused tax
losses to the extent that it is probable that taxable
profit will be available against which the losses can be
utilised. Significant management judgment is required
to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the
level of future taxable profits together with future tax
planning strategies.

Impairment of non-financial assets

Impairment exists when the carrying value of an
asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs
of disposal and its value in use. The fair value less costs
of disposal calculation is based on available data from
binding sales transactions, conducted at arm’s length,
for similar assets or observable market prices less
incremental costs for disposing of the asset. The value
in use calculation is based on a Discounted Cash Flow
(''DCF’) model.

3.2 Significant estimates

(a) Defined benefit plans

The costs of post-retirement benefit obligation are
determined using actuarial valuations. An actuarial
valuation involves making various assumptions
that may differ from actual developments in
the future. These include the determination of
the discount rate; future salary increases and
mortality rates. Due to the complexities involved
in the valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed
at each reporting date.

(b) Useful lives of property, plant and equipment

As described in the significant accounting policies,
the Company reviews the estimated useful lives
of property, plant and equipment and intangible
assets at the end of each reporting period.
Company has determined useful life assets based

on expert opinion. Useful lives of intangible assets
is determined on the basis of estimated benefits
to be derived from use of such intangible assets.
These reassessments may result in change in
the depreciation /amortisation expense in future
periods.

(c) Leases - Estimating the incremental borrowing
rate

The Company cannot readily determine the
interest rate implicit in the lease, therefore, it uses
its incremental borrowing rate (''IBR’) to measure
lease liabilities. The IBR is the rate of interest that
the Company would have to pay to borrow over a
similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value
to the right-of-use asset in a similar economic
environment.

(d) Fair value measurement of financial instruments

When the fair values of financial assets and
financial liabilities recorded in the standalone
financial statements cannot be measured based
on quoted prices in active markets, their fair
value is measured using valuation techniques
including the DCF model. The inputs to these
models are taken from observable markets where
possible, but where this is not feasible, a degree
of judgment is required in establishing fair values.
Judgments include considerations of inputs such
as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect
the reported fair value of financial instruments.

(e) Effective interest rate

For the requirement of Ind AS 109 and Ind AS
116, company has used incremental borrowing
rate as the rate for discounting and amortising.
This incremental borrowing rate reflects the
rate of interest that the Company would have to

pay to borrow over a similar term, with a similar
security, the funds necessary to obtain an asset
of a similar nature and value in a similar economic
environment. Determination of the incremental
borrowing rate requires estimation.

4 NEW AND AMENDED STANDARDS

The Company applied for the first-time certain
standards and amendments, which are effective for
annual periods beginning on or after 01^st April, 2024
wherever applicable. The Company has not early
adopted any standard, interpretation or amendment
that has been issued but is not yet effective.

(i) Ind AS 117 Insurance Contracts

The Ministry of corporate Affairs (MCA) notified the
Ind AS 117. Insurance Contracts, vide notification
dated 12^th August, 2024, under the Companies
(Indian Accounting Standards) Amendment Rules,
2024, which is effective from annual reporting
periods beginning on or after 01^st April, 2024.-The
application of Ind AS 117 had no impact on the
Company’s standalone financial statements as
the Company has not entered any contracts in the
nature of insurance contracts covered under ind
AS 117.

(ii) Ind AS 116 Sale & Lease Back Transaction
Amendments

The Ministry of corporate Affairs (MCA) notified
amendment to the Ind AS 116 specifically on
Sale & Lease back Transactions vide notification
dated 09^th September, 2024, under the Companies
(Indian Accounting Standards) Amendment Rules,
2024, which is effective from annual reporting
periods beginning on or after 01^st April, 2024.-
As there is no such transaction, hence the said
amendment has no impact on the Company’s
standalone financial statements

As per our report of even date attached

For Priya Choudhary & Associates LLP For and on behalf of the Board of Directors

Chartered Accountants HP ADHESIVES LIMITED

Firm''s Registration No : 011506C/C400307

Vaibhav Choudhary ANJANA HARESH MOTWANI KARAN HARESH MOTWANI

Partner (Chairman) (Managing director)

Membership No: 407543 DIN: 02650184 DIN: 02650089

MIHIR SURESH SHAH JYOTI NIKUNJ CHAWDA

(Chief Financial Officer) (Company Secretary)

(Pan : AZBPS0681B) (Mem No.: 40074)

Place: Bhilwara Place: Mumbai

Date: 13^th May, 2025 Date: 13^th May, 2025

---

Mar 31, 2024

(a) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risk and uncertainties surrounding the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pretax 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.

(b) Contingent liabilities

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.

These are reviewed at each financial reporting date and adjusted to reflect the current best estimates

(c) Contingent assets

Contingent assets are not recognised though are disclosed, where an inflow of economic benefits is probable.

.12 Employee Benefits

(a) Short-term obligations

Employee benefits such as salaries and other benefits along with any other non-monetary benefits falling due wholly within twelve months of rendering the service are classified as short-term employee benefits and undiscounted amount of such benefits are expensed in the Statement of Profit and Loss in in the period in which the employee renders the related services.

(b) Other long-term employee benefit obligations :

Post Employment Benefits

(i) Defined contribution plan

Provident Fund: The Company’s contributions to statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan, are charged to the Statement of Profit and Loss in the period of accrual. The Company has no obligation, other than the contribution payable to the provident fund.

(ii) Defined benefit plans

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees of HP Adhesives Limited. The Gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees'' salary and the tenure of employment with the Company. The Company contributes gratuity liabilities directly to HDFC Trust Group through HP Adhesives Limited Employees Group Gratuity Trust. Trustees administer contributions made to the Trusts and contributions are invested in a scheme with the HDFC Group as permitted by Indian Law.

The calculation is performed by a qualified Actuary using the projected unit credit method. When the calculation results in a liability to the Company, the present value of liability is recognised as provision for employee benefit. Any actuarial gains or losses in respect of gratuity are recognised in OCI in the period in which they arise.

The Company''s net obligation is measured at the present value of the estimated future cash flows using a discount rate based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the defined benefit obligations at each reporting date.

Re-measurement, comprising actuarial gains and losses, is recognised in other comprehensive income and is reflected in retained earnings and the same is not eligible

to be reclassified to Statement of Profit and Loss.

The Company recognises the net obligation of a defined plan in its Balance Sheet. Defined benefit costs comprising current service cost, past service cost, interest cost and gains or losses on settlements are recognised in the Statement of Profit and Loss as employee benefits expense. Gains or losses on settlement of any defined benefit plan are recognised when the settlement occurs. Past service cost is recognised as expense at the earlier of the plan amendment or curtailment and when the Company recognises related restructuring costs or termination benefits.

(iii) Other employee benefits

Compensated absences, if any, which accrue to employees and which can be carried to future periods but are excepted to be encashed/ availed within twelve months immediately following the year end are reported as expenses during the year in which employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits. Where the availment or encashment is otherwise not excepted to wholly occur within the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

2.13 Financial Instruments

Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.

Initial Recognition

Financial assets and financial liabilities are initially measured at fair value, plus in the case of Financial assets not recorded at fair value through Profit or Loss (FVTPL), transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss. However, those financial

assets & liabilities that do not contain significant financial component are measured at transaction price.

Classification and Subsequent Measurement: Financial Assets

The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") on the basis of following:

(i) the entity’s business model for managing the financial assets and

(ii) the contractual cash flow characteristics of the financial asset.

Amortised Cost

A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:

(i) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

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

In case of financial asset classified and measured at amortised cost, any interest income, foreign exchange gains/losses and impairment are recognised in the Statement of Profit and Loss.

Fair Value through OCI

A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:

(i) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

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

Where the Company has elected to present the fair value gain on equity instruments in other comprehensive income, there is no subsequent classification of fair value gain or losses to profit and loss account. Dividend from such instruments is recognised in profit and loss account as other income where right to receive is established.

Fair Value through Profit or Loss

A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. For financial assets at fair value through profit or loss, net gain or losses, including any interest or dividend income are recognised in the Statement of Profit and Loss.

Classification and Subsequent Measurement: Financial Liabilities

Financial liabilities are classified as either financial liabilities at FVTPL or ''other financial liabilities’.

Financial Liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

Other Financial Liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method. Interest expense (based on effective interest method), foreign exchange gains and losses and any gain or loss on derecognition is recognised in the Statement of Profit and Loss.

Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies Expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, no impairment is recognised.

However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent period, the credit quality of the instrument improves then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

Re-Estimation of ECL Provision (Accounting Estimates):

During the year company has Re-estimated ECL provisions considering the trend due to portfolio composition of trade receivables under different ageing bracket and different customer segment. The effect of such change is applied prospectively and change in estimate is recognised in current period and is expected to have an effect in future periods also for which estimation is impracticable.

ECL impairment loss allowance (or reversal) recognised during the year is recognised as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortised cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount. Company measures the loss allowance at an amount equal to lifetime expected credit losses for Trade receivables (i.e. ''simplified approach'').

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 -

Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.

(iv) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of the asset or if, the Company has neither transferred nor retained substantially all risk and reward of the asset, but has transferred control of the asset to another party.

On derecognition of a financial asset, other than investments classified as FVOCI, in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.

On derecognition of equity investments classified as FVOCI, accumulated gains or loss recognised in OCI is transferred to retained earnings.

(b) Financial liabilities and equity instruments: Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received.

(c) Reclassification of financial assets and liabilities

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and

financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.

(d) Offsetting financial instrument

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle financial asset and liability on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.14 Cash & cash equivalents

Cash and cash equivalent in the Balance Sheet comprises Cash at Banks, Cash on Hand and ShortTerm Deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.

For the purpose of the Statement of cash flows, cash and cash equivalents consist of unrestricted cash and short-term deposits, as defined above as they are considered an integral part of the Company''s cash management.

2.15 Segment reporting

The business of the Company falls within a single line of business i.e. business of Adhesives & Solvent products. All other activities of the Company revolve around its main business. Hence no separate reportable primary segment

Operating segments are reported in a manner consistent with the internal reporting provided to the management. Management assesses the financial performance and position of the Company and makes strategic decisions.

2.16 Statement of cash flows

Statement of cash flows is made using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferral accruals of past or future cash receipts or payments and item of income or expense associated with investing or financing of cash flows. The cash flows from operating, financing and investing activities of the Company are segregated.

2.17 Corporate Social Responsibility ("CSR") expenditure

CSR expenditure incurred by the Company is charged to the Statement of the Profit and Loss.

2.18 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buyback of ordinary shares, if any are recognised as a deduction from equity, net of any tax effects.

Share issue expense

The share issue expenses incurred by the Company on account of new shares issued are netted off from securities premium account.

2.19 Earnings per share Basic earnings per share

Basic earnings per share is computed by dividing the net profit after tax by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the year, if any, is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

Diluted earnings per share

Diluted earnings per share is computed by dividing the profit after tax after considering the effect of interest and other financing costs or income (net of attributable taxes) associated with dilutive potential equity shares by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.

The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods for any share split and bonus share issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

2.2 Measurement of EBITDA

During the year under review company has opted NOT to present earnings before interest (finance cost), tax, depreciation and Amortisation (EBITDA) as a separate line item on the face of the Statement of Profit and Loss

for the period, same has been applied for presentation of previous year''s figures.

3 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The estimates used in the preparation of the Standalone Financial Statements of each year presented are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events), that the Company believes to be reasonable under the existing circumstances. The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates - even if the assumptions underlying such estimates were reasonable when made, if these results differ from historical experience or other assumptions do not turn out to be substantially accurate. The changes in estimates are recognised in the Standalone Financial Statements in the period in which they become known.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Actual results could differ from these estimates.

3.1 Significant Judgments

Impairment of Trade Receivables

As per Ind AS 109 impairment allowance has been determined based on expected credit loss method. Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amount are based on ageing of the receivable balances and historical experiences. Individual trade receivables are written off when management deems not be collectible.

Change in Estimate : (ECL Model)

During the year company has re-estimated ECL provisions considering the trend of trade receivables under different ageing bracket and different customer segment. The effect of such change in estimate is applied prospectively and is expected to have an effect in future periods also for which estimation is impracticable.

Impairment of other financial assets

The impairment provision for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation., based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Contingencies

Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an out flow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the nature of business differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes current tax payable, based on reasonable estimates. The amount of such current tax payable is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the companies.

Recoverability of deferred taxes

In assessing the recoverability of deferred tax assets, management considers whether it is probable that taxable profit will be available against which the losses can be utilized. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible.

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required

to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (''DCF'') model.

3.2 Significant estimates

(a) Defined benefit plans

The costs of post-retirement benefit obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

(b) Useful lives of property, plant and equipment

As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period. Company has determined useful life assets based on expert opinion. Useful lives of intangible assets is determined on the basis of estimated benefits to be derived from use of such intangible assets. These reassessments may result in change in the depreciation /amortisation expense in future periods.

(c) Leases - Estimating the incremental borrowing rate

The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (''IBR'') to measure lease liabilities. The IBR is the rate of interest that

the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

(d) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Standalone Statement of Assets and Liabilities Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

(e) Effective interest rate

For the requirement of Ind AS 109 and Ind AS 116, company has used incremental borrowing rate as the rate for discounting and amortising. This incremental borrowing rate reflects the rate of interest that the Company would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value in a similar economic environment. Determination of the incremental borrowing rate requires estimation.

4 NEW AND AMENDED STANDARDS

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules, 2023 dated 31^st March, 2023, to amend the following Ind AS which are effective for annual beginning on or after April 01, 2023. The Company applied for the first time these amendments.

(i) Definition of Accounting Estimates -Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. It has also been clarified how entities use

measurement techniques and inputs to develop accounting estimates.

Change in Accounting Estimates during the period has been recognised in line with the amendments.

(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ''significant'' accounting policies with a requirement to disclose their ''material'' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments have had an impact on the Company''s disclosures of accounting policies, but not on the measurement, recognition or

presentation of any items in the Company''s financial statements.

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.

The Company was recognising separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12, there is no impact in the balance sheet. There was also no impact on the opening retained earnings.

As per our report of even date attached

For Priya Choudhary & Associates LLP For and on behalf of the Board of Directors

Chartered Accountants HP ADHESIVES LIMITED

Firm''s Registration No : 011506C/C400307

Vaibhav Choudhary ANJANA HARESH MOTWANI KARAN HARESH MOTWANI

Partner (Chairman) (Managing Director)

Membership No: 407543 DIN: 02650184 DIN: 02650089

MIHIR SURESH SHAH JYOTI NIKUNJ CHAWDA

(Chief Financial Officer) (Company Secretary)

(PAN : AZBPS0681B) (Mem No.: 40074)

Place: Bhilwara Place: Mumbai

Date: 14^th May, 2024 Date: 14^th May, 2024

Note on other risks:

i. Investment Risk - The funds are invested by HDFC Bank and they provide returns basis the prevalent bond yields, Bank on an annual basis requests for contributions to the fund.

ii. Interest Risk -HDFC Bank does not provide market value of assets, rather maintains a running statement with interest rates declared annually - The fall in interest rate is not therefore offset by increase in value of Bonds, hence may pose a risk.

iii. Longevity Risk - Since the gratuity payment happens at the retirement age of 60 or on leaving of Job post completion of 5 years whichever is early, longevity impact is very low at this age, hence this is a non-risk.

iv. Salary Risk - The liability is calculated taking into account the salary increase, basis past experience of the Company’s actual salary increases with the assumptions used, they are in line, hence this risk is low risk.

44 | FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The management assessed that cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, Investment in Deposits, Loans and advances, Security Deposits, Investment in Gratuity Fund, Borrowings, Trade payables and lease liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The amortised cost using effective interest rate (EIR) of non-current financial - term deposits is not significantly different from the carrying amount.

45 | FAIR VALUE HIERARCHY

The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - I nputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

46 | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company’s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include investments, foreign currency receivables and payables, loans and borrowings and deposits. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

(ii) Currency risk

The functional currency of the Company is Indian Rupee. The Company is exposed to currency risk on account of its trade receivables, trade payables and payables for goods in foreign currency. The Company has not used derivative financial instruments either for hedging purpose or for trading or speculative purposes.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the foreign currency exchange rate, with all other variables held constant, of the Company’s profit before tax (due to changes in the fair value of monetary assets and liabilities). The Company’s exposure to foreign currency changes for all other currencies is not material.

(B) 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. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

The Company limits its exposure to credit risk of cash held with banks by dealing with highly rated banks and institutions and retaining sufficient balances in bank accounts required to meet a month’s operational costs. The Management reviews the bank accounts on regular basis and fund drawdowns are planned to ensure that there is minimal surplus cash in bank accounts. The Company does not foresee any credit risks on deposits with regulatory authorities and lease deposits and/ or any other financial assets.

48 | CAPITAL MANAGEMENT

For the purposes of the Company’s capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company’s capital management is to ensure that it maintains an efficient capital structure and maximise shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using net debt to equity ratio, which is net debt (as reduced by cash and cash equivalent) divided by total equity.

56 | DISCLOSURE REGARDING UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM

(A) The Management has represented that, to the best of its knowledge and belief, 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, 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 regarding amount received on subscription of shares through IPO by FII (Qualified Institutional Investors) for which company as assured due diligence, FEMA Compliance have been duly complied by the Lead Merchant Banker, Registrar and Bankers to IPO.

(c) Utilisation of Share Premium - Refer Note No.!7.

57 | Disclosure regarding undisclosed/surrendered Income if any under provisions of Income Tax Act, 1961: Company has

no such events.

58 | Disclosure regarding trading or inviting in Crypto Currency or Virtual Currency - NIL

59 | The financial statements of the Company were authorised for issued in accordance with a resolution of the directors on

14^th May, 2024.

60 | RECLASSIFICATION IN THE STATEMENT OF PROFIT AND LOSS

Based on review of commonly prevailing practices and to align with presentation used by the peer group companies, the management of the Company has reclassified/separated the cost of Subvention Charges from Bank Charges under same head of Finance Cost of '' 3.25 Lakhs for the year ended 31^st March, 2023.

The management believes that the such reclassification does not have any material impact on information presented in the Statement of Profit and loss and in the balance sheet at the beginning of the preceding period. Accordingly, the Group has not presented third balance sheet in the financial statements/results.

61 | MANAGEMENT NOTE ON AUDIT TRAIL

The Company has used accounting software for maintaining its Books of Accounts which has a feature of recording summarized Audit trail (Edit log) facility and the same has been operated throughout the year for the relevant transactions recorded in the software except for other software used by company to maintain payroll and inventory records. Wherever Audit trail is enabled no instances of Audit trail feature being tampered with was noted in respect of above software.

As per our report of even date attached

For Priya Choudhary & Associates LLP For and on behalf of the Board of Directors

Chartered Accountants HP ADHESIVES LIMITED

Firm''s Registration No : 011506C/C400307

Vaibhav Choudhary ANJANA HARESH MOTWANI KARAN HARESH MOTWANI

Partner (Chairman) (Managing Director)

Membership No: 407543 DIN: 02650184 DIN: 02650089

MIHIR SURESH SHAH JYOTI NIKUNJ CHAWDA

(Chief Financial Officer) (Company Secretary)

(PAN : AZBPS0681B) (Mem No.: 40074)

Place: Bhilwara Place: Mumbai

Date: 14^th May, 2024 Date: 14^th May, 2024

---

Mar 31, 2023

EQUITY SHARE CAPITAL Ordin ary Shares

Ordinary shares are classified as equity share capital. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buy back are recognised as a deduction from equity, net of any tax effects.

Description of reserves Retained earnings

Retained Earnings represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Securities premium

Security Premium Account represents premium received on issue of shares through Rights issue and IPO . This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

(d) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of '' 10 each. The Shareholders are entitled to receive dividend in proportion to the amount of paid up equity shares held by them. The Company has not declared any dividend during the year. Each shareholder is entitled to vote in proportion to his share of paid up equity share capital of the Company, except in case of voting by show of hands where each shareholder present in person shall have one vote only. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion of the number of shares held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

As per Companies Act, 2013 the holders of Equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in the event of liquidation of the Company. However no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Sanction Terms

Long term & Short term Secured Loans & Working Capital Facilities:-ICICI Bank

Against Hypothecation of company’s entire stock of Raw Material, semi finished & Finished goods, consumable Stores & Spares and such other movable current assets including book debts, bills whether documentary or clean, outstanding monies, receivables, both present and future, in a form and manner satisfactory to the bank.

Collateral Charge on corporate office of the Company at C-501, Business Square, Chakala, Andheri(East), Mumbai.

IndusInd Bank

Against Hypothecation of company’s entire current Assets.

Personal Guarantee of Directors - Karan Motwani & Anjana Motwani

Collateral Charge on Industrial Land & Building owned by the Directors Mr. Karan Motwani & Ms. Anjana Motwani.

In India, the market for high quality corporate bonds being not developed, the yield of government bonds is considered as the discount rate. The tenure has been considered taking into account the past long-term trend of employees’ average remaining service life which reflects the average estimated term of the post-employment benefits obligations.

Gratuity fund asset is managed by HDFC Life Group, there is no material risk that the Company would be unable to meet its gratuity liability. Also as the fund is set up as a trust, the monies as a part of the trust will not flow back into the Company until the last employee of the trust is paid.

The present value of the Defined Benefits obligation and the related current service cost is measured using the Projected Unit Credit Actuarial Method at the end of Balance Sheet date by the Actuary.

Note on other risks:

i. Investment Risk - The funds are invested by HDFC Life Group and they provide returns basis the prevalent bond yields, Bank on an annual basis requests for contributions to the fund.

ii. Interest Risk -HDFC Life Group does not provide market value of assets, rather maintains a running statement with interest rates declared annually - The fall in interest rate is not therefore offset by increase in value of Bonds, hence may pose a risk.

iii. Longevity Risk - Since the gratuity payment happens at the retirement age of 60 or on leaving of Job post completion of 5 years whichever is early, longevity impact is very low at this age, hence this is a non-risk.

iv. Salary Risk - The liability is calculated taking into account the salary increase, basis past experience of the Company’s actual salary increases with the assumptions used, they are in line, hence this risk is low risk.

Note : Fair Value of Assets- The Investment made was with HDFC Life Group in March 2022 & March 2023 & the fair value is considered same as the amount invested in the funds since the return statement was awaited from HDFC Life.

1 Sitting Fees to Non-Executive & Independent Directors paid during the year is '' 7.60 Lakhs.

2 Remuneration paid to KMPs (other than directors) during the year is '' 51.72 Lakhs.

3 Transaction with Raigad Carbides HUF- Purchase of Raw materials (Oxygen and nitrogen cylinder, LPG Cylinder) & Sales of Solvents appears to be at arm’s length value. Values of transactions are insignificant and occasional in nature.

4 Transaction with Raigad Oxygen Private Limited- Payments for purchase of Fuel/Diesel. On sample verification transaction are generally on arm’s length values as market comparable rates available.

5 Related parties taken as identified by management.

43. | FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The fair value of other current financial assets, cash and cash equivalents, trade receivables, trade payables, commission payable and other financial liabilities (including creditors for expense etc.) approximate the carrying amounts because of the short term nature of these financial instruments.

The amortised cost using effective interest rate (EIR) of non-current financial - term deposits is not significantly different from the carrying amount.

Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, and other financial assets.

The impact of fair value on such portion is not material and therefore not considered for above disclosure. Similarly, carrying values of non-current security deposits and non-current term deposits are not significant and therefore the impact of fair value is not considered for above disclosure.

The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

The carrying amount of cash and cash equivalents, trade receivables, fixed deposits, trade payables, other payables are considered to be the same as their fair values. The fair values of borrowings and security deposits were calculated based on cash flows discounted using a current lending rate which are similar to the incremental borrowing rate on the date of the deposit discounting initial recognition.

45. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various financial risks. These risks are categorised into market risk, credit risk and liquidity risk. The Company’s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency).

(B) 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. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

The Company limits its exposure to credit risk of cash held with banks by dealing with highly rated banks and institutions and retaining sufficient balances in bank accounts required to meet a month’s operational costs. The Management reviews the bank accounts on regular basis and fund drawdowns are planned to ensure that there is minimal surplus cash in bank accounts. The Company does not foresee any credit risks on deposits with regulatory authorities and lease deposits and/ or any other financial assets.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.

For the purpose of the Company’s capital management, capital includes issued equity capital 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 and to ensure the Company’s ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors net debt i.e. total debt net off cash and cash equivalent. Total debt comprises of non-current and current borrowings. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

52. | Disclosure regarding pending registration of charges or satisfaction with Registrar of Companies : As explained by company

and secretarial compliance officer, No such matter are pending.

53. | Disclosure regarding compliance with number of layers of companies as prescribed clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable on the Company as no subsidiaries to the Company.

55. | DISCLOSURE REGARDING UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM

(A) The Management has represented that, to the best of its knowledge and belief, 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, 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 regarding amount received on subscription of shares through IPO by FII (Qualified Institutional Investors) for which company as assured due diligence, FEMA Compliance have been duly complied by the Lead Merchant Banker, Registrar and Bankers to IPO.

(c ) Utilisation of Share Premium - Refer Note No.!7.

56. | Disclosure regarding undisclosed/surrendered Income if any under provisions of Income Tax Act, 1961: Company has no

such events.

57. | Disclosure regarding trading or inviting in Crypto Currency or Virtual Currency - NIL

58. | The financial statements of the Company were authorised for issued in accordance with a resolution of the directors on

12^th May, 2023.

59. | Previous year figures are regrouped and rearranged wherever required.