Notes to Accounts of Sula Vineyards Ltd.

Mar 31, 2025

xx. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a
present obligation (legal or constructive) as a result of
past events and it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation, in respect of which a reliable estimate
can be made of the amount of obligation. Provisions
(excluding gratuity and compensated absences) are
determined based on management''s estimate required
to settle the obligation at the Balance Sheet date. In
case the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the
risks specific to the liability. When discounting is used,
168 | Annual Report 2024-25

the increase in the provision due to the passage of time
is recognised as a finance cost. These are reviewed at
each Balance Sheet date and adjusted to reflect the
current management estimates.

The Company recognises a provision in respect of an
onerous contract when the expected benefits to be
derived from a contract is lower than the unavoidable
costs of meeting the future obligations under the contract.
The provision is measured at lower of the expected cost
of terminating the contract and the expected net cost of
fulfilling the contract. Contingent liabilities are disclosed in
respect of possible obligations that arise from past events,
whose existence would be confirmed by the occurrence
or non-occurrence of one or more uncertain future
events not wholly within the control of the Company. A
contingent liability also arises, in rare cases, where a liability
cannot be recognised because it cannot be measured
reliably. Contingent assets are disclosed where an inflow of
economic benefits is probable.

xxi. Foreign currency transactions and balances

(a) Initial Recognition

Foreign currency transactions are initially recorded in the
reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency
and the foreign currency at the date of the transaction.

(b) Conversion

Monetary assets and liabilities denominated in foreign
currencies are reported using the closing rate at the reporting
date. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.

(c) Treatment of Exchange Difference

Exchange differences arising on settlement/ restatement of
short-term foreign currency monetary assets and liabilities
of the Company are recognised as income or expense in the
Statement of Profit and Loss

xxii. Earnings Before Interest, Tax, Depreciation and
amortisation (EBIDTA)

Earnings Before Interest, Tax, Depreciation and
amortization (EBIDTA) is computed by adding interest
(finance cost), tax expenses and depreciation and
amortization expense to net profit for the period/year.

Note 2.2 Recent accounting pronouncements

Ministry of Corporate Affairs notifies new standards
or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as
issued from time to time. For the year ended 31 March
2025, MCA has notified Ind AS - 117 Insurance Contracts
and amendments to Ind AS 116 - Leases, relating to sale
and leaseback transactions, applicable to the Company
w.e.f. 1 April 2024. The Company has reviewed the new
pronouncements and based on its evaluation has
determined that it does not have any significant impact
on its financial statements as at and for the year ended
31 March 2025.

Notes:

i. Compensation to key managerial personnel does not include (i) provisional gratuity liability and compensated absences valued by an actuary, as separate figures are not
available and (ii) reimbursement of expenses related to business.

ii. During the year, the Company granted Stock Options to eligible employees, including KMPs under its Employee Stock Option Schemes.
Since such Stock Options are not tradeable, no perquisite or benefit is immediately conferred upon the employee by grant of such Stock Options and accordingly the
said grants have not been considered as ''remuneration''. However, in accordance with Ind AS -102, the Company has recorded employee benefits expense by way of share
based payments to employees at ?3.78 Crores for the year ended 31 March 2025 (2024 - ?1.23 Crores), of which ?0.78 Crores (31 March 2024 - ?0.38 Crores) is attributable
to KMPs.

iii. Transactions amongst related parties are made on terms equivalent to those that prevail in arm''s length transactions and represent the substance over the legal form.

iv. Trade receivables, trade and other payables as at year-end are unsecured and interest free and settlement occurs in cash. For the year ended 31 March 2025, the Company
has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2024: ? Nil). This assessment is undertaken each financial year
through examining the financial position of the related party and the market in which the related party operates.

v. Refer note 6 for terms and condition with respect to loans given to related parties.

Note 48

The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014
inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only
such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts
along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

a. The Company has used an accounting software for maintaining its books of account for the period 1 April 2024 to 30 September 2024 which has a feature of recording
audit trail (edit log) facility and the same has been operated throughout the period for all relevant transactions recorded in the accounting software.

b. The Company has used another accounting software for maintaining its books of account for the period from 1 October 2024 to 31 March 2025 which has a feature of
recording audit trail (edit log) facility and the same has been operated throughout the period for all relevant transactions recorded in the accounting software at the
application level. However, the database of the said accounting software is operated by a third-party software provider. The ''Independent Service Auditor''s Assurance
Report on the Description of Controls, their Design and Operating Effectiveness'' (''Type 2 report'' issued in accordance with ISAE 3402, Assurance Reports on Controls at a
Service Organization) does not provide any information for any direct changes made at the database level of the said software for the aforesaid period.

c. An accounting software used for maintenance of sales records for the hospitality services (resort operations) did not have a feature of recording audit trail (edit log)
facility.

d. In respect of the accounting software used for maintenance of sales records for the hospitality services (other than resort operations), the Company has migrated to a
new software from 1 June 2024 onwards. The accounting software used until 31 May 2024 did not have a feature of recording audit trail (edit log) facility. Further, the new
accounting software used from 1 June 2024 is operated by a third-party software service provider and has a feature of recording audit trail (edit log) facility and the
same has been operated throughout the period for all relevant transactions recorded in the accounting software at the application level. The ''Independent Service
Auditor''s Assurance Report on the Description of Controls, their Design and Operating Effectiveness'' (''Type 2 report'' issued in accordance with SAE 3402, Assurance
Reports on Controls at a Service Organization), is not available.

e. The Company has also used an accounting software for maintenance of payroll records which is operated by a third-party software provider and as per the
''Independent Service Auditor''s Report on a Description of the Service Organization''s System and the Suitability of the Design and Operating Effectiveness of Controls''
(''Type 2 report'' issued in accordance with attestation standards established by the American Institute of Certified Public Accountants (''AICPA'')), audit trail is enabled and
operated throughout the year at the application level and database level to log any direct data changes.

Note 49 Other Statutory I nformatlon

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

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

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

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

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding
that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

b. directly or indirectly provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

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

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or

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

(vii) 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 TaxAct, 1961).

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

(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

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

Note 50

Previous year figures have been re-grouped / re-classified wherever necessary, to confirm to the current period''s presentation wherever considered necessary
This is a summary of material accounting policies and other explanatory information referred to in our audit report of even date

For WalkerChandiok & Co LLP For and on behalf of Board of Directors of Sula Vineyards Limited

Chartered Accountants
FirmRegistrationNo.001076N /N500013

Rohan Jain Rajeev Samant Alok Vajpeyi

Partner CEO andManaging Director Chairman and Director

Membership No. 139536 DIN: 00020675 DIN: 00019098

Abhishek Kapoor Shalaka Koparkar

Chief Financial Officer Company Secretary

ACA: 098459 Membership No. A25314

Place: Mumbai Place: Mumbai

Date: 08 May 2025 Date: 08 May 2025

---

Mar 31, 2024

xxi. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of obligation. Provisions (excluding gratuity and compensated absences) are determined based on management''s estimate required to settle the obligation at the Balance Sheet date. In case the time value of money is material, provisions are discounted using a current pretax rate that reflects 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. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

The Company recognises a provision in respect of an onerous contract when the expected benefits to be derived from a contract is lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating the contract and the expected net cost of fulfilling the contract. Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. A contingent liability also arises, in rare cases, where a liability cannot be recognised because it cannot be measured reliably. Contingent assets are disclosed where an inflow of economic benefits is probable.

xxii. Earnings per share

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares).

xxiii. Foreign currency transactions and balances

(a) Initial Recognition

Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion

Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Treatment of Exchange Difference

Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss

xxiv. Earnings Before Interest, Tax, Depreciation and amortisation (EBIDTA)

Earnings Before Interest, Tax, Depreciation and amortization (EBIDTA) is computed by adding interest (finance cost), tax expenses and depreciation and amortization expense to net profit for the period/year.

Note 2.2 Recent accounting pronouncements

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 for annual periods beginning on or after 1 April 2023. The Company applied for the first-time these amendments.

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

The amendments clarify the distinction between changes in accounting estimates 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 had no impact on the Company''s standalone 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 have had an impact on the Company''s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company''s financial statements.

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

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

The Company previously recognised for deferred tax on leases on a net basis. As a result of these amendments, the Company has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12,there is no impact in the balance sheet. There was also no impact on the opening retained earnings as at 1 April 2022.

d. Shares reserved for issue under Employee Stock Options Scheme:

As at 31 March 2024, the Company has 659,400 (31 March 2023: 155,757) employee stock options issued under the Employee stock option scheme of the Company to its employees. [Refer note 42]

e. Bonus shares / buy back / shares for consideration other than cash issued during past five years including current year:

(i) Aggregate number and class of shares allotted as fully paid up pursuant to contracts without payment being received in cash FY 2020-21: 2,012 equity shares (of face value INR 10 per share) at a premium of INR 716.93 per share

FY 2019-20 : 2,746 equity shares (of face value INR 10 per share) at a premium of INR 921.76 per share

FY 2018-19 : 2,441 and 2,118 equity shares (of face value INR 10 per share) at a premium of INR 750 and INR 840 per share, respectively.

(ii) Aggregate number and class of shares allotted as fully paid-up by way of bonus shares - Nil

(iii) Aggregate number and class of shares bought back - Nil

Note 14 Other Equity (Contd..)

ii. Share option outstanding account

The share option outstanding account represents reserve in respect of equity settled share options granted to the Company''s employees in pursuance of the Employee Stock Option Plans. The amounts recorded in this account are transferred to the securities premium account upon exercise of stock options, as applicable. In case of forfeiture, corresponding balance is transferred to general reserve.

iii. General reserve

Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn.

iv. Retained earnings

Retained earnings represents the profits / losses that the Company has earned / incurred till date including gain / (loss) on remeasurement of defined benefits plans as adjusted for distributions to owners, transfer to other reserves etc.

v. Money received against share warrants

Money received against share warrants represents the subscription amount received at the time of issue of share warrants less utilised for conversion of warrants into equity shares.

vi. Share Application money pending allotment

Represents share application money received towards equity shares of the Company for which allotment is yet to be done.

Note 35(C)(i) : The Company had completed its Initial Public Offer (IPO) of 26,900,530 equity shares of face value of INR 2 each at an issue price of INR 357 per share (including a share premium of INR 355 per share) that was listed on National Stock Exchange of India Limited (NSE) and Bombay Stock exchange Limited (BSE) on 22 December 2022. Entire IPO comprised of offer to sale of 26,900,530 equity shares by selling shareholders.

During the previous year ended 31 March 2023, the Company had incurred expenses aggregating to INR 52 crore towards various services availed in connection with aforesaid IPO under the terms of agreement executed between the Company and respective service providers. Such expenses have been recovered from the selling shareholders during the year ended 31 March 2023 and the balance recoverable amount of INR 2.81 crore from selling shareholders has been presented under other current financial assets in these financial statements as at 31 March 2023. The aforesaid balance has been recovered during the current year.

Note 35(C)(ii) : Compensation to key managerial personnel does not include (i) provisional gratuity liability and compensated absences valued by an actuary, as separate figures are not available and (ii) reimbursement of expenses related to business.

Note 36 Financial risk management objectives and policies

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

i 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 and currency risk. Major financial instruments affected by market risk includes loans and borrowings.

a. Interest rate risk

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

Notes:

i) Expected volatility reflects assumption that the historical volatility over a year similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome

ii) Above mentioned schemes existed as at 31 March 2023, except for ESOS 2021 (4), ESOS 2021 (5) and ESOS 2023 and consequently disclosure for previous year have not been given separately.

Note 43 As at 31 March 2024, the Company has non-current investments and non-current loans amounting to INR 27.69 crore and INR 24.66 crore, respectively, in its wholly owned subsidiary Artisan Spirits Private Limited (''ASPL''). As at 31 March 2024, ASPL has accumulated losses and its net-worth has been substantially eroded. However, the net-worth of this subsidiary does not represent its true market value as the value of the entity on a going concern basis, based on valuation report of an independent valuer, is higher. Therefore, based on certain estimates like future business plans, growth prospects as well as considering the valuation report from an independent valuer, the management believes that the realizable amount of the subsidiary is higher than the carrying value of the non-current investments and loans due to which these are considered as good and recoverable.

Note 44 The Company had a disputed excise duty demand of INR 115.90 crore in respect of which the Company had preferred an appeal and stay was granted by Hon''ble Minister for State Excise, Maharashtra (''Minister'') in earlier years. On 7 March 2024, the Minister has passed an order wherein the aforementioned demand of INR 115.90 crore has been set aside and matter now stands disposed off in favor of the Company.

Government Grants relate to Wine Incentive Promotion Subsidy (WIPS) scheme launched by the state of Maharashtra. Under the WIPS scheme, Value Added Tax (VAT) paid by Company on wine manufactured from grapes produced in Maharashtra including blending of wine manufactured from grapes purchased within the state of Maharashtra and subsequently sold in Maharashtra is eligible for 80% refund. The Company being involved in the business of manufacturing and sale of wine, avails WIPS incentive. There are no unfulfilled conditions or contingencies attached to these grants.

Government grants relating to Electric Vehicle

The government grants relates to asset i.e., purchase of electric vehicles and accordingly will be recognised on straight line basis over the period of 5 years. There are no unfulfilled conditions or contingencies attached to these grants.

Government grants relating to CEFPPC scheme received from MOFPI

Government Grants relate to Creation / Expansion of Food processing and preservation capacities (CEFPPC scheme) under Ministry of Food processing Industries. Under this scheme, expenses incurred on purchase of plant, property and equipment by Company towards expansion of cellar door facility are reimbursed to Company by way of grant in aid as per scheme document. There are no unfulfilled conditions or contingencies attached to these grants. As the grant relates to assets, the same will be treated as deferred income and will be recognized in the Stadalone Statement of Profit and Loss on a systematic and rational basis over the useful life of the related PPE.

Government Grants relating to Electricity for Industries in Vidarbha, Marathwada, Uttar Maharashtra & D, D area

This government grant relate to region based subsidy for industries in Vidarbha, Marathwada, Uttar Maharashtra & D, D area declared by Government of Maharashtra and is recognised in the year in which it is earned.

Note 48 During the current year, Principal Commission of Income Tax (''PCIT'') has filed a Writ Petition in the Bombay High Court challenging the legality of the order dated 27 September 2019 passed by the Income Settlement Commissioner (''ITSC'') under Sec 245D(4) of Income Tax Act. For the grounds stated in the Writ Petition, PCIT has sought for the ITSC order dated 27 September 2019 to be quashed and set aside. Management believes that the aforemention petition is not likely to have any material impact on the financial statements.

Note 49 The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses accounting software (SAP ECC 6.0 and HROne) 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 accounting software.

The Company also uses accounting software (OnePos and IDS) for maintaining sales records of the hospitality services which does not have a feature of recording audit trail (edit log) facility. Based on management assessment, the non-availability of audit trail functions will not have any impact on the performance of the accounting software, as management has all other necessary controls in place which are operating effectively.

Note 50 Events after the reporting year

Acquisition of N D Wines Private Limited :

The Company has entered into a Share Purchase Agreement dated 12 April 2024 with existing shareholders to acquire 100% shareholding of N.D. Wines Private Limited for a consideration of INR 13.10 crore. Pursuant to the above, effective 12 April 2024, N.D. Wines Private Limited becomes the wholly owned subsidiary of the Company.

Note 51 Other Statutory Information

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

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

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

statutory year.

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

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities

(Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

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

Note 51 Other Statutory Information (Contd..)

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

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or

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

(vii) 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).

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

(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

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

(xi) The standalone financial statements until the year ended 31 March 2023 were presented in INR million. Effective 1 April 2023, the Company has presented the financial statements in INR crore. Consequently, the financial statements for the comparative periods have also been presented in INR crore.

This is a summary of material accounting policies

and other explanatory information referred to in our audit report of even date

For Walker Chandiok & Co LLP For and on behalf of Board of Directors of

Chartered Accountants Sula Vineyards Limited

Firm Registration No. 001076N / N500013

Rakesh R. Agarwal Rajeev Samant Chetan Desai

Partner CEO and Managing Director Chairman and Director

Membership No.109632 DIN: 00020675 DIN: 03595319

Abhishek Kapoor Ruchi Sathe

Chief Financial Officer Company Secretary

ACA: 98459 Membership No. A33566

Place: Mumbai Place: Mumbai

Date: 8 May 2024 Date: 8 May 2024

---

Mar 31, 2023

Note: During the year ended 31 March 2022 the Company has issued 1,375,000 equity shares of INR 2 each at premium of INR 238 per share on preferential basis, in compliance with requirements of section 42 and section 62 of the Act and the rules formed thereon

b. Terms/rights attached to equity shares:

The Company has only one class of equity shares having a par value of INR 2 per share (INR 10 per share until 30 June 2021) . Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, if any.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/members the above shareholding represents both legal and beneficial ownership of shares.

d. Shares reserved for issue under Employee Stock Options Scheme:

As at 31 March 2023, the Company has 155,757 (31 March 2022: 2,811,510) employee stock options issued under the Employee stock option scheme of the Company to its employees. [refer note 42]

e. Bonus shares / buy back / shares for consideration other than cash issued during past five years including current year:

(i) Aggregate number and class of shares allotted as fully paid up pursuant to contracts without payment being received in cash

o FY 2020-21: 2,012 equity shares (of face value INR 10 per share) at a premium of INR 716.93 per share

o FY 2019-20 : 2,746 equity shares (of face value INR 10 per share) at a premium of INR 921.76 per share

o FY 2018-19 : 2,441 and 2,118 equity shares (of face value INR 10 per share) at a premium of INR 750 and INR 840 per share respectively.

(ii) Aggregate number and class of shares allotted as fully paid up by way of bonus shares - NIL

(iii) Aggregate number and class of shares bought back - NIL

(iii) The share warrants for financial year 2014-15 have been issued on payment of 10% amount of exercise price at the time of subscription and the balance to be paid on conversion, with a right to convert them into equivalent number of equity shares any time before the Initial Public Offering / Qualified Institutional Placement.

(iv) The warrants from financial year 2016-17 to financial year 2018-19 have been issued at INR 10 each fully paid up at the time of subscription and the balance to be paid on conversion, with a right to convert them into equivalent number of equity shares any time before the Initial Public Offering / Qualified Institutional Placement.

(v) During the year ended 31 March 2022, share warrants have been issued with no subscription amount required at the time of subscription. The entire amount to be paid on conversion, with a right to convert them into equivalent number of equity shares any time before the Initial Public Offering / Qualified Institutional Placement.

(vi) During the current year, 3,002,784 (31 March 2022: 1,671,221) share warrants have been converted into equivalent number of equity shares of INR 2 each at the exercise price of INR 170 per equity share.

(vii) The above warrants on conversion shall rank pari passu in all respects with the existing fully paid up equity shares of the Company except for dividend which shall be pro-rata from the date of conversion.

h. Pursuant to the resolution passed by the Board of Directors of the Company and approval of the members at the 18th Annual General Meeting of the Company held on 30 July 2021, each Equity Share of nominal face value of INR 10 each was sub-divided to 5 (five) Equity Share of INR 2 each. The effective date for the said sub-division was 30 July 2021. The impact of share split of shares has been accordingly considered for the computation of Earnings Per Share as per the requirements of Ind AS 33. Further, the outstanding number of share warrants and employee stock options and their respective exercise prices have also been revised accordingly.

Nature and purpose of reserves

i. Securities premium

Securities premium is used to record the premium on issue of shares. The account is utilised in accordance with the provisions of the Companies Act, 2013

ii. Share option outstanding reserve

The share option outstanding reserve represents reserve in respect of equity settled share options granted to the Company''s employees in pursuance of the Employee Stock Option Plans.

iii. General reserve

Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn.

iv. Retained earnings

Retained earnings represents the profits / losses that the Company has earned / incurred till date including gain / (loss) on remeasurement of defined benefits plans as adjusted for distributions to owners, transfer to other reserves etc.

v. Money received against share warrants

Money received against share warrants represents the subscription amount received at the time of issue of share warrants less utilised for conversion of warrants into equity shares.

vi. Share Application money pending allotment

Represents share application money received towards equity shares of the Company for which allotment is yet to be done.

Note 15.2: Deferred sales tax loan is interest free and has been fully repaid during the year ended 31 March 2023

Note 15.3: Working capital demand loans facilities of Company are repayable on demand. They carry interest rate ranging from 7.25% to 8.81% p.a. (31 March 2022: 7.20% to 12.00%) and are secured by all existing and future current assets, movable and immovable property, plant and equipment.

Note 15.4: Other Bank loans carry interest ranging from 7.20% to 7.50% p.a. (31 March 2022: 7.20% to 7.30% p.a.) and are repayable within 1 year.

Note 15.5: The Company is in compliance with the applicable debt covenants prescribed in the terms of borrowings. Also, there has been no default in repayment of borrowings and payment of interest during the year.

The amounts receivable from customers become due after expiry of credit period which on an average ranges between 30-90 days. There is no significant financing component in any transaction with the customers. The company does not have any remaining performance obligation as contracts entered for sale of goods are for a shorter duration. Further, the company''s entire business falls under single operating segment of "Manufacture, purchase and sale of alcoholic beverages (wine and spirits) (Refer note 45).

Note 32 Contingent liabilities and commitments A. Contingent liabilities
Particulars	As at 31 March 2023	As at 31 March 2022
i) Guarantees issued by banks on behalf of the Company	174.43	148.26
ii) Disputed liability relating to stamp duty	15.41	15.41
iii) Others	2.43	1.01

iv) Provident Fund:

Based on the judgement by the Honorable Supreme Court dated 28 February 2019, past provident fund liability, is not determinable at present, in view of uncertainty on the applicability of the judgement to the Company with respect to timing and the components of its compensation structure. In absence of further clarification, the Company has been legally advised to await further developments in this matter to reasonably assess the implications on its financial statements, if any.

Note:

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above contingent liabilities. Future cash outflows in respect of the above are determinable only on receipt of judgments / decisions pending with various forums/ authorities. The Company does not expect any outflow of economic resources in respect of the above and therefore no provision is made in respect thereof.

B. Commitments
Particulars	As at 31 March 2023	As at 31 March 2022
Capital commitment (net of advances)	42.79	14.13

The Gratuity Scheme is invested in a New Group Gratuity Cash Accumulation Plan Policy offered by Life Insurance Corporation of India (LIC) and Aditya Birla Sun Life Insurance Company Limited. The information on the allocation of the fund into major asset classes and expected return on each major asset are not readily available. The expected rate of return on plan assets is based on market expectations, at the beginning of the year, for returns over the entire life of the related obligation.

Sensitivities due to mortality and withdrawals are not material and hence the impact of change due to these are not calculated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the Balance Sheet

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.

Risk exposure:

The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:

a) Salary increases - Actual salary increases will increase the plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability

b) Investment risk - If plan is funded then assets/liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability

c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan''s liability

d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities

e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact plan''s liability

III Liabilities for leave obligation

The leave obligations cover the Company''s liability for sick and privilege leaves. The amount of provision with respect to leave obligation is INR 21.43 million (31 March 2022: INR 20.70 million) 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 take the full amount of accrued leave or require payment within the next 12 months. The expense recognised during the year towards leave encashment is INR 8.05 million (31 March 2022: INR 15.09 million)

Note 34 Fair Value

The fair value of the financial assets are included at amounts at which the instruments 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 value:

(a) Fair value of cash and short-term deposits, trade and other short-term receivables, trade payables, other current liabilities, approximate their carrying amounts largely due to the short-term maturities of these instruments.

(b) Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

B Fair value hierarchy

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

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

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

Note 35(C)(i) : The Company has completed its Initial Public Offer (IPO) of 26,900,530 equity shares of face value of INR 2 each at an issue price of INR 357 per share (including a share premium of INR 355 per share) that were listed on National Stock Exchange of India Limited (NSE) and Bombay Stock exchange Limited (BSE) on 22 December 2022. Entire IPO comprised of offer to sale of 26,900,530 equity shares by selling shareholders.

During the year the Company has incurred expenses aggregating to INR 520.04 million (31 March 2022: INR 14.85 million) towards various services availed in connection with aforesaid IPO under the terms of agreement executed between the Company and respective service providers. Such expenses have been recovered from the selling shareholders during the year and the balance recoverable amount of INR 28.10 million (31 March 2022: INR 19.72 million) from selling shareholders has been presented under other current financial assets in these financial statements.

Note 35(C)(ii) : Compensation to key managerial person does not include provisional gratuity liability valued by an actuary, as separate figures are not available

Note 36 Financial risk management objectives and policies

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

i 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. Major financial instruments affected by market risk includes loans and borrowings

a. Interest rate risk

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

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

b. Foreign currency risk

Although, the exchange rate between the rupee and foreign currencies has changed in recent years, it has not affected the results of the Company. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.

Note 36 Financial risk management objectives and policies (Contd)

Note :

The Company''s exposure of foreign currency financial instruments as at respective reporting dates is not material and consequentially the impact on Statement of Profit and Loss due to fluctuation in exchange rates would also be immaterial. Therefore, the disclosure for sensitivity analysis not been included in the standalone financial statements

c. Equity price risk

The Company''s non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to:

o unlisted equity securities at fair value through other comprehensive income is INR 0.03 million (31 March 2022: INR 0.03 million).

o unlisted equity in subsidiaries at cost of INR 274.58 million (31 March 2022: INR 269.86 million) ii 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, financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.

a Trade receivables (net of loss allowance)

Trade receivables are unsecured and are derived from revenue earned from two main classes of trade receivables i.e. receivables from sales to government corporations and receivables from sales to private parties. A substantial portion of the Company''s trade receivables are from government corporation customers having strong credit worthiness. Further, Company''s historical experience of collecting receivables is that redit risk is low. Hence trade receivables are considered to be a single class of financial assets.

b Financial assets other than trade receivables

Financial assets other than trade receivables comprise of cash and cash equivalents, bank balances other than cash and cash equivalents, government grant receivables and loan to subsidiaries / employees. The Company monitors the credit exposure on these financial assets on a case-to-case basis. Loans to subsidiaries are assessed for credit risk based on the underlying valuation of the entity and their ability to repay within the contractual repayment terms.

iii Liquidity risk

Liquidity is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

Note 37 Capital management

The primary objective of the Company''s capital management is to maximise the shareholder''s wealth.The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital employed as well as the level of dividend to shareholders.

Note 38 Leases - Ind AS 116 (Contd)

In the long run, the Company''s strategy is to continue to maintain the gearing ratio of less than 0.75. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings that define the capital structure requirements. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current or previous financial year.

Note 38 Leases - Ind AS 116

Right-of-use Assets:

The net carrying value of right-o f-use assets as at 31 March 2023 amounts to INR 89.81 million (31 March 2022 : INR 92.81 million) have been disclosed on the face of the balance sheet (Also refer note 3A)

Note 42 Disclosures required pursuant to Ind AS 102 - Share Based Payment

The Company has granted stock options under the employee stock option schemes. As at 31 March 2023, employee stock option scheme Employee stock option scheme (ESOS 2020) and Employee stock option scheme (ESOS 2021) are in existence. These options would vest based on the vesting conditions as per letter of grant executed between the company and the employee of the company. Each option when exercised would be converted into one fully paid-up equity share of INR 2 each of the company. The relevant details of the scheme, grant and activity under ESOS scheme are summarized below:

Note 43

As at 31 March 2023, the Company has non-current investments and non-current loans amounting to INR 274.58 million and INR 298.98 million, respectively, in its wholly owned subsidiary Artisan Spirits Private Limited (‘ASPL''). As at 31 March 2023, ASPL has accumulated losses and its net-worth has been substantially eroded. However, the net-worth of this subsidiary does not represent its true market value as the value of the entity on a going concern basis, based on valuation report of an independent valuer, is higher. Therefore, based on certain estimates like future business plans, growth prospects as well as considering the valuation report from an independent valuer, the management believes that the realizable amount of the subsidiary is higher than the carrying value of the noncurrent investments and loans due to which these are considered as good and recoverable.

Note 44

There is a disputed excise duty demand of INR 1,158.95 million (31 March 2022: INR 1,158.95 million), against which a stay has been granted. The outcome of the Company''s appeal is pending. The Company has been legally advised that the demand notice is not tenable in law.

Note 45 Segment reporting

a) The Company is engaged in the business of manufacture, purchase and sale of alcoholic beverages (wines and spirits). The Executive Committee of the Group (being the Chief Operating Decision Maker) assesses performance and allocates resources for the business of the Company as a whole and hence the management considers Company''s business activities as a single operating segment.

b) The geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.

Government grants relate to Wine Incentive Promotion Subsidy (WIPS) scheme launched by the state of Maharashtra. Under the WIPS scheme, Value Added Tax (VAT) paid by Company on wine manufactured from grapes produced in Maharashtra including blending of wine manufactured from grapes purchased within the state of Maharashtra and subsequently sold in Maharashtra is eligible for 80% refund. The Company being involved in the business of wine manufacturing, avails WIPS incentive. There are no unfulfilled conditions or contingencies attached to these grants.

Note 48 Events after the reporting year

Subsequent to the reporting date, 19,271 shares were alloted against the share application money received pending allotment of INR 3.28 millions. Accordingly, there are no share application money received pending allotment as on the date of adoption of the standalone financial statement of the Company.

Note 49 Other Statutory Information

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

the Company for holding any Benami property.

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

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

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

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

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

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

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or

b. Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) 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."

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

(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

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