Notes to Accounts of Indigo Paints Ltd.

Mar 31, 2025

Provision for expected credit losses of trade
receivables

The Company uses a provision matrix to calculate ECLs for trade
receivables. The provision rates are based on days past due for
groupings of various customer segments that have similar loss patterns

The provision matrix is initially based on the Company''s historical
observed default rates. The Company will calibrate the matrix to
adjust the historical credit loss experience with forward-looking
information. At every reporting date, the historical observed
default rates are updated and changes in the forward-looking
estimates are analysed.

The assessment of the correlation between historical observed
default rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive to changes
in circumstances and of forecast economic conditions. The
Company''s historical credit loss experience and forecast
of economic conditions may also not be representative of
customer''s actual default in the future.

Share-based payments

For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the Company
uses a DCF model for Employee Share Option Plan. The
assumptions and models used for estimating fair value for share-
based payment transactions are disclosed in note 29.

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and other post¬
employment benefits and the present value of the gratuity

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.

Fair value measurement of financial instruments

When the fair value of financial assets and liabilities recorded in
the balance sheet cannot be measured based on quoted prices
in active markets, their fair value is measured using valuation
techniques including the discounted cash flow (DCF) model.
The inputs to these models are taken from observable markets
if available, otherwise, a degree of judgement is required in
establishing fair values. Judgements 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 the financial instrument.

2.3 Changes in accounting policies and disclosures

The Ministry of Corporate Affairs vide notification dated
9 September 2024 and 28 September 2024 notified the
Companies (Indian Accounting Standards) Second Amendment
Rules, 2024 and Companies (Indian Accounting Standards)
Third Amendment Rules, 2024, respectively, which amended/
notified certain accounting standards (see below), and
are effective for annual reporting periods beginning on or
after 1 April 2024:

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback - Amendments
to Ind AS 116

These amendments did not have any material impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.

3.1 Property, plant and equipment (PPE) (Contd..)

ii. Buildings include those constructed on leasehold land.

iii. Title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease arrangements are
duly executed in favour of the lessee) are held in the name of the Company.

iv. The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the
current or previous year.

v. The Capital work in progress (CWIP) consists of construction of building and expenditure towards plant and machinery at its
manufacturing facilities.

vi. Refer note 30 for disclosure of contractual commitments towards acquisition of Property, plant and equipment and intangible assets.

As at March 31, 2025, the carrying amount of goodwill is H 3,055.20 lakhs (March 31, 2024: H 3,055.20) (deemed cost as at April 01,
2019). Such goodwill arose as part of the business purchase and merger of Hi-Build Coating Private Limited (HBC) pursuant to the composite
scheme of amalgamation approved by National Company Law Tribunal (""NCLT"") vide its order dated March 02, 2017 (Appointed date:
April 01, 2016). For the purpose of impairment testing of Goodwill, as per the business plan of purchase, the entire business of the Company
is considered as single Cash Generating Unit (CGU), as post business combination the entire operations of the Company have been
integrated for synergies, includes aligning of manufacturing facilities, logistics management, technology exchange, etc.

The Company performs impairment testing annually. The recoverable amount of the CGU has been determined based on a value in use
calculation using cash flow projections from financial budgets approved by the management covering a five year period. The pre-tax
discount rate applied to cash flow projections for impairment testing during March 31, 2025: 10% (March 31, 2024: 10%). Based on the
cash flow projections, discount rate and other assumptions including gross margin, sales discount, market share, volume growth, etc it was

concluded that the value in use exceeds the carrying value of goodwill and overall CGU. As at March 31, 2025, there were no indicators
of impairment noted by management.

The Company constantly monitors the latest government legislation in relation to climate-related matters. At the current time, no legislation
has been passed that will impact the Company. The Company will adjust the key assumptions used in value-in-use calculations and
sensitivity to changes in assumptions should a change be required.

C. Terms and rights attached to the equity shares:

The Company has only one class of equity shares having a par value of H 10 per share (March 31, 2024: H 10). Each holder of equity
shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to
receive the remaining assets of the Company after distribution of the preferential amounts. The distribution of the remaining assets of
the Company will be in proportion to the number of equity shares held by the shareholders.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting (refer note 12).

Nature and purpose of reserves:

Securities premium account - This represents the amount received in excess of par value of equity shares.

General reserve - Represents amounts transferred from retained earnings in earlier years as per the requirements of the erstwhile
Companies Act 1956.

Share based payment reserve - The share based payment reserve is used to recognise the grant date fair value of options issued to
employees under Employee stock option plan.

Retained earnings - Retained earnings are the profits/(loss) that the company has earned/incurred till date, less any transfers to general
reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement gain/(loss) on defined benefit
plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

The entire amount of the provision of H 80.31 lakhs (March 31, 2024: H 138.43 lakhs) is presented as current, since the Company does
not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company
does not expect all employees to avail the full amount of accrued leave or require payment for such leave within the next 12 months.
This is an unfunded scheme.

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed
five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
For certain class of employees, the gratuity will be paid at 30 days salary (last drawn salary) for each completed year of service post
their completion of 20 years of employment. The plan is funded with LIC by the Company.

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined
benefit obligation at the end of the reporting period less the fair value of plan assets. The cost of providing benefits under the defined
benefit plan is determined using the projected unit credit method.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss, the funded status
and amounts recognised in balance sheet for the plan.

iii. Risk Exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Asset Volatility:

The Plan liabilities are calculated using a discount rate set with reference to bond yields. If plan assets underperform, this yield will
create a deficit. The plan assets are maintained with fund manager LIC of India. They are subject to interest rate risk which is managed
by the insurer.

Changes in bond yield:

A decrease in bond yields will increase plan liabilities.

Asset risk:

All plan assets are maintained in a trust fund managed by a public sector insurer viz; Life Insurance Corporation (LIC) of India. LIC has
a sovereign guarantee and has been providing consistent and competitive returns over the years.

The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no
control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained
for both the investment and claim settlement and hence 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of.

Future salary escalation and Inflation risks:

Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially
unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this risk.

Life expectancy:

Increases in life expectancy of employee will result in an increase in the plan liabilities. This is particularly significant where inflationary
increases result in higher sensitivity to changes in life expectancy.

Terms and conditions of related party transactions and balances:

Outstanding balances at the end of the year are unsecured and interest free and settlement occurs in cash.

The transactions with related parties (excluding relatives of KMPs) includes managerial remuneration which is determined based
on market conditions and is approved by Nomination and Remuneration Committee of the Company.

Share-based payments include the perquisite value of stock incentives exercised during the year, determined in accordance
with provisions of Income Tax Act, 1961.

In case of transactions with related parties during the year, the amounts are exclusive of applicable taxes.

The expected life of the share options is based on the historical data and current expectations and is not necessarily indicative of
exercise pattern that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the
life of the options is indicative of future trends, which may not necessarily be the actual outcome.

vi. Effect of the employee share-based payment plans on the Statement of Profit and Loss and on its
financial position

Compensation expense arising from equity-settled employee share based payment plans for the year ended March 31, 2025
amounted to H 601.01 lakhs (March 31, 2024: H 697.77 lakhs). The liability for employee stock options outstanding as at March 31,
2025 is H 1,730.34 lakhs (March 31, 2024: H 1,290.08 lakhs).

30 Capital and other commitments

i) The estimated amounts of contracts remaining to be executed on capital account and not provided for are H 13,428.39 lakhs (net of
advances: H 1,241.69 lakhs) [March 31, 2024: H 17,963.64 lakhs (net of advances: H 1,898.69 lakhs)]

ii) The Company has guaranteed purchase of certain quantities of tinting machine and gyro shakers. In the event the Company is not
able to make the purchases, it will be liable to compensate the manufacturer with a fee equivalent to the manufacturer''s price towards
inventory of components including the customized front panel TAB, keyboard, mouse and USB hub with cabling.

iii) For commitments relating to lease arrangements, refer note 35.

33 Segment reporting

The Board of Directors of the Company performs the function of allotment of resources and assessment of performance of the Company.
Considering the level of activities performed, frequency of their meetings and level of finality of their decisions, the Company has identified
that Chief Operating Decision Maker function is being performed by the Managing Director. The financial information presented to the
Board and Managing Director in the context of results and for the purposes of approving the annual operating plan is on a consolidated
basis for various products of the Company. As the Company''s business activity falls within a single business segment viz. ''Paints'' and
the sales substantially being in the domestic market, the financial statements are reflective of the information required by Ind AS 108
"Operating Segments”.

For details on geographical distribution of revenue, refer note 18.

All non-current assets of the Company are located within India.

34 Operating leases

Operating lease - Company as lessor

The Company has given tinting machines and gyro shakers on operating lease to its dealers. The Company enters into 5 years cancellable
lease agreements. The minimum aggregate lease payments to be received in future is considered as H Nil. Accordingly, the disclosure
of minimum lease payments receivable at the Balance sheet date is not made. The amount received from the dealers in nature of non¬
refundable deposits (representing lease income received in advance) is deferred and amortised over the period of lease. The initial direct
cost relating to acquisition of tinting machines and gyro shakers is capitalised. The information on gross amount of leased asset, depreciation
and impairment is given in note 3.1(i).

35 Leases

A Company as a lessee

The Company has lease contracts mainly for land and buildings (godowns and depots) used for factory operations and storage of
goods. Leases of such depots /godowns generally have lease terms between 3 and 10 years. The Company''s obligations under
its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing
the leased assets.

35 Leases (Contd..)

The Company had total cash outflows for leases of H 882.09 lakhs in March 31, 2025 (H 718.98 lakhs in March 31, 2024).
The Company also had non-cash additions to right-of-use assets and lease liabilities of H 990.44 lakhs in March 31, 2025
(H 1,243.74 lakhs in March 31, 2024). The future cash outflows relating to leases are disclosed in note 38.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management
to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises
significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

There are no variable lease payment terms.

The total lease payment for the leasehold land rights for the lease period has already been made. Therefore the Company is not
required to create any corresponding liabilities.

ii) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised
and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has
classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows
underneath the table.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required
to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There has been no transfer among Level 1, Level 2 and Level 3 during the year.

iii) Valuation technique used to determine fair value

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

The fair values of the unquoted mutual funds and bonds are based on NAV obtained from asset management companies at the reporting date.

iv) Valuation process

The finance department of the Company includes a team that oversees the valuations of financial assets and liabilities required for
financial reporting purposes, including level 3 fair values.

External valuers are involved for valuation of significant assets, such as unquoted financials assets. Involvement of external valuers is decided by
the finance team. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained.
The Finance team decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.

Changes in level 3 fair values are analysed at the end of each reporting period during the valuation discussion between the valuation
team and external valuer. As part of this discussion the team presents a report that explains the reason for the fair value movements.

37 Capital management

The Company''s objective for capital management is to maximise shareholders value, safeguard business continuity and support the growth of
the Company. The Company determines the capital requirements based on annual operating plans and long-term and other strategic investment
plans. The funding requirements are met through equity and operating cash flows generated. No changes were made in the objectives, policies or
processes during the year ended March 31, 2025. Capital represents equity attributable to equity holders of the Company. The Company monitors
capital using a gearing ratio, which is net debt/obligation divided by total equity. The Company''s policy is to keep the gearing ratio optimum.

38 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise lease liabilities and trade payables and other payables. The main purpose of these
financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade receivables and other
receivables, and cash and cash equivalents that are derived directly from its operations. The Company also holds investments in mutual funds.

The Company is exposed to market risk, credit risk, price risk, liquidity risk and interest risk. The Company''s senior management oversees
the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s
policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the
appropriate skills, experience and supervision. The Managing Director and the Board of Directors review and agree policies for managing
each of these risks, which are summarised below.

(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. Financial
instruments affected by market risk include deposits and investments.

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 is not exposed to the interest rate risk as there are no floating interest rates on financial assets and no
debt obligations.

(i) Price risk

The Company invests its surplus funds in mutual funds which are linked to equity/debt markets. The Company is exposed to
price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments
in mutual funds, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with
Company''s investment policy approved by the Board of Directors.

(ii) 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. Generally, the Company''s exposure to the risk of changes in the market interest rates primarily relate to the
Company''s debt obligations with the floating interest rates. The Company does not have any borrowings in the current year as
well as previous year.

(iii) Foreign currency risk

The company is engaged in international trade and thereby exposed to foreign exchange risk arising from foreign currency
transactions, primarily with respect to the USD and EUR. Foreign exchange risk arises from recognised assets and liabilities
denominated in a currency that is not the Company''s functional currency (H). The Company''s exposure to foreign currency arises
from short term receivables and payables where fluctuations in the foreign exchange rates are generally not significant and
consequently limiting the Company''s exposure.

(b) Credit risk

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

(i) Trade receivables

Customer credit risk is managed by the Company''s established policies, procedures and controls relating to customer credit
risk management. Credit quality of a customer is assessed based on an individual credit limits and are defined in accordance
with management''s assessment of the customer. Outstanding customer receivables are regularly monitored. The concentration
of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total
balance of trade receivables.

The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision
matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for
forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the
forward-looking estimates are analysed.

The ageing of trade receivable as on balance sheet date is given below. The age analysis has been considered from the date
when the invoices were due for payment.

Credit risk from balances with banks, mutual funds is managed by the management in accordance with the Company''s policy.
Investments of surplus funds are made only with approved counterparties based on limits defined by the management. The limits
are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make
payments. The Company''s maximum exposure to credit risk for financial instruments (mutual funds), bank balances and deposits
as at March 31, 2025 and March 31, 2024 is the carrying amounts as mentioned in note 4 and 8.

(c) Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with
financial liabilities that are required to be settled by delivering cash or another financial asset. The Company closely monitors
its liquidity position and deploys a robust cash management system. It aims to minimise these risks by generating sufficient
cash flows from its current operations, which in addition to the available cash and cash equivalents, will provide liquidity.
The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The carrying amounts are assumed to
be reasonable approximation of fair value.

40 (i) New and amended standards

The Ministry of Corporate Affairs (MCA) vide notification dated 9 September 2024 and 28 September 2024 notified the Companies
(Indian Accounting Standards) Second Amendment Rules, 2024 and Companies (Indian Accounting Standards) Third Amendment
Rules, 2024, respectively, which amended/ notified certain accounting standards (see below), and are effective for annual reporting
periods beginning on or after 1 April 2024:

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback - Amendments to Ind AS 116

These amendments did not have any material impact on the amounts recognised in prior periods or current period and are not
expected to significantly affect the future periods.

(ii) Standard issued but not yet effective

MCA notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as
issued from time to time. During the year ended March 31, 2025, MCA has not notified any new standards or amendments to the
existing standards which are not yet effective.

41 Other statutory information:

(i) No proceedings have been initiated or are pending against the Company for holding any Benami property under the Prohibition of
Benami Property Transactions Act, 1988 (as amended from time to time) (formally the Benami Transaction (Prohibition) Act, 1988
(45 of 1988)) and Rules made there under.

(ii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

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

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the current or previous financial year.

(v) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind
of funds) to any other person or entity, including foreign entities (Intermediaries) with the understanding (whether recorded in writing
or otherwise) that the intermediary shall:

(a) d irectly 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:

(vi) The Company has not received any funds from any person or entity, including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:

(a) d irectly 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.

(vii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the
current or previous year.

41 Other statutory information: (Contd..)

(viii) There were no payments made by the Company to political parties during current or previous year.

(ix) The Company does not have any borrowings from banks or financial institutions or government or government authorities or
any other lender.

(x) There are no loans and advances in the nature of loans granted to promoters, directors, key managerial personnel and related parties
as at March 31, 2025 and March 31, 2024.

(xi) 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 year 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.

(xii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(xiii) The Company has no borrowings from bank or financial institutions or government or government authorities or any lender on the
basis of securities of current assets during the current or previous financial year.

(xiv) The Company has complied with the number of layers prescribed under the Companies Act, 2013 read with the Companies (Restrictions
on number of layers) Rules, 2017.

42 Transactions with companies struck off:

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

As per our report of even date

For Price Waterhouse Chartered Accountants LLP For and on behalf of the Board of Directors of

Firm Registration No: 012754N/N500016 Indigo Paints Limited

CIN :L24114PN2000PLC014669

Neeraj Sharma Hemant Jalan Narayanankutty K.V.

Partner Chairman & Managing Director Director

Membership number: 108391 DIN: 00080942 DIN: 00296465

Sayalee Yengul Chetan Humane

Company Secretary & Compliance Officer Chief Financial Officer
ACS number: A37267 PAN: ABGPH4376K

Place: Pune Place: Pune

Date: May 24, 2025 Date: May 24, 2025

---

Mar 31, 2024

l. 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 expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

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.

m. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

(i) The date of the plan amendment or curtailment, and

(ii) The date that the Company recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

(i) Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and

(ii) Net interest expense or income

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company recognizes expected cost of short-term employee benefit as an expense, when an employee renders the related service.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting date.

n. Share-based payments

Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in share-based payment reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

No expense is recognised for awards that do not ultimately vest because service conditions have not been met. When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

o. 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 or for which the Company has applied the practical expedient, 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. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under Ind AS 115.

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 four categories:

(i) Financial assets at amortised cost (debt instruments)

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

(iii) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

(iv) Financial assets at fair value through profit or loss

Financial assets at amortised cost (debt instruments)

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

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

(ii) 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.

This category is the most relevant to the Company. 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 trade receivables and other receivables.

Financial assets at fair value through profit or loss

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 derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.

Derecognition

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

(i) The rights to receive cash flows from the asset have expired, or

(ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Impairment of financial assets

In accordance with Ind-AS 109, the Company applies expected credit loss ("ECL") model for measurement and recognition of impairment loss. The Company follows ‘simplified approach'' for recognition of impairment loss allowance on trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other 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, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events on a financial instrument that are possible within 12 months after the reporting date.

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 Company expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, a Company is required to consider:

(i) All contractual terms of the financial instrument (including prepayment, extension, call and similar options) 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 Company is required to use the remaining contractual term of the financial instrument

(ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of profit and loss. This amount is reflected in a separate line in the Statement of profit and loss as an impairment gain or loss. The balance sheet presentation is described below:

Financial assets measured as at amortized cost and contractual revenue receivables. ECL 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.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

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.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

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)

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.

Financial liabilities at amortised cost (Loans and borrowings)

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

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 as finance costs in the statement of profit and loss.

This category generally applies to 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.

p. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term 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.

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

q. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors of the Company has identified the Managing Director and Chief Executive Officer as the chief operating decision maker of the Company.

r. Contingent liability

A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and 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 the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made

s. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holders of parent company (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders of the parent company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

2.2 Significant accounting judgements, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Other disclosures relating to the Company''s exposure to risks and uncertainties includes:

• Capital management

• Financial risk management objectives and policies

• Sensitivity analyses disclosures Judgements

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Determining the lease term of contracts with renewal and termination options - Company as lessee

The Company determines the lease term as the noncancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

Revenue from contracts with customers

The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:

• Determining method to estimate variable consideration and assessing the constraint

Certain contracts for the sale of goods include a right of return and volume rebates that give rise to variable consideration. In estimating the variable consideration, the Company is required to use either the expected value method or the most likely amount method based on which method better predicts the amount of consideration to which it will be entitled.

The Company determined that the expected value method is the appropriate method to use in estimating the variable consideration for the sale of goods with rights of return, given the large number of customer contracts that have similar characteristics. In estimating the variable consideration for the sale of goods with volume rebates, the Company determined that using a combination of the most likely amount method and expected value method is appropriate. The selected method that better predicts the amount of variable consideration was primarily driven by the number of volume thresholds contained in the contract.

Before including any amount of variable consideration in the transaction price, the Company considers whether the amount of variable consideration is constrained. The Company determined that the

estimates of variable consideration are not constrained based on its historical experience, business forecast and the current economic conditions. In addition, the uncertainty on the variable consideration will be resolved within a short time frame.

Estimates and assumptions

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. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

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 DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill recognised by the Company. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis.

Provision for expected credit losses of trade receivables and contract assets

The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns

The provision matrix is initially based on the Company''s historical observed default rates. The Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company''s historical credit loss experience and forecast of economic conditions may also not be representative of customer''s actual default in the future.

Share-based payments

For the measurement of the fair value of equity-settled transactions with employees at the grant date, the Company uses a DCF model for Employee Share Option Plan. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 29.

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity 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.

Fair value measurement of financial instruments

When the fair value of financial assets and liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable markets if available, otherwise, a degree of judgement is required in establishing fair values. Judgements 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 the financial instrument.

Revenue recognition - Estimating variable consideration for returns and volume rebates

The Company estimates variable considerations to be included in the transaction price for the sale of goods with rights of return and volume rebates.

The Company developed a model for forecasting sales returns. The model used the historical return data of each product to come up with expected return percentages. These percentages are applied to determine the expected value of the variable consideration. Any significant changes in experience as compared to historical return pattern will impact the expected return percentages estimated by the Company.

The Company''s expected volume rebates are analysed on a per customer basis for contracts that are subject to a volume threshold. Determining whether a customer will be likely entitled to rebate will depend on the customer''s historical rebates entitlement and accumulated purchases to date.

The Company applied a model for estimating expected volume rebates for contracts. The model uses the historical purchasing patterns and rebates entitlement of customers to determine the expected rebate percentages and the expected value of the variable consideration. Any significant changes in experience as compared to historical purchasing patterns and rebate entitlements of customers will impact the expected rebate percentages estimated by the Company.

The Company updates its assessment of expected returns and volume rebates annually and the refund liabilities are adjusted accordingly. Estimates of expected returns and volume rebates are sensitive to changes in circumstances and the Company''s past experience regarding returns and rebate entitlements may not be representative of customers'' actual returns and rebate entitlements in the future. Refer note 18 for further details.

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. The IBR therefore reflects what the Company ‘would have to pay'', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates).

2.3 Changes in accounting policies and disclosures

Several amendments and interpretations apply for the first time in the year ended March 31,2024, but do not have a material impact on the financial statements of the Company.

3.4 Impairment testing of goodwill

As at the March 31,2024, the carrying amount of goodwill is H 3,055.20 lakhs (March 31,2023: H 3,055.20) (deemed cost as at April 01,2019). Such goodwill arose as part of the business purchase and merger of Hi-Build Coating Private Limited (HBC) pursuant to the composite scheme of amalgamation approved by National Company Law Tribunal (""NCLT"") vide its order dated March 02, 2017 (Appointed date: April 01,2016). For the purpose of impairment testing of Goodwill, as per the business plan of purchase, the entire business of the Company is considered as single Cash Generating Unit (CGU), as post business combination the entire operations of the Company has been integrated for synergies, includes aligning of manufacturing facilities, logistic management, technology exchange, etc.

The Company performs impairment testing annually at the same time. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five year period. The pre-tax discount rate applied to cash flow projections for impairment testing during March 31,2024: 10% (March 31,2023: 10%). Based on the cash flow projections, discount rate and other assumptions including gross margin, sales discount, market share, volume growth, etc it was concluded that the value in use exceeds the carrying value of goodwill and overall CGU. As at March 31, 2024, there were no indicators of impairment noted by management.

C. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of J 10 per share (March 31, 2023: H10). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company. The distribution of the remaining assets of the Company will be in proportion to the number of equity shares held by the shareholders.

27 Gratuity Gratuity plan

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. For certain class of employees, the gratuity will be paid at 30 days salary (last drawn salary) for each completed year of service post their completion of 20 years of employment. The plan is funded with LIC by the Company.

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss, the funded status and amounts recognised in balance sheet for the plan.

29 Employee stock option scheme (adjusted for issue of bonus shares) (Contd..)

vi. Effect of the employee share-based payment plans on the Statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share based payment plans for the year ended March 31, 2024 amounted to H 697.77 lakhs (March 31, 2023: H 860.36 lakhs). The liability for employee stock options outstanding as at March 31,2024 is H1,290.08 lakhs (March 31,2023: H 985.14 lakhs

30 Capital and other commitments

i) The estimated amounts of contract remaining to be executed on capital account and not provided for are H17,963.64 lakhs (net of advances: H1,898.69 lakhs) [March 31, 2023: H 2,016.37 lakhs (net of advances: H 154.59 lakhs)]

ii) The Company has guaranteed purchase of certain quantities of tinting machine and gyro shakers. In the event the Company is not able to make the purchases, it will be liable to compensate the manufacturer with a fee equivalent to the manufacturer''s price towards inventory of components including the customized front panel TAB, keyboard, mouse and USB hub with cabling.

iii) The Company has issued bank guarantee of H1,800 lakhs in favour of the bankers of subsidiary, for credit facilities availed by subsidiary (March 31,2023: H Nil).

iv) For commitments relating to lease arrangements, refer note 35.

33 Segment reporting

The Board of Directors of the Company performs the function of allotment of resources and assessment of performance of the Company. Considering the level of activities performed, frequency of their meetings and level of finality of their decisions, the Company has identified that Chief Operating Decision Maker function is being performed by the Managing Director. The financial information presented to the Board in the context of results and for the purposes of approving the annual operating plan is on a consolidated basis for various products of the Company. As the Company''s business activity falls within a single business segment viz. ‘Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108 "Operating Segments".

The revenue from operations from products and services has not been disclosed as adjustments for discounts and rebates /performance obligation adjustments cannot be allocated at product category level.

34 Operating leases

Operating lease - Company as lessor

The Company has given tinting machine and gyro shakers on operating lease to its dealers. The Company enters into 5 years cancellable lease agreements. The minimum aggregate lease payments to be received in future is considered as H Nil. Accordingly, the disclosure of minimum lease payments receivable at the Balance sheet date is not made. The amount received from the dealers in nature of non-refundable deposits (representing lease income received in advance) is deferred and amortised over the period of lease. The initial direct cost relating to acquisition of tinting machine and gyro shakers is capitalised. The information on gross amount of leased asset, depreciation and impairment is given in note 3.1(i).

35 Leases

A Company as a lessee

The Company has lease contracts mainly for land and buildings (godowns and depots) used for factory operations and storage of goods. Leases of such depots /godowns generally have lease terms between 3 and 10 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets.

Leasehold land has lease term between 83 to 99 years.

For details on Right to use assets, refer note 3.2

The carrying amounts of lease liabilities and the movements during the year:

The Company''s objective for capital management is to maximise shareholders value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirements based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. No changes were made in the objectives, policies or processes during the period ended March 31,2024. Capital represents equity attributable to equity holders of the Company.

The Company''s principal financial liabilities comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual funds.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(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. Financial instruments affected by market risk include deposits and investments.

The Company does not have significant direct exposure to foreign currency 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 is not exposed to the interest rate risk as there are no floating interest rates on financial assets and no debt obligations.

(b) Credit risk

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

(i) Trade receivables

Customer credit risk is managed by the Company''s established policies, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an individual credit limits and are defined in accordance with management''s assessment of the customer. Outstanding customer receivables are regularly monitored. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

(ii) Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds is managed by the management in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties based on limits defined by the management. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk for financial instruments (mutual funds), bank balances and deposits as at March 31, 2024 and March 31,2023 is the carrying amounts as mentioned in note 4 and 8.

(c) Price risk

The Company invests its surplus funds in mutual funds which are linked to equity/debt markets. The Company is exposed to price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with Company''s investment policy approved by the Board of Directors.

(d) Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with financial liabilities that are required to be settled by delivering cash or another financial asset. The Company closely monitors its liquidity position and deploys a robust cash management system. It aims to minimise these risks by generating sufficient cash flows from its current operations, which in addition to the available cash and cash equivalents, will provide liquidity. The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The carrying amounts are assumed to be reasonable approximation of fair value.

42 Business acquisition:

On April 3, 2023, the Company has acquired 51% stake in Apple Chemie India Private Limited ("ACIPL") for a consideration of 2,933.09 lakhs. Accordingly, effective such date ACIPL has become a subsidiary of the Company. Further, the promoter shareholders of ACIPL (NCI of the subsidiary) have put option for selling balance stake of 49% to the Company at a value to be determined as per the terms of Shareholders Agreement. The fair value of the put option on the date of acquisition of H91.20 lakhs has been included in the cost of investments and resultant change in liability is recognised under ‘Other expense'' during the year.

43 Compliance with section 143 (3) for maintenance of books of accounts

With effect from August 5, 2022, the Ministry of Corporate Affairs (MCA) has amended the Companies (Accounts) Rules, 2014, relating to maintenance of electronic books of accounts and other relevant books and papers. Pursuant to this amendment, the Company is required to maintain the books of accounts which are accessible in India at all times and their backup is to be kept on servers located in India on a daily basis. The Company has a process to take daily back-up of books of account maintained in electronic mode and along with the logs of the back-up of such books of accounts.

44 Compliance with section 143(3) for maintenance of audit trail:

The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for certain changes made using privileged/ administrative access rights to the application (SAP ECC6) and/or the underlying database (Oracle 19C). Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.

45 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 charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) The Company have not advanced or loaned or invested funds to any other person or entity, 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.

(v) The Company have not received any fund from any person or entity, 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.

(vi) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year 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.

As per our report of even date.

For S R B C & CO LLP For and on behalf of the Board of Directors of

Chartered Accountants Indigo Paints Limited

ICAI Firm Registration No.: 324982E/E300003 CIN :L24114PN2000PLC014669

per Sumit Kumar Agrawal Hemant Jalan Anita Jalan

Partner Chairman & Managing Director Director

Membership number: 135859 DIN: 00080942 DIN: 00085411

Dayeeta Gokhale Chetan Humane

Company Secretary & Compliance Officer Chief Financial Officer A - 50582 PAN: ABGPH4376K

Place: Mumbai Place: Pune

Date: May 22, 2024 Date: May 22, 2024

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Mar 31, 2023

IMPAIRMENT TESTING OF GOODWILL

As at the March 31, 2023, the carrying amount of goodwill is H 3,055.20 Lakhs (March 31, 2022: H 3,055.20) (deemed cost as at April 01, 2019). Such goodwill arose as part of the business purchase and merger of Hi-Build Coating Private Limited (HBC) pursuant to the composite scheme of amalgamation approved by National Company Law Tribunal (""NCLT"") vide its order dated March 02, 2017 (Appointed date: April 01, 2016). For the purpose of impairment testing of Goodwill, as per the business plan of purchase, the entire business of the Company is considered as single Cash Generating Unit (CGU), as post business combination the entire operations of the Company has been integrated for synergies, includes aligning of manufacturing facilities, logistic management, technology exchange, etc.

The Company performs impairment testing annually at the same time. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five year period. The pre-tax discount rate applied to cash flow projections for impairment testing during March 31, 2023: 10% (March 31, 2022: 10%). Based on the cash flow projections, discount rate and other assumptions including gross margin, sales discount, market share, volume growth, etc it was concluded that the value in use exceeds the carrying value of goodwill and overall CGU. As a result of the analysis, no impairment of the Goodwill was required. As at March 31, 2023, there were no indicators of impairment noted by management.

The Company constantly monitors the latest government legislation in relation to climate-related matters. At the current time, no legislation has been passed that will impact the Company. The Company will adjust the key assumptions used in value-inuse calculations and sensitivity to changes in assumptions should a change be required.

No trade receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivables due from firms or private companies respectively in which any director is a partner, a director or a member.

Trade receivables are non interest bearing and generally on terms of 30 to 90 days. The Company has considered invoice date for the purpose of ageing of trade receivables.

There are no unbilled receivables, hence the same is not disclosed in the ageing schedule.

C. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of H 10 per share (March 31, 2022: H 10). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company. The distribution of the remaining assets of the Company will be in proportion to the number of equity shares held by the shareholders.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting (refer note 12). "

E. 43,984,320 bonus shares were issued in FY 2016-17 by capitalization of securities premium for various class of equity shares and compulsory convertible cumulative preference shares (CCCPS). Subsequently, all classes of equity shares and CCCPS were converted to ordinary equity shares.

27 GRATUITY Gratuity plan

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. For certain class of employees, the gratuity will be paid at 30 days salary (last drawn salary) for each completed year of service post their completion of 20 years of employment. The plan is funded with LIC by the Company.

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method."

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss, the funded status and amounts recognised in balance sheet for the plan.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis didn''t change compared to the previous periods.

The expected life of the share options is based on the historical data and current expectations and is not necessarily indicative of exercise pattern that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

vi. Effect of the employee share-based payment plans on the Statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share based payment plans for the year ended March 31, 2023 amounted to H 860.36 Lakhs (March 31, 2022: H 218.71 Lakhs). The liability for employee stock options outstanding as at March 31, 2023 is H 985.14 Lakhs (March 31, 2022: H 271.58 Lakhs).

30 CAPITAL AND OTHER COMMITMENTS

i) The estimated amounts of contract remaining to be executed on capital account and not provided for are H2,016.37 Lakhs (net of advances: H154.59 Lakhs) [March 31, 2022: H 12,351.31 Lakhs (net of advances: H 4,161.96 Lakhs)]

ii) The Company has guaranteed purchase of certain quantities of tinting machine and gyro shakers. In the event the Company is not able to make the purchases, it will be liable to compensate the manufacturer with a fee equivalent to the manufacturer''s price towards inventory of components including the customized front panel TAB, keyboard, mouse and USB hub with cabling.

iii) For commitments relating to lease arrangements, refer note 35.

31 CONTINGENT LIABILITIES
Particulars	March 31, 2023	March 31, 2022
Sales tax - C forms	6.14	2.67
Value added tax	1,727.80	1,727.80
Income tax matters	45.53	28.19
Excise and service tax related matters	5.72	5.72
Building tax	22.75	22.75
Goods and services tax	1,372.43	-
Total*	3,180.37	1,787.13

Sales tax/ Income tax/ Excise and service tax /Goods and services tax dues comprise of demand from Indian tax authorities for payment of additional tax in relation to various tax matters. The Company is contesting the demands and the management, including its tax advisors, believe its position will likely be upheld in appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management based on its assessment, believe that the outcome of these contingencies will be favourable, but not probable, and accordingly no provision for liability has been recognized in the financial statements.

*excludes interest and penalty (if any), thereon.

33 SEGMENT REPORTING

The Board of Directors of the Company performs the function of allotment of resources and assessment of performance of the Company. Considering the level of activities performed, frequency of their meetings and level of finality of their decisions, the Company has identified that Chief Operating Decision Maker function is being performed by the Managing Director. The financial information presented to the Board in the context of results and for the purposes of approving the annual operating plan is on a consolidated basis for various products of the Company. As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108 "Operating Segments''.''

The revenue from operations from products and services has not been disclosed as adjustments for discounts and rebates / performance obligation adjustments cannot be allocated at product category level.

34 OPERATING LEASES Operating lease - Company as lessor

The Company has given tinting machine and gyro shakers on operating lease to its dealers. The Company enters into 5 years cancellable lease agreements. The minimum aggregate lease payments to be received in future is considered as H Nil. Accordingly, the disclosure of minimum lease payments receivable at the Balance sheet date is not made. The amount received from the dealers in nature of non-refundable deposits (representing lease income received in advance) is deferred and amortised over the period of lease.

35 LEASES

A Company as a lessee

The Company has lease contracts mainly for land and buildings (godowns and depots) used for factory operations, depots and storage of goods. Leases of such depots /godowns generally have lease terms between 3 and 6 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. The Company also has certain leases of depots with lease terms of 12 months or less and leases of low value.

The Company had total cash outflows for leases of H 581.03 Lakhs in March 31, 2023 (H 502.86 Lakhs in March 31, 2022). The Company also had non-cash additions to right-of-use assets and lease liabilities of H 445.81 Lakhs in March 31, 2023 (H 83713 Lakhs in March 31, 2022). The future cash outflows relating to leases are disclosed in note 38.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

37 CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value. The Company''s capital management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximise shareholders'' value. The management and the board of directors monitors the return on capital as well as the level of dividends to the shareholders. The Company manages its capital structure and makes adjustments in light of changes in economic conditions.

38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual funds.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(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. Financial instruments affected by market risk include deposits and investments.

The Company has negligible direct exposure to foreign currency 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 is not exposed to the interest rate risk as there is no long-term debt obligations."

(b) Credit risk

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

(i) Trade receivables

Customer credit risk is managed by the Company''s established policies, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an individual credit limits and are defined in accordance with management''s assessment of the customer. Outstanding customer receivables are regularly monitored. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The Company uses ageing buckets and provision matrix for the purpose of computation of expected credit loss. The provision rates are based on past trend of recoverability. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

(ii) Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds is managed by the management in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties based on limits defined by the management. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk for financial instruments (mutual funds), bank balances and deposits as at March 31, 2023 and March 31, 2022 is the carrying amounts as mentioned in note 4 and 8.

(c) Price risk

The Company invests its surplus funds in mutual funds which are linked to equity/debt markets. The Company is exposed to price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with Company''s investment policy approved by the Board of Directors.

(d) Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with financial liabilities that are required to be settled by delivering cash or another financial asset. The Company closely monitors its liquidity position and deploys a robust cash management system. It aims to minimise these risks by generating sufficient cash flows from its current operations, which in addition to the available cash and cash equivalents, will provide liquidity.

The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The carrying amounts are assumed to be reasonable approximation of fair value.

The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

40 STANDARDS NOTIFIED BUT NOT YET EFFECTIVE

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind AS which are effective from 01 April 2023.

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

The amendments clarify the distinction between changes in accounting estimates and 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.

The amendments are effective for annual reporting periods beginning on or after 1 April 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.

The amendments are not expected to have a material impact on the Company''s financial statements.

(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 to Ind AS 1 are applicable for annual periods beginning on or after 1 April 2023. Consequential amendments have been made in Ind AS 107.

The amendments are not expected to have a material impact on 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.

The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognised for all deductible and taxable temporary differences associated with leases and decommissioning obligations. Consequential amendments have been made in Ind AS 101. The amendments to Ind AS 12 are applicable for annual periods beginning on or after 1 April 2023.

The amendments are not expected to have a material impact on the Company''s financial statements.

42 BUSINESS ACQUISITION:

Subsequent to the year end, the Company has entered into a Share Purchase and Share Subscription Agreement ("SPSS") and a Shareholders Agreement ("SHA") on April 03, 2023 with Apple Chemie India Private Limited ("ACIPL"") and its shareholders to acquire 51% equity shares in ACIPL. ACIPL is engaged in the manufacture and sale of construction chemicals and water proofing products. With the acquisition of 51% equity share, ACIPL will become a subsidiary of the Company, enabling the Company in expanding its product portfolio in the space of construction and water proofing products.

43 COMPLIANCE WITH SECTION 143 (3) FOR MAINTENANCE OF BOOKS OF ACCOUNTS

With effect from August 5, 2022, the Ministry of Corporate Affairs (MCA) has amended the Companies (Accounts) Rules, 2014, relating to maintenance of electronic books of accounts and other relevant books and papers. Pursuant to this amendment, the Company is required to maintain the books of accounts which are accessible in India at all times and their backup is to be kept on servers located in India on a daily basis. The Company has a process to take daily back-up of books of account maintained in electronic mode and alongwith the logs of the back-up of such books of accounts.

44 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 charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) The Company have not advanced or loaned or invested funds to any other person or entity, 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."

(v) The Company have not received any fund from any person or entity, 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."

(vi) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year 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.

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Mar 31, 2022

3.4 IMPAIRMENT TESTING OF GOODWILL

As at the March 31, 2022, the carrying amount of goodwill is Rs. 3,055.20 lakhs (March 31, 2021: Rs. 3,055.20) (deemed cost as at April 01, 2019). Such goodwill arose as part of the business purchase and merger of Hi-Build Coating Private Limited (HBC) pursuant to the composite scheme of amalgamation approved by National Company Law Tribunal ("NCLT") vide its order dated March 02, 2017 (Appointed date: April 01,2016). For the purpose of impairment testing of Goodwill, as per the business plan of purchase, the entire business of the Company is considered as single Cash Generating Unit (CGU), as post business combination the entire operations of the Company has been integrated for synergies, includes aligning of manufacturing facilities, logistic management, technology exchange, etc.

The Company performs impairment testing annually at the same time. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five year period. The projected cash flows have been updated to reflect the demand changes for products pursuant to Covid-19 pandemic. The pre-tax discount rate applied to cash flow projections for impairment testing during March 31, 2022: 10% (March 31, 2021: 10%). Based on the cash flow projections, discount rate and other assumptions including gross margin, sales discount, market share, volume growth, etc it was concluded that the value in use exceeds the carrying value of goodwill and overall CGU. As a result of the analysis, no impairment of the Goodwill was required. As at March 31, 2022, there were no indicators of impairment noted by management.

No trade receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivables due from firms or private companies respectively in which any director is a partner, a director or a member.

Trade receivables are non interest bearing and generally on terms of 30 to 90 days. The Company has considered invoice date for the purpose of ageing of trade receivables.

*During the previous year, the Company, had completed the Initial Public Offering (IPO) of 7,853,422 Equity Shares of Face Value of Rs. 10 each for cash at a price of Rs. 1,490 per Equity Share (for employee reservation portion of 70,000 equity shares at a price of Rs. 1,342 per equity share) aggregating to Rs. 116,912.39 lakhs comprising a Fresh Issue of 2,013,422 Equity Shares aggregating to Rs. 29,973.43 Lakhs and on offer for sale of 58,40,000 Equity Shares aggregating to Rs. 86,938.96 Lakhs. Pursuant to the IPO, the Equity Shares of the Company got listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on February 02, 2021. The selling shareholders included Mr. Hemant Jalan, Sequoia Capital India Investments IV and SCI Investments V (''Selling shareholders'').

For the year ended March 31, 2021, the Company had incurred Rs. 4,251.33 Lakhs (net of GST) as IPO related expenses and allocated such expenses between the Company Rs. 1,087.71 Lakhs (net of income tax impact Rs. 854.71) and selling shareholders 3,163.62 Lakhs. Such amounts were allocated based on agreement between the various parties and in proportion to the total proceeds in the IPO. The Company''s share of expenses of Rs. 854.71 Lakhs has been adjusted to securities premium. Refer note 11 of the financial statements.

Further, the Company had charged Rs. 3,163.62 Lakhs from the selling shareholder towards management support for their share of IPO expenses, based on the agreement with and indemnity from the selling shareholder for the IPO expenses, part of which being a qualified Export of services under GST Regulations. The Company has relied on expert opinion for invoicing to the selling shareholder.

The details of utilization of IPO proceeds - Rs. 29,118.72 Lakhs, net of IPO expenses of Rs. 854.71 Lakhs of the Company are as follows:

@-net of IPO related expenses

#Based on the advice received by the Company from the monitoring agency, the expenditure has been disclosed gross of tax (i.e. gross debits).

The unutilised funds have been earmarked by the Company in fixed deposits and monitoring account (current account). Refer note 8.

For the purpose of below notes:

Class A Equity Shares shall mean collectively, the Class A1 Equity Shares and Class A2 Equity Shares;

CCCPS shall mean collectively, Series A1 CCCPS, Series A2 CCCPS, Series B CCCPS and Series C CCCPS C. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share (March 31,2021: Rs 10). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company. The distribution of the remaining assets of the Company will be in proportion to the number of equity shares held by the shareholders.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting (refer note 41).

Each of Class A equity shares and CCCPS was converted into 1 equity shares of Rs. 10 each in 2020-21 at the ratio of 1:1.

27 GRATUITY Gratuity plan

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. For certain class of employees, the gratuity will be paid at 30 days salary (last drawn salary) for each completed year of service post their completion of 20 years of employment. The plan is funded with LIC by the Company.

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss, the funded status and amounts recognised in balance sheet for the plan.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis didn''t change compared to the previous periods.

* The remuneration does not include gratuity and leave encashment since the same is calculated for all the employees of the Company as a whole. Further, the amount excludes employee stock option perquisites

#The transactions of previous year do not include IPO related expenses and its recoverable balances, incurred on behalf of related parties as selling shareholders in Offer for Sale. Refer note 10.1 of the financial statements for details IPO expenses incurred by the company and allocated to selling shareholders.

Terms and conditions of related party transactions and balances

The transactions with related parties are assessed to be at arm''s length transactions by the management. Outstanding balances at the end of the year are unsecured and interest free and settlement occurs in cash.

Majority of the transactions with related parties includes managerial remuneration which is determined based on market conditions and is subject to approval from the Nomination and Remuneration Committee of the Company.

The expected life of the share options is based on the historical data and current expectations and is not necessarily indicative of exercise pattern that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

vi. Effect of the employee share-based payment plans on the Statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share based payment plans for the year ended March 31, 2022 amounted to Rs. 218.71 lakhs (March 31, 2021: Rs. 42.08 lakhs). The liability for employee stock options outstanding as at March 31, 2022 is Rs. 271.58 lakhs (March 31, 2021: Rs. 52.87 lakhs).

30 CAPITAL AND OTHER COMMITMENTS

i) The estimated amounts of contract remaining to be executed on capital account and not provided for are Rs. 12,351.31 lakhs (net of advances: Rs. 4,161.96 lakhs) [March 31, 2021: Rs. 454.32 lakhs (net of advances: Rs. 34.41 lakhs)]

ii) The Company has guaranteed purchase of certain quantities of tinting machine and gyro shakers. In the event the Company is not able to make the purchases, it will be liable to compensate the manufacturer with a fee equivalent to the manufacturer''s price towards inventory of components including the customized front panel TAB, keyboard, mouse and USB hub with cabling.

iii) Bank guarantee issued to stock exchange is Rs. Nil (March 31, 2021: Rs. 870.16 lakhs).

iv) For commitments relating to lease arrangements, refer note 35.

31 CONTINGENT LIABILITIES

Particulars	March 31, 2022	March 31, 2021
Sales tax - C forms	2.67	3.05
Value added tax	1,727.80	1,787.62
Income tax matters	28.19	28.19
Excise and service tax related matters	5.72	5.72
Building tax	22.75	22.75
Total*	1,787.13	1,847.33

The management based on its assessment, believe that the outcome of these contingencies will be favourable, but not probable, and accordingly no provision for liability has been recognized in the financial statements.

*excludes interest and penalty thereon.

33 SEGMENT REPORTING

The Board of Directors of the Company performs the function of allotment of resources and assessment of performance of the Company. Considering the level of activities performed, frequency of their meetings and level of finality of their decisions, the Company has identified that Chief Operating Decision Maker function is being performed by the Managing Director. The financial information presented to the Board in the context of results and for the purposes of approving the annual operating plan is on a consolidated basis for various products of the Company. As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108 "Operating Segments".

The revenue from operations from products and services has not been disclosed as adjustments for discounts and rebates /performance obligation adjustments cannot be allocated at product category level.

34 OPERATING LEASES

Operating lease - Company as lessor

The Company has given tinting machine and gyro shakers on operating lease to its dealers. The Company enters into 5 years cancellable lease agreements. The minimum aggregate lease payments to be received in future is considered as Rs. Nil. Accordingly, the disclosure of minimum lease payments receivable at the Balance sheet date is not made. The amount received from the dealers in nature of non-refundable deposits (representing lease income received in advance) is deferred and amortised over the period of lease.

35 LEASES

A Company as a lessee

The Company has lease contracts mainly for land and buildings (godowns and depots) used for factory operations, depots and storage of goods. Leases of such depots /godowns generally have lease terms between 3 and 6 years. The Company''s obligations under its leases are secured by the lessors title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. The Company also has certain leases of depots with lease terms of 12 months or less and leases of low value

35 LEASES (CONTD.)

The Company had total cash outflows for leases of Rs. 502.86 lakhs in March 31,2022 (Rs 411.11 lakhs in March 31,2021). The Company also had non-cash additions to right-of-use assets and lease liabilities of Rs. 837.13 lakhs in March 31, 2022 (Rs. 642.02 lakhs in March 31, 2021). The future cash outflows relating to leases are disclosed in Note 38.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

37 CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value. The Company''s capital management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximise shareholders'' value. The management and the board of directors monitors the return on capital as well as the level of dividends to the shareholders. The Company manages its capital structure and makes adjustments in light of changes in economic conditions.

38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(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. Financial instruments affected by market risk include deposits and FVTPL investments.

38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

The Company has negligible direct exposure to foreign currency 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 is not exposed to the interest rate risk as there is no long-term debt obligations.

(b) Credit risk

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

(i) Trade receivables

Customer credit risk is managed by the Company''s established policies, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an individual credit limits and are defined in accordance with management''s assessment of the customer. Outstanding customer receivables are regularly monitored. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The Company uses ageing buckets and provision matrix for the purpose of computation of expected credit loss. The provision rates are based on past trend of recoverability. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The Company does not hold collateral as security.

(ii) Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds is managed by the management in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties based on limits defined by the management. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk for financial instruments (mutual funds), bank balances and deposits as at March 31, 2022 and March 31, 2021 is the carrying amounts as mentioned in note 4 and 8.

(c) Price risk

The Company invests its surplus funds in mutual funds which are linked to equity/debt markets. The Company is exposed to price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with Company''s investment policy approved by the Board of Directors.

(d) Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with financial liabilities that are required to be settled by delivering cash or another financial asset. The Company closely monitors its liquidity position and deploys a robust cash management system. It aims to minimise these risks by generating sufficient cash flows from its current operations, which in addition to the available cash and cash equivalents, will provide liquidity. The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The carrying amounts are assumed to be reasonable approximation of fair value.

41 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 charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) The Company have not advanced or loaned or invested funds to any other person or entity, 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.

(v) The Company have not received any fund from any person or entity, 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.

(vi) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year 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.

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Mar 31, 2021

As at the March 31, 2021, the carrying amount of goodwill is Rs. 3,055.20 lakhs (deemed cost as at April 01, 2019). Such goodwill arose as part of the business purchase and merger of Hi-Build Coating Private Limited (HBC) pursuant to the composite scheme of amalgamation approved by National Company Law Tribunal ("NCLT") vide its order dated March 02, 2017 (Appointed date: April 01,2016). For the purpose of impairment testing of Goodwill, as per the business plan of purchase, the entire business of the Company is considered as single Cash Generating Unit (CGU), as post business combination the entire operations of the Company has been integrated for synergies, includes aligning of manufacturing facilities, logistic management, technology exchange, etc.

The Company performs impairment testing annually at the same time. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five year period. The projected cash flows have been updated to reflect the demand changes for products pursuant to Covid-19 pandemic. The pretax discount rate applied to cash flow projections for impairment testing during March 31,2021: 10% (March 31,2020: 10%). Based on the cash flow projections, discount rate and other assumptions including gross margin, sales discount, market share, volume growth, etc it was concluded that the value in use exceeds the carrying value of goodwill and overall CGU. As a result of the analysis, no impairment of the Goodwill was required. As at March 31, 2021, there were no indicators of impairment noted by management.

*During the year, the Company, has completed the Initial Public Offering (IPO) of 7,853,422 Equity Shares of Face Value of Rs. 10 each for cash at a price of Rs. 1,490 per Equity Share (for employee reservation portion of 70,000 equity shares at a price of Rs. 1,342 per equity share ) aggregating to Rs. 116,912.39 lakhs comprising a Fresh Issue of 2,013,422 Equity Shares aggregating to Rs. 29,973.43 Lakhs and on offer for sale of 58,40,000 Equity Shares aggregating to Rs. 86,938.96 Lakhs. Pursuant to the IPO, the Equity Shares of the Company got listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on February 02, 2021. The selling shareholders included Mr. Hemant Jalan, Sequoia Capital India Investments IV and SCI Investments V (''Selling shareholders'').

The Company has incurred Rs. 4,251.33 Lakhs (net of GST) as IPO related expenses and allocated such expenses between the Company Rs. 1,087.71 Lakhs (net of income tax impact Rs. 854.71) and selling shareholders 3,163.62 Lakhs. Such amounts were allocated based on agreement between the various parties and in proportion to the total proceeds in the IPO. The Company''s share of expenses of Rs. 854.71 Lakhs has been adjusted to securities premium. Refer note 12 of the financial statements.

The Company has charged Rs. 3,163.62 Lakhs from the selling shareholder towards management support for their share of IPO expenses, based on the agreement with and indemnity from the selling shareholder for the IPO expenses, part of which being a qualified Export of services under GST Regulations. The Company has relied on expert opinion for invoicing to the selling shareholder.

Of the above unutilized funds, Rs. 25,374.18 lakhs has been earmarked by the Company in fixed deposits and monitoring account (current account). Refer note 9.

For the purpose of below notes:

"Class A Equity Shares" shall mean collectively, the Class A1 Equity Shares and Class A2 Equity Shares;

"CCCPS" shall mean collectively, Series A1 CCCPS, Series A2 CCCPS, Series B CCCPS and Series C CCCPS

C. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share (March 31,2020: Rs 10). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company. The distribution of the remaining assets of the Company will be in proportion to the number of equity shares held by the shareholders.

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

Each of Class A equity shares and CCCPS was converted into 1 equity shares of Rs. 10 each in 2020-21 at the ratio of 1:1.

a. Term loan

I ndian Rupee loan from bank comprises of loans having interest in the range of 9.55% p.a. to 10.10% p.a. (March 31, 2020: 9.55% p.a. to 10.10% p.a.).

i. Term loan from a bank for Rs Nil (March 31, 2020: Rs 769.61 lakhs) (against sanction of Rs 1409.83 lakhs) is secured

by exclusive charge of land, factory building and entire plant and machinery at SY No 1126/1D/3 & 130/1D/3 of

Thrikkakkara North Village in Major Industrial Estate Kalamassery, exclusive charge on land, building and entire plant and machinery located at F-910/911 RIICO Industrial Area, Phase IV, Boranada Jodhpur-342001 and pari-passu charge on inventory and trade receivables. The loan is repayable in 60 equal monthly instalments beginning from August 2018. The term loan is repaid during the year.

ii. Term loan from a bank for Rs Nil (March 31, 2020: Rs 2771.98 lakhs) (against sanction of 3300.00 lakhs) is secured

by exclusive charge on land, factory building and entire plant and machinery at SY No 1126/1D/3 & 130/1D/3 of

Thrikkakkara North Village in Major Industrial Estate Kalamassery, exclusive charge on land, building and entire plant and machinery at F-910 & 911 RIICO Industrial Area, Phase IV, Boranada Jodhpur-342001, exclusive charge on land located at plot no A-207-208 (Old SEZ) at Jodhpur Boranada Industrial Area, Jodhpur, Rajasthan and pari-passu charge on inventory and trade receivables. The loan is repayable in 60 equal monthly instalments commencing from April 2019. The term loan is repaid during the year.

b. The loans against movable assets hypothecated for vehicles carries an interest rate of 9.14% p.a. Loans are repayable in 60 equal monthly instalments till June 2021.

c. There is no borrowing cost capitalized during the current year. The rates used for capitalisation of borrowing cost range from 9.55% p.a to 10.10% p.a. for year ended March 31, 2020. Refer note 24.

d. Refer note 15 for interest accrued and due on borrowings.

a) (i) Cash credit facilities from a bank with sanction limit of Rs 2000 lakhs carries interest in the range of 10.20% p.a. to 10.95%

p.a. (March 31, 2020: 9.85% p.a. to 11.70 % p.a.), linked to base rate. The loan is secured by creating first charge by way of hypothecation of inventory and trade receivables, both present and future of the Company and is payable on demand. The loan is collaterally secured by exclusive charge of land, factory building and entire plant and machinery at SY No 1126/1D/3 & 130/1D/3 of Thrikkakkara North Village in Major Industrial Estate Kalamassery, exclusive charge on land, building and entire plant and machinery located at F-910/911, G-904/905/906 RIICO Industrial Area, Phase IV, Boranada Jodhpur-342001, exclusive charge on land located at plot no A-207-208 (Old SEZ) at Jodhpur Boranada Industrial Area, Jodhpur, Rajasthan.

(ii) Cash credit facilities from a bank with sanction limit of Rs 1200 lakhs carries interest in the range of 9.85% p.a. to 11.00 % p.a. (March 31, 2020: 9.85% p.a. to 11.00 % p.a.), linked to base rate. The loan was secured by creating first charge by way of hypothecation of inventory and trade receivables and was payable within 12 months. The loan was collaterally secured by exclusive charge of land, factory building and plant and machinery at SIPCOT Industrial Estate, Pudukkottai, Tamil Nadu. During the year the loan facility is closed and charge has been released.

b) Unsecured working capital loan facilities from bank carried interest rate of MCLR 160 basis point and was payable within 90 days. The loan is repaid during the year.

28 Gratuity-Gratuity plan

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. For certain class of employees, the gratuity will be paid at 30 days salary (last drawn salary) for each completed year of service post their completion of 20 years of employment. The plan is funded with LIC by the Company.

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss, the funded status and amounts recognised in balance sheet for the plan.

The expected life of the share options is based on the historical data and current expectations and is not necessarily indicative of exercise pattern that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

vi. Effect of the employee share-based payment plans on the Statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share based payment plans for the year ended March 31, 2021 amounted to Rs. 42.08 lakhs (March 31, 2020: Rs. 10.94 lakhs). The liability for employee stock options outstanding as at March 31, 2021 is Rs. 52.87 lakhs (March 31, 2020: Rs. 152.51 lakhs).

31 Capital and other commitments

i) The estimated amounts of contract remaining to be executed on capital account and not provided for are Rs. 454.32 lakhs (net of advances: Rs. 34.41 lakhs) [March 31, 2020: Rs. 46.41 lakhs (net of advances: Rs. 93.66 lakhs)]

ii) The Company has guaranteed purchase of certain quantities of tinting machine and gyro shakers. In the event the Company is not able to make the purchases, it will be liable to compensate the manufacturer with a fee equivalent to the manufacturer''s price towards inventory of components including the customized front panel TAB, keyboard, mouse and USB hub with cabling.

iii) Bank guarantee issued to stock exchange for Rs. 870.16 lakhs (March 31, 2020: Rs. Nil).

iv) For commitments relating to lease arrangements, refer note 36.

34 Segment reporting

The Board of Directors of the Company performs the function of allotment of resources and assessment of performance of the Company. Considering the level of activities performed, frequency of their meetings and level of finality of their decisions, the Company has identified that Chief Operating Decision Maker function is being performed by the Managing Director. The financial information presented to the Board in the context of results and for the purposes of approving the annual operating plan is on a consolidated basis for various products of the Company. As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108 "Operating Segments".

The revenue from operations from products and services has not been disclosed as adjustments for discounts and rebates / performance obligation adjustments cannot be allocated at product category level.

35 Operating leasesOperating lease - Company as lessor

The Company has given tinting machine and gyro shakers on operating lease to its dealers. The Company enters into 5 years cancellable lease agreements. The minimum aggregate lease payments to be received in future is considered as Rs. Nil. Accordingly, the disclosure of minimum lease payments receivable at the Balance sheet date is not made. The amount received from the dealers in nature of non-refundable deposits (representing lease income received in advance) is deferred and amortised over the period of lease.

36 LeasesA Company as a lessee

The Company has lease contracts mainly for land and buildings (godowns and depots) used for factory operations, depots and storage of goods. Leases of such godowns generally have lease terms between 3 and 6 years, while depots have lease terms of 3 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. The Company also has certain leases of depots with lease terms of 12 months or less and leases of low value.

39 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise loans, borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(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. Financial instruments affected by market risk include loans and borrowings, deposits and FVTPL investments.

The Company has negligible direct exposure to foreign currency 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 is not exposed to the interest rate risk as there is no long-term debt obligations as at March 31,2021.

(b) Credit risk

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

(i) Trade receivables

Customer credit risk is managed by the Company''s established policies, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an individual credit limits and are defined in accordance with management''s assessment of the customer. Outstanding customer receivables are regularly monitored. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The Company uses ageing buckets and provision matrix for the purpose of computation of expected credit loss. The provision rates are based on past trend of recoverability. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The Company does not hold collateral as security.

(ii) Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds is managed by the management in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties based on limits defined by the management. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. The Company''s maximum exposure to credit risk for financial instruments (mutual funds), bank balances and deposits as at March 31, 2021 and March 31, 2020 is the carrying amounts as mentioned in note 4 and 9.

(c) Price risk

The Company invests its surplus funds in mutual funds which are linked to equity/debt markets. The Company is exposed to price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with Company''s investment policy approved by the Board of Directors.

(d) Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with financial liabilities that are required to be settled by delivering cash or another financial asset. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases. The Company closely monitors its liquidity position and deploys a robust cash management system. It aims to minimise these risks by generating sufficient cash flows from its current operations, which in addition to the available cash and cash equivalents and sufficient committed fund facilities, will provide liquidity.

The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The carrying amounts are assumed to be reasonable approximation of fair value.

40 The Company has considered the possible effects that may result from COVID-19 in the preparation of these financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of COVID-19, the Company has, at the date of approval of the financial results, used internal and external sources of information and expects that the carrying amount of the assets will be recovered. The impact of COVID-19 on the Company''s financial results may differ from that estimated as at the date of approval of the same.

41 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India, however, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued by the Government of India. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.