Notes to Accounts of Valiant Organics Ltd.

Mar 31, 2021

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

The Company is expected to contribute '' 87.67 lakhs to defined benefit plan obligations funds for the year ended March 31, 2022.

Expected return on assets is determined by multiplying the opening fair value of the plan assets by the expected rate of return determined at the start of the annual reporting period, taking account of expected contributions & expected settlements during the reporting period.

The Weighted Average Duration of the Plan works out to 9 years.

Asset Liability matching strategy:

The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be invested. The trustees of the plan have outsourced the investment management of the fund to an insurance Company. The insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy. There is no compulsion on the part of the Company to fully prefund the liability of the Plan.

Information about major customers

Ind As 108 Segment Reporting Requires Disclosure of its Major customers if Revenue from transactions with single external customer amounts to 10 per cent or more of Company''s total Revenue. Company’s total Revenue of '' 57,423.86 Lakhs (P.Y. '' 58,357.66 Lakhs) include sales of '' 13,765.97 Lakhs (P.Y. '' 11,053.28 Lakhs) to one large customer with whom the Company is having long standing Relationship.

. DIVIDEND

The Board in its meeting held on 8^th Nov, 2020 has declared an interim dividend of '' 5/- per equity share i.e. 50% of nominal value of '' 10/- each for the financial year 2020-21. The interim dividend shall be the final dividend for the year. The dividend has resulted in an outlay of '' 678.83 Lakhs (P.Y. '' 2,636.37 Lakhs including DDT).

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is in place and available on the website of the Company https://www.valiantorganics.com/investors.php?action=showSubcat&id=3

. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility Expenditure [Refer Para 11.5 of the GN on Division II - Ind AS Schedule III to the Companies Act 2013]

CSR Amount required to be spent as per section 135 of the companies Act, 2013 read with schedule VII thereof by the Company During the year is '' 280.38 Lakh (Previous Year '' 165.81 Lakh)

. FINANCIAL RISK MANAGEMENT Financial risk management objectives and policies

The Company''s principal financial liabilities, comprises of borrowings, 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, investments and cash and cash equivalents that derive directly from its operations.

The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. The Company uses derivative financial instruments, such as forward contracts, option contracts and cross currency swaps to hedge foreign currency risk and interest rate risk exposure . Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

.1 market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprise three types of risks: foreign currency risk, interest rate risk and liquidity risk. Financial instruments affected by foreign currency and market risk primarily include trade receivables, trade payables and cash and cash equivalents.

.1.1 interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate due to changes in market interest rates. In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, finance department performs a comprehensive corporate interest rate risk management study by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

According to the Company, interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is done assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts in several currencies and consequently the Company is exposed to foreign exchange risk through its sales outside India, and purchases from overseas suppliers in various foreign currencies. The Company has also borrowings in foregin currency. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are affected as the rupee appreciates / depreciates against these currencies. Foreign currency exchange rate exposure is partly balanced by purchase of raw materials and services in the respective currencies.

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 for trade receivables and deposits with banks and other financial assets. The Company ensures that sales of products are made to customers with appropriate creditworthiness. Outstanding customer receivables are regularly monitored by the management. An impairment analysis is performed at each reporting date on an individual basis for major customers. Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks.

As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk. As per Policy receivables are classified into different buckets based on the overdue period ranging from more than 180 days to more than 3 years. There are different provisioning norms for each bucket which are ranging from 1% to 100%.

48.3 LIQUIDITY RISK

Liquidity risk is the risk that the Company may not be able to meet its financial obligations without incurring unacceptable losses. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Group consistently generates sufficient cash flows from operations or from cash and cash equivalents to meet its financial obligations including lease liabilities as and when they fall due.

49. CAPITAL MANAGEMENT Risk management

For the purpose of the Company''s capital management, capital includes issued equity capital, and all other equity reserves attributable to the equity shareholders. The primary objective of the Company’s capital management is to maximise the shareholder value, safeguard business continuity and support the growth of the Company. The Company manages its capital structure and makes suitable adjustments in light of changes in economic conditions.

TRANSITION TO IND AS

These are the first Standalone Financial Statements of the Company prepared in accordance with Ind AS.

The Accounting Policies set out in Note 3 have been applied in preparing the Financial Statements for the year ended March 31, 2021, the comparative information presented in these Financial Statements for the year ended March 31, 2020 and in the preparation of an opening Ind AS Balance Sheet as at April 01, 2019 (the date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in Financial Statements prepared in accordance with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (IGAAP). An explanation of how the transition from IGAAP to Ind AS has affected the standalone financial position, financial performance and cash flows of the Company is set out in the following tables and notes:

Ind AS optional exemptionsDeemed cost for property, plant and equipment and intangible assets:

The Company has elected to continue with the carrying value of all of its plant and equipment, capital work-in- progress and intangible assets recognised as of 1^st April, 2019 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

Determining whether an arrangement contains a lease:

The Company has applied Ind AS 19 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing on that date.

Investments in subsidiaries, associates and joint ventures

Ind AS 101 permits a first-time adopter to measure it''s investment, at the date of transition, at cost determined in accordance with Ind AS 27, or deemed cost, The deemed cost of such investment shall be it''s fair value at the date of transition to Ind AS of the Company, or IGAAP carrying amount at that date. The Company has elected to measure its investment in subsidiaries at cost.

Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVTOCI on the basis ofthe facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity instruments.

past business combinations:

Ind AS 103 (Business Combinations) has not been applied retrospectively to business combinations that occurred prior to 1^st April, 2019. Use of this exemption means that in the opening Balance Sheet, goodwill/capital reserve and other assets and liabilities acquired in previous business combinations remain at the previous GAAP carrying values.

ind As Mandatory ExceptionsClassification and measurement of financial assets:

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

Derecognition of financial assets and liabilities:

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1^st April, 2019 (the transition date).

Estimates

Estimates in accordance with Ind AS at the transition date shall be consistent with estimates made for the same date in accordance with IGAAP (after adjustments to reflect any difference in Accounting Policies) unless there is objective evidence that those estimates were in error.

The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous IGAAP:

- Investment in equity instruments carried at FVTPL or FVTOCI; and

- Impairment of financial assets based on expected credit loss model.

Reconciliations between previous IGAAp and ind As

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous IGAAP to Ind AS.

Notes on Reconciliation Fair valuation of investments

Under the previous IGAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVTOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2020.

Right of Use (ROU) Assets, Security Deposits and Other Income

Under IGAAP, interest free deposits were recognised at cost i.e. the amount actually paid. Under Ind AS, such deposits are recognised at fair value on initial recognition and at amortised costs on subsequent measurement. Accordingly, non-interest bearing security deposit paid towards ROU asset is measured at the present value and the remaining amount to be amortised over the life of the ROU Asset is capitalised as a part of Property, Plant & Equipment. Notional Interest on such security deposits is accrued on a yearly basis at the effective internal rate of return.

Depreciation has been created on Right of Use assets on the basis of lease terms. Accordingly, depreciation of '' 14.74 lakhs (April 1, 2019 - '' Nil lakhs) have been charged against right of use assets with a corresponding adjustment to retained earnings.

| Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous IGAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2020 increased by '' 32.51 lakhs. There is no impact on the total equity as at March 31, 2020.

deferred Tax Liabilities (net)

IGAAP requires deferred tax accounting using the income statement approach, which is difference between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which is calculated on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. In addition, the various transitional adjustments lead to temporary differences. Deferred Tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or other comprehensive income on the date of transition.

Retained Earnings

Retained earnings as at April 01, 2019 have been adjusted consequent to the above Ind AS transition adjustments.

(vi) Other Comprehensive Income

Under Ind AS, all items of income and expenses recognised in a period are to be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognised in profit or loss, but are shown in the Statement of Profit and Loss as ''Other Comprehensive Income'' which includes remeasurement of defined benefit plans and fair value gain/(loss) on FVTOCI equity instruments. The concept of Other Comprehensive Income did not exist under IGAAP.

51. RECENT PRONOUNCEMENTS

On March 24, 2021, the Ministry of Corporate Affairs (""MCA"") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021.

Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:

Balance Sheet:

• Lease liabilities should be separately disclosed under the head ‘financial liabilities’, duly distinguished as current or non-current.

• Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.

• Specified format for disclosure of shareholding of promoters.

• Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.

• If a Company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.

• Specific disclosure under ‘additional regulatory requirement’ such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of Company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held, etc.

Statement of profit and Loss:

• Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head ‘additional information’ in the notes forming part of the financial statements.

The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.

52. new accounting standards issued but not effective

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 01, 2021.

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Mar 31, 2018

1.1 22,24,030 Equity Shares (Previous year Nil) were issued to the Shareholders of Abhilasha Texchem Ltd. pursuant to its Merger with the Company.

1.2 Bonus Shares Issued during past five years 32,76,288 Equity shares of Rs.10/- each issued as bonus shares in F.Y. 2015-16

1.3 Buy back of Shares during past five years N.A.

1.4 Terms / Rights attached to Equity Shares

The Company has only one class of Shares referred to as Equity Shares having a par value of Rs. 10. Each holder of equity shares is entitiled to one vote per share. The company declares and pays dividend 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. 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 prefential amounts. the distribution will be in proportion to the number of equity shares held by the shareholder.

Note: Working Capital loan of Rs. 13,00,00,000/- (Previous Year Rs. 13,00,00,000) from Citi Bank is secured by exclusive charge on present and future stocks, book debts, fixed assets, hypothecation of stock and book debts of the respective activities and collateral security is provided by creating equitable mortgage of the properties held by the company. It is also personally guaranteed by the Directors of the company.

Disclosure pursuant to Accounting Standard - 15 (Revised) ''Employee benefits''

Defined Contribution Plans amounting to''18,10,041/- (P.Y.Rs.13,01,602/-) towards Providend Fund is recognized as an expense & included in “Contribution to Providend and other funds” in the Profit and Loss Account. The figures for current as well as previous year include that of Abhilasha unit as well.

Defined benefits plan and short term employment benefits.

Gratuity (Defined benefits plan)

The Company has a defined benefit gratuity plan. Every employee who has completed five (5) years of service gets a gratuity on death or resignation or retirement at 15 days of Salary (last drawn salary) for each completed year of service. The gratuity has been provided on the basis of valuation provided by the actuary, since gratuity has not been funded, no information as to assets has been disclosed. Further liability at the close of the year has been charged to profit & loss account.

Leave Encashment (Short term employment benefits)

Payment of all accumulated leave balance has been made at the year end.

Gratuity is provided in the books on the basis of following assumptions :

* For calculation of EPS we have considered, 22,24,030 Equity shares alloted on 15th March, 2018 for merger of Abhilasha Tex-Chem Limited into the company from the Appointed date i.e 1st July, 2016

2 Related Party Disclosure under Accounting Standard :

I Following are the Subsidiaries of the Company as defined in para 3(a) of Accounting Standard - 18.

N.A.

II Following are the Associates of the Company as definded in para 3(b) of the Accounting Standard - 18.

N.A.

III Following are the Enterprises / Firms over which controlling Individuals / Key Management Personnel, of the Company along with their relatives, have significant influence as definded in para 3(e) of the Accounting Standard - 18.

N.A.

IV Following are the individuals who with their relatives as defined in para 3(c) and 3(d) of the Accounting Standard - 18 own Directly / Indirectly 20% or more voting power in the Company or have significant influence or are Key Management Personnel.

1. Arvind K. Chheda CFO / Wholetime Director

2. Hemchand L. Gala CEO / Managing Director

3. Vishnu J. Sawant Wholetime Director

4. Mahek M. Chheda Wholetime Director

5. Mahesh M. Savadia Wholetime Director

3 Related Party Disclosure under Accounting Standard :

I Following are the Subsidiaries of the Company as defined in para 3(a) of Accounting Standard - 18.

N.A.

II Following are the Ventures or the Investing Parties as definded in para 3(b) of the Accounting Standard - 18. N.A.

III Following are the Enterprises / Firms over which controlling Individuals / Key Management Personnel, of the Company along with their relatives, have significant influence as definded in para 3(e) of the Accounting Standard - 18.

N.A.

IV Following are the individuals who with their relatives as defined in para 3(c) and 3(d) of the Accounting Standard - 18 own Directly / Indirectly 20% or more voting power in the Company or have significant influence or are Key Management Personnel.

1. Arvind K. Chheda CFO / Wholetime Director

2. Hemchand L. Gala CEO / Managing Director

3. Vishnu J. Sawant Wholetime Director

4. Mahek M. Chheda Wholetime Director

5. Mahesh M. Savadia Wholetime Director

(A) Details relating to parties referred to in items I, II and III above.

A = Associate K = Key Management Personnel S = Significant Influence R = Relative of Key Management Personnel

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Mar 31, 2017

Segmental capital employed:

Fixed assets used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that currently it is not practicable to provide segment disclosures relating to total assets and liabilities.

1. Related Party Disclosure under Accounting Standard :

2. Following are the Subsidiaries of the Company as defined in para 3(a) of Accounting Standard -18.

N.A.

3. Following are the Associates of the Company as defended in para 3(b) of the Accounting Standard -18.

N.A.

4. Following are the Enterprises / Firms over which controlling Individuals / Key Management Personnel, of the Company along with their relatives, have significant influence as defined in para 3(e) of the Accounting Standard -18.

N.A.

5. Following are the individuals who with their relatives as defined in para 3(c) and 3(d) of the Accounting Standard -18 own Directly / Indirectly 20% or more voting power in the Company or have significant influence or are Key Management Personnel.

6. Arvind K. Chheda CFO / Whole time Director

7. Hemchand L. Gala CEO / Managing Director

8. Vishnu J. Sawant Whole time Director

9. Vicky H. Gala Director

10. Jeenal K. Savla Director

11. Dhirajlal D. Gala Director

12. Related Party Disclosure under Accounting Standard :

13. Following are the Subsidiaries of the Company as defined in para 3(a) of Accounting Standard -18.

N.A.

14. Following are the Ventures or the Investing Parties as defined in para 3(b) of the Accounting Standard -18.

N.A.

15. Following are the Enterprises / Firms over which controlling Individuals / Key Management Personnel, of the Company along with their relatives, have significant influence as defended in para 3(e) of the Accounting Standard - 18.

N.A.