Notes to Accounts of Granules India Ltd.

Mar 31, 2025

i. Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the
Company has a present legal or constructive obligation

that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the
expected future cash flows (representing the best estimate
of the expenditure required to settle the present obligation
at the balance sheet date) at a pre-tax rate that reflects
current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the
discount is recognised as finance cost. Expected future
operating losses are not provided for.

Contingent liabilities and contingent assets

A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but
probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in
respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.

Contingent assets are not recognised in the standalone
financial statements. A contingent asset is disclosed where
an inflow of economic benefits is probable. Contingent
assets are assessed continually and, if it is virtually certain
that an inflow of economic benefits will arise, the asset
and related income are recognised in the period in which
the change occurs.

Onerous contracts

A contract is considered to be onerous when the expected
economic benefits to be derived by the Company from
the contract are lower than the unavoidable cost of
meeting its obligations under the contract. The provision
for an onerous contract is measured at the present value
of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the
contract. Before such a provision is made, the Company
recognises any impairment loss on the assets associated
with that contract.

j. Earnings per share (‘EPS’)

The earnings considered in ascertaining the Company’s
Earnings Per Share (EPS) comprise net profit after tax.
The number of shares used in computing basic EPS is the
weighted average number of shares outstanding during
the year. Dilutive potential equity shares are deemed to be
converted as of the beginning of the year, unless they have
been issued at a later date. The number of shares used for
computing the diluted EPS is the weighted average number
of shares outstanding during the year after considering the
dilutive potential equity shares.

k. Segment Reporting

An operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any of the

Company’s other components, and for which discrete
financial information is available. Operating segments
are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker.
The Chairperson and Managing Director of the Company
is responsible for allocating resources and assessing
performance of the operating segments and accordingly
is identified as the Chief Operating Decision Maker
(CODM). All operating segments’ operating results are
reviewed regularly by the CODM to make decisions about
resources to be allocated to the segments and assess
their performance.

The Company operates in one reportable business
segment i.e. “Pharmaceuticals”.

l. Revenue

i. Sale of goods

Revenue from sale of goods is recognised when
a promise in a customer contract(performance
obligation) has been satisfied by transferring control
over the promised goods to the customer. Control is
usually transferred upon shipment, delivery to, upon
receipt of goods by the customer, in accordance
with the delivery and acceptance terms agreed
with the customers. The amount of revenue to be
recognised is based on the consideration expected
to be received in exchange for goods, excluding
applicable discounts, sales returns and any taxes or
duties collected on behalf of the government which
are levied on sales such as GST where applicable.
Any additional amounts based on terms of agreement
entered into with customers, is recognised in the
period when the collectability becomes probable and
a reliable measure of the same is available.

ii. Sales return allowances

The Company accounts for sales return by recording
an allowance for sales return concurrent with the
recognition of revenue at the time of a product sale.
The allowance is based on Company’s estimate
of expected sales returns. The estimate of sales
return is determined primarily by the Company’s
historical experience in the markets in which the
Company operates.

iii. Export incentives

Export incentives are recognised as income when the
right to receive credit as per the terms of the scheme
is established in respect of the exports made and
where there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.

iv. Interest income or expense

Interest income or expense is recognised using the
effective interest method on time proportion method.

v. Dividend income

Dividend income is recognised when the Company’s
right to receive dividend is established, which is
generally when shareholders approve the dividend.

m. Contract Balances

i. Contract assets

A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs by transferring
goods or services to a customer before the
customer pays consideration or before payment is
due, a contract asset is recognised for the earned
consideration that is conditional.

ii. Trade receivable

A receivable is recognised if an amount of
consideration that is unconditional (i.e., only the
passage of time is required before payment of the
consideration is due). Refer to accounting policies of
financial assets in section (a) Financial instruments -
initial recognition and subsequent measurement.

iii. Contract liabilities

A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received consideration (or an amount
of consideration is due) from the customer. If a
customer pays consideration before the Company
transfers goods or services to the customer, a
contract liability is recognised when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when
the Company performs under the contract.

n. Leases
Lessee

The Company’s lease asset classes primarily consist of
leases for buildings and plant and machinery.

At inception of a contract, the Company assesses whether
a contract is, or contains, a lease as per the requirement
of Ind AS 116. At inception or on reassessment of a
contract that contains a lease component, the Company
allocates the consideration in the contract to each lease
component on the basis of their relative stand-alone
prices. However, for the leases of buildings in which it is
a lessee, the Company has elected not to separate non¬
lease components and account for the lease and non¬
lease components as a single lease component.

The Company elected to use the following practical
expedients on initial application:

• Applied a single discount rate to a portfolio of leases
with similar characteristics.

• Applied the exemption not to recognise right-of-use
assets and liabilities for leases with less than 12 months
of lease term on the date of initial application.

Excluded the initial direct costs from the measurement of
the right-of-use asset at the date of initial application.

The Company recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located, less any lease incentives received.

The right-of-use assets is subsequently measured at
cost less any accumulated depreciation, accumulated
impairment losses, if any and adjusted for any
remeasurement of the lease liability. The right-of-use
assets is depreciated using the straight-line method from
the commencement date over the useful life of right-of-
use asset. Right-of-use assets are tested for impairment
whenever there is any indication that their carrying
amounts may not be recoverable. Impairment loss, if any,
is recognised in the Statement of Profit and Loss.

The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the Company''s
incremental borrowing rate. The lease liability is
subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made
and remeasuring the carrying amount to reflect any
reassessment or lease modifications or to reflect revised
in-substance fixed lease payments. The Company
recognises the amount of the re-measurement of lease
liability due to modification as an adjustment to the right-
of-use asset and statement of profit and loss depending
upon the nature of modification. Where the carrying
amount of the right-of-use asset is reduced to zero and
there is a further reduction in the measurement of the lease
liability, the Company recognises any remaining amount of
the re-measurement in Statement of Profit and Loss.

Lease payments included in the measurement of the lease
liability comprise the following:

a. Fixed payments including in-substance fixed payments;

b. Variable lease payments that depend on an index or
a rate, initially measured using the index or rate as at
the commencement date;

c. Amounts expected to be payable under a residual
value guarantee; and

d. the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise an
extension option, and penalties for early termination
of a lease unless the Company is reasonably certain
not to terminate early.

The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is
a change in future lease payments arising from a change
in an index or rate, if there is a change in the Company''s
estimate of the amount expected to be payable under
a residual value guarantee, if the Company changes
its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised in¬
substance fixed lease payment.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss
if the carrying amount of the right-of-use asset has been
reduced to zero. The Company presents right-of-use assets
that do not meet the definition of investment property
in ‘property, plant and equipment’ and lease liabilities in
‘financial liabilities’ in the statement of financial position.

o. Income tax

Income tax comprises current and deferred income tax.
Income tax expense is recognised in statement of profit
and loss or in other comprehensive income.

i. Current tax

Current tax comprises the expected tax payable
or receivable on the taxable income or loss for
the year and any adjustment to the tax payable or
receivable in respect of previous years. Current tax
for current year and prior periods is recognised at
the amount expected to be paid or recovered from
the tax authorities, using the tax rates and laws that
have been enacted or substantively enacted by the
balance sheet date.

Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognised amounts and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

ii. Deferred tax

Deferred income tax assets and liabilities are
recognised for all temporary differences arising

between the tax bases of assets and liabilities
and their carrying amounts in the standalone
financial statements.

Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.

Deferred income tax assets and liabilities are
measured using the tax rates and laws that have
been enacted or substantively enacted by the
balance sheet date and are expected to apply to
taxable income in the years in which those temporary
differences are expected to be recovered or settled.

The effect of changes in tax rates on deferred income
tax assets and liabilities is recognised as income or
expense in the period that includes the enactment or
substantive enactment date. A deferred income tax
assets is recognised to the extent it is probable that
future taxable income will be available against which
the deductible temporary timing differences and tax
losses can be utilised.

Deferred tax assets and deferred tax liabilities are
offset only if there is a legally enforceable right to
set off the recognised amounts and it is intended to
realise the asset and settle the liability on a net basis
or simultaneously.

p. Borrowing cost

Borrowing costs are interest and other costs (including
exchange differences relating to foreign currency
borrowings to the extent that they are regarded as an
adjustment to interest costs) incurred in connection
with the borrowing of funds. Borrowing costs directly
attributable to acquisition or construction of an asset
which necessarily take a substantial period of time to get
ready for their intended use are capitalised as part of the
cost of that asset. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to the
borrowing costs. Other borrowing costs are recognised as
an expense in the period in which they are incurred.

q. Recent pronouncements

Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as
issued from time to time. For the year ended March 31,
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. April 01, 2024. The Company has reviewed the
new pronouncements and based on its evaluation has

determined that it does not have any impact in Standalone
financial statements.

(i) Ind AS 117 Insurance Contracts

The Ministry of Corporate Affairs (MCA) notified the
Ind AS 117, Insurance Contracts, vide notification
dated 12 August 2024, under the Companies (Indian
Accounting Standards) Amendment Rules, 2024,
which is effective from annual reporting periods
beginning on or after April 01,2024.

Ind AS 117 Insurance Contracts is a comprehensive
new accounting standard for insurance contracts
covering recognition and measurement, presentation
and disclosure. Ind AS 117 replaces Ind AS 104
Insurance Contracts. Ind AS 117 applies to all types of
insurance contracts, regardless of the type of entities
that issue them as well as to certain guarantees and
financial instruments with discretionary participation
features; a few scope exceptions will apply. Ind AS
117 is based on a general model, supplemented by:

• A specific adaptation for contracts with direct
participation features (the variable fee approach)

• A simplified approach (the premium allocation
approach) mainly for short-duration contracts

The application of Ind AS 117 does not have material
impact on the Company’s Standalone financial
statements as the Company has not entered any
contracts in the nature of insurance contracts
covered under Ind AS 117.

(ii) Amendments to Ind AS 116 Leases - Lease
Liability in a Sale and Leaseback

The MCA notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024, which
amend Ind AS 116, Leases, with respect to Lease
Liability in a Sale and Leaseback.

The amendment specifies the requirements that a
seller-lessee uses in measuring the lease liability
arising in a sale and leaseback transaction, to ensure
the seller-lessee does not recognise any amount of
the gain or loss that relates to the right of use it retains.

The amendment is effective for annual reporting
periods beginning on or after April 01,2024 and must
be applied retrospectively to sale and leaseback
transactions entered into after the date of initial
application of Ind AS 116.

The amendments do not have a material impact on
the Company’s Standalone financial statements.

8.5 Employee stock option plan

For details of shares reserved for issue under Employee stock option scheme (ESOS) of the Company, refer note 27.

8.6 There are no shares issued pursuant to contract without payment being received in cash or by way of bonus shares during the
period of five years immediately preceding the reporting date.

8.7 Buy back of Shares

During the year ended March 31,2023, the Company has bought back 6,250,000 equity shares of H 1 each, representing 2.52% of
total number of equity share fully paid-up for an aggregate amount of H. 2,500 millions (excluding taxes and transaction cost) at H.
400 per share. The equity shares bought back were extinguished on 19 October 2022. An amount corresponding to face value of the
shares bought back was transferred to Capital Redemption Reserve were adjusted against General reserve.

9. Other equity

(Refer disclosure of other equity in Statement of changes in equity)

Securities premium

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

Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or
securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The
reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013.

General reserve

It represents the portion of the net profit which the Company has transferred, before declaring dividend pursuant to the earlier
provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders.

Share based payment reserve

The Company has established various equity settled share based payment plans for certain categories of employees of the Company.
Refer Note 27 for further details on these plans.

Capital reserve

Capital reserve arising pursuant to scheme of amalgamation.

Dividends

The following dividends were paid by the Company

27. Share based payments

Granules India Limited - Employee Stock Option Scheme 2009 & 2017 (ESOS-2009 & ESOS-2017)

Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an
Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors.
This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 10,048,070 have been reserved to be issued to the eligible directors and employees (Employees
under permanent employment of the Company and its subsidiary company(ies), including eligible Directors of the Company and its
subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter
group employees) with each option conferring a right upon the Optionee to apply for one equity share.

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading
volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the
grant of options is approved.

Under the above Scheme till date, options were granted in eight tranches. The options granted under the Plan shall start vesting
in tranches after one year from the date of grant and not more than four years under Grant VIII from the respective date of grant
of the options.

Pursuant to the decision of the shareholders at their meeting held on 28th September, 2017, the Company has formulated an
Employee Stock Option Scheme 2017 to be administered by the Nomination & Remuneration Committee of the Board of Directors.
This scheme has been formulated in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014 (‘SEBI Regulations’) for the time being in force and as may be modified from time to time.

Under the Plan, options not exceeding 11,435,100 have been reserved to such person(s) who are in the permanent employment of
the Company, whether working in India or out of India and to the Directors of the Company and to such other persons as may from
time to time be allowed to be eligible for the benefits of the stock options under applicable laws and regulations prevailing from
time to time (all such persons are hereinafter collectively referred to as ‘Eligible Employees’), except persons who are promoters
or belong to the promoter group or a Director who either himself or through his relative or through any Body corporate, directly or
indirectly, holds more than ten per cent of the outstanding equity shares of the company and Independent Directors, at such price
or prices, in one or more tranches and on such terms and conditions, as may be fixed or determined by the Board in accordance
with the ESOS 2017.

Under the above Scheme till date, options were granted in one tranche viz. Grant I. The options granted under the Plan shall start
vesting in tranches after one year from the date of grant and not more than three years under Grant I from the respective date of
grant of the options.

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free
interest rates. In respect of exercise price of options granted, the expected term of an option (or “option life”) is estimated based on
the vesting term, contractual term, as well as expected exercise behavior of the employees receiving the option. In respect of fair
market value of the options granted, the option life is estimated based on the simplified method. Expected volatility of the option
is based on historical volatility, of the observed market prices of the Company’s publicly traded equity shares. Dividend yield of the
options is based on recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time
of the grant. These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties
based on market conditions generally outside of the Company’s control.

33. Financial risk management

Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and
interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of
the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well
as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous
basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to
concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits
and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except
for trade receivables.

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements
of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an
amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk
on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing
the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account
historical credit loss experience and adjusted for forward-looking information. Company’s exposure to customers is diversified
and major customer contributes around 59% and 62% of outstanding trade receivable as of March 31, 2025 and March 31,2024.
The maximum exposure to credit risk was H 12,988.14 millions and H 16,379.87 millions as of March 31, 2025 and March 31,2024
respectively, being the total of the carrying amount of balances with trade receivables, loans and other financial assets excluding
derivative assets.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer''s
credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals.
The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the
provision matrix.

Credit risk on financial assets, except trade receivables is limited as the Company generally transacts with banks and financial
institutions with high credit rating assigned by international and domestic credit rating agencies. Investment primarily include
investment in subsidiaries whose carrying value is evaluated by the management at the end of every reporting period for impairment.
As at the end of the reporting period, there are no indicators of impairment of investments.

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive
income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a
currency other than the functional currency of the respective entities. Considering the countries and economic environment in which
the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks
primarily relate to fluctuations in USD/EURO against the functional currencies of the Company.

Commodity rate risk

Exposure to market risk with respect to commodity prices primarily arises from the Company’s purchases and sales of active
pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. These are commodity
products, whose prices may fluctuate significantly over short periods of time. The prices of the Company’s raw materials generally
actuate in line with commodity cycles, although the prices of raw materials used in the Company’s active pharmaceutical ingredients
business are generally more volatile. The cost of raw materials forms the largest portion of the Company’s operating expenses.
Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31,
2025, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.

Cash flow hedges
Foreign currency risk:

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast sales in US dollar.
Further, Euro denominated debt are designated as hedging instruments in cash flow hedges of forecast sales in Euro. These forecast
transactions are highly probable. The foreign exchange forward contract balances vary with the level of expected foreign currency
sales and changes in foreign exchange forward rates.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange
forward contracts and loans match the terms of the expected highly probable forecast transactions (i.e., notional amount and
expected payment date). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of
the foreign exchange forward contracts and loans are identical to the hedged risk components. To test the hedge effectiveness, the
Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against
the changes in fair value of the hedged items attributable to the hedged risks.

The hedge ineffectiveness can arise from:

• Differences in the timing of the cash flows of the hedged items and the hedging instruments

• The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items

Changes to the forecasted amount of cash flows of hedged items and hedging instruments

The Company is holding the following foreign exchange forward contracts

34. Segment reporting

A. Basis for segmentation

The operations of the Company are limited to one segment viz. Pharmaceutical products including ingredients and intermediaries.
The products being sold under this segment are of similar nature and comprises of pharmaceutical products only. The Company''s
Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on aggregation of financial
information of the Company on a periodic basis, for the purpose of allocation of resources and evaluation of performance. Accordingly,
management has identified pharmaceutical segment as the only operating segment for the Company.

B. Segment information for secondary segment reporting (by geographical segment)

The Company has reportable geographical segments based on location of its customers:

(i) Revenue from customers within India - Domestic

(ii) Revenue from customers outside India - Exports

Revenue from one external customer does not exceed 10% of Company’s total revenue from operations during the current or
previous year. Revenue from subsidiaries is disclosed in note 31.

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 interest-bearing loans and borrowings that define capital structure requirements. Breaches in
meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in
the financial covenants of any interest-bearing loans and borrowing in the current year.

36. Subsequent event

No significant subsequent events have been observed till May 28, 2025 which may require any additional disclosure or an adjustment
to the standalone financial statements other than the items mentioned below

a) Proposed dividend

Refer note 9

b) Acquisition of Senn Chemicals AG

The Company has entered into a Share Purchase Agreement (“SPA”) for the acquisition of Senn Chemicals AG on February 21,2025. The
Company has incorporated Granules Peptides Private Limited (“GPPL”) (wholly owned subsidiary in India) for the purpose of this acquisition
on March 04, 2025. The closing of the acquisition was subject to certain conditions which were subsequently completed on April 10, 2025.

Senn Chemicals AG, founded in 1963 is headquartered in Dielsdorf, Switzerland. It is a privately held Peptide CDMO company that
specializes in custom peptide development and manufacturing, supporting global clients across Pharmaceuticals, Cosmetics and
Theragnostic industries, from early development to commercial production.

c) Merger of Granules USA Inc., with Granules Pharmaceuticals Inc.

Granules USA Inc., was merged with Granules Pharmaceuticals Inc., USA both being the wholly owned subsidiaries of the Company
with effect from April 01, 2025.

38. Other Statutory information

i) There are no proceedings initiated or pending against the Company as at March 31,2025, under Prohibition of Benami Property
Transaction Act, 1988 and rules made thereunder (As amended in 2016).

ii) The Company does not have any transactions with companies struck off as per Section 248 of the Companies Act, 2013 and
Section 560 of the Companies Act, 1956.

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

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

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

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

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

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

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

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

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

viii) The Company does not have any such transaction which is not recorded in the books of 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).

ix) The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the
Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act,
2002 (15 of 2003).

x) Title deeds of all immovable properties were held in the name of the Company.

As per our report of even date attached

for S. R. Batliboi and Associates LLP for and on behalf of the Board of Directors of

Chartered Accountants Granules India Limited

Firm registration number: 101049W/E300004 CIN : L24110TG1991PLC012471

Navneet Kabra Dr. Krishna Prasad Chigurupati Dr. K.V.S Ram Rao

Partner Chairman and Managing Director Joint Managing Director and Chief Executive Officer

Membership No : 102328 DIN : 00020180 DIN : 08874100

Mukesh Surana Chaitanya Tummala

Chief Financial Officer Company Secretary

Place: Hyderabad Place: Hyderabad

Date: May 28, 2025 Date: May 28, 2025

---

Mar 31, 2024

8.2 Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of I 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares dividends in Indian rupees. During the year ended March 31,2024, the amount of final dividend per equity share recommended by the board to equity shareholders was I 1.50 (March 31,2023: I 1.50). 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. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

9. Other equity

(Refer disclosure of other equity in Statement of changes in equity)

Securities premium

Securities premium is used to record the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013.

Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilized in accordance with the provisions of section 69 of the Companies Act, 2013.

General reserve

It represents the portion of the net profit which the Company has transferred, before declaring dividend pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders.

Share-based payment reserve

The Company has established various equity settled share-based payment plans for certain categories of employees of the Company. Refer Note 27 for further details on these plans.

Capital reserve

Capital reserve arising pursuant to scheme of amalgamation.

Dividends

The following dividends were paid by the Company

8.5 Employee stock option plan

For details of shares reserved for issue under Employee stock option scheme (ESOS) of the Company, refer note 27.

8.6 There are no shares issued pursuant to contract without payment being received in cash or by way of bonus shares during the period of five years immediately preceding the reporting date.

8.7 Buy back of Shares

During the previous year, the Company has bought back 6,250,000 equity shares of H 1 each, representing 2.52% of total number of equity share fully paid-up for an aggregate amount of I 2,500 millions (excluding taxes and transaction cost) at I 400 per share. The equity shares bought back were extinguished on October 19, 2022. An amount corresponding to face value of the shares bought back was transferred to Capital Redemption Reserve were adjusted against General reserve.

Analysis of items of OCI, net of tax

Remeasurements of defined benefit plans (refer note - 28)

Remeasurements of defined benefit plans comprises actuarial gains and losses and return on plan assets.

Effective portion of Cash flow hedges

Cash flow hedge represents the cumulative effective portion of gains or losses (net of taxes) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.

i) All secured current borrowings from banks are secured by a pari passu first charge on the current assets of present and future of the Company and a pari passu second charge of the property, plant and equipment of present and future of the Company.

ii) The Company has outstanding foreign currency denominated loans carrying an interest rate ranging 5.7% to 5.9% p.a Benchmark linked to SOFR from banks. The facility is repayable within 180 days from the date of its origination.

iii) The Company''s exposure to interest rate, foreign currency and liquidity risks is included in note 33.

iv) As on March 31, 2024, the Company has obtained various borrowings from banks on basis of security of current assets wherein the returns/statements filed with the banks are in agreement with the audited / unaudited books of account.

The operations of the Company are limited to one segment viz. pharmaceuticals products. Revenue from contract with customers is from sale of manufactured goods. Sale of products are made at a point in time and revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant.

26. Contingent liabilities and commitments
Particulars	As at March 31, 2024	As at March 31, 2023
(a) Contingent liabilities:
Claims arising from disputes not acknowledged as debts - direct taxes	21.11	21.11
Claims arising from disputes not acknowledged as debts - indirect taxes	9.29	9.29

The Company is involved in taxation matters that arise from time to time in the ordinary course of business. Management is of the view that above claims are not tenable and will not have any material adverse effect on the Company’s financial position and results of operations.

The Company has a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that there are no material foreseeable losses on such long-term contracts which needs to be provided for in the books of account.

The Company has reviewed all its pending litigations including legal proceedings initiated in the ordinary course of business except as disclosed above. The Company does not expect the outcome of these proceedings to have a material and adverse effect on its financial position and accordingly no adjustment in respect thereof is expected.

Particulars	As at March 31, 2024	As at March 31, 2023
(b) Guarantees
Corporate guarantees given in favour of banks towards loans obtained by Wholly-Owned subsidiary company
- Granules USA, Inc.	1,250.20	1,293.28
- Granules Pharmaceuticals, Inc.	-	344.87
- Granules Life Sciences Private Limited	189.63	-
During March 31, 2024, the Company has given guarantee to State Bank of India on behalf of Granules Lifesciences Private Limited ("GLS") amounting to I 4,000 Million for a term loan obtained by GLS. GLS has utilized guarantee to the extent of I 189.63 Million as at March 31, 2024 towards business purpose.
Particulars	As at March 31, 2024	As at March 31, 2023
(c) Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances	445.65	466.38

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. In respect of exercise price of options granted, the expected term of an option (or “option life”) is estimated based on the vesting term, contractual term, as well as expected exercise behavior of the employees receiving the option. In respect of fair market value of the options granted, the option life is estimated based on the simplified method. Expected volatility of the option is based on historical volatility, of the observed market prices of the Company’s publicly traded equity shares. Dividend yield of the options is based on recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of the grant. These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company’s control.

27. Share-based payments

Granules India Limited - Employee Stock Option Scheme 2009 & 2017 (ESOS-2009 & ESOS-2017)

Pursuant to the decision of the shareholders at their meeting held on September 25, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 10,048,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including eligible Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the optionee to apply for one equity share.

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

Under the above Scheme till date, options were granted in eight tranches. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than four years under Grant VII & VIII from the respective date of grant of the options.

Pursuant to the decision of the shareholders at their meeting held on September 28, 2017, the Company has formulated an Employee Stock Option Scheme 2017 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Share-based Employee Benefits) Regulations, 2014 (‘SEBI Regulations’) for the time being in force and as may be modified from time to time.

Under the Plan, options not exceeding 11,435,100 have been reserved to such person(s) who are in the permanent employment of the Company, whether working in India or out of India and to the Directors of the Company and to such other persons as may from time to time be allowed to be eligible for the benefits of the stock options under applicable laws and regulations prevailing from time to time (all such persons are hereinafter collectively referred to as ‘Eligible Employees’), except persons who are promoters or belong to the promoter group or a Director who either himself or through his relative or through any Body corporate, directly or indirectly, holds more than ten per cent of the outstanding equity shares of the company and Independent Directors, at such price or prices, in one or more tranches and on such terms and conditions, as may be fixed or determined by the Board in accordance with the ESOS 2017.

Under the above Scheme till date, options were granted in one tranche viz. Grant I. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than three years under Grant I from the respective date of grant of the options.

i) As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Key Management Personnel and their relatives is not ascertainable and, therefore, not included above.

ii) *Foreign currency balances included above have been shown at restated values arrived by using the closing exchange rates

iii) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense for the year and that of provision for taxation.

iv) There were no loans or advances in the nature of loans granted by the Company to promoters, Directors, Key managerial persons and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that were repayable on demand or without specifying any terms or period of repayment.

32. Fair Values

The management assessed that loans, cash and cash equivalents, trade receivables, current borrowings, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

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.

Fair Valuation measurement hierarchy

The following table shows the carrying amounts and fair values of financial assets and liabilities including their levels of fair value hierarchy:

33. Financial risk management

Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except for trade receivables.

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Company’s exposure to customers is diversified and major customer contributes around 62% and 44% of outstanding trade receivable as of March 31, 2024 and March 31, 2023. The maximum exposure to credit risk was I 16,379.87 millions and I 13,742.99 millions as of March 31, 2024 and March 31, 2023 respectively, being the total of the carrying amount of balances with trade receivables.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer''s credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

Credit risk on financial assets, except trade receivables is limited as the Company generally transacts with banks and financial institutions with high credit rating assigned by international and domestic credit rating agencies. Investment primarily include investment in subsidiaries whose carrying value is evaluated by the management at the end of every reporting period for impairment. As at the end of the reporting period, there are no indicators of impairment of investments.

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

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 change in market interest rates. All the debt obligations of the Company are with floating interest rates which is subject to exposure to the risk of changes in market interest rates.

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in USD/EURO against the functional currencies of the Company.

Exposure to market risk with respect to commodity prices primarily arises from the Company’s purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company’s raw materials generally actuate in line with commodity cycles, although the prices of raw materials used in the Company’s active pharmaceutical ingredients business are generally more volatile. The cost of raw materials forms the largest portion of the Company’s operating expenses. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2024, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.

Cash flow hedges Foreign currency risk:

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast sales in US dollar. Further, Euro denominated debt are designated as hedging instruments in cash flow hedges of forecast sales in Euro. These forecast transactions are highly probable. The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange forward contracts and loans match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts and loans are identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

i) Non-current assets for this purpose consist of property, plant and equipment, capital work-in-progress, right-of-use assets, intangible assets, intangible assets under development and other non-current assets.

35. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by equity. Net debt consists of borrowings including interest accrued on borrowings, less cash and cash equivalents and other bank balances.

34. Segment reporting

A. Basis for segmentation

The operations of the Company are limited to one segment viz. Pharmaceutical products including ingredients and intermediaries. The products being sold under this segment are of similar nature and comprises of pharmaceutical products only. The Company''s Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on aggregation of financial information of the Company on a periodic basis, for the purpose of allocation of resources and evaluation of performance. Accordingly, management has identified pharmaceutical segment as the only operating segment for the Company.

B. Segment information for secondary segment reporting (by geographical segment)

The Company has reportable geographical segments based on location of its customers:

(i) Revenue from customers within India - Domestic

(ii) Revenue from customers outside India - Exports

Revenue from one external customer does not exceed 10% of Company’s total revenue from operations during the current or previous year. Revenue from subsidiaries is disclosed in note 31.

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 interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.

36. The Company had encountered an incident related to information security on May 24, 2023 (hereinafter referred to as “incident”), which affected some of the Company''s IT assets. A ransomware group has claimed responsibility for this incident. The Company has acted decisively to control and address the impact of the incident with appropriate protocols for containment and to minimize the risk.

The incident had a significant effect on the operations and took considerable time to address the regulatory expectations, qualifications, recertifications, and fine-tuning of the quality and production systems. This has impacted significantly the revenue and profitability of the Company for the year ended March 31,2024.

The Company believes that no significant legal violations have occurred because of the incident, and the known impacts on the standalone financial statement for the year ended on March 31, 2024, have been accounted for.

Further, the Company has enhanced the security measures to handle the incident and reduce the likelihood of a similar occurrence in the future.

38. Other Statutory information

i) There are no proceedings initiated or pending against the Company as at March 31,2024, under Prohibition of Benami Property Transaction Act, 1988 and rules made thereunder (As amended in 2016).

ii) The Company does not have any transactions with companies struck off as per Section 248 of the Companies Act, 2013 and Section 560 of the Companies Act, 1956.

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

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

viii) The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of MoneyLaundering Act, 2002 (15 of 2003).

ix) Title deeds of all immovable properties were held in the name of the Company.

39. Subsequent event

No significant subsequent events have been observed till May 15, 2024 which may require any additional disclosure or an adjustment to the standalone financial statements other than proposed dividend (refer note 8 and 9).

---

Mar 31, 2023

Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of '' 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares dividends in Indian rupees. During the year ended March 31, 2023, the amount of interim dividend per share distributed along with final dividend per equity share recommended by the board to equity shareholders was '' 1.50 (March 31, 2022: '' 1.50). 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. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Shares reserved for issue under options

For details of shares reserved for issue under Employee stock option scheme (ESOS) of the Company, refer Note 27.

8.6 There are no shares issued pursuant to contract without payment being received in cash or by way of bonus shares during the period of five years immediately preceding the reporting date.

Buy back of Shares

During the current year, the Company has bought back 6,250,000 equity shares of '' 1 each, representing 2.52% of total number of equity share fully paid-up for an aggregate amount of '' 2,500 millions (excluding taxes and transaction cost) at '' 400 per share. The equity shares bought back were extinguished on 19 October 2022. An amount corresponding to face value of the shares bought back was transferred to Capital Redemption Reserve were adjusted against General reserve.

9. Other equity

(Refer disclosure of other equity in Statement of changes in equity)

Securities premium

Securities premium is used to record the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013.

Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilized in accordance with the provisions of section 69 of the Companies Act, 2013.

General reserve

It represents the portion of the net profit which the Company has transferred, before declaring dividend pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders.

Share based payment reserve

The Company has established various equity settled share based payment plans for certain categories of employees of the Company. Refer Note 27 for further details on these plans.

Capital reserve

Capital reserve arising pursuant to scheme of amalgamation.

Dividends

The following dividends were paid by the Company

i) All secured current borrowings from banks are secured by a paripassu first charge on the current assets of present and future of the Company and a paripassu second charge of the property, plant and equipment of present and future of the Company.

ii) The Company has outstanding foreign currency denominated loans carrying an interest rate ranging 3.2% to 3.4% p.a benchmark linked to SOFR (March 31, 2022 : LIBOR 0.20 % p.a. to 1 % or SOFR 0.20% to 1% p.a) from banks. The facility is repayable within 180 days from the date of its origination.

iii) The Company''s exposure to interest rate, foreign currency and liquidity risks is included in note 33.

iv) As on March 31, 2023, the Company has obtained various borrowings from banks on basis of security of current assets wherein the returns/statements filed with the banks are in agreement with the audited / unaudited books of accounts.

The operations of the Company are limited to one segment viz. pharmaceuticals products. Revenue from contract with customers is from sale of manufactured goods. Sale of goods are made at a point in time and revenue is recognized upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant.

The Company has a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that there are no material foreseeable losses on such long term contracts which needs to be provided for in the books of account.

The Company has reviewed all its pending litigations including legal proceedings initiated in the ordinary course of business except as disclosed above. The Company does not expect the outcome of these proceedings to have a material and adverse effect on its financial position and accordingly no adjustment in respect thereof is expected.

Note : Pursuant to Supreme Court Judgement dated 28 February 2019, regarding the provident fund contribution wherein there has been a clarification provided of the inclusions of basic wages for the purpose of computation of contribution towards provident fund, the Company has been legally advised that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has assessed the impact of the judgement only from the year ended March 31, 2019 and concluded that there was no impact. Further, no contingent liability has been recognized based on retrospective application as amount cannot be reliably measured.

from time to time be allowed to be eligible for the benefits of the stock options under applicable laws and regulations prevailing from time to time (all such persons are hereinafter collectively referred to as ‘Eligible Employees''), except persons who are promoters or belong to the promoter group or a Director who either himself or through his relative or through any Body corporate, directly or indirectly, holds more than ten per cent of the outstanding equity shares of the company and Independent Directors, at such price or prices, in one or more tranches and on such terms and conditions, as may be fixed or determined by the Board in accordance with the ESOS 2017.

Under the above Scheme till date, options were granted in one tranche viz. Grant I. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than three years under Grant I from the respective date of grant of the options.

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. In respect of exercise price of options granted, the expected term of an option (or “option life”) is estimated based on the vesting term, contractual term, as well as expected exercise behavior of the employees receiving the option. In respect of fair market value of the options granted, the option life is estimated based on the simplified method. Expected volatility of the option is based on historical volatility, of the observed market prices of the Company''s publicly traded equity shares. Dividend yield of the options is based on recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of the grant. These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control.

27. Share based payments

Granules India Limited - Employee Stock Option Scheme 2009 & 2017 (ESOS-2009 & ESOS-2017)

Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 10,048,070 have been reserved be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including eligible Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

Under the above Scheme till date, options were granted in eight tranches. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than four years under Grant VII & VIII from the respective date of grant of the options.

Pursuant to the decision of the shareholders at their meeting held on 28th September, 2017, the Company has formulated an Employee Stock Option Scheme 2017 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘SEBI Regulations'') for the time being in force and as may be modified from time to time.

Under the Plan, options not exceeding 11,435,100 have been reserved to such person(s) who are in the permanent employment of the Company, whether working in India or out of India and to the Directors of the Company and to such other persons as may

i) As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Key Management Personnel and their relatives is not ascertainable and, therefore, not included above.

ii) *Foreign currency balances included above have been shown at restated values arrived by using the closing exchage rates

iii) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense for the year and that of provision for taxation.

iv) There were no loans or advances in the nature of loans granted by the Company to promoters, Directors, Key managerial persons and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that were repayable on demand or without specifying any terms or period of repayment.

32. Fair Values

The management assessed that loans, cash and cash equivalents, trade receivables, current borrowings, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

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.

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except for trade receivables.

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Company''s exposure to customers is diversified and major customer contributes around 44% and 42% of outstanding trade receivable as of March 31, 2023 and March 31, 2022. The maximum exposure to credit risk was '' 13,721.88 millions and '' 12,104.27 millions as of March 31, 2023 and March 31, 2022 respectively, being the total of the carrying amount of balances with trade receivables.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer''s credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

Credit risk on financial assets, except trade receivables is limited as the Company generally transacts with banks and financial institutions with high credit rating assigned by international and domestic credit rating agenies. Investment primarily include investment in subsidiaries whose carrying value is evaluated by the management at the end of every reporting period for impairment. As at the end of the reporting period, there are no indicators of impairment of investments.

33. Financial risk management

Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

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 change in market interest rates. All the debt obligations of the Company are with floating interest rates which is subject to exposure to the risk of changes in market interest rates.

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in USD/EURO against the functional currencies of the Company.

For the year ended March 31, 2023 and March 31, 2022, every percentage point depreciation / appreciation in the exchange rate between Indian rupees and U.S. dollar/Euro will affect the Company''s profit before tax by approximately (0.00%) and (0.10%) respectively.

Commodity rate risk

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials generally actuate in line with commodity cycles, although the prices of raw materials used in the Company''s active pharmaceutical ingredients business are generally more volatile. The cost of raw materials forms the largest portion of the Company''s operating expenses. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2023, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.

Cash flow hedges Foreign currency risk:

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast sales in US dollar. Further, Euro denominated debt are designated as hedging instruments in cash flow hedges of forecast sales in Euro. These forecast transactions are highly probable. The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange forward contracts and loans match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts and loans are identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

The hedge ineffectiveness can arise from:

? Differences in the timing of the cash flows of the hedged items and the hedging instruments

? The counterparties'' credit risk differently impacting the fair value movements of the hedging instruments and hedged items

34. Segment reporting

A. Basis for segmentation

The operations of the Company are limited to one segment viz. Pharmaceutical products including ingredients and intermediaries.. The products being sold under this segment are of similar nature and comprises of pharmaceutical products only. The Company''s Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on aggregation of financial information of the Company on a periodic basis, for the purpose of allocation of resources and evaluation of performance. Accordingly, management has identified pharmaceutical segment as the only operating segment for the Company.

B. Segment information for secondary segment reporting (by geographical segment)

The Company has reportable geographical segments based on location of its customers:

(i) Revenue from customers within India - Domestic

(ii) Revenue from customers outside India - Exports

Revenue from one external customer does not exceed 10% of Company''s total revenue from operations during the current or previous year. Revenue from subsidiaries is disclosed in note 31.

i) Non-current assets for this purpose consist of property, plant and equipment, capital work in progress, right-of-use assets, intangible assets, intangible assets under development and other non-current assets.

35. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share 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 manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by equity. Net debt consists of borrowings including interest accrued on borrowings, less cash and cash equivalents and other bank balances.

37. Other Statutory information

i) There are no proceedings initiated or pending against the Company as at March 31, 2023, under Prohibition of Benami Property Transaction Act, 1988 and rules made thereunder (As amended in 2016).

ii) The Company does not have any transactions with companies struck off as per Section 248 of the Companies Act, 2013 and Section 560 of the Companies Act, 1956.

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

iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the 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 complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

ix) Title deeds of all immovable properties were held in the name of the Company.

38. Subseqent event

No significant subsequent events have been observed till May 16, 2023 which may require any additional disclosure or an adjustment to the standalone financial statements other than proposed dividend (refer Note 8 and 9)

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Mar 31, 2022

(i) Loan given to Granules Europe Limited an amount of ''178.56 lakhs (March 31, 2021 ''77.51 lakhs) during the financial year ended March 31, 2022. The Loan carries the rate equivalent to prevailing Government bond rate closest to the tenor of the loan on the date of loan given to Granules Europe limited. These loans are given for the purpose of setting up, modernization and general corporate purpose of the subsidiaries outside India.

(ii) The above amount includes interest accrued of ''210.83 lakhs (March 31, 2021 - ''83.57 lakhs) from Granules Europe Limited.

(iii) The loan is repayable on May 2, 2022. Subsequent to the year end, the Company vide its amendment to the agreement w.e.f May 3, 2022, has extended the term loan for a period of 5 years. Accordingly, the loan has been disclosed as non-current in this financial statements.

i) For details of inventories hypothecated against current borrowings refer note 10A and Note 13A.

ii) The Company recorded inventory write-down/(reversal) of ''(94.32) lakhs (March 31, 2021 - ''(563.00) lakhs). These were recognised as an expense during the year and included in “changes in finished goods and work-in-progress in Statement of profit and loss.

8.2 Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ''1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares dividends in Indian rupees. During the year ended March 31, 2022, the amount of interim dividend per share distributed along with final dividend per share recommended by the board to equity shareholders was ''1.50 (March 31, 2021: ''1.50). 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. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

General reserve

It represents the portion of the net profit which the Company has transferred, before declaring dividend pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders Share based payment reserve

The Company has established various equity settled share based payment plans for certain categories of employees of the Company. Refer Note 27 for further details on these plans.

Capital reserve

Capital reserve arising pursuant to scheme of amalgamation

8.4 Shares reserved for issue under options

For details of shares reserved for issue under Employee stock option scheme (ESOS) of the Company, refer Note 27.

8.5 There are no shares issued pursuant to contract without payment being received in cash or by way of bonus shares during the period of five years immediately preceding the reporting date.

8.6 Buy back of Shares

During the previous year, the Company has bought back 7,101,374 equity shares of ''1 each, representing 2.79% of total number of equity share fully paid-up for an aggregate amount of ''14,202.75 lakhs (excluding taxes and transaction cost) at ''200 per share. The equity shares bought back were extinguished on 25 June 2020.An amount corresponding to face value of the shares bought back was transferred to Capital Redemption Reserve were adjusted against General reserve.

9. Other equity

(Refer disclosure of other equity in Statement of changes in equity)

Securities premium

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

Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013

Analysis of items of OCI, net of tax

Remeasurements of defined benefit plans (refer Note - 28)

Remeasurements of defined benefit plans comprises actuarial gains and losses and return on plan assets.

Effective portion of Cash flow hedges

Cash flow hedge represents the cumulative effective portion of gains or losses (net of taxes) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.

i) All secured term loans are secured by a paripassu first charge on the fixed assets of present and future of the Company and a paripassu second charge of the current assets of present and future of the Company.

ii) The Company has not defaulted on payment of principal and interest thereon on above term loans.

*During the year the company has re-financed long term borrowing of Deutsche Investitions Und Entwicklungsschaft MBh Euro 16.2 mn with Hong Kong and Shanghai Banking Corporation

i) All secured short term borrowings from banks are secured by a paripassu first charge on the current assets of present and future of the Company and a paripassu second charge of the fixed assets of present and future of the company.

ii) During the year ended March 31, 2022, the Company has outstanding foreign currency denominated loans carrying an interest rate of LIBOR 0.20% p.a to 1% or SOFR 0.2% to 1% from banks. The facility is repayable within 180 days from the date of its origination.

iii) The Company''s exposure to interest rate, foreign currency and liquidity risks is included in note 33.

iv) As on March 31, 2022 the company has obtained various borrowings from banks on basis of security of current assets wherein the quarterly returns/statements of current as filed with the banks in agreement with the books except the below. Subsequently, the Company has recitifed the quarterly returns of statements and filed with the banks.

The operations of the Company are limited to one segment viz. pharmaceuticals products. Revenue from contract with customers is from sale of manufactured goods. Sale of goods are made at a point in time and revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant. Variable components such as discounts, chargebacks, rebates, sales returns etc. continues to be recognised as deductions from revenue in compliance with Ind AS 115.

The Company is involved in taxation matters that arise from time to time in the ordinary course of business. Management is of the view that above claims are not tenable and will not have any material adverse effect on the Company''s financial position and results of operations.

The Company has a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that there are no material foreseeable losses on such long term contracts which needs to be provided for in the books of account.

The Company has reviewed all its pending litigations including legal proceedings initiated in the ordinary course of business except as disclosed above. The Company does not expect the outcome of these proceedings to have a material and adverse effect on its financial position and accordingly no adjustment in respect thereof is expected.

Note : Pursuant to Supreme Court Judgement dated 28 February 2019, regarding the provident fund contribution wherein there has been a clarification provided of the inclusions of basic wages for the purpose of computation of contribution towards provident fund, the Company has been legally advised that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has assessed the impact of the judgement only from the year ended March 31, 2019 and concluded that there was no impact. Further, no contingent liability has been recognised based on retrospective application as amount cannot be reliably measured.

27. Share based payments

Granules India Limited - Employee Stock Option Scheme 2009 & 2017 (ESOS-2009 & ESOS-2017)

Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 10,048,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including eligible Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

Under the above Scheme till date, options were granted in eight tranches viz. Grant I, Grant II, Grant III, Grant IV, Grant V, Grant VI, Grant VII & Grant VIII. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV, V, VI, VII & VIII from the respective date of grant of the options.

Pursuant to the decision of the shareholders at their meeting held on 28th September, 2017, the Company has formulated an Employee Stock Option Scheme 2017 to be administered by the Nomination & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘SEBI Regulations'') for the time being in force and as may be modified from time to time.

Under the Plan, options not exceeding 11,435,100 have been reserved to such person(s) who are in the permanent employment of the Company, whether working in India or out of India and to the Directors of the Company and to such other persons as may from time to time be allowed to be eligible for the benefits of the stock options under applicable laws and regulations prevailing from time to time (all such persons are hereinafter collectively referred to as ‘Eligible Employees''), except persons who are promoters or belong to the promoter group or a Director who either himself or through his relative or through any Body corporate, directly or indirectly, holds more than ten per cent of the outstanding equity shares of the company and Independent Directors, at such price or prices, in one or more tranches and on such terms and conditions, as may be fixed or determined by the Board in accordance with the ESOS 2017.

Under the above Scheme till date, options were granted in one tranche viz. Grant I. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than three years under Grant I from the respective date of grant of the options.

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. In respect of exercise price of options granted, the expected term of an option (or “option life”) is estimated based on the vesting term, contractual term, as well as expected exercise behavior of the employees receiving the option. In respect of fair market value of the options granted, the option life is estimated based on the simplified method. Expected volatility of the option is based on historical volatility, of the observed market prices of the Company''s publicly traded equity shares. Dividend yield of the options is based on recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of the grant. These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control.

b) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employee''s length of service and salary at retirement/termination age. The gratuity plan is a funded plan and the Company make contributions to a recognised fund in India.

i) As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Key Management Personnel and their relatives is not ascertainable and, therefore, not included above.

ii) *Foreign currency balances included above have been shown at restated values arrived by using the closing exchage rates

iii) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense for the year and that of provision for taxation.

iv) There were no loans or advances in the nature of loans granted by the Company to promoters, Directors, Key managerial persons and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that were repayable on demand or without specifying any terms or period of repayment.

32. Fair Values

The management assessed that loans, cash and cash equivalents, trade receivables, borrowings, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

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.

33. Financial risk management

Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except for trade receivables.

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Company''s exposure to customers is diversified and major customer contributes around 42% and 41% of outstanding trade receivable as of March 31, 2022 and March 31, 2021. The maximum exposure to credit risk was ''121,042.80 lakhs and ''101,423.62 lakhs as of March 31, 2022 and March 31, 2021 respectively, being the total of the carrying amount of balances with trade receivables.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer''s credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

Credit risk on financial assets, except trade receivables is limited as the company generally transacts with banks and financial institutions with high credit rating assigned by international and domestic credit rating agenies. Investment primarily include investment in subsidiaries, associate and joint venture whose carrying value is evaluated by the management at the end of every reporting period for impairment. As at the end of the reporting period, there are no indicators of impairment of investments.

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

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 change in market interest rates. All the debt obligations of the Company are with floating interest rates which is subject to exposure to the risk of changes in market interest rates.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in USD/EURO against the functional currencies of the Company.

For the year ended March 31, 2022 and March 31, 2021, every percentage point depreciation / appreciation in the exchange rate between Indian rupees and U.S. dollar/Euro will affect the Company''s profit before tax by approximately 0.10% and 0.15% respectively.

Commodity rate risk

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials generally actuate in line with commodity cycles, although the prices of raw materials used in the Company''s active pharmaceutical ingredients business are generally more volatile. The cost of raw materials forms the largest portion of the Company''s operating expenses. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of 31 March 2022, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices

Cash flow hedges Foreign currency risk:

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast sales in US dollar. Further, Euro denominated debt are designated as hedging instruments in cash flow hedges of forecast sales in Euro. These forecast transactions are highly probable. The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange forward contracts and loans match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts and loans are identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

The hedge ineffectiveness can arise from:

> Differences in the timing of the cash flows of the hedged items and the hedging instruments

> The counterparties'' credit risk differently impacting the fair value movements of the hedging instruments and hedged items Changes to the forecasted amount of cash flows of hedged items and hedging instruments

34. Segment reporting

A. Basis for segmentation

The operations of the Company are limited to one segment viz. Pharmaceutical products including ingredients and intermediaries. The products being sold under this segment are of similar nature and comprises of pharmaceutical products only. The Company''s Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on aggregation of financial information of the Company on a periodic basis, for the purpose of allocation of resources and evaluation of performance. Accordingly, management has identified pharmaceutical segment as the only operating segment for the Company.

B. Segment information for secondary segment reporting (by geographical segment)

The Company has reportable geographical segments based on location of its customers:

(i) Revenue from customers within India - Domestic

(ii) Revenue from customers outside India - Exports

Revenue from one external customer exceed 10% of company''s total revenue from operations of '' NIL for the year ended March 31, 2022 (March 31, 2021 - ''33,293.59 lakhs)

35. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share 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 manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by equity. Net debt consists of borrowings including interest accrued on borrowings, less cash and cash equivalents and other bank balances.

37. The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 has not been made in these financial statements since the requirement does not pertain to financial year ended 31 March 2022

38. Other Statutory information

i) There are no proceedings initiated or pending against the company as at March 31, 2022, under Prohibition of Benami Property Transaction Act, 1988 (As amended in 2016)

ii) The Company do not have any transactions with companies struck off as per Section 248 of the Companies Act, 2013 and Section 560 of the Companies Act, 1956.

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

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

v) The Company have 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 have 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 have not 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 is not declared a wilful defaulter by any bank or financial institutions or vendor.

ix) Title deeds of all immovable properties were held in the name of the Company.

39. On March 24, 2021, the Ministry of Corporate Affairs (MCA) through notification, amended Schedule III to the Companies Act, 2013, applicable for financial period commencing from April 01, 2021. The Company has incorporated the changes as per the said amendment in the above results and has also changed the comparative numbers wherever applicable.

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Mar 31, 2018

1 Company overview

1.1 Reporting entity

Granules India Limited (“Granules” or “the Company”) is a company domiciled in India, with its registered office situated at Hyderabad, Telangana. The company has been incorporated under the provisions of Indian Companies Act and its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The company is primarily involved in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation intermediates (PFIs) and Finished Dosages (FDs)

1.2 Basis of preparation

a) Statement of compliance

The standalone financial statements have been prepared m accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013 (the ‘Act’) and other relevant provisions of the Act

These standalone financial statements have been prepared for the Company as a going concern on the basis of relevant Ind AS that are effective at the Company’s annual reporting date, March 31, 2018. These standalone financial statements were authorised for issuance by the Company’s Board of Directors on May 24, 2018.

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)

The financial statements are presented in INR and all values are rounded to the nearest lakhs, except when otherwise indicated.

Details of the Company’s accounting policies are included in Note 2.

b) Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification

An asset is treated as current when it is

- Expected to be realised or intended to be sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realised within twelve months after the reporting period or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current A liability is current when

- It is expected to be settled in normal operating cycle

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Company classifies all other liabilities as non-current

Deferred tax assets and liabilities are classified as non-current assets and liabilities

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle

c) Functional and presentation currency

These standalone financial statements are presented in Indian rupees (INR), which is also the functional currency of the Company. All amounts have been rounded-off to the nearest lakh, unless otherwise indicated.

d) Basis of measurement

These standalone financial statements have been prepared on the historical cost basis, except for the following items:

- Certain financial assets and liabilities are measured at fair value;

- Net defined benefit assets/(liability) are measured at fair value of plan assets, less present value of defined benefit obligations

e) Use of estimates and judgements

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes

- Note 1.2(c) - Assessment of functional currency;

- Note 2(a) and 32 - Financial instruments;

- Note 3A - Useful lives of property, plant and equipment;

- Note 28 - Assets and obligations relating to employee benefits;

- Note 27 - Share based payments;

- Note 24 & 26 (i) - Provision for income taxes, duties/ tax contingencies and evaluation of recoverability of deferred tax assets.

Assumptions and estimation uncertainities

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31, 2018 is included in the following notes:

- Note 26 (i) - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources

- Note 27 - Share based payments

- Note 28 - measurement of defined benefit obligations key actuarial assumptions;

f) Measurement of fair values

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

- Level 2: inputs other than quoted prices included in 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 asset or liability that are not based on observable market data (unobservable inputs)

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred

Further information about the assumptions made in measuring fair values is included in the following notes

- Note 27 - share based payment; and

- Note 32 - financial instruments

Note:

(i) The term loan of RS.22,143.73 lakhs to Granules Pharmaceuticals Inc. and RS.170.58 lakhs to Granules Europe Limited, provided during the financial year ended March 31, 2018, carries fixed interest rate of 4%. These loans are given for the purpose of setting up, modernisation and general corporate purpose of the subsidiaries outside India

i) For details of inventories hypothecated against current borrowings Refer Note 10

ii) Write-down of inventories to net realisable value amounted to RS.50.76 lakhs (March 31, 2017 - H Nil). These were recognised as an expense during the year and included in “changes in finished goods and work-in-progress” in statement of profit and loss.

Refer note 31 for trade receivables due from private companies/partnership firm in which Company’s director is a director/partner. The Company’s exposure to credit and currency risks, and loss allowances related to trade receivables are disclosed in Note 33. For receivables secured against borrowings, refer Note 10 & 13A.

2.1 Rights, prefernces and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of RS.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares dividends in Indian rupees. During the year ended March 31, 2018, the amount of interim dividend per share distributed along with final dividend per share recommended by the board to equity shareholders was RS.1.00 (March 31, 2017: H0.90). 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. However, no such preferential amounts exist currently. 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 and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

2.2 Shares reserved for issue under options

For details of shares reserved for issue under Employee Stock Option Scheme (ESOS) of the Company, refer note 27

2.3 Shares issued through QIP

On September 26, 2017, the Company issued and allotted 2,47,54,792 Equity Shares of RS.1/- each at an issue price of RS.121.25 per share to raise RS.30,015.18 Lakhs by way of Qualified Institutional Placement (“QIP”) under Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 . Expenses related to the issue amounting to RS.79745 Lakhs have been adjusted against Securities Premium. Use of the net proceeds of the Qualified Institutional Placement is intended for business purposes such as meeting for expansion of business verticals by way of strategic investment in research and development, repayment or pre-payment of outstanding indebtedness, investment in subsidiaries, joint ventures, capital expenditure and other general corporate purposes.

3. Other equity

Attributable to owners Securities premium reserve

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

General reserve

It represents the portion of the net profit which the Company has transferred, before declaring dividend pursuant to the earlier provision of companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders

Share based payment reserve

The Company has established various equity settled share based payment plans for certain categories of employees of the Company. Also refer note 27 for further details on these plans

Capital reserve

Capital reserve arising pursuant to scheme of amalgamation

Dividends

The following dividends were declared and paid by the Company during the year

Analysis of items of OCI, net of tax Remeasurements of defined benefit plans

Remeasurements of defined benefit plans comprises actuarial gains and losses and return on plan assets (Refer note - 28)

Cash flow hedge reserve

Cash flow hedge represents the cumulative effective portion of gains or losses (net of taxes) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges

i) The term loan was prepaid in full on October 6, 2017.

ii) The term loans were closed during the year ended March 31, 2018 as the entire balance outstanding as at March 31, 2017 was due and paid during the current year

iii) All secured term loans are secured by a paripassu first charge on the fixed assets of present and future of the company except all monies in the banks with a carrying amount of RS.85,958.02 lakhs (March 31, 2017 - RS.65,058.95 lakhs) and a paripassu second charge of the current assets of present and future of the Company with a carrying amount of RS.1,13,841.52 lakhs (March 31, 2017 - RS.83,318.33 lakhs).

iv) The sales tax authority has sanctioned an interest free deferment of sales tax. The loan is to be paid at the end of 13 years from the respective deferment and the balance outstanding loan is due to be paid fully in the year ended March 31, 2019. Accordingly the balance outstanding is classified as part of other current liabilities

i) The Company has working capital facilities with various banks carrying interest rate ranging from 9.20% - 10.7% p.a and base rate plus 85 bps. These facilities are repayable on demand

ii) During the year ended March 31, 2018, the Company has outstanding secured foreign currency denominated loans carrying an interest rate of LIBOR 0.25% p.a. to 0.34% p.a. from a bank. The facility is repayable within 120 days from the date of its origination

iii) During the year ended March 31, 2018, the Company has outstanding secured foreign currency denominated loans carrying an interest rate of LIBOR 0.65% p.a. to 1.10% p.a. from a bank. The facility is repayable within 120 days from the date of its origination

iv) During the year ended March 31, 2018, the Company has outstanding secured foreign currency denominated loans carrying an interest rate of LIBOR 0.65% p.a. to 1% p.a. from a bank. The facility is repayable within 180 days from the date of its origination

v) All secured short term borrowings from banks are secured by a paripassu first charge on the current assets of present and future of the Company with a carrying amount of RS.1,14,516.24 lakhs (March 31, 2017 - RS.83,349.81 lakhs) and a paripassu second charge of the fixed assets of present and future of the company with a carrying amount of RS.85,958.02 lakhs (March 31, 2017 - RS.65,058.95 lakhs).

vi) During the year ended March 31, 2018, the Company has outstanding unsecured foreign currency denominated loans carrying an interest rate of LIBOR 0.65% p.a. from a bank. The facility is repayable within 120 days from the date of its origination

vii) The Company’s exposure to interest rate, foreign currency and liquidity risks is included in note 33.

Note:

i) Post implementation of Goods and Service Tax (‘GST’) with effect from July 01, 2017, revenue from operations is disclosed net of GST. For the periods prior to July 01, 2017, the excise duty amount was recorded as part of revenue with a corresponding amount recorded as expense. Accordingly, revenue from operations for the year ended March 31, 2018 are not comparable with those of the previous period presented. Following additional information is being provided to facilitate such comparison

The Company is involved in taxation matters that arise from time to time in the ordinary course of business. Management is of the view that above claims are not tenable and will not have any material adverse effect on the Company’s financial position and results of operations.

(b) Operating Leases

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable on a periodic basis at the option of either of the parties

There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognised in the Statement of Profit and Loss for cancellable lease is RS.34761 lakhs (March 31, 2016: RS.233.58 lakhs) and non-cancellable lease is RS.6752 lakhs (March 31, 2017 : RS.18.39 lakhs).

The schedule of future minimum rental payments in respect of non-cancellable operating leases is set out below

4. Share based payments

Granules India Limited - Employee Stock Option Scheme 2009 (“ESOS-2009’)

Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 1,00,48,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including eligible Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved

Under the above Scheme till date, options were granted in six tranches viz. Grant I, Grant II, Grant III , Grant IV, Grant V & Grant VI. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV , V & VI from the respective date of grant of the options

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. In respect of exercise price of options granted, the expected term of an option (or “option life”) is estimated based on the vesting term, contractual term, as well as expected exercise behavior of the employees receiving the option. In respect of fair market value of the options granted, the option life is estimated based on the simplified method. Expected volatility of the option is based on historical volatility, of the observed market prices of the Company’s publicly traded equity shares. Dividend yield of the options is based on recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of the grant. These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company’s control.

b) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employee’s length of service and salary at retirement/termination age. The gratuity plan is a funded plan and the Company make contributions to a recognised fund in India

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at balance sheet date:

Assumptions regarding future mortality experience are set in accordance with published statistics and mortality tables

The weighted average duration of the defined benefit obligation was 6.78 years

The defined benefit plan expose the Company to actuarial risks, such as longevity and interest rate risk.

(iii) Sensitivity analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions are as below

Sensitivity of significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of defined benefit obligation by one percentage, keeping all other actuarial assumptions constant. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumption shown.

As of March 31, 2018 and March 31, 2017, the plan assets have been invested in Life Insurance Corporation

As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Key Management Personnel and their relatives is not ascertainable and, therefore, not included above.

*Foreign currency balances included above have been shown at restated values arrived by using the closing exchage rates

5. Fair values

The management assessed that loans, cash and cash equivalents, trade receivables, borrowings, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments

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.

Fair Valuation measurement hierarchy

The following table shows the carrying amounts and fair values of financial assets and liabilities including their levels of fair value hierarchy:

6. Financial risk management

Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market Risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company

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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except for trade receivables.

Exposure to credit risk:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was RS.68,173.67 lakhs and RS.46,831.27 lakhs as of March 31, 2018 and March 31, 2017 respectively, being the total of the carrying amount of balances with trade receivables

Trade receivables:

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Company’s exposure to customers is diversified and some customer contributes around 23% and 30% of outstanding trade receivable as of March 31, 2018 and March 31, 2017.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer’s credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below provides details regarding the undiscounted contractual maturities of significant financial liabilities as of March 31, 2018:

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

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 change in market interest rates. As the Company’s debt obligation with floating interest rates are in USD/EURO which is subject to insignificant change, exposure to the risk of changes in market interest rates are substantially independent of changes in market interest rates

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of borrowings affected With all other variables held constant, the Company’s profit before tax is affected through the impact on borrowings, as follows:

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in USD/EURO against the functional currencies of the Company

For the year ended March 31, 2018 and March 31, 2017, every percentage point depreciation / appreciation in the exchange rate between Indian rupees and U.S. dollar/Euro will affect the Company’s profit by approximately 1.33 % and 0.24% respectively.

The Company designates certain non derivative financial liabilities, such as foreign currency borrowings from financial institutions, as hedging instruments for the hedge of foreign exchange risk associated with highly probable forecasted transactions and, accordingly, applies cash flow hedge accounting for such relationships. Re-measurement gain/loss on such non derivative financial liabilities is accumulated in other equity under the heading cash flow hedging reserve, and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions

Cash flow hedge reserve

The reconciliation of cash flow hedge reserve for the year ended March 31, 2018 is as follows:

7. Segment reporting

The Company is engaged in the manufacture of Pharmaceuticals, which in the context of Ind AS 108 is considered only business segment.

i) Non-current assets for this purpose consist of property, plant and equipment, capital work in progress and other non-current assets.

8. Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, share 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 manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by Equity plus net debt. Net debt consists of borrowings including interest accrued on borrowings, less cash and cash equivalents and other bank balances.

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 interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period

9. The disclosures regarding details of specified bank notes held and transacted during November 8, 2016 to December 30, 2016 has not been made since the requirement does not pertain to financial year ended March 31, 2018. Corresponding amounts as appearing in the audited Standalone financial statements for the year ended March 31, 2017 have been disclosed.

*For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

10. Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands

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Mar 31, 2017

1.Earning per equity share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

2. Commitments and Contingencies A. Leases

Operating lease commitments - Company as lessee

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable / cancellable at the option of either of the parties.

There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is RS,251.97 lakhs (March 31, 2016: RS, 241.12 lakhs).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

**Business requirement in respective of Joint Venture.

3. Share based payments

Granules India Limited - Employee Stock Option Scheme 2009 (“ES0S-2009'')

Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Under the Plan, options not exceeding 1,00,48,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optioned to apply for one equity share.

The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

Under the above Scheme till date, options were granted in five tranches viz. Grant I, Grant II, Grant III , Grant IV & Grant V. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV & V from the respective date of grant of the options.

The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no defered compensation cost to be amortized over the vesting period.

For options exercised during the year, the weighted average share price at the exercise date under ESOS 2009 scheme was H 24.01 per share (March 31, 2016: 17.51, April 01, 2015: H 9.53) The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:

b) Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan and governed by Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the statement of profit and loss, the fund status and balance sheet position:

4. Related party disclosures

Names of related parties and description of relationship

Name of the related party Relationship

1 Granules USA, Inc. Wholly owned subsidiary company

2 GIL Life sciences Private Limited Wholly owned subsidiary company (Amalgamated with Granules India Limited - refer note 47)

3 Granules Pharmaceuticals, Inc. Wholly owned subsidiary company

4 Granules Europe Limited Wholly owned subsidiary company

5 Granules-Biocause Pharmaceutical Co. Ltd Joint venture

6 Granules Omnichem Private Limited Joint venture

7 Karvy Computershare Private Limited Enterprises over which key management personnel or their relatives exercise significant influence

8 Tyche Technologies Private Limited Enterprises over which key management personnel or their relatives exercise significant influence Key managerial personnel

1 Mr.Krishna Prasad Chigurupati Chairman & Managing Director

2 Mr.Harsha Chigurupati (Upto Oct 30, 2015) Executive Director

3 Mrs. Uma Devi Chigurupati Executive Director

4 Dr. V.V.N.K.V. Prasad Raju (w.e.f Jan 4, 2017) Executive Director

5 Mr. V.V.S.Murthy Chief Financial Officer

6 Mrs. Chaitanya Tummala Company Secretary Relatives to key managerial personnel

1 Ms.Priyanka Chigurupati Manager-Marketing

2 Mrs.V.V.N.Chandrika (Upto Mar 01, 2016) Executive

As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Key Management personnel and their relatives is not ascertainable and, therefore, not included above.

5. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgments, 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.

(A) Judgments

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

(i) Lease commitments - the Company as lessee

The Company has entered into leases for office premises . The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.

(B) 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.

(i) Share-based payments

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimation requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The Black Scholes valuation model has been used by the Management for share-based payment transactions. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 29.

(ii) Defined employee benefit plans (Gratuity)

The cost of the defined benefit gratuity plan 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.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 30.

6. Fair Values

The management assessed that loans, cash and cash equivalents, trade receivables, borrowings, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

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.

7. Financial risk management objectives and policies Financial Risk Management Framework

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates and interest rate), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, loans, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk, except for trade receivables.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was RS, 46,831.27 lakhs, RS, 44,416.29 lakhs and RS, 41,059.12 lakhs as of March 31, 2017, March 31, 2016 and April 1, 2015 respectively, being the total of the carrying amount of balances with trade receivables.

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Company''s exposure to customers is diversified and some customer contributes around 30% of outstanding trade receivable as of March 31, 2017, March 31, 2016 and April 01, 2015, however there was no default on account of those customer in the past.

Before accepting any new customer, the Company uses an external/internal credit scoring system to assess the potential customer''s credit quality and defines credit limits of customer. Limits and scoring attributed to customers are reviewed at periodic intervals. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix.

Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

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 change in market interest rates. As the Company''s debt obligation with floating interest rates are in USD which is subject to insignificant change, exposure to the risk of changes in market interest rates are substantially independent of changes in market interest rates.

As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

Foreign Currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar against the functional currencies of the Company.

For the year ended March 31, 2017 and March 31, 2016, every percentage point depreciation / appreciation in the exchange rate between Indian rupees and U.S. dollar will affect the Company''s profit by approximately 0.33 % and 0.85% respectively.

8. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value.

The Company manages its capital structure in consideration to the changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by Equity plus net debt. Net debt consists of borrowings including interest accrued on borrowings, trade and other payables, less cash and short-term deposits.

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 interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2017.

9. First time adoption of Ind AS

These financial statements, for the year ended March 31, 2017, are the first set of financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 ("Indian GAAP" or "Previous GAAP").

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

(a) Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered businesses under Ind AS that occurred before April 1, 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognises all assets acquired and liabilities assumed in a past business combination. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognise or exclude any previously recognized amounts as a result of Ind AS recognition requirements.

(b) As per IND- AS 20, benefit of a government loan at nil or below-market rate of interest (e.g. interest free sales tax deferral scheme) is treated as a government grant. A first time adopter can apply requirements in IND- AS 109 prospectively or retrospectively to government loans existing at the date of transition to IND- AS. Accordingly, the Company has chosen to use Indian GAAP carrying values as its carrying value under IND-AS and apply principles of IND-AS 109 prospectively

(c) The Company has elected to regard carrying values for all of property, plant and equipment as deemed cost at the date of the transition.

(d) The Company applied Ind AS 102 Share-based payment to equity instruments that remain unvested as of transition date. The Company has elected to avail this exemption and apply the requirements of Ind AS 102 to all such grants .Accordingly, these options have been measured at fair value as against intrinsic value previously under IGAAP

(e) Ind AS 101 requires a first-time adopter to apply derecognition requirements in Ind AS 109 prospectively to transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company continues to de-recognize the financial assets and financial liabilities for transactions which have occurred before the date of transition to Ind AS.

(f) The Company has elected to avail Ind AS 101 exemption with regard to Long Term Foreign Currency Monetary Items and may continue to adopt for accounting for exchange differences arising from translation of long-term foreign currency monetary items to be recognized in financial statements.

(g) Under Ind AS 109, at initial recognition of a financial asset, an entity may take irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial asset as ''fair value through other comprehensive income'' on the basis of the facts and circumstances that existed at the date of transition to Ind AS. Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

(h) In the preparation of separate financial statements, Ind AS 27 Separate Financial Statements requires an entity to account for its investments in subsidiaries, jointly controlled entities and associates either:

a) At cost, or

b) In accordance with Ind AS 109.

If a first-time adopter measures such an investment at cost, it can measure that investment at one of the following amounts in its separate opening Ind AS balance sheet :

- Cost determined in accordance with Ind AS 27

- Deemed cost, defined as

Fair value determined in accordance with Ind AS 113 at the date of transition to Ind AS, or

Previous GAAP carrying amount at the transition date.

A first-time adopter may choose to use either of these bases to measure investment in each subsidiary, joint venture or associate where it elects to use a deemed cost.

Accordingly, the Company has opted to carry the investment in subsidiaries and associate at the Previous GAAP carrying amount at the transition date.

Estimates

The estimates as at April 01, 2015 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 01, 2015 (transition date), March 31, 2016 and March 31, 2017.

D. Notes to reconciliation of equity as at April 01, 2015 and March 31, 2016 and profit or loss for the year ended March 31, 2016

i. Investments

Investments in equity instruments are carried at fair value through OCI as per IND-AS 109 as compared to being carried at cost under Previous GAAP

ii. Unamortized expenses

The Company carried unamortized VRS expenditure of RS, 168.67 lakhs (April 1, 2015: RS,290.72 lakhs) and certain preliminary expense of RS,15.00 lakhs (April

1, 2015: RS,15.00 lakhs) under Previous GAAP As the same do not meet the definition of assets, have been adjusted against in opening reserves.

iii. Bill discounting with Banks

The company had discounted certain export bills under recourse method. The Company was de-recognizing the same under Previous GAAP As per Ind AS 109, "if the entity retains substantially all the risks and rewards of ownership of the financial asset, the entity shall continue to recognize the financial asset". As the bills were discounted under recourse method, the Company has recognized both receivable and borrowings.

iv. Compensated Absences

As per Ind AS 19,the Company recognized a liability in the books for accumulated sick leaves, net of related deferred taxes as per certified valuer to an extent of RS, 29.76 lakhs.

v. Deferred Tax Liabilities

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the Balance sheet approach, which focuses on temporary difference between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Previous GAAP In addition, the various transitional adjustments lead to temporary differences and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying transaction in other equity.

vi. Proposed dividend:

Under Previous GAAP proposed dividends including DDT are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability towards dividend for the year ended March 31, 2016 and April, 1, 2015 to an extent of RS,521.61 lakhs and RS,1,229.16 lakhs respectively, has been derecognized against retained earnings and adjusted as an appropriation for the year ended March 31, 2017 and March 31, 2016.

vii. Revenue

Trade discounts allowed to an extent of RS,75.88 lakhs shown as an expense in Previous GAAP is adjusted against revenue as per Ind -AS 18.

viii. Excise Duty on sale of Goods

As per Previous GAAP excise duty should be included and shown as reduction from the gross turnover on the statement of profit and loss. However, Ind AS 18 does not specifically prescribe any guidance for inclusive presentation of excise duty. Accordingly the Company has presented revenue gross of excise duty. This resulted in increase of revenue and increase of excise duty expense to an extent of RS, 2,575.51 lakhs. Further, amounts collected by the seller on behalf of the government are not be included as part of the revenue as per IND-AS 18.

ix. Share based payments:

The Company has granted employee stock options to certain employees of the Company or its subsidiaries. Under Previous GAAP as both intrinsic value or fair value method were allowed for the purpose of accounting of the compensation cost, the Company has accounted the same on intrinsic value method. However, as per IND- AS 102, the Company has to account for the same only on fair value method. Accordingly, for employee stock options not vested before date of transition, the Company has accounted for such options under fair value method. Thus, the employee benefit cost is increased by RS, 79.34 lakhs.

x. Remeasure of actuarial gains/ (losses):

Both under Previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Previous GAAP the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus, the employee benefit cost is increased by RS, 28.27 lakhs and remeasurement gains/ losses on defined benefit plans has been recognized in the OCI.

xi. Foreign exchange loss

Foreign exchange loss re-grouped from finance cost to other expenses

xii. Other comprehensive income

As per Ind AS, the company translated Previous GAAP profit or loss to total comprehensive income .

xiii. Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

10. During the year, the Hon''ble High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh has approved the scheme of amalgamation (''''Scheme'''') of GIL Lifesciences Private Limited, a wholly owned subsidiary of the Company and the Company by its order dated September 01, 2016 and the same has been filed with Registrar of Companies (''''ROC'''') on October 26, 2016. In terms of the scheme, with effect from April 01, 2016 (''''Appointed date''''), interalia, the following effect has been given as directed by the court;

a) The Company has recorded assets and liabilities of GIL Life sciences Private Limited at their respective fair values.

b) Intercompany investments, balances and transactions have been eliminated.

c) There is no impact on the profit on account of the above scheme.

*For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

11. Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.

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Mar 31, 2016

(a) Terms/Rights attached to equity shares:

The Company has only one class of equity shares having face value of Rs.1/- . Each holder of equity shares is entitled to one vote per share. The company declares 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.

A final dividend of 20 paise per share of face value of Rs.1/- each has been recommended by the Board of Directors at their meeting held on April 28, 2016. This is in addition to three interim dividends of 15 paise each per share of face value of Rs.1/- declared and paid during the year.

Post approval of final dividend of 20 paise per equity share by the shareholders, the total dividend for the financial year 2015-16 would aggregate 65 paise per equity share of face value of Rs.1/- each (dividend for the previous year 2014-15, 50 paise per equity share of face value of Rs.1/- each)

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 all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

1. Employee Stock Option Plan

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,00,63,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Nomination & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in four tranches viz. Grant I, Grant II, Grant III & Grant IV. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

2. The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11th October 1999 and its clarification vide Letter dated 4th August 2001 determined an eligibility of Rs.184.12 Lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 4 years commencing from June 30, 1998 to June 29, 2012 is deferred. The liability of Rs. 62.23 Lakhs as at March 31, 2016 (Previous year Rs.63.89 Lakhs) for the deferred Sales tax is shown under unsecured loans.

3. Previous year''s figures have been regrouped/reclassified wherever necessary to confirm to current year''s classification.

4. Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.

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Mar 31, 2015

Corporate information

Granules India Limited (the company) is a public domiciled in India and incorporated under the Companies Act, 1956. Its shares are listed on two Stock exchanges in India. The company is engaged in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs) and Pharmaceutical Formulation intermediates (PFIs) and Finished Dosages (FDs). The company caters to both domestic and international markets.

1. Refer Note 2.1 (Note 2)

(b) Terms/Rights attached to equity shares:

The Company has only one class of equity shares having face value of Rs.1/- . Each holder of equity shares is entitled 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.

During the year end 31st March 2015, the amount of per share dividend recognized as distribution to equity shareholders was 50 paise per equity share of Rs.1/- each face value (31st March 2014: Rs.3.50/- per share of Rs.10/- each face value)

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

All secured term loans are secured by a paripassu first charge on fixed assets and a paripassu second charge on the current assets of the Company.

Out of the foreign currency loans from Financial Institutions an amount of Rs.3,753.96 Lakhs as on 31st March 2015 is further guaranteed by the personel guarantee of the Chairman & Managing Director of the Company.

Deferred sales tax loan is interest free and payable in 14 yearly installments commencing from June 2013 onwards

2.1 Deferred Tax Liabilities

Deferred tax has been accounted for in accordance with the Accounting Standard - 22, "Accounting for taxes on income", issued by the Institute of Chartered Accountants of India. The components of Deferred Tax Assets and Liabilities recognized in these accounts are as follows:

2.2 Employee Stock Option Plan

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on 25 th September 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,00,63,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in four tranches viz. Grant I, Grant II, Grant III & Grant IV. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

f) The following is the number of granted options outstanding during the year:

2.3 The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11th October 1999 and its clarification vide Letter dated 4th August 2001 determined an eligibility of Rs.184.12 Lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 14 years commencing from 30th June 1998 to 29 th June 2012 is deferred. The liability of Rs.63.89 Lakhs as at 31st March 2015 (Previous year Rs.64.73 Lakhs) for the deferred Sales tax is shown under unsecured loans.

(Rs in Lakhs) As at As at Particulars 31st March 2015 31st March 2014

1) Contingent Liabilities

a) Claims against the Company not acknowledged as debt

Income Tax 1,182.43 1,182.43

Excise 226.76 205.55

Service Tax 95.41 89.37

Customs 43.47 43.47

Total (a) 1,548.07 1,520.82 b) Bills discounted with banks 21,561.84 17,820.42

Total (b) 21,561.84 17,820.42

c) Corporate Guarantee given for JV loan 12,096.00 14,863.77

Total (c) 12,096.00 14,863.77

TOTAL (a b c) 35,205.91 34,205.01

2) Commitments

a) Estimated amount of contracts to be executed on capital account 1,730.26 2,086.76

Grand Total 36,936.17 36,291.77

2.4 Related party disclosures required as per Accounting Standard (AS-18) on "Related party disclosures" issued by the Institute of Chartered Accountants of India, are as below:

a) Names of related parties and the description of relationship:

Name Relationship

Granules USA Inc Wholly owned subsidiary Company

GIL Life sciences Private Limited Wholly owned subsidiary Company

Granules Pharmaceuticals Inc Wholly owned subsidiary Company

Granules-Biocause Pharmaceutical Joint - Venture Co.Ltd

Granules Omnichem Private Limited Joint - Venture

Key Management Personnel:

Mr. C. Krishna Prasad Chairman & Managing Director

Mr. Harsha Chigurupati Executive Director

Ms. C. Uma Devi Executive Director

Mr. VVS. Murthy Chief Financial Officer

Ms. Chaitanya Tummala Company Secretary

Others:

Mr. Vijay Ramanavarapu GM-Procurement

Ms. C. Priyanka Manager- Marketing

Ms. Shivangi Sharma Company Secretary

Ms. VVN Chandrika Executive

Karvy Computershare Private Limited Directors interest

Tyche Technologies Pvt.Ltd Directors interest

2.5 The Scheme of amalgamation submitted by Auctus Pharma Ltd (APL), a wholly owned subsidiary of the Company, was sanctioned by the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh vide its order dated 23 rd September 2014 and the same has been filed with the Registrar of Companies (RoC), on 13 th November 2014. The Scheme is effective from 1st April 2013 (i.e. appointed date).

a) The Company has taken over the assets valued at Rs.17,861.01 Lakhs and liabilities aggregating to Rs.7,348.69 Lakhs of APL, based on fair valuation performed by an independent valuer.

b) As the financial statements of the Company for previous year ended 31st March 2014 were already approved by the shareholders of the Company, the previous year balances (i.e for FY 2013-14) are not restated and all the relevant accounting entries with respect to the Scheme are accounted for on 1st April 2014 and consequently, the surplus in the Statement of Profit and Loss as on 31st March 2014 of APL has been transferred to the opening reserve (Refer note 2.2.e) of the Company.

c) The entire issued, subscribed and paid up share capital and reserves and surpluses (except statutory reserves of the APL), after the appointed date stand cancelled. Accordingly, investment by the Company in APL amounting to Rs.10,225.51 Lakhs has been cancelled along with all other inter-company balances including loans, advances outstanding.

d) The excess of fair value of assets over the liabilities after adjusting value of the investments in APL, amounting to Rs.286.80 Lakhs has been recognized as capital reserve.

e) No consideration is payable or receivable on implementation of the Scheme as the Scheme involves a wholly owned subsidiary

f) Investment subsidy of Rs.15 Lakhs of APL will continue in Reserves & Surpluses even after amalgamation and the same amount is being shown under Other Non-Current Assets as "Amalgamation adjustment account".

# in respect of the Tax demand of Rs. 354.39 lakh pertaining to the Asst. Year 2008-09, ITAT has disposed off the appeal in favour of the company, the consequential order on the same is pending to be passed by the Transfer Pricing Officer.

@ Pertains to Auctus Pharma Limited which was amalgamated with the company during the year.

2.6 Previous year's figures have been regrouped / reclassified wherever necessary to confirm to current year's classification.

2.7 Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.

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Mar 31, 2013

CORPORATE INFORMATION

Granules India Limited (the Company) is a public domiciled in India and incorporated under the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India. The Company is engaged in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) and Finished Dosages (FDs). The Company caters to both domestic and international markets.

1.1 EMPLOYEE STOCK OPTION PLAN

Granules India Equity Option Plan 2002

a) Pursuant to the decision of the shareholders at their meeting held on July 30, 2002, the Company has formulated an Employee Stock Option Plan 2002 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 391,082 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary Company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees), with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan would vest not less than one year and not more than five years under Grant I & II and two years under Grant III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on September 25,2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,006,307 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary Company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I and five years under Grant II & III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

1.2

The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11 October 1999 and its clarification vide Letter dated U August 2001 determined an eligibility of Rs.18412 lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 1U years commencing from 30 June 1998 to 29 June 2012 is deferred. The liability of Rs.75.24 Lakhs as at 31 March 2013 (Previous yearRs.75.24 lakhs) for the deferred Sales tax is shown under unsecured loans.

1.3

Sundry debtors include a sum of Rs.3,040.17 Lakhs (Previous YearRs.3,414.45 lakhs) due from Subsidiary Company.

1.4

During the year, the Company has capitalized borrowing costs of Rs.364.20 Lakhs (Previous Year Rs.215.69 Lakhs).

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Mar 31, 2011

1) Contingent liabilities not provided for in respect of:

(Rs. in Lakhs)

Particulars As at As at March 31, 2011 March 31, 2010

a) Claims against the Company not acknowledged as debts:

Customs duty 705.39 210.93

b) Estimated amount of contracts remaining to be executed 930.39 426.56 on Capital account and not provided for ( net of advances)

c) Letters of credit and Bank Guarantees issued by Banks 2,202.52 1,812.73

d) Bills discounted with banks 8,511.11 7,893.38

a) Term loans: Term loans from Banks are secured by equitable mortgage of Land and buildings and hypothecation of plant and machinery located at Jeedimetla, Gagillapur and Bonthapally on pari passu basis.

Term loans are further secured by second charge on hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables. The term loans from Kotak Mahindra Bank, Exim Bank and State Bank of Travancore are further secured by personal guarantee of the Managing Director.

b) Working capital facilities: The working capital facilities from Banks are secured by hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables on pari passu basis. The working capital facilities are further secured by a second charge on the fixed assets of the Company on pari passu basis.

c) Hire purchase loans are secured by hypothecation of the asset purchased.

8) Licensed, Installed capacity and actual production of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) (As certified by the Management)

11) During the year, the Company has capitalised borrowing costs of Rs. 44.92 lakhs (Previous year nil)

b) Assets: All the assets of the Company except the debtors and loans and advances amounting to Rs. 2,447.69 lakhs (Previous year Rs. 1,935.12 lakhs), are within India.

13) Related party disclosures required as per Accounting Standard (AS-18) on "Related party disclosures" issued by the Institute of Chartered Accountants of India, are as below:

a) Names of related parties and the description of relationship

SL. Name Relationship

No

(i) Granules USA Inc Wholly owned subsidiary Company

(ii) GIL Lifesciences Private Limited Wholly owned subsidiary Company

(iii) Granules Singapore Pte Ltd Wholly owned subsidiary Company

(iv) Granules-Biocause Pharmaceutical Co. Ltd Joint-Venture

(v) Key management personnel: Managing Director

Shri C. Krishna Prasad

(vi) Others:

Dr. C. Nageswara Rao Non Executive Chairman

Mr.CHarsha Executive Director

(vii) Mr.Vijay Ramanavarapu Consultant

14) Employee Benefits

a) Defined benefit plans:

The following table sets forth the status of the Gratuity Plan of the Company and the amounts recognised in the Balance Sheet and Profit and Loss Account:

15) Employee Stock Option Plan

Granules India Equity Option Plan 2002

a) Pursuant to the decision of the shareholders at their meeting held on July 30, 2002, the Company has formulated an Employee Stock Option Plan 2002 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 3,91,082 have been reserved to be issued to the eligible employees, with each option conferring a right upon the employee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee meeting at which the grant of options is approved.

d) Under the above Scheme, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan would vest not less than one year and not more than five years under Grant I & II and two years under Grant III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortised over the vesting period.

18) Sundry debtors include a sum of Rs. 4,150.83 lakhs (Previous year: Rs. 3,554.15 lakhs) due from a subsidiary Company

19) Amortisation of Miscellaneous Expenditure:

a) GDR issue expenses of Rs. 151.89 lakhs carried forward from earlier years are amortised over a period of 5 years commencing from the year in which the Projects commence commercial production. Tablet Block at Gagillapur had commenced commercial production during September 2008, hence the issue expenses are proportionately amortised.

b) The Company has implemented a Voluntary Retirement Scheme (VRS). The total cost of separation ofRs. 15.57 lakhs excluding Gratuity under the Gratuity scheme applicable to the employees is amortised over a period of 5 years.

20) The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated October 11, 1999 and its clarification vide Letter dated August 4, 2001 determined an eligibility of Rs. 184.12 lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 14 years commencing from June 30, 1998 to June 29, 2012 is deferred. The liability of Rs. 75.24 lakhs as at March 31, 2011 (Previous year Rs. 75.24 lakhs) for the deferred Sales tax is shown under unsecured loans.

21) In terms of accounting policy 11 for the accrual of export benefits, estimated benefits of Rs. 150.57 lakhs (Previous year Rs. 146.16 lakhs) have been taken into account under the DEEC/DEPB Schemes.

23) Previous year's figures have been regrouped / reclassified wherever necessary to confirm to current year's classification.

24) Figures in Balance Sheet and Profit & Loss account have been rounded off to the nearest Rupee and figures in Notes have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.

---

Mar 31, 2010

1) Contingent liabilities not provided for in respect of:

(Rupees in Lakhs)

As at As at March 31, 2010 March 31, 2009

a) Claims against the Company not acknowledged as debts: Customs duty 210.93 43.47

b) Estimated amount of contracts remaining to be executed on Capital account and not provided for (net of advances) 426.56 -

c) Letters of credit and Bank Guarantees issued by Bank 1,812.73 1,965.02

d) Bills discounted with banks 7,893.38 8,050.26



2) Secured Loans:

a) Term loans: Term loans from Banks are secured by equitable mortgage of Land and buildings and hypothecation of plant and machinery located at Jeedimetla, Gagillapur and Bonthapally on pari passu basis.

Term loans are further secured by second charge on hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables.

b) Working capital facilities: The working capital facilities from Banks are secured by hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables on pari passu basis. The working capital facilities are further secured by a second charge on the fixed assets of the Company.

c) All the above loans except loan from International Finance Corporation are further secured by personal guarantee of the Managing Director. The Company has requested Consortium Bankers to waive the personal guarantee of the Managing Director, which is under active consideration.

d) Hire purchase loans are secured by hypothecation of the asset purchased.

Note: Captive consumption of APIs is 3,075.00 MT and PFI is 238.37 (Previous Year API is 2,809.19 MT and that of PFI’s is 249.10) included in Production.

3) Details of Imported and Indigenous Raw Materials:

4) During the year, the Company has not capitalized any borrowing costs (Previous year Rs.1,044.89 lakhs were capitalized for Tablet facility at Gagillapur, grouped under Capital Work in Progress).

5) Segment reporting: The Company has only one business segment of "Pharmaceuticals". The secondary segment is geographical, which is given as under :

b) Assets: All the assets of the Company, except the debtors and loans and advances amounting to Rs.1,935.12 lakhs (Previous year Rs.1,518.18 lakhs), are within India.

6) Related Party Disclosures required as per Accounting Standard (AS-18) on “Related Party Disclosur Institute of Chartered Accountants of India, are as below:

a) Names of related parties and the nature of relationships:

Name Relationship

(i) Granules USA Inc Wholly owned subsidiary company

(ii) GIL Lifesciences Private Limited Wholly owned subsidiary company

(iii) Granules Singapore Pte Ltd Wholly owned subsidiary company

(iv)Granules-Biocause Pharmaceutical Co. Ltd Joint - Venture

(v) Key management personnel: Shri C. Krishna Prasad Managing Director

(vi) Others: Dr. C. Nageswara Rao Non Executive Chairman

Mr.C.Harsha Chief Marketing Officer

(vii) Mr.Vijay Ramanavarapu Consultant



7) Employee Benefits

a) Defined benefit plans:

*details of the scheme with Life Insurance Corporation of India

8) Granules India Equity Option Plan 2002

a) Pursuant to the decision of the shareholders at their meeting held on July 30, 2002, the Company has formulated an Employee Stock Option Plan 2002 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 3,91,082 have been reserved to be issued to the eligible employees, with each option conferring a right upon the employee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee meeting at which the grant of options is approved.

d) Under the above Scheme, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan would vest not less than one year and not more than five years under Grant I & II and two years under Grant III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

Granules India Limited – Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on September 25, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,002,857 have been reserved to be issued to the eligible employees, with each option conferring a right upon the employee to apply for one equity share.

c) No options were granted under the above Scheme. Hence, there is no deferred compensation cost to be amortized.

9) Sundry debtors include a sum of Rs. 3,554.15 lakhs (Previous year: Rs.4,552.51 lakhs) due from a subsidiary company.

10) Balances appearing under Sundry creditors, Capital WIP, Loans & Advances and debtors are subject to confirmation and / or reconciliation, if any.

11) Amortization of Miscellaneous Expenditure:

a) GDR issue expenses of Rs.151.89 lakhs carried forward from earlier years are amortized over a period of 5 years commencing from the year in which the Projects commence commercial production. Tablet Block at Gagillapur had commenced commercial production during September 2008; hence the issue expenses are proportionately amortized.

b) The Company has implemented a Voluntary Retirement Scheme (VRS). The total cost of separation of Rs.24.11 lakhs excluding Gratuity under the Gratuity scheme applicable to the employees is amortized over a period of 5 years.

c) In accordance with the SEBI (Employee Stock Option Scheme) Guidelines, 1999, the excess of market price of shares at the date of grant of options under Employee Stock Option Scheme, 2002 over the exercise price is to be treated as employee compensation. However, as the market price and the exercise price are the same, there is no employee compensation resulting out of the ESOPs granted during the year which is to be amortized over vesting period as per SEBI Guidelines.

12) The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated October 11, 1999 and its clarification vide Letter dated August 4, 2001 determined an eligibility of Rs.184.12 lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 14 years commencing from June 30, 1998 to June 29, 2012 is deferred. The liability of Rs.75.24 lakhs as at March 31, 2010 (Previous year Rs.75.24 lakhs) for the deferred Sales tax is shown under unsecured loans.

13) In terms of accounting policy 11 for the accrual of export benefits, estimated benefits of Rs.146.16 lakhs (Previous year Rs.168.74 lakhs) have been taken into account under the DEEC/DEPB Schemes.

14) Previous year figures are not comparable as current year consists of twelve months as against nine months in the previous year.

15) Figures in Balance Sheet and Profit & Loss account have been rounded off to the nearest Rupee and figures in Notes have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.