Notes to Accounts of Piramal Enterprises Ltd.

Mar 31, 2025

(i) During the year, there was no change in the business model under which the Company holds financial assets and therefore no reclassifications were made due to change in business model.

(ii) During the year, the Company has sold certain loans classified under amortised cost as part of Direct assignment classified under amortised cost for liquidity and recovery management strategy of the Company. Such sale of loans will not lead to change in business model as per the Company’s board approved policy and management’s evaluation of business model.

(iii) Loans or Advances in the nature of loans granted to promoters, directors, KMPs and related parties (other than as disclosed in note 45) as defined under Companies Act, 2013 either severally or jointly with any other person, that are:

(a) Repayable on demand - Nil (Previous year: Nil)

(b) Without specifying any terms or period of repayment - Nil (Previous year: Nil)

(iv) Refer note 45(3) for the receivables from Related Parties.

(v) Refer Note 49.3 for stage wise classification of loan assets and expected credit loss movement.

71 During the year, the Company disposed of its investments in certain wholly owned subsidiaries, namely Piramal Systems & Technologies Private Limited, Piramal Securities Limited, and PEL Finhold Private Limited, by way of sale to Piramal Investment Advisory Services Private Limited, wholly owned subsidiary, for an aggregate consideration of H19.11 crores. The transaction resulted in a net gain of H3.11 crores.

7.2 During the year ended March 31, 2024, Piramal Dutch IM Holdco BV (“PDIMBV”), a non-operative, non-material wholly owned subsidiary, had completed its liquidation, based upon the struck off confirmation received from Netherlands Chamber of Commerce on September 08, 2023. Accordingly, PDIMBV ceases to be a wholly-owned subsidiary of the Company.

7.3 During the year ended March 31, 2024, Piramal International (“PINT”), a non-operative, non-material wholly owned subsidiary, had completed its liquidation, based upon the struck off confirmation received from Director of Insolvency Service at Mauritius on September 21, 2023. Accordingly, PINT ceases to be a wholly-owned subsidiary of the Company.

7.4 Based on review of internal and external factors, the management has reassessed the assumptions, strategy and business model pertaining to its overall exposure in Real Estate fund management business. The recoverable amount of the Company’s investment in equity shares of Piramal Fund Management Private Limited of H63.61 crores as at March 31, 2024 has been determined based on a value in use calculation as per the requirements of Ind AS 36 determined by the Company. The projected cash flows used reflect the management’s assessment of the net cash flows available to the Company from the operations of the subsidiary. It was concluded that the fair value less costs of disposal did not exceed the value in use. As a result of this analysis, management had recognised an impairment charge of H44.65 crores towards investments in equity shares of the subsidiary (recorded under ‘Other expense’ in the statement of profit or loss); Fair value loss of H105 crores towards investments in preference shares of the said subsidiary (recorded under ‘Net gain on fair value changes’ in the statement of profit or loss) and expected credit loss allowance of H110.16 crores towards loans outstanding from the said subsidiary (recorded under ‘Impairment on financial instruments’ in the statement of profit or loss). Accordingly, the Company had recognised impairment loss / FVTPL loss / expected credit loss aggregating to H259.82 crores.

Further, during the year ended March 31, 2025, the Administrative Committee of the Board of Directors of the Company at its meeting held on March 26, 2025 approved conversion of i) Inter-Corporate Deposit (‘ICD’) having an outstanding amount of H115.87 crores provided to Piramal Fund Management Private

7 INVESTMENTS (Contd.)

Limited (‘PFMPL’), a wholly owned subsidiary of the Company and ii) 0.01% Cumulative Optionally Convertible Participative Preference Shares (‘OCRPS’) of H100/- each held by the Company in PFMPL of H115 crores, into equity shares of PFMPL.

Further, pursuant to the conversion of ICD and OCRPS as mentioned above, the FVTPL loss / expected credit loss aggregating to H226.98 crores have been reversed and reclassified as provision for impairment in subsidiary’s investment during the year ended March 31, 2025.

7.5 (i) Government securities of H8.00 crores (Previous Year: 5 crores) is pledge for triparty repo dealing

and settlement (TREPS).

(ii) During the current year, with effect from April 01, 2024, the Company changed its business model for managing its portfolio of government securities (G-Sec) Previously, the objective was to hold these loans to collect contractual cash flows. The new objective is to invest for the purpose of holding the securities to collect contractual cash flows and for selling on the basis of market conditions. This change reflects a strategic decision to enhance capital efficiency and liquidity. Consequently, the Company has re-classified these investments in portfolio of G-Sec of carrying amount of H446.16 crores on April 01, 2024 from amortised cost to FVTOCI measurement category. This reclassification did not result in any material fair value gain.

7.6 Mutual funds of H9.35 crores (Previous Year: Nil) are lien marked against securitised borrowings

7.7 During the year ending March 31, 2025, the Company has invested in 1,60,00,00,000 equity shares through a right issue at a face value of H10 each, aggregating to H1,600 crores into its wholly owned subsidiary, its wholly owned subsidiary, Piramal Finance Limited (Formerly known as “Piramal Capital & Housing Finance Limited”)

7.8 Viridis Infrastructure Investment Managers Private Limited has been strucked off March 19, 2025.

7.9 During the year ended March 31, 2024, the Company had sold its entire stake in Shriram Finance Limited for a net consideration of H4,788.58 crores resulting in profit of H854.68 crores which had been recorded under "Net gain on fair value changes.”

During the current year there was increase in scope/design of the Projects in progress pertaining to "Project - Right to Name” on account of which there has been change in timelines and project cost. Further, there are no intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan during the previous year.

Refer Note 41B for the contractual capital commitments for purchase of Property, plant & equipment. & Intangible assets

There has been no revaluation of property, plant and equipment and intangible assets during the year ended March 31, 2025 and March 31, 2024.

The Company holds the title deeds of all the immovable properties in its name.

The coupon rates for the above loans are 7.50% -10.70% p.a (Previous Year:7.99% - 10.40 % p.a))

The Company has utilised funds borrowed from banks and financial institutions for the purpose for which it was taken.

Refer Note 60 for assets hypothecated/mortgaged as securities against the Secured Borrowings

*“Movable* Assets" shall mean all standard Receivables of the Borrower (both present and future), including without limitation;

(a) Receivables arising out of lending loans and advances; and

(b) Receivables arising out of its investments (including non-convertible debenture excluding investments made in the nature of equity investments), inter-corporate deposits; and

(c) current assets and/or financial assets; save and except any Receivables arising out of its investments made or loan extended by the Borrower to its subsidiaries or Affiliates;

(b) The company has not allotted any equity shares as bonus shares.

(c) Shares bought back:

During the financial year ended March 31, 2024, the Board of Directors at its meeting held on July 28, 2023, approved buyback of equity shares of the company of up to 1,40,00,000 number of Equity Shares of face value of H2/- each representing 5.87% of the pre-buyback fully paid up equity shares at a price of H1,250 per share aggregating to H1,750 crores, through the tender offer route. Company extinguished those shares on September 18, 2023, and accordingly, the issued and paid up capital stands reduced by H2.80 Crores and Securities Premium by H1,747.20, respectively. Further, the Company has incurred buy back expenses of H12.91 crores, tax on buy-back of H405.22 crores and created Capital Redemption Reserve of H2.80 crores, which have been adjusted from Securities Premium.

(v) Terms and Rights attached to equity shares

The Company has one class of equity shares having a par value of H2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The Company uses hedging instruments as part of its management of interest rate risk associated with investment in floating rate bonds. For hedging interest rate risk, the Company uses interest rate swaps which is also designated as cash flow hedges. To the extent these hedges are effective; the changes in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amount recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects Statement of profit or loss (e.g. interest payments).

Share options outstanding account is created as required by Ind AS 102 ‘Share Based Payments’ on the Employee Stock Option Scheme. Stock Options outstanding represents amount of reserve created by recognition of compensation cost at grant date fair value on stock options vested but not exercised by employees and unvested stock options in the Statement of profit and loss in respect of equity-settled share options granted to the eligible employees of the Company and group in pursuance of the Employee Stock Option Plan.

During the year ended March 31, 2024, to cover for any possible uncertainties in the near future, the Company had created additional management overlay provision on certain real estate wholesale portfolio aggregating to H300 crores. This had been duly approved by the Sustainability and Risk Management Committee and the Board of Directors of the company. The total management overlay as on March 31, 2024 stood at H323 crores (including continuing provisions of H23 crores created in FY 2022-23)

Further, during year ended March 31, 2025, H213.95 crores has been released as per the policy laid down. Accordingly, as of March 31, 2025, the management overlay stood at H109.05 crores.

The amount of long term capital loss on which DTA is not created is H81.63 crores. This loss is allowable to be carried forward till AY 2033-34

The amount of remaining business loss on which DTA is not created is H496.71 crores. This loss is allowable to be carried forward till AY 2031-32

The tax rate used for the reconciliations above is the corporate tax rate of 25.17% for the financial year 2024-25 and 2023-24

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences.

39 EARNINGS PER SHARE (EPS)

In accordance with Ind AS 33 ‘Earnings per share’, Basic EPS is calculated by dividing the profit / loss for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS is calculated by dividing the profit / (loss) 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 of the Company.

41 CONTINGENT LIABILITIES AND COMMITMENTS
Particulars	As at	As at
	March 31, 2025	March 31, 2024
A. Contingent Liabilities:
Disputed tax demands
Income Tax
- where the Company is in appeal	230.79	208.88
- where the Department is in appeal	411.48	411.48
Sales tax	9.76	9.60
Goods and service tax
- where the Company is in appeal (refer note 3 below)	1,504.62	0.35
Central / State Excise / Service Tax / Customs	54.93	54.93
Stamp duty	9.37	9.37
Legal cases	3.23	3.23
B. Commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances):
- Related party (refer note 45(3))	218.40	201.38
- Others	1.72	3.62
(b) Undisbursed loan commitments including cancellable	3,044.77	3,800.34
commitments
(c) For Other Commitments towards investments (refer note 49.1)

Notes:

1 Vide Demand dated June 05, 1984, the Government has asked for payment to the credit of the Drugs Prices Equalisation Account, the difference between the common sale price and the retention price on production of Vitamin ‘A’ Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 which was not accepted by the Company. The Company was legally advised that the demand is untenable.

2 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

3 During the year, the Company received demand order of H1,502 crores relating to Slump Sale ‘Business Undertaking’of Pharma business by the Company to Piramal Pharma Limited in Financial Year 2021. The Company reasonably expects to have a favourable outcome of getting the Order set aside.

4 The Company’s pending cases are primarily proceedings pending with Income Tax, Goods & Services Tax & Central / State Excise / Service Tax / Customs authorities. The Company has also reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company is not in a position to ascertain the timing of possible cash outflow, however the outcome of these proceedings is not expected to have a materially adverse effect on its Standalone Financial Statements.

42 SEGMENT REPORTING

In accordance with Ind AS 108 ‘Operating Segments’, the Company is primarily engaged in the business of lending and investing. Also, based on the geographic information analysis, the Company’s revenues and assets by the country of domicile, all the Company’s revenues and assets are based in India. Accordingly, there are no separate reportable segmental information in accordance with Ind AS 108 - Operating Segments as notified u/s 133 of the Companies Act, 2013.

Further, no single customer represents 10% or more of the Company’s total revenue for the year ended March 31, 2025 and March 31, 2024.

43 INVESTMENT PROPERTY

Investment property, recorded at a carrying value of H675 crores (Previous Year: H675 crores), consists of land development rights for real estate property located in suburban in Mumbai, without any restriction on its realisability and is being held for capital appreciation and eventual monetization by exploring various options.

In accordance with Ind AS 113, the fair value of investment property is determined by the Company at H675 crores (Previous Year: H675 crores) following the risk-adjusted discounted cash flow method and based on Level 3 inputs from an independent accredited valuation expert, as defined under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 with relevant valuation experience for similar properties/ rights. The main inputs used in determining fair valuation are area available for development, location, construction cost, demand, weighted-average cost of capital and current real estate prices of real estate market at the location. Refer note 47 for Fair valuation approach and methodology.

As at March 31, 2024, the Company had reviewed the saleable area and other underlying assumptions based on current market conditions and discussions with the authorities. Resultantly, impairment loss of H660.31 crores had been recognised. Based upon the current market conditions considered in the valuation report obtained by the Company as at March 31, 2025, no further impairment was required to be recognised.

Direct operating expenses (including repairs and maintenance) arising from investment property that did not generate rental income during the year is Nil (Previous Year: H26.85 crores)

44 DISCLOSURE PURSUANT TO IND AS 116

The Company’s significant operating lease arrangements are mainly in respect of office premises. These lease arrangements are for a period range 3 to 5 years and are in most cases renewable by mutual consent, on mutually agreeable terms.

II. Disclosures for defined benefit plans based on actuarial valuation reports:

The Company has scheme for gratuity as part of post retirement plan. The Company has a defined benefit gratuity plan in India which is funded. The Company’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The fund is managed by Employees Group Gratuity Trusts which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

Gratuity is payable as per company’ scheme as detailed in the report.

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.

Salary escalation and attrition rate are considered as advised by the company; they appear to be in line with the industry practice considering promotion and demand and supply of the employees.

Maturity Analysis of Benefit Payments is undiscounted cash flows considering future salary, attrition & death in respective year for members as mentioned above

Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation.

Weighted Average Duration of the Defined Benefit Obligation is the weighted average of cash flow timing, where weights are derived from the present value of each cash flow to the total present value.

Any benefit payment and contribution to plan assets is considered to occur end of the year to depict liability and fund movement in the disclosures.

These plans typically expose the Company to the following actuarial risks:

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Interest risk

A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Asset Liability Matching Risk

The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk

Mortality Risk

Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.

47 FAIR VALUE DISCLOSURES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

The Company determines fair values of its financial instruments according to the fair value hierarchy as explained in Note 2(A)(iv).

This note describes the fair value measurement of financial instruments.

The Company’s valuation framework includes:

• Benchmarking prices against observable market prices or other independent sources;

• Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.

• Use of fair values as determined by the derivative counter parties.

These valuation models are subject to a validation before they become operational and are continuously calibrated. The Company ensures that the fair values are in compliance with the requirements of Indian Accounting Standards.

i . Investments in quoted instruments are fair valued using quoted prices or closing Net Asset Value

(NAV), with the appropriate adjustments as required by Ind AS 113.

ii. Investments in Alternative Investment Funds (including those covered in RBI Circular as explained in Note 51) and Security Receipts is valued basis the Net Asset Value (NAV), with appropriate adjustments as required by Ind AS 113. The Company obtains valuation of the Security Receipts on a 6-monthly basis as permitted under regulatory requirements.

iii. Valuation has been determined by using discounted cash flow method on the basis of the contractual cash flows. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the government securities rates from date of initial recognition to the reporting dates.

iv. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk. The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the government securities rates from date of initial recognition to the reporting dates.

v. Fair value of Government Securities, T-Bills, and CROMS has been determined based on market quotes or prices published by FBIL/CCIL

i nvestments in subsidiaries and joint venture companies are measured at cost less provision for impairment, if any and therefore the above disclosure is not applicable for the same.

*The fair value of investment and loans at amortised cost is gross of impairment/ECL provisions, excluding stage 3 which are shown are presented as net of impairment /ECL provision

48 CAPITAL MANAGEMENT

The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or combination of short term /long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The primary objectives of the Company’s capital management policy are to ensure that it complies with capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI’s capital adequacy guidelines, the Company is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I and Tier II capital, shall not be less than 15% of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet. The Company has complied with all regulatory requirements related to capital and capital adequacy ratios as prescribed by RBI. Refer Note 54 for capital adequacy and debt equity ratio. Refer Note 23.9 for dividend paid and proposed by the Company.

49 RISK MANAGEMENT

Risk Management is an integral part of the Company’s business strategy. The Risk Management oversight structure includes Committees of the Board and Management Committees. Company’s risk philosophy is to develop and maintain a healthy portfolio which is within its risk appetite and the regulatory framework. While the Company is exposed to various types of risks, the most important among them are liquidity risk, interest rate risk, credit risk, regulatory risk and fraud and operational risk. The measurement, monitoring and management of risks remain a key focus area for the Company.

The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with RBI and other regulators.

The Company’s risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with market best practices.

The Sustainability & Risk Management Committee of the Board (“SRMC”) reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyse risk exposure and provides oversight of risk across the organization. The SRMC nurtures a healthy and independent risk management function to inculcate a strong risk management culture in the Company and broadly perceives the risk arising from (i) credit risk, (ii) liquidity risk, (iii) interest rate risk and (iv) fraud risk and operational risk (v) regulatory risk

49.1 Liquidity risk

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy in line with RBI guidelines for NonBanking Financial Company. The Asset Liability Management Committee (ALCO) is responsible for the management of the companies funding and liquidity requirements. The company manages liquidity risk by maintaining sufficient cash and marketable securities, unutilised banking facilities, credit lines and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The liquidity risk and funding function are managed by the Company’s treasury team under liquidity risk management framework through various means like HQLA, liquidity buffers, sourcing of long-term funds, positive asset liability mismatch, keeping strong pipeline of sanctions from banks and assignment of loans to counter liquidity situation under the guidance of ALCO and Board.

The following tables detail the Company’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company is required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of March 31, 2025 and March 31, 2024 respectively has been considered.

RBI vide circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 has issued guidelines on liquidity risk framework for NBFCs. It covers various aspects of Liquidity risk management such as granular level classification of buckets in structural liquidity statement, tolerance limits thereupon, and liquidity risk management principles. The Company has a Asset Liabilities Management Guidelines which covers liquidity risk management policy, strategies and practices, liquidity coverage ratio (LCR), stress testing, maturity profiling, liquidity risk measurement, interest rate risk and liquidity risk monitoring framework.

The Company exceeds the regulatory requirement of LCR which mandate maintaining prescribed coverage of expected net cash outflows for a stressed scenario in the form of high quality liquid assets (HQLA). Refer note 62 (xxix) for LCR disclosures. LCR requirement have moved to 100% from December 01, 2024.

The Company has the undrawn credit lines available as at the end of the year (refer note 3)

The following tables details the Company’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of March 31, 2025 and March 31, 2024 respectively has been considered. The contractual maturity is based on the earliest date on which the Company may be required to pay.

49.2 Interest rate risk and sensitivity analysis

The Company is exposed to interest rate risk as it has assets and liabilities based on both fixed and floating interest rates. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

The exposure of the Company’s borrowings to the interest rate risk at the end of the year for variable rate borrowing is of H5,148.51 crores (Previous Year: H4,512.88 crores) and fixed rate borrowings are H3,302.35 crores (Previous Year: H3,358.16 crores)

49.3 Credit risk

The Company is exposed to credit risk through its lending activity. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

For both Wholesale & Retail business, a ‘Risk Management Policy’ is in place which oversees credit risk. The Company’s Risk management team has developed proprietary internal risk rating models to evaluate the credit risk for the loans and investments made by the Company. The output of traditional credit rating model is an estimate of probability of default. For wholesale business, the Company’s proprietary risk rating models are different from the traditional credit rating models as they integrate both probability of default and loss given default into a single model.

Credit risk management

Credit risk for retail is managed through models and credit policies for various products. Credit risk management for wholesale is achieved by considering various factors like:

• Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

• Industry & micro-market risk - This is an assessment of the riskiness of the industry and/or micro-market to which the borrower/project belongs

• Project risk - This is an assessment of the standalone project from which interest servicing and principal repayment is expected to be done.

• Structure risk - This is an assessment of the loan structure which is characterized by its repayment tenor, moratorium, covenants, etc.

• Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

• Micro Market- This is an assessment of the micro-market in which the underlying project is located

Each of the above components of the risk analysis are assigned a specific weight which differ based on type of loan. The weights are then used with the scores of individual components for conversion to a risk rating.

Further, a periodic review of the performance of the portfolio is also carried out by the risk team. The risk team adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned credit-rating agencies or mutual funds.

Provision for expected credit loss

The Company has assessed the credit risk associated with its financial assets for provision of Expected Credit Loss (ECL) as at the reporting dates. The Company makes use of various reasonable supportive forward looking parameters which are both qualitative as well as quantitative while determining the change in credit risk and the probability of default. These parameters have been detailed out in Note No. iii of Material Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired).

For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

The Company has developed a PD Matrix after considering some parameters which have been stated below:

For provisioning on the wholesale financial assets, the key parameters for various scorecards are highlighted as follows -Real Estate products (Construction Finance, Structured Debt, LRD) - (1) Developer Grade (2) Past Overdue History (3) Remaining Tenure (4) Sales and collection deviations (5) Stage of the project (6) Geography etc. Some of the Parameters for Non Real Estate products (Senior lending, mezzanine, project finance etc) - (1) Sponsor strength (2) Overdues (3) Average debt service coverage ratio (4) Regulatory Risk (5) Stability of EBITDA (6) Quality of underlying assets etc. Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, due to lack of default history to statistically substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD.

The Company uses ECL allowance for retail financial assets measured at amortised cost, which are not individually significant, and comprise of a large number of homogeneous loans that have similar characteristics. The expected credit loss is a product of exposure at default, probability of default (PD) and loss given default. Due to lack of sufficient internal data, the Company uses a mix of internal and external PD data from credit bureau agency (TransUnion for last 7 years) for potential credit losses. Further, the estimates from the above sources have been adjusted with forward looking inputs from anticipated change in future macro-economic conditions to comply with IndAS 109.

49.4 Regulatory risk:

The Company requires certain statutory and regulatory approvals for conducting business and failure to obtain retain or renew these approvals in a timely manner, may adversely affect operations. Any change in laws or regulations made by the government or a regulatory body that governs the business of the Company may increase the costs of operating the business, reduce the attractiveness of investment and/ or change the competitive landscape.

49.5 Fraud risk and operational risk:

Operational risk refers to the potential loss or disruption resulting from inadequate or failed internal processes, people, systems, or external events. It encompasses risks related to human error, technology failures, legal and compliance issues, and business continuity disruptions that can impact the operations of a finance company.

Operational Risk Management policy provides the structure and techniques that will facilitate consistent functioning of Operational Risk Management (ORM) framework. This Policy is focused on Operational Risk arising on account of People, Process, Systems, and external events. Company has Operational Risk Management Committee (ORMC) consisting of senior executives which monitors the ORM framework.

Fraud Risk Management policy focuses on prevention, detection, investigation of fraud and actions that Company should take in the event of fraud. Company has formulated Fraud Risk Management Committee (FRMC) consisting of senior executives. Company has also established a channel for employees to report frauds and related concern in timely manner.

The Company has a robust Risk Management framework to identify, measure and mitigate business risks and opportunities. This framework seeks to creates transparency, minimize adverse impact on the business strategy and enhance the Company’s competitive advantage. This risk framework thus helps in managing market, credit, operational and fraud risks and quantifies potential impact at a Company level.

The Company has an elaborate system of internal audit commensurate with the size, scale and complexity of its operations and covers funding operations, financial reporting, fraud control and compliance with laws and regulations.

49.6 Accounting for cash flow hedge

As at March 31, 2025, the Company has invested in floating rate government securities/bonds which are linked to treasury bill rate. For managing the interest rate risk arising from changes in treasury bill rate on such investments, the Company has entered into an interest rate swaps (IRS) for the investments. The Company has designated the IRS (hedging instrument) and the investment (hedged item) into a hedging relationship and applied hedge accounting.

Under the terms of the IRS, the Company receives interest at fixed rate and pays interest at the floating rate based on daily compounded overnight FBIL MIBOR. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying fixed rates) are not exactly matched, the Company uses the hypothetical derivative method to assess effectiveness. The interest cash flows of the hypothetical derivative and interest rate swap are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument (interest rate swap) and hedged item (hypothetical derivative) have values that generally move in the opposite direction. The mismatch between the hedged item and the hedging instrument is a key source of ineffectiveness.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

50 ASSETS HELD FOR SALE

(a) During the year ended March 31, 2023, on conclusion of a strategic review of its investments, the Company initiated identification and evaluation of potential buyers for its associate investments, Shriram Ll Holdings Private Limited, Shriram GI Holdings Private Limited and Shriram Investment Holdings Limited. The Company anticipated completion of the sale in foreseeable future and accordingly, investments amounting to H2,27754 crores in respect of these associates had been reclassified under ‘assets held for sale’

On reclassification, these investments have been measured at the lower of carrying amount and fair value less cost to sell.

(b) Shriram Investment Holdings Private Limited

In addition to point (a) above, during the year ended March 31, 2024, the Company has entered into share purchase agreement to sell its entire direct investment of 20% equity held in Shriram Investment Holdings Private Limited (formerly known as Shriram Investment Holdings Limited), classified as assets held for sale, to Shriram Ownership Trust, for a cash consideration of H1,439.89 crores. Accordingly, a gain of H870.69 crores is accounted in the books of the Company on completion of the transaction and classified under other operating income.

(c) Shriram Life Insurance Company Limited (''SLI'') and Shriram General Insurance Company Limited (''SGI'')

(i) Pursuant to the restructuring of Shriram Group in November 2022, the Company had received shares in multiple Shriram Group companies. It included Company''s ownership of 20% in both Shriram GI Holdings Private Limited and Shriram LI Holdings Private Limited (Holding Companies). On receipt of these shares, the Company''s intention was to dispose them off and hence were classified as ‘assets held for sale’. These Holding Companies own stakes in Shriram General Insurance Company Limited and Shriram Life Insurance Company Limited (Operating Companies) respectively. Further, during the year ended March 31, 2025, Shriram Group merged its Holding Companies into the respective Operating Companies, which has resulted in the Company''s holding direct stakes in these Operating Companies.

Investment in SLI and SGI continue to meet the conditions to be classified as "Assets held for Sale” as the management remains committed to its active plan and pursuit to monetise these investments in near future. During the current year, owing to certain corporate events in Shriram group and regulatory approvals, which were beyond the control of the Company, caused delay in the monetisation.

(ii) The Company received dividend of H12.68 crores (Previous Year:H9.88 crores) and H44.77 crores (Previous Year: H39.70 crores) from Shriram Life Insurance Company Limited and Shriram General Insurance Company Limited respectively during the year ended March 31, 2025.

(iii) Based on valuation reports of independent external valuer, no impairment provision was required for the year ended March 31, 2025 on these investments.

51 REGULATORY AIF PROVISIONS

During the year ended March 31, 2024, the Company made regulatory provision of H365.00 crores in respect of investments in Alternative Investment Funds (AIFs) pursuant to the RBI circular dated December 19, 2023 and further clarifications vide RBI circular dated March 27, 2024. The same was disclosed under ''exceptional items'' due to the nature and amount of provision. The Management remains confident of full recovery of the balance AIF investment.

During the year ended March 31, 2025, the Company has received H187.24 crores from AIF''s redemptions which has been disclosed under "Other Operating Income" as a reversal of regulatory provisions. As a result, the outstanding regulatory provisions stood at H177.76 crores as of March 31, 2025. Prior to the adoption of the financial statements, the Company sought and obtained an opinion from the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI). Based on the recovery pattern, the EAC has opined that gain from such recoveries from AIFs should not be presented as exceptional items, in the Statement of Profit and Loss.

53 ADDITIONAL REGULATORY INFORMATION

i) Quarterly Asset cover statements submitted to Debenture and Security Trustee’s are in agreement with the books of accounts.

ii) There are no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the current year & previous year.

iii) No proceeding has been initiated during the year or pending against the Company for holding any Benami property.

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

v) During the current year the Company has not traded or invested in Crypto currency or Virtual Currency.

vi) The Company have not been declared as a wilful defaulter by any bank or financial institution (as defined under Companies Act, 2013) or consortium thereof, in accordance with the guidance on wilful defaulters issued by Reserve Bank of India.

vii) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the act read with companies (Restriction on number of Layers) Rules, 2017.

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 not advanced or loaned or invested funds to any other person(s) or entity(is), 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.

x) 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,

xi) The Company has advanced loans/ ICDs to its subsidiary companies. The disclosures pursuant to Regulation 53(f) and (Regulation 34(3) read with para A of Schedule V to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Refer note 45(4))

xii) The Company has not granted loan or advance in nature of loans to Related parties which are repayable on demand or without specifying terms/period of repayment

xiii) There have been no delays in transferring amounts required do be transferred to the Investor Education and Protection Fund by the Company. In one instance, transfer of unpaid dividend for financial year 2016-17 aggregating to H2.75 crores which was due on October 01, 2024, was paid on November 04, 2024. The delay was on account of persistent technical issues on the MCA portal.

During the year ended March 31, 2024, the security receipts issued to the Company by the Asset Reconstruction Company (ARC) towards consideration for transfer of stressed loans have not been rated by the ARC since the prescribed time period of six months in accordance to Reserve Bank of India circular RBI/2021-22/154 DOR.SIG.FIN.REC 84/26.03.001/2021-22 dated February 10, 2022 has not elapsed from the date of acquisition of loans by the ARC.

56 COMPOSITE SCHEME OF ARRANGEMENT FOR MERGER

The Board of Directors of the Company, in its meeting dated May 08, 2024, approved the Composite Scheme of Arrangement amongst the Company, PFL (the wholly owned subsidiary of the Company) and their respective shareholders and creditors under Sections 230 to 232 read with Section 52 and Section 66 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder (‘Scheme’). The Scheme was modified by the Administrative Committee of the Board of Directors of the Company at its meetings held on October 26, 2024 and April 09, 2025. The appointed date of the Scheme is April 01, 2024. The proposed accounting of the Scheme is in compliance with the requirements of the applicable Indian Accounting Standards.

RBI approval on Scheme was received on April 08, 2025 and the Company on April 10, 2025 has filed Application with the National Company Law Tribunal, Mumbai Bench (‘NCLT’). The Scheme will be given effect to once the same is approved by the NCLT and filed with the regulatory authorities.

58 FOREIGN CURRENCY RISK MANAGEMENT

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function, as applicable.

The Company has defined strategies for addressing the risks for each category of exposures. The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

59 EMPLOYEE STOCK OPTION PLAN

The Company had formulated Employees’ Stock Ownership Plan - 2015 ("ESOP Scheme 2015”), under which, such eligible employees of the Company and its subsidiaries can exercise Stock Options that were vested in them under such ESOP Scheme 2015

The ESOP Scheme 2015 was approved by the Nomination and Remuneration Committee and the effective date of the same is March 31, 2023.

Under the ESOP Scheme 2015, 32,46,826 (Previous year: 18,21,487) stock options are granted on various grant dates, of which 17,61,032 (Previous Year: 14,04,690) stock options were granted to employees of group companies.

Method used to account for the Scheme

The Company recognises compensation expense relating to share based payments in accordance with Ind AS 102 Share-based Payment. Stock options granted by the Company are accounted as equity settled options. Accordingly, the estimated fair value of options granted that is determined on the date of grant, is charged to statement of Profit and Loss over the vesting period of options which is the requisite service period, with corresponding increase in the equity.

For Balance Sheet Reconciliation, refer note 23.8 of the financial statements

60 Loans, investments, cash & bank balances and investment property are mortgaged / hypothecated to the extent of H13,826.92 crores (Previous Year: H14,847.20 crores) as a security against secured borrowings as at March 31, 2025.

61 EVENTS AFTER REPORTING PERIOD

There have been no events other then referred in note 56 after the reporting date that require adjustment in these financial statements.

62 DISCLOSURES IN TERMS OF RBI/DOR/2023-24/106 DOR.FIN.REC.NO.45/03.10.119 /2023-24 - MASTER DIRECTION - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL COMPANY - SCALE BASED REGULATION) DIRECTIONS, 2023 DATED OCTOBER 19, 2023 (AS UPDATED). (Contd.)

Qualitative disclosures

1 The Company has implemented the guidelines on Liquidity Risk Management Framework prescribed by the Reserve Bank of India requiring maintenance of Liquidity Coverage Ratio (LCR), which aim to ensure that an NBFC maintains an adequate level of unencumbered HQLAs that can used to meet its liquidity needs for the next 30 days under a significantly severe liquidity stress scenario.

2 LCR = Stock of High-Quality Liquid Assets (HQLAs)/Total Net Cash Outflows over the next 30 calendar days

3 For the purpose of HQLA, the company considers: (1) Unencumbered government securities (2) Cash and Bank Balances, (3) Floating rate bonds, (4) CROMS, (5) TREPS and (6) Treasury Bills

4 The cash inflows includes amount based on contractual basis for Loans & Advances that are standard in nature.

5 Other Contingent Funding Obligations includes the undisbursed loan amount only of those loans which have non-cancellable clauses.

6 The Liquidity Risk Management framework of the Company is governed by its Asset Liability Management Policy approved by the Board. The Asset Liability Management Committee (ALCO) oversee the implementation of liquidity risk management framework of the Company and ensure adherence to the risk tolerance / limits set by the Board.

7 As prescribed by the RBI Guidelines, Total net cash outflows are arrived after taking into consideration total expected cash outflows minus total expected cash inflows for the subsequent month

8 Total net cash outflows over the next 30 days = Stressed Outflows - [Min (stressed inflows; 75% of stressed outflows)].

9 Total expected cash outflows (stressed outflows) are calculated by multiplying the outstanding balances of various categories or types of liabilities by 115% (15% being the rate at which they are expected to run off further or be drawn down)

10 Total expected cash inflows (stressed inflows) are calculated by multiplying the outstanding balances of various categories of contractual receivables by 75% (25% being the rate at which they are expected to under-flow)

---

Mar 31, 2024

6.1 During the year ended 31 March 2023, pursuant to Composite Scheme of Arrangement and Amalgamation in Shriram group, the Company received shares of Shriram Finance Limited (SFL), Shriram LI Holdings Private Limited (SLIH), Shriram GI Holdings Private Limited (SGIH) and Shriram Investment Holdings Limited (SIHL) against the shares of Shriram City Union Finance Limited(SCUF) and Shrilekha Business Consultancy Private Limited(Shrilekha). These shares have been initially recognised as per the requirement of Ind AS 109 as follows:

(a) Shares received against investment in SCUFresulted in gain of f 172.10 crores accounted in other comprehensive income.

(b) Shares received against investment in Shrilekha resulted in gain of f 2,857.44 crores accounted in profit and loss under "other operating income "

(c) Further, during the year ended 31 March 2024, the Company had sold its entire stake in Shriram Finance Limited for a net consideration of f 4,788.58 crores resulting in profit of f 854.68 crores which has been recorded under "Net gain / (loss) on fair value changes".

6.2 During the year ended 31 March 2023, the Company has divested its stake in Piramal Holdings (Suisse) SA (''PHSA''), a non-operative, non-material wholly owned subsidiary of the Company to Heather Investment in Commercial Enterprises & Management Co. LLC, UAE, for a consideration of f 1.65 crores. Consequent to the divestment, PHSA ceases to be a wholly-owned subsidiary of the Company.

6.3 During the year ended 31 March 2024, Piramal Dutch IM Holdco BV (" PDIM BV"), a non-operative, non-material wholly owned subsidiary, had completed its liquidation, based upon the struck off confirmation received by Netherlands Chamber of Commerce on 8 September 2023. Consequent to which, PDIMBV ceases to be a wholly-owned subsidiary of the Company.

6.4 During the year ended 31 March 2024, Piramal International ("PINT"), a non-operative, non-material wholly owned subsidiary, had completed its liquidation, based upon the struck off confirmation received by Director of Insolvency Service at Mauritius on 21 September 2023. Consequent to which, PINT ceases to be a wholly-owned subsidiary of the Company.

6.5 Based on review of internal and external factors, the management has reassessed the assumptions, strategy and business model pertaining to its overall exposure in Real Estate fund management business. The recoverable amount of the Company''s investment in equity shares of Piramal Fund Management Private Limited of f 63.61 crores as at 31 March 2024 has been determined based on a value in use calculation as per the requirements of Ind AS 36 determined by the Company. The projected cash flows used reflect the management''s assessment of the net cash flows available to the Company from the operations of the subsidiary. It was concluded that the fair value less costs of disposal did not exceed the value in use. As a result of this analysis, management has recognised an impairment charge of f 44.65 crores towards investments in equity shares of the subsidiary (recorded under ''Other expense'' in the statement of profit or loss); Fair value loss of f 105 crores towards investments in preference shares of the subsidiary (recorded under ''Net gain on fair value changes'' in the statement of profit or loss) and expected credit loss charge of f 110.16 crores towards loans outstanding from the subsidiary (recorded under ''Impairment on financial instruments'' in the statement of profit or loss).

6.6 Government securities of f 5 Crore (previous year Nil) is pledge for triparty repo dealing and settlement (TREPs)

6.7 During the year ending 31 March 2024, the Company has invested in 2,00,00,00,000 equity shares through a right issue at a face value of f 10 each, aggregating to f 2,000 crores into its wholly owned subsidiary, Piramal Capital & Housing Finance Ltd.

(b) The company has not allotted any equity shares as bonus shares.

(c) Shares bought back:

During the current year, The Board of Directors at its meeting held on 28 July 2023, approved buyback of equity shares of the company of up to 1,40,00,000 number of Equity Shares of face value of ? 2/- each representing 5.87% of the pre-buyback fully paid up equity shares at a price of ?1,250 per share aggregating to ?. 1,750 crores, through the tender offer route. Company extinguished those shares on 18 September 2023, and accordingly, the issued and paid up capital stands reduced by ? 2.80 Crores and Securities Premium by ? 1,747.20, respectively. Further, the Company has incurred buy back expenses of ? 12.91 crores, tax on buy-back of ? 405.22 crores and created Capital Redemption Reserve of ? 2.80 crores, which have been adjusted from Securities Premium account.

(v) Terms and Rights attached to equity shares

The Company has one class of equity shares having a par value of ? 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The Company uses hedging instruments as part of its management of interest rate risk associated with investment in floating rate bonds. For hedging interest rate risk, the Company uses interest rate swaps which is also designated as cash flow hedges. To the extent these hedges are effective; the changes in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amount recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects Statement of profit or loss (e.g. interest payments).

Share options outstanding account is created as required by Ind AS 102 ‘Share Based Payments¹ on the Employee Stock Option Scheme. Stock Options outstanding represents amount of reserve created by recognition of compensation cost at grant date fair value on stock options vested but not exercised by employees and unvested stock options in the Statement of profit and loss in respect of equity-settled share options granted to the eligible employees of the Company and group in pursuance of the Employee Stock Option Plan.

Retained earnings represents the surplus in profit and loss account and net amount of appropriations made to/from retained earnings.

On 8 May, 2024, a Dividend of f 10 per equity share (Face value of f 2/- each) was recommended by the Board of Directors which is subject to shareholders approval. If approved, there would be cash outflow amounting to approximately f 225 crores.

Loss of derecognition of financial assets consists of loss arising from sale of loans and advances as well as technical write off where the Company having no reasonable expectations of recovering the financial asset. The Company may apply enforcement activities to financial assets written off. (also refer note 48 (c))

During the year ended 31 March 2024, to accommodate any possible uncertainties in the near future, the Company has created additional management overlay provision on certain real estate wholesale portfolio amounting to ? 300 crore. This has been duly approved by the RMC and the Board of Directors. The total management overlay as on 31 March 2024 is ? 323 crore (Previous year ? 94.43 crores).

*lncluding exceptional item of f 397.83 crores in for the year ended 31 March 2023

The tax rate used for the reconciliations above is the corporate tax rate of 25.17% for the year 2023-24 and 2022-23

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carryforwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

32 (A) CONTINGENT LIABILITIES AND COMMITMENTS
Particulars		As at 31 March 2024	As at 31 March 2023
A.	Contingent Liabilities :
1.	Claim against the Company not acknowledged as debt
Vide Demand dated 5 June1984, the Government has asked for payment to the credit of the Drugs Prices Equalisation Account, the difference between the common sale price and the retention price on production of Vitamin ''A'' Palmitate (Oily Form) from 28 January 1981 to 31 March 1985 which is not accepted by the Company. The Company has been legally advised that the demand is untenable.		NA	NA
2.	Others
Disputed tax Demand
-where the Company is in appeal		208.88	324.20
-where the department is in appeal		411.48	321.05
Sales Tax		9.60	9.73
Goods and Service Tax		0.35	-
Central / State Exercise / Service Tax / Customs		54.93	54.93
Stamp Duty		9.37	9.37
Legal Case		3.23	3.23
B.	Commitments
(a)	Estimated amount of contracts remaining to be executed on capital account and not provided for	205.00	207.01
(b)	Undisbursed loan commitments including cancellable commitments	3,800.34	1,055.15
(c)	For Other Commitments towards investment (refer note 41.1)

The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses

The Company has also reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its Standalone Financial Statements.

34 SEGMENT REPORTING

In accordance with Ind AS 108 ''Operating Segments'', the Company is primarily engaged in the business of financing and accordingly there are no separate reportable segmental information as per Ind AS 108.

No single customer represents 10% or more of the Company''s total revenue for the year ended 31 March 2024 and 31 March 2023. Based on the geographic information analyses the Company''s revenues and assets by the country of domicile, all the Company''s revenues and assets other than financial assets and tax assets are based in India.

35 INVESTMENT PROPERTY

Investment property, recorded at a carrying value of ? 675 crores (Previous Year: ? 1,335.31 crores), consists of land development rights for real estate property located in suburban in Mumbai, without any restriction on its realisability and is being held for capital appreciation and eventual monetization by exploring various options.

In accordance with Ind AS 113, the fair value of investment property is determined by the Company at ? 675 crores (Previous Year: ? 1,471 crores) following the risk-adjusted discounted cash flow method and based on Level 3 inputs from an independent accredited valuation expert, as defined under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 with relevant valuation experience for similar properties/rights. The main inputs used in determining fair valuation are area available for development, location, construction cost, demand, weighted-average cost of capital and current real estate prices of real estate market at the location.Refer note 39 for Fair valuation approach and methodology.

As at 31 March 2024, the Company has reviewed the the saleable area and other underlying assumptions based on current market conditions and discussions with the authorities. Resultantly, an impairment loss of ? 660.31 crores (Previous Year: NIL) has been recognised. Direct operating expenses (including repairs and maintenance) arising from investment property that did not generate rental income during the year is ? 26.85 crores (Previous Year : Nil)

36 DISCLOSURE PURSUANT TO IND AS 116

The Company has office premises on lease basis. The lease period range from 3 years to 5 years. Details for the lease as lessee are as under:

Gratuity is payable as per company'' scheme as detailed in the report.

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation. Salary escalation and attrition rate are considered as advised by the company; they appear to be in line with the industry practice considering promotion and demand and supply of the employees.

Cash flow projection is done considering future salary, attrition and death in respective year for members as mentioned above.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

39 FAIR VALUE DISCLOSURES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

The Company determines fair values of its financial instruments according to the fair value hierarchy as explained in Note 2 (iv).

This note describes the fair value measurement of both financial and non-financial instruments.

The Company''s valuation framework includes:

• Benchmarking prices against observable market prices or other independent sources;

• Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.

• Use of fair values as determined by the derivative counter parties.

Valuation methodologies adopted

i. Investments in quoted instruments are fair valued using quoted prices or closing Net Asset Value (NAV), with appropriate adjustments as required by Ind AS 113.

ii. Investments in Alternative Investment Funds (other than those covered in RBI Circular as explained in Note 44) and Security Receipts is valued basis the Net Asset Value (NAV), with appropriate adjustments as required by Ind AS 113. The Company obtains valuation of the Security Receipts on a 6-monthly basis as permitted under regulatory requirements.

iii. Valuation has been determined by using discounted cash flow method on the basis of the contractual cash flows. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the government securities rates from date of initial recognition to the reporting dates.

iv. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk. The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the government securities rates from date of initial recognition to the reporting dates.

# The Company has not disclosed the fair value of cash & cash equivalents, bank balances, other financial assets, trade payables and other financial liabilities, because their carrying amounts are a reasonable approximation of fair value.

Investments in subsidiaries and joint venture companies are measured at cost less provision for impairment, if any and therefore the above disclosure is not applicable for the same.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

For Non-convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3^rd party vendor for these data have been used.

The current market borrowing rates of the Company are compared with relevant market matrices as at the reporting dates to arrive at the discounting rates

For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3^rd party vendor for these data have been used.

For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach- comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

e) Sensitivity for FVTPL Instruments measured at Level 3

The following table summarises the valuation techniques together with the significant unobservable inputs used to measure Level 3 financial assets. Relationships between unobservable inputs (discount rate and projected cash flows) have been incorporated in this table.

Discount rates used when calculating the present value of future cash flows are adjusted to spreads to the benchmark rate for discounting the future expected cash flows. Hence, these spreads reduce the net present value of an asset.

Cash flows estimated reflect the estimated realisation to the Company. Realisation rates for less liquid instruments are usually unobservable and are estimated based on historical data.

40 CAPITAL MANAGEMENT

The Company''s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or combination of short term /long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio. The primary objectives of the Company''s capital management policy are to ensure that it complies with capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI''s capital adequacy guidelines, the Company is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I and Tier II capital, shall not be less than 15% of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet.

The Company has complied with all regulatory requirements related to capital and capital adequacy ratios as prescribed by RBI. Refer note 47 for capital adequacy and related disclosures. Refer note 20.10 for dividend paid and proposed by the Company.

41 RISK MANAGEMENT

Risk Management is an integral part of the Company''s business strategy. The Risk Management oversight structure includes Committees of the Board and Management Committees. Company''s risk philosophy is to develop and maintain a healthy portfolio which is within its risk appetite and the regulatory framework. While the Company is exposed to various types of risks, the most important among them are liquidity risk, interest rate risk, credit risk, regulatory risk and fraud and operational risk. The measurement, monitoring and management of risks remain a key focus area for the Company.

The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with RBI and other regulators.

The Company''s risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with market best practices.

The Sustainability & Risk Management Committee of the Board ("SRMC") reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyse risk exposure and provides oversight of risk across the organization. The SRMC nurtures a healthy and independent risk management function to inculcate a strong risk management culture in the Company and broadly perceives the risk arising from (i) credit risk, (ii) liquidity risk, (iii) interest rate risk and (iv) fraud risk and operational risk (v) regulatory risk

41.1Liquidity risk

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy in line with RBI guidelines for Non-Banking Financial Company. The Asset Liability Management Committee (ALCO) is responsible for the management of the companies funding and liquidity requirements. The company manages liquidity risk by maintaining sufficient cash and marketable securities, unutilised banking facilities, credit lines and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The liquidity risk and funding function are managed by the Company''s treasury team under liquidity risk management framework through various means like HQLA, liquidity buffers, sourcing of long-term funds, positive asset liability mismatch, keeping strong pipeline of sanctions from banks and assignment of loans to counter liquidity situation under the guidance of ALCO and Board.

The following tables detail the Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of 31 March 2024 and 31 March 2023 respectively has been considered. The contractual maturity is based on the earliest date on which the Company may be required to pay.

RBI vide circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 has issued guidelines on liquidity risk

framework for NBFCs. It covers various aspects of Liquidity risk management such as granular level classification of buckets in structural liquidity statement, tolerance limits thereupon, and liquidity risk management principles. The Company has a Asset Liabilities Management Guidelines which covers liquidity risk management policy, strategies and practices, liquidity coverage ratio (LCR), stress testing, maturity profiling, liquidity risk measurement, interest rate risk and liquidity risk monitoring framework. The Company exceeds the regulatory requirement of LCR which mandate maintaining prescribed coverage of expected net cash outflows for a stressed scenario in the form of high quality liquid assets (HQLA). Refer note 54 (xxix) for LCR disclosures. LCR requirement have moved to 85% from 1 December 2023 and would be moving to 100% by December 2024.

The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.

41.2 Interest rate risk and sensitivity analysis

The Company is exposed to interest rate risk as it has assets and liabilities based on both fixed and floating interest rates. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

The exposure of the Company''s borrowings to the interest rate risk at the end of the year for variable rate borrowing is of carrying value ? 4,512.88 crores (31 March 2023 ? 5,300.80 crores) and fixed rate borrowings are ? 3,358.66 crores(31 March 2023- ? 3,414.46 crores)

Refer note 41.6 for interest rate risk on cash flow hedge

41.3Credit risk

The Company is exposed to credit risk through its lending activity. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

For both Wholesale & Retail business, a ''Risk Management Policy'' is in place which oversees credit risk. The Company''s Risk management team has developed proprietary internal risk rating models to evaluate the credit risk for the loans and investments made by the Company. The output of traditional credit rating model is an estimate of probability of default. For wholesale business, The Company''s proprietary risk rating models are different from the traditional credit rating models as they integrate both probability of default and loss given default into a single model.

Credit risk management

Credit risk for retail is managed through models and credit policies for various products. Credit risk management for wholesale is achieved by considering various factors like :

• Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

• Industry & micro-market risk - This is an assessment of the riskiness of the industry and/or micro-market to which the borrower/ project belongs

• Project risk - This is an assessment of the standalone project from which interest servicing and principal repayment is expected to be done.

• Structure risk - This is an assessment of the loan structure which is characterized by its repayment tenor, moratorium, covenants, etc.

• Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

• Exit - This is an assessment of the liquidity of the loan or investment.

Each of the above components of the risk analysis are assigned a specific weight which differ based on type of loan. The weights are then used with the scores of individual components for conversion to a risk rating.

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned credit-rating agencies or mutual funds.

Provision for expected credit loss

The Company has assessed the credit risk associated with its financial assets for provision of Expected Credit Loss (ECL) as at the reporting dates. The Company makes use of various reasonable supportive forward looking parameters which are both qualitative as well as quantitative while determining the change in credit risk and the probability of default. These parameters have been detailed out in Note No.iii of

Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

For the year ended 31 March 2024 and 31 March 2023 the Company has developed a PD Matrix after considering some parameters as stated below :

For provisioning on the wholesale financial assets, the key parameters for various scorecards are highlighted as follows-Real Estate products (Construction Finance, Structured Debt, LRD)- (1) Developer Grade (2) Past Overdue History (3) Remaining Tenure (4) Status from monthly Asset Monitoring report (5) Stage of the project (6) Geography etc . Some of the Parameters for Non Real Estate products (Senior lending, mezzanine, project finance etc)- (1) Sponsor strength (2) Overdues (3) Average debt service coverage ratio (4) Regulatory Risk (5) Stability of EBITDA (6) Quality of underlying assets etc. Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, due to lack of default history to statistically substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD. The Company also maintains Expected Credit Loss for undisbursed limits. The Company uses ECL allowance for retail financial assets measured at amortised cost, which are not individually significant, and comprise of a large number of homogeneous loans that have similar characteristics. The expected credit loss is a product of exposure at default, probability of default and loss given default. Due to lack of sufficient internal data, the Company uses external data from credit bureau agency (TransUnion upto Dec-22) for potential credit losses. Further, the estimates from the above sources have been adjusted with forward looking inputs from anticipated change in future macro-economic conditions to comply with IndAS 109.

41.4Regulatory risk:

The Company requires certain statutory and regulatory approvals for conducting business and failure to obtain retain or renew these approvals in a timely manner, may adversely affect operations. Any change in laws or regulations made by the government or a regulatory body that governs the business of the Company may increase the costs of operating the business, reduce the attractiveness of investment and / or change the competitive landscape.

41.5Fraud risk and operational risk:

Operational risk refers to the potential loss or disruption resulting from inadequate or failed internal processes, people, systems, or external events. It encompasses risks related to human error, technology failures, legal and compliance issues, and business continuity disruptions that can impact the operations of a finance company.

Operational Risk Management policy provides the structure and techniques that will facilitate consistent functioning of Operational Risk Management (ORM) framework. This Policy is focused on Operational Risk arising on account of People, Process, Systems, and external events. Company has Operational Risk Management Committee (ORMC) consisting of senior executives which monitors the ORM framework.

Fraud Risk Management policy focuses on prevention, detection, investigation of fraud and actions that Company should take in the event of fraud. Company has formulated Fraud Risk Management Committee (FRMC) consisting of senior executives. Company has also established a channel for employees to report frauds and related concern in timely manner.

The Company has a robust Risk Management framework to identify, measure and mitigate business risks and opportunities. This framework seeks to creates transparency, minimize adverse impact on the business strategy and enhance the Company''s competitive advantage. This risk framework thus helps in managing market, credit, operational and fraud risks and quantifies potential impact at a Company level.

The Company has an elaborate system of internal audit commensurate with the size, scale and complexity of its operations and covers funding operations, financial reporting, fraud control and compliance with laws and regulations.

41.6Accounting for cash flow hedge

As at 31 March 2024, the Company has invested in floating rate government securities/bonds which are linked to treasury bill rate. For managing the interest rate risk arising from changes in treasury bill rate on such investments, the Company has entered into an interest rate swaps (IRS) for the investments. The Company has designated the IRS (hedging instrument) and the investment (hedged item) into a hedging relationship and applied hedge accounting.

Under the terms of the IRS, the Company receives interest at fixed rate and pays interest at the floating rate based on daily compounded overnight FBIL MIBOR. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying fixed rates) are not exactly matched, the Company uses the hypothetical derivative method to assess effectiveness. The interest cash flows of the hypothetical derivative and interest rate swap are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument (interest rate swap) and hedged item (hypothetical derivative) have values that generally move in the opposite direction. There was no such contract outstanding as on 31 March 2023.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

42 COMPOSITE SCHEME OF ARRANGEMENT - DISCONTINUED OPERATIONS

Disposal Of Pharmaceutical Business

The board of directors of the Company, at their meeting held on 7 October 2021, had inter alia, approved the composite Scheme of Arrangement under applicable provisions of the Companies Act, 2013 between Company, Piramal Pharma Limited (''PPL''), Convergence Chemicals Private Limited (''CCPL''), Hemmo Pharmaceuticals Private Limited (''HPPL''), PHL Fininvest Private Limited (''PFPL'') and their respective shareholders and creditors (''Scheme''). The Scheme inter alia provides for the following:

(i) the transfer by way of demerger of the Demerged Undertaking (as set out in the Scheme) from Company to PPL, a subsidiary of PEL

(ii) the amalgamation of CCPL and HPPL (both being wholly owned subsidiaries of PPL) into PPL.

The Scheme was approved by the Hon''ble National Company Law Tribunal on 12 August 2022. Accordingly, the Scheme became operative from Appointed date i.e. 1 April 2022.

The composite scheme of arrangement ("the Scheme") for demerger of Pharma undertaking and merger of PHL Fininvest Private Limited, a wholly owned subsidiary company, into the Company was approved by the Hon''ble National Company Law Tribunal on 12 August 2022. Accordingly, the Scheme became operative from Appointed date i.e. 1 April 2022.

The Company had given effect to accounting as follows:

All assets and liabilities pertaining to demerged Pharma undertaking had been classified as non-cash assets held for transfer to Piramal Pharma Limited / shareholders as on 1 April 2022 being the appointed date. The difference between book values of the assets and liabilities transferred is recognised as gains in Profit and loss account amounting to ? 11,459.96 crores as per the requirements of Appendix A to Ind AS 10. At the date of approval of the Scheme, the liability was subsequently remeasured resulting in remeasurement gain of ? 759.76 crores. The corresponding aggregate charge was recognised in retained earnings (reserve) as per the requirements of the aforesaid Ind AS. The nature of the gain (including remeasurement gain) being non-recurring in nature was classified as exceptional item by the Company. As per the requirements of Ind AS 105, the income and expense pertaining to Pharma business in the previous comparable periods were presented in a separate line item - discontinued operations.

Merger of PHL Fininvest Private Limited

Pursuant to above composite scheme of arrangement, all assets and liabilities of PHL Fininvest Private Limited had been recorded at book values as appearing in the financial statement after eliminating all inter-company transactions and balances. All prior period comparative information was restated as per the requirements of Appendix A to Ind AS 103. Accordingly, capital reserve of ? 4.66 crores was recognised by the Company.

43 ASSETS HELD FOR SALE

(a) During the year ended 31 March 2023, on conclusion of a strategic review of its investments, the Group initiated identification and evaluation of potential buyers for its associate investments, Shriram Ll Holdings Private Limited, Shriram GI Holdings Private Limited and Shriram Investment Holdings Limited. The Company anticipated completion of the sale in foreseeable future and accordingly, investments amounting to ? 2,277.54 crores in respect of these associates had been reclassified under ''assets held for sale'' On reclassification, these investments have been measured at the lower of carrying amount and fair value less cost to sell.

(b) Shriram Investment Holdings Private Limited

In addition to point (a) above, during the year ended 31 March 2024, the Company has entered into share purchase agreement to sell its entire direct investment of 20% equity held in Shriram Investment Holdings Private Limited (formerly known as Shriram Investment Holdings Limited), classified as assets held for sale, to Shriram Ownership Trust, for a cash consideration of ?1,439.89 crores. Accordingly, a gain of ? 870.69 crores is accounted in the books of the Company on completion of the transaction and classified under other operating income.

(c) Shriram Ll Holdings Private Limited and Shriram GI Holdings Private Limited

(i) Pursuant to the restructuring of Shriram Group in November 2022, the Company had received shares in multiple Shriram Group companies, as explained in note 6.1 of the financial statements. It includes Company''s ownership of 20% in both Shriram GI Holdings Private Limited and Shriram LI Holdings Pvt Limited (Holding Companies). On receipt of these shares, the Company''s intention was to dispose them off and hence were classified as ''assets held for sale''. These Holding Companies own stakes in Shriram General Insurance Company Limited and Shriram Life Insurance Company Limited (Operating Companies) respectively.

Subsequently, Shriram Group has proposed to merge Holding Companies into the respective Operating Companies, which will result in the Company''s holding direct stakes in these Operating Companies. Based on discussions with prospective buyers, the feedback is that there is a preference towards owning direct stakes in the Operating Companies rather than in Holding Companies. Hence, these prospective buyers are inclined to wait for the said merger process to get completed. However, this merger process is subject to the approval from regulators particularly IRDA.

In light of the above, it has been decided to wait for the completion of the said merger process. However, the Company remains committed to its plans to divest its stakes in these non-core investments and does not intend to hold these investments in the long term. Accordingly these investments are classified as held for sale under Ind AS 105.

(ii) The Company received dividend of ? 9.88 crores and ? 39.70 crores from Shriram Ll Holdings Private Limited and Shriram GI Holdings Private Limited respectively during the year ended 31 March 2024.

(iii) Based on valuation reports of independent external valuer, no impairment provision was required for the year ended 31 March 2024 on these investments.

44 REGULATORY AIF PROVISIONS

During the year ended 31 March 2024, the Company made regulatory provision of ? 365.00 crores in respect of investments in Alternative Investment Funds (AIFs) pursuant to the RBI circular dated 19 December 2023 and further clarifications vide RBI circular dated 27 March 2024. The same has been disclosed under exceptional items due to the nature and amount of provision. The Management remains confident of full recovery of the balance AIF investment.

46 ADDITIONAL REGULATORY INFORMATION

i) Quarterly Asset cover statements submitted to Debenture and Security Trustee''s are in agreement with the books of accounts.

ii) There are no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the current year & previous year.

iii) No proceeding has been initiated during the year or pending against the Company for holding any Benami property.

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

v) During the current year the Company has not traded or invested in Crypto currency or Virtual Currency.

vi) The Company have not been declared as a wilful defaulter by any bank or financial institution (as defined under Companies Act, 2013) or consortium thereof, in accordance with the guidance on wilful defaulters issued by Reserve Bank of India.

vii) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the act read with companies (Restriction on number of Layers) Rules, 2017.

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 not advanced or loaned or invested funds to any other person(s) or entity(is), 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.

x) The Company, has not received any fund from any person(s) or entity(is), 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,

50 FOREIGN CURRENCY RISK MANAGEMENT

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

51 The previous year''s figures have been regrouped / reclassified wherever necessary, to conform to the current year''s classification / presentation.

52 EMPLOYEE STOCK OPTION PLAN

The Company had formulated Employees'' Stock Ownership Plan- 2015 ("ESOP Scheme 2015"), under which, such eligible employees of the Company and its subsidiaries can exercise Stock Options that were vested in them under such ESOP Scheme 2015

The ESOP Scheme 2015 were approved by the Nomination and Remuneration Committee and the effective date of the same is 31 March 2023

Under the ESOP Scheme 2015, 18,21,487 (Previous year 7,70,022 ) stock options are granted on various grant dates, of which 14,04,690 (Previous year 5,88,194) stock options were granted to employees of group companies.

53 The Board of Directors of Piramal Capital & Housing Finance Limited (""PCHFL""), in its meeting dated 8 May 2024, has approved a Composite Scheme of Arrangement ("Scheme") under sections 230 to 232 read with section 66 and section 52 and other applicable provisions of the Companies Act, 2013 for amalgamation of the Company with PCHFL as a reverse merger. This amalgamation is set to take effect from appointed date i.e. 1 April 2024, by way of reverse merger by absorption pursuant to a scheme of arrangement under the provisions of Sections 230 - 232 read with section 66 and section 52 and other relevant provisions of the Companies Act, 2013 (including the rules thereunder).

The proposed scheme is subject to various approvals, including the approval from shareholders, lenders, regulators, the National Company Law Tribunal ("NCLT") and other regulatory/statutory approvals, as may be required. The proposed amalgamation aims to simplify group structure including the regulatory developments and reforms including higher regulatory standards for NBFCs, optimize capital, strengthen the balance sheet, and enhance operational and financial effectiveness.

(xvi) Structured product issued

The Company has not issued any structured product during the current and previous year ended 31 March 2024 and 31 March 2023 respectively.

(xvii) Summary of Significant Accounting Policies

The accounting policies regarding key areas of operations are disclosed in note 2 to the standalone financial statements.

For the purpose of calculating CRAR, below points have been considered:

1 Provision is calculated as per the Expected Credit loss (''ECL'') model as given in Note 2 (v) of the standalone financial statements.

2 Stage 3 assets are considered as NPA and Stage 1 and 2 assets are considered as Standard assets.

3 The amortised cost of loans and advances and Investments and fair value in case of FVTPL instruments as per Ind AS as given in Note 2 (iii) of the standalone financial statement.

4 Amount for contingent liabilities and undrawn committed credit lines under non-funded exposures have been considered as per note 32 (a) of the standalone financial statements.

5 During the course of inspection for the position as on 31 March 2023, the Reserve Bank of India ("RBI") had observed certain deficiencies pertaining to the adequacy of the Company''s system and documentation with respect to direct assignment transactions, particularly, non-compliance with Guidelines on Transfer of Loans Exposures dated 24 September 2021. Consequentially, the RBI had increased the capital weightage to the Company''s loans purchased from other financial entities (other than PCHFL) through direct assignment by way of additional risk weighted assets ("RWAs") at 567%. Subsequently, on account of remedial measures taken by the Company and submission of compliance thereof, RBI vide their email dated 14 March 24 has accepted the Company''s submission and also allowed the Company to maintain the capital charge on risk weighted assets as per extant RBI guidelines for the acquired loans which are transferred from other financial entities.

Based on this, as on 31 March 2024, the Company has calculated CRAR using the capital weightage as per the extant RBI guidelines and directives. Management believes that the Company continues to be compliant with RBI guidelines on Transfer of Loans Exposures dated 24 September 2021.

Note:

1 Amount disclosed represents the amortised cost of instruments and Investments and fair value in case of FVTPL instruments as per Ind AS as given in Note 2 (ii) of the standalone financial statement.

2 Value of Investments includes Investment Property and Assets held for Sale.

3 Investment in Non Convertible Debentures in the nature of Loans and Advances have been considered under Loans & Advances for the purpose of above disclosures.

(xx) Details of Single Borrower Limit (SBL)/Group Borrower Limit (GBL) exceeded

The Company has not exceeded the prudential exposure limits during the current and previous year.

(xxi) Unsecured advances

Refer note 5 for details related to unsecured loans. The Company has not issued any advances against the right, licence and authority as collateral.

(xxii) Remuneration of non-executive Directors

Details of remuneration of directors disclosed in Report on corporate governance.

(xxiii) Management Discussion and Analysis (MD&A)

Details of Management Discussion and Analysis disclosed in Annual report.

(xxiv) Net profit or loss for the period, prior period items and changes in accounting policies

There are no prior period items that have impact on the current year''s profit and loss.

(xxv) Revenue recognition

There have been no instances in which revenue recognition has been postponed pending the resolution of significant uncertainties.

(xxvi) Consolidated financial statements (CFS)

The Company has consolidated financial statement of its all the underlying subsidiaries, joint ventures and associate companies as permitted / required by accounting standards.

Qualitative disclosures

1 The Company has implemented the guidelines on Liquidity Risk Management Framework prescribed by the Reserve Bank of India requiring maintenance of Liquidity Coverage Ratio (LCR), which aim to ensure that an NBFC maintains an adequate level of unencumbered HQLAs that can used to meet its liquidity needs for the next month under a significantly severe liquidity stress scenario.

2 LCR = Stock of High-Quality Liquid Assets (HQLAs)/Total Net Cash Outflows over the next 30 calendar days.

3 For the purpose of HQLA, the company considers: (1) Unencumbered government securities (2) Cash and Bank Balances and (3) Treasury Bills

4 Since the Company commenced it''s NBFC business from 18 August 2022, hence the company has prepared the LCR disclosure basis simple averages of balances from 18 August 2022.

5 The cash inflows includes amount based on contractual basis for Loans & Advances that are standard in nature.

6 Other Contingent Funding Obligations includes the undisbursed loan amount only of those loans which have non-cancellable clauses.

7 The Liquidity Risk Management framework of the Company is governed by its Asset Liability Management Policy approved by the Board. The Asset Liability Management Committee (ALCO) oversee the implementation of liquidity risk management framework of the Company and ensure adherence to the risk tolerance / limits set by the Board.

8 As prescribed by the RBI Guidelines, Total net cash outflows are arrived after taking into consideration total expected cash outflows minus total expected cash inflows for the subsequent month.

9 Total net cash outflows over the next 30 days = Stressed Outflows- [Min (stressed inflows; 75% of stressed outflows)].

10 Total expected cash outflows (stressed outflows) are calculated by multiplying the outstanding balances of various categories or types of liabilities by 115% (15% being the rate at which they are expected to run off further or be drawn down).

11 Total expected cash inflows (stressed inflows) are calculated by multiplying the outstanding balances of various categories of contractual receivables by 75% (25% being the rate at which they are expected to under-flow).

12 The company has maintained healthy Liquidity Coverage Ratio (LCR) for the time period under consideration. The company had LCR of 718.67% as of March 31, 2024, 661.29% as of 31 December 2023, 490.69% as of 30 September 2023 and 617.64% as of 30 June 2023 which is higher than LCR mandated by RBI. The company regularly reviews the maturity position of assets and liabilities and liquidity buffers, and ensures maintenance of sufficient quantum of High Quality Liquid Assets.

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Mar 31, 2023

For previous year

a) The credit period on sale of goods generally ranged from 7 to 150 days

b) The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2023 of Rs. Nil (as at March 31, 2022 of 156.62 Crores), the top 3 customers of the Company represent the balance of Rs. Nil as at March 31, 2023 (as at March 31, 2022 - 57.91 Crores). as at March 31, 2022 there were five customers who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience, adjusted for forward looking information including the likelihood of increased credit risk considering emerging situations due to COVID-19 based on external sources of information. 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. The provision matrix at the end of the reporting period is as follows:

Notes :-

6.1 During the year, pursuant to Composite Scheme of Arrangement and Amalgamation in Shriram group, the Company received shares of Shriram Finance Limited (SFL), Shriram Ll Holdings Private Limited (SLIH), Shriram GI Holdings Private Limited (SGIH) and Shriram Investment Holdings Limited (SIHL) aganist the shares of Shriram City Union Finance Limited(SCUF) and Shrilekha Business Consultancy Private Limited(Shrilekha). These shares have been initially recognised as per the requirement of Ind AS 109 as follows:

(a) Shares received against investment in SCUF resulted in gain of Rs. 172.10 crores accounted in other comprehensive income.

(b) Shares received against investment in Shrilekha resulted in gain of Rs. 2,857.44 crores accounted in profit and loss under ""other operating income""

6.2 During the the year ended 31 March 2023, the Company has divested its stake in Piramal Holdings (Suisse) SA (''PHSA''), a non-operative, non-material wholly owned subsidiary of the Company to Heather Investment in Commercial Enterprises & Management Co. LLC, UAE, for a consideration of Rs.1.65 crores. Consequent to the divestment, PHSA ceases to be a wholly-owned subsidiary of the Company.

6.3 During the year, the Company has sold a wholly owned subsidiary company "Piramal Finance Sales and Service Private Limited" to Piramal Capital and Housing Fiance Limited (subsidiary Company).

6.4 Amounts are below the rounding off norm adopted by the Company.

6.5 During the previous year ended March 31, 2022 Piramal Pharma Limited (PPL) a wholly-owned subsidiary has issued 96,57,423 equity shares of face value of Rs 10 each in lieu of the outstanding payables of Rs 592 Crores to the Company.

6.6 During the previous year ended March 31, 2022, Piramal Dutch IM Holdco B.V. (Dutch IM), a wholly-owned subsidiary of the Company has repurchased 2,00,00,000 shares held by the Company, at a nominal value of EUR 1 per share aggregating to the total consideration of Rs 167.32 Crores

6.7 During the previous year ended March 31, 2022, the Company has exercised conversion option in respect of optionally convertible debentures (including accrued interest) of Rs. 36.03 Crores held in Piramal Systems and Technologies Private Limited (PSTPL), a wholly-owned subsidiary of the Company. On conversion, the Company has received 3,60,26,630 equity shares of face value of Rs. 10 each. Further, the Company has also received 89,07,451 equity shares of face value of Rs. 10 each, on conversion of outstanding loan of Rs 8.90 Crores given by the Company to PSTPL.

Retained earnings are the profits that the Company has earned till date, less any transfers to statutory reserve and dividends paid to investors and can be distributed by the Company as dividends to its equity shareholders is determined based on the standalone financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirely.

On May 05, 2023, a Dividend of Rs. 31 per equity share (Face value of Rs.2/- each) amounting to Rs. 739.86 Crores was recommended by the Board of Directors which is subject to shareholders approval.

On May 26, 2022, a Dividend of Rs. 33 per equity share (Face value of Rs. 2/- each) amounting to Rs. 787.59 Crores was recommended by the Board of Directors which was approved by the Shareholders in annual general meeting held on July 29, 2022.

The tax rate used for the reconciliations above is the corporate tax rate of 25.17% for the year 2022-23 and 2021-22

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

32 (A) CONTINGENT LIABILITIES AND COMMITMENTS		(C in Crores)
	Year ended 31 March, 2023	Year ended
Particulars		31 March, 2022
		(Restated)
A. Contingent Liabilities :
1. Claim against the Company not acknowledged as debt
Vide Demand dated June 5,1984, the Government has asked for payment to the credit of the Drugs Prices Equalisation Account, the difference between the common sale price and the retention price on production of Vitamin ''A'' Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 which is not accepted bt the Company. The Company has been legally advised that the demand is untenable.	Nil	0.61
2. Others
i. Appeal filed in respect of disputed demands
Income Tax
-where the Company is in appeal	324.20	333.86
-where the department is in appeal	321.05	369.29
Sales Tax	9.73	14.86
Central / State Exercise / Service Tax / Customs	54.93	62.11
Stamp Duty	9.37	9.37
Legal Case	3.23	3.88
B. Commitments
(a) Estimated amount of contracts remaining to be executed on capital account and not provided for	207.01	0.30
(b) The Company has imported raw materials at concessional rates, under the Advance License Scheme of the	Nil	1.14
Government of India, to fulfil conditions related to quantified exports in stipulated period
(c ) Undisbursed loan commitments	1,055.15	410.61

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At year end the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts has been made in the books of accounts.

The Company has also reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

33 SEGMENT REPORTING

In accordance with Ind AS 108 ''Operating Segments'', segment information has been given in the consolidated financial statements of the Company, which are presented in the same Annual Report and therefore, no separate disclosure on segment information is given in these financial statements.

34 INVESTMENT PROPERTY

Investment property, recorded at a carrying value of Rs. 1,335.31 crores, consists of land development rights, without any restriction on its realisability and is being held for capital appreciation and eventual monetization by exploring various options.

In accordance with Ind AS 113, the fair value of investment property is determined by the Company at Rs. 1,471 crores (Previous Year: Rs. 1,734 crores) following the risk-adjusted discounted cash flow method and based on Level 3 inputs from an independent valuation expert, as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair valuation is based on current real estate prices in the active market for similar properties.The main inputs used are area, location, construction cost, demand, weighted-average cost of capital and trend of real estate market at the location.

35 LEASE DISCLOSURE AS LESSEE

The Company has office premises on lease basis. The lease period range from 3 years to 5 years.

Details for the lease as lessee are as under:

Related parties as defined under para 9 of Ind AS 24 ''Related Party Disclosures'' have been identified based on representations made by key managerial personnel and information available with the Company

Interest rates charged to subsidiaries are made at market rates comparable with prevailing rates in the respective geographies. All other transactions were made on normal commercial terms and conditions and at market rates.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

i. The fair value of the preference shares has been calculated by using discounted cash flow method.

ii. This includes listed instruments which are fair valued using quoted prices or closing NAV in the market.

iii. Investments in Alternative Investment Funds and Security Receipts is valued basis the net asset value received from the fund house.

iv. Discounted cash flow method basis contractual cash flow has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates. Credit risk adjustment has not been considered while arriving at the fair values.

v. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable

inputs, including own credit risk. The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the

Government Securities rates from date of initial recognition to the reporting dates.

# The Company has not disclosed the fair value of cash and bank balances, other financial assets, trade payables and other financial liabilities, because their carrying amounts are a reasonable approximation of fair value.

Investments in subsidiaries and joint venture companies are measured at cost less provision for impairment, if any and therefore the above disclosure is not applicable for the same.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

For Non-convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

The current market borrowing rates of the Company are compared with relevant market matrices as at the reporting dates to arrive at the discounting rates

For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach -comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

39 CAPITAL MANAGEMENT

The Company''s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or combination of short term /long term debt as may be appropriate. The Company determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio.

The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI''s capital adequacy guidelines, the Company is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital.

Capital at any point of time, shall not exceed 100 percent of Tier I Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I and Tier II capital, shall not be less than 15% of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet.

The Company has complied with all regulatory requirements related capital and capital adequacy ratios as prescribed by RBI. Refer Note 53 for capital adequacy and related disclosures. Refer Note 20.9 for dividend paid and proposed by the Company.

40 RISK MANAGEMENT

Risk Management is an integral part of the Company''s business strategy. The Risk Management oversight structure includes Committees of the Board and Management Committees. Company''s risk philosophy is to develop and maintain a healthy portfolio which is within its risk appetite and the regulatory framework. While the Company is exposed to various types of risks, the most important among them are liquidity risk, interest rate risk, credit risk, regulatory risk and fraud and operational risk. The measurement, monitoring and management of risks remain a key focus area for the Company.

The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with RBI and other regulators.

The Company''s risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with market best practices.

The Risk Management Committee of the Board ("RMC") reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyse risk exposure and provides oversight of risk across the organization. The RMC nurtures a healthy and independent risk management function to inculcate a strong risk management culture in the Company and broadly perceives the risk arising from (i) credit risk, (ii) liquidity risk, (iii) interest rate risk and (iv) fraud risk and operational risk (v) regulatory risk

40.1 Liquidity risk

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy in line with RBI guidelines for Non-Banking Financial Company. The Asset Liability Management Committee (ALCO) is responsible for the management of the companies funding and liquidity requirements. The company manages liquidity risk by maintaining sufficient cash and marketable securities, unutilised banking facilities, credit lines and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities.

The following tables detail the Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of March 31, 2023 and March 31, 2022 respectively has been considered. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.

In previous year company is use to present financials in division II format and after giving effect to restructuring, previous year''s figures has not be presented (Refer note 42)

40.2 Interest rate risk and sensitivity analysis

The Company is exposed to interest rate risk as it has assets and liabilities based on both fixed and floating interest rates. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

The exposure of the Company''s borrowings to the interest rate risk at the end of the year for variable rate borrowing is of carrying value Rs. 5,300.80 crores (March 31, 2022 405.98 crores) and fixed rate borrowings are Rs. 3,414.46 crores(March 31, 2022- Rs. 10,836.44 crores)

40.3Credit risk

The Company is exposed to credit risk through its lending activity. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Company''s Risk management team has developed proprietary internal risk rating models to evaluate the credit risk for the loans and investments made by the Company. The output of traditional credit rating model is an estimate of probability of default. The Company''s proprietary risk rating models are different from the traditional credit rating models as they integrate both probability of default and loss given default into a single model.

The lending exposure includes lending to the below sectors:

Credit risk management

Credit risk management is achieved by considering various factors like :

• Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

• Industry & micro-market risk - This is an assessment of the riskiness of the industry and/or micro-market to which the borrower/ project belongs

• Project risk - This is an assessment of the standalone project from which interest servicing and principal repayment is expected to be done.

• Structure risk - This is an assessment of the loan structure which is characterized by its repayment tenor, moratorium, covenants, etc.

• Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

• Exit - This is an assessment of the liquidity of the loan or investment.

Each of the above components of the risk analysis are assigned a specific weight which differ based on type of loan. The weights are then used with the scores of individual components for conversion to a risk rating.

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned credit-rating agencies or mutual funds.

Provision for expected credit loss

The Company has assessed the credit risk associated with its financial assets for provision of Expected Credit Loss (ECL) as at the reporting dates. The Company makes use of various reasonable supportive forward looking parameters which are both qualitative as well as quantitative while determining the change in credit risk and the probability of default. These parameters have been detailed out in Note No.iii of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

For the year ended March 31, 2023 and March 31, 2022 the Company has developed a PD Matrix after considering some parameters as stated below :

The key parameters for various scorecards are highlighted as follows -Real Estate products (Construction Finance, Structured Debt, LRD) -(1) Developer Grade (2) Past Overdue History (3) Tenant profile (4) Status from monthly Asset Monitoring report (5) Stage of the project (6) Geography etc . Some of the Parameters for Non Real Estate products (Senior lending, mezzanine, project finance etc) - (1) Sponsor strength (2) Overdues (3) Average debt service coverage ratio (4) Regulatory Risk (5) Stability of EBITDA (6) Quality of underlying assets etc. Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, due

40 RISK MANAGEMENT (Continued)

to lack of default history to statistically substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD. The Company also maintains Expected Credit Loss for undisbursed limits after applying the Credit conversion factor (CCF). CCF for these limits is computed based on historical disbursement trends observed across various products.

40.4 Regulatory risk:

The Company requires certain statutory and regulatory approvals for conducting business and failure to obtain retain or renew these approvals in a timely manner, may adversely affect operations. Any change in laws or regulations made by the government or a regulatory body that governs the business of the Company may increase the costs of operating the business, reduce the attractiveness of investment and / or change the competitive landscape.

40.5 Fraud risk and operational risk:

The Company has a robust Risk Management framework to identify, measure and mitigate business risks and opportunities. This framework seeks to creates transparency, minimize adverse impact on the business strategy and enhance the Company''s competitive advantage. This risk framework thus helps in managing market, credit, operational and fraud risks and quantifies potential impact at a Company level.

The Company has an elaborate system of internal audit commensurate with the size, scale and complexity of its operations and covers funding operations, financial reporting, fraud control and compliance with laws and regulations.

41 EMPLOYEE STOCK OPTION PLAN

The Company had formulated Employees'' Stock Ownership Plan - 2015 ("ESOP Scheme 2015"), under which, such eligible employees of the Company and its subsidiaries can exercise Stock Options that were vested in them under such ESOP Scheme 2015

The ESOP Scheme 2015 were approved by the Nomination and Remuneration Committee and the effective date of the same is 31 March 2023 Under the ESOP Scheme 2015, 181,828 stock options are granted during the year ended March 31, 2023.

Number and weighted average exercise prices (WAEP) of, and movements in, share options during the year

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

Method used to account for the Scheme (Intrinsic or fair value):

The Company recognises compensation expense relating to share based payments in accordance with Ind AS 102 Share-based Payment. Stock options granted by the Company are accounted as equity settled options. Accordingly, the estimated fair value of options granted that is determined on the date of grant, is charged to statement of Profit and Loss over the vesting period of options which is the requisite service period, with corresponding increase in the equity.

During the year ended March 31, 2023, Rs. 0.02 crores has been charged to statement of profit & loss account with a corresponding increase in employee stock options reserves of Rs. 0.02 crores. [Refer not no. 20.8 and 27]

42 COMPOSITE SCHEME OF ARRANGEMENT - DISCONTINUED OPERATIONS

Disposal Of Pharmaceutical Business

The board of directors of the Company, at their meeting held on 7 October 2021, had inter alia, approved the composite Scheme of Arrangement under applicable provisions of the Companies Act, 2013 between Company, Piramal Pharma Limited (''PPL''), Convergence Chemicals Private Limited (''CCPL''), Hemmo Pharmaceuticals Private Limited (''HPPL''), PHL Fininvest Private Limited (''PFPL'') and their respective shareholders and creditors (''Scheme''). The Scheme inter alia provides for the following:

(i) the transfer by way of demerger of the Demerged Undertaking (as set out in the Scheme) from Company to PPL, a subsidiary of PEL

(ii) the amalgamation of CCPL and HPPL (both being wholly owned subsidiaries of PPL) into PPL.

(iii) the amalgamation of PFPL (a wholly owned subsidiary of PEL) into company (''FS Amalgamation'').

The Scheme was approved by the Hon''ble National Company Law Tribunal on 12 August 2022. Accordingly, the Scheme became operative from Appointed date i.e. 1 April 2022.

The composite scheme of arrangement ("the Scheme") for demerger of Pharma undertaking and merger of PHL Fininvest Private Limited, a wholly owned subsidiary company, into the Company was approved by the Hon''ble National Company Law Tribunal on 12 August 2022. Accordingly, the Scheme became operative from Appointed date i.e. 1 April 2022.

In view of the above, the previously issued standalone financials for the year ended 31 March 2022 have been restated to give impact of the Scheme. The Company has given effect to accounting as follows:

All assets and liabilities pertaining to demerged Pharma undertaking have been classified as non-cash assets held for transfer to Piramal Pharma Limited / shareholders as on 1st April 2022 being the appointed date. The difference between book values of the assets and liabilities transferred is recognised as gains in Profit and loss account amounting to Rs. 11,459.96 crores as per the requirements of Appendix A to Ind AS 10. At the date of approval of the Scheme, the liability was subsequently remeasured resulting in remeasurement gain of Rs 759.76 crores. The corresponding aggregate charge was recognised in retained earnings (reserve) as per the requirements of the aforesaid Ind AS. The nature of the gain (including remeasurement gain) being non-recurring in nature was classified as exceptional item by the Company. As per the requirements of Ind AS 105, the income and expense pertaining to Pharma business in the previous comparable periods were presented in a separate line item - discontinued operations.

Exceptional for the previous year ended represents transaction costs of Rs.10.20 crores in relation to the composite Scheme of Arrangement under applicable provisions of the Companies Act, 2013 between Company, Piramal Pharma Limited (''PPL''), Convergence Chemicals Private Limited (''CCPL''), Hemmo Pharmaceuticals Private Limited (''HPPL''), PHL Fininvest Private Limited (''PFPL'') and their respective shareholders and creditors (''Scheme'').

43 ASSETS HELD FOR SALE

During the year ended 31 March 2023, on conclusion of a strategic review of its investments, the Company initiated identification and evaluation of potential buyers for its associate investments, Shriram Ll Holdings Private Limited, Shriram GI Holdings Private Limited and Shriram Investment Holdings Limited. The Company anticipates completion of the sale in foreseeable future and accordingly, investments amounting to Rs. 2,277.54 crores in respect of these associates have been reclassified under ''assets held for sale''. On reclassification, these investments has been measured at the lower of carrying amount and fair value less cost to sell. No impairment provision was required to be recognised in the statement of profit and loss for the year ended 31 March 2023, on these investments

45 ADDITIONAL REGULATORY INFORMATION

i) There have been no events after the reporting date that require disclosure in these financial statements.

ii) There are no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the current year. Transactions with struck off companies for the Previous year has been tabulated below

iii) No proceeding has been initiated during the year or pending against the Company for holding any Benami property.

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

v) During the current year the Company has not traded or invested in Crypto currency or Virtual Currency.

vi) The Company have not been declared as a wilful defaulter by any bank or financial institution (as defined under Companies Act, 2013) or consortium thereof, in accordance with the guidance on wilful defaulters issued by Reserve Bank of India.

vii) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the act read with companies (Restriction on number of Layers) Rules, 2017.

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 not advanced or loaned or invested funds to any other person(s) or entity(is), 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.

x) The Company, has not received any fund from any person(s) or entity(is), 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,

(xi) The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

(ii) Pursuant to the Reserve Bank of India circular RBI/2021-22/154 DOR.SIG.FIN.REC 84/26.03.001/2021-22 dated 10th February 22, the security receipts issued to the Company by the Asset Reconstruction Company (ARC) towards consideration for transfer of stressed loans have not been rated by the ARC since the prescribed time period of six months has not elapsed from the date of acquisition of loans by the ARC.

(d) The Company has not acquired any stressed loan during the year ended 31 March 2023.

48 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

a) Changes in capital and asset structure arising from financing activities and investing activities (Ind AS 7 ''Statement of Cash Flows'')

The Company does not have any financing activities and investing activities which affect the capital and asset structure of the Company without the use of cash and cash equivalents.

b) Changes in liability arising from financing activities (Ind AS 7 ''Statement of Cash Flows'')

49 FOREIGN CURRENCY RISK MANAGEMENT

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

50 On July 26, 2022, The Company had received the Certificate of Registration to carry on the business of Non Banking Financial Institution. Hence, Previous Years Figures in RBI Disclosures, SBR Disclosures and Disclosure under regulation 52(4) of SEBI (LODR) regulation, 2015 have not been provided.

51 DISCLOSURE ON PRUDENTIAL FLOOR FOR ECL

In terms of RBI circular DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13, 2020

Notes

1 Since the total impairment allowances under Ind AS 109 is higher than the total provisioning required under IRACP (including standard asset provisioning) as at 31st March, 2023, no amount is required to be transferred to ''Impairment Reserve''. The balance in the ''Impairment Reserve'' (if and when created) shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

2 In terms of recommendations as per above referred notification, the Company has adopted the same definition of default for accounting purposes as guided by the definition used for regulatory purposes.

3 Policy for sales / transfers out of amortised cost business model portfolios Sale/ transfer of portfolios out of amortised cost business model:

As a short-term financing approach, the Company has been transferring or selling certain pools of fixed rate loan receivables by entering in to direct assignment transactions with Asset reconstruction companies for consideration received in cash and security receipts at the inception of the transaction. With an objective of better liquidity and risk management, the Company, during the course of the year, obtains approval of Asset Liability Committee (ALCO) and Risk Management Committee (RMC) of the Board of Directors for undertaking direct assignment transactions of certain value of loan assets comprising the collateral based loan receivables at appropriate times during the year.

These transactions are carried out after complying with extant RBI guidelines. Besides direct assignment as alternate financing tool, it is also being used as a effective Balance sheet management through better liquidity and risk management by transfer of assets from risk averse to risk takers. Such sale/transfer does not change the Company''s business objective of holding financial assets to collect contractual cash flows. The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. The Company has sold certain stressed portfolio classified under amortised cost for liquidity and recovery management strategy of the Company. Such sale of loans will not lead to change in business model as per the company''s board approved policy and management''s evaluation of business model.

6 Institutional set-up for liquidity risk management

a) The Asset Liability Committee (ALCO) is responsible for the management of the companies funding and liquidity requirements, within the board approved framework and extant regulations.

b) The Company manages liquidity risk by maintaining an appropriate mix of unutilised banking facilities, credit lines as necessary and by continuously monitoring expected and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities.

Qualitative disclosures

1 The Company has implemented the guidelines on Liquidity Risk Management Framework prescribed by the Reserve Bank of India requiring maintenance of Liquidity Coverage Ratio (LCR), which aim to ensure that an NBFC maintains an adequate level of unencumbered HQLAs that can used to meet its liquidity needs for the next month under a significantly severe liquidity stress scenario.

2 LCR = Stock of High-Quality Liquid Assets (HQLAs)/Total Net Cash Outflows over the next 30 calendar days

3 For the purpose of HQLA, the company considers: (1) Unencumbered government securities (2) Unencumbered Cash and Bank Balances and (3) Treasury Bills

4 Since the Company commenced it''s NBFC business from 18th August 2022, hence the company has prepared the LCR disclosure basis simple averages of balances from 18th August 2022.

5 The cash inflows includes amount based on contractual basis for Loans & Advances that are standard in nature.

6 Other Contingent Funding Obligations includes the undisbursed loan amount only of those obligations which have non-cancellable clauses.

7 The Liquidity Risk Management framework of the Company is governed by its Asset Liability Management Policy approved by the Board.

The Asset Liability Management Committee (ALCO) oversee the implementation of liquidity risk management framework of the Company and ensure adherence to the risk tolerance / limits set by the Board.

8 As prescribed by the RBI Guidelines, Total net cash outflows are arrived after taking into consideration total expected cash outflows minus total expected cash inflows for the subsequent month

9 Total net cash outflows over the next 30 days = Stressed Outflows - [Min (stressed inflows; 75% of stressed outflows)].

10 Total expected cash outflows (stressed outflows) are calculated by multiplying the outstanding balances of various categories or types of liabilities by 115% (15% being the rate at which they are expected to run off further or be drawn down)

11 Total expected cash inflows (stressed inflows) are calculated by multiplying the outstanding balances of various categories of contractual receivables by 75% (25% being the rate at which they are expected to under-flow)

12 The company has maintained healthy Liquidity Coverage Ratio (LCR) for the time period under consideration. The company had LCR of

825% as of March 31, 2023, 235% as of December 31, 2022 and 210% as of September 30, 2022 which is higher than LCR mandated by RBI.

The company regularly reviews the maturity position of assets and liabilities and liquidity buffers, and ensures maintenance of sufficient quantum of High Quality Liquid Assets.

(xxi) Extent of financing of parent company product

Not Applicable

(xxii) Details of off-balance sheet SPV''s sponsored

The Company does not have any off- balance sheet SPV''s sponsored.

(xxiii) Disclosure of complaints

There are no customer complaints received during the year.

(xxiv) Securitisation/ assignment transactions

The Company transfers loans through direct assignment transactions. Details of the same are provided in Note 47 (a)

(xxv) Details of financial assets sold to Securitisation/Reconstruction Company for asset reconstruction

Details of the same are provided in Note 47 (c)

(xxvi) Details of non-performing financial assets purchased / sold

Details of the same are provided in Note 47 (c)

(xxvii) Details of single borrower limit (SBL) / group borrower limit (GBL) exceeded by the NBFC

The Company has not exceeded the prudential exposure limits during the year

(xxviii) Unsecured advances

Refer note 5 for details related to unsecured loans. The Company has not issued any advances against the right, licence and authority as collateral.

(xxix) Related party transactions

Details of all material transactions with related parties are disclosed in point note 36.

(xxx) Remuneration of directors

Details of remuneration of directors disclosed in section "Directors Report"

(xxxi) Management Discussion and Analysis (MD & A)

Details of Management Discussion and Analysis disclosed in section "Directors Report"

(xxxii) Net profit or loss for the period, prior period items and changes in accounting policies

There are no prior period items that have impact on the current year''s profit and loss.

(xxxiii) Revenue recognition

There have been no instances in which revenue recognition has been postponed pending the resolution of significant uncertainties.

(xxxiv) Ind AS 110 - Consolidated financial statements (CFS)

The company has prepared the consolidated Financial Statements (CFS) as per Ind AS 110

(xxxv) Forward rate agreement (FRA) / Interest rate swap (IRS)

The Company has not taken any exchange traded Forward rate agreement (FRA) / Interest rate swap (IRS) during the year ended 31 March, 2023.

(xxxvi) Exchange traded interest rate (IR) derivative

The Company has not taken any exchange traded interest rate (IR) derivatives during the year ended 31 March, 2023.

(xxxvii) Disclosure on risk exposure in derivative - Qualitative and quantitative disclosures

The Company has not taken any risk exposure in derivative during the year ended 31 March, 2023.

(xxxviii) Disclosure on Credit Default Swap

The Company has not taken any Credit Default Swap exposure during the year ended 31 March, 2023.

(xxxix) Disclosure on Currency Option/Currency Futures

The Company has not taken any Currency Option/Currency Futures exposure during the year ended 31 March, 2023.

(xxxx) Disclosure on Perpetual Debt Instruments

The Company has not issued / Invested in any Perpetual Debt Insturments during the year ended 31 March, 2023.

55 DISCLOSURE REQUIREMENTS UNDER SCALE BASED REGULATION FOR NBFCS

(i) Exposure to real estate sector

The Company''s exposure to real estate sector is provided in Note 54.2 (vi)

(ii) Exposure to capital market

The Company''s exposure to capital market is provided in Note 54.2 (vii)

(vi) Related Party Disclosure

Details of all material transactions with related parties are disclosed in point note 36.

(vii) Disclosure of complaints

There are no customer complaints received during the year.

(viii) Corporate governance

Further details on Corporate Governance are provided in Report of the Directors

(ix) Breach of covenant

There are NIL case of breach of covenant during the year ended 31 March, 2023.

(x) Divergence in Asset Classification and Provisioning

Not Applicable

(xi) Items of income and expenditure of exceptional nature.

Details of exceptional items are provided in note 29

56 DISCLOSURES IN TERMS OF REGULATION 52(4) OF THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

1 The Company has paid interest and principal on Non-Convertible Debentures on due dates.

2 Debenture redemption reserve is not required in respect of privately placed debentures in terms of Rule 18(7)(b)(ii) of Companies (Share Capital and Debenture) Rules, 2014.

3 There is no material deviations in the use of the proceeds from the issue of Non-Convertible Debentures.

57 The financial statements have been approved for issue by Company''s Board of Directors on 5 May, 2023.

---

Mar 31, 2022

Refer Note 2(a)(iii)

# Depreciation for the year ended March 31, 2022 includes depreciation amounting to C Nil Crores (Previous year: C4.67 Crores) on assets used for Research and Development locations at Ennore and Mumbai.

^A The Company has a 25% share in joint ownership of Helicopter.

Refer Note 39 for the assets mortgaged as security against borrowings.

Refer Note 36B for the contractual capital commitments for purchase of Property, Plant & Equipment.

There has been no revaluation of property, plant and equipment (“PPE") and intangibles during the year ended March 31, 2022 and March 31, 2021.

The Company holds the title deeds of all the immovable properties in its name.

Considering internal and external sources of information, the Company has evaluated at the end of the reporting period, whether there is any indication that any intangible asset may be impaired. Where such indication exists, the Company has estimated the recoverable amount of the intangible assets based on ''value in use'' method. The financial projections on the basis of which the future cash flows have been estimated consider.

(a) reassessment of the discount rates,

(b) revisiting the growth rates factored while arriving at terminal value, and these variables have been subjected to a sensitivity analysis. The carrying amount of the intangible assets represent the Company''s best estimate of the recoverable amounts.

* Amounts are below the rounding off norm adopted by the Company.

#**During the year ended March 31, 2022 Piramal Pharma Limited (“PPL) a wholly-owned subsidiary has issued 96,57,423 equity shares of face value of C10 each in lieu of the outstanding payables of C592 Crores to the Company.

***# During the year ended March 31, 2022, Piramal Dutch IM Holdco B.V. (“Dutch IM"), a wholly-owned subsidiary of the Company has repurchased 2,00,00,000 shares held by the Company, at a nominal value of EUR 1 per share aggregating to the total consideration of C 167.32 Crores.

## During the quarter ended March 31, 2022, the Company has exercised conversion option in respect of optionally convertible debentures (including accrued interest) of C36.03 Crores held in Piramal Systems and Technologies Private Limited (“PSTPL"), a wholly-owned subsidiary of the Company. On conversion, the Company has received 3,60,26,630 equity shares of face value of C10 each. Further, the Company has also received 89,07,451 equity shares of face value of C10 each, on conversion of outstanding loan of C8.90 Crores given by the Company to PSTPL.

The credit period on sale of goods generally ranges from 7 to 150 days (Previous year: 7 to 90 days).

The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2022 of C156.62 Crores (as at March 31, 2021 of 162.87 Crores), the top 3 customers of the Company represent the balance of C57.91 Crores as at March 31, 2022 (as at March 31, 2021 - 42.03 Crores). There were five customers (Previous year: four customers) who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience, adjusted for forward-looking information including the likelihood of increased credit risk considering emerging situations due to COVID-19 based on external sources of information. 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. The provision matrix at the end of the reporting period is as follows:

(v) Terms and Rights attached to equity shares Equity Shares:

The Company has one class of equity shares having a par value of C2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The coupon rates for the above debentures are in the range of 8.00% to 9.75 % per annum per annum (Previous year: 8.55% to 9.75 % per annum) Refer Note 39 for assets hypothecated/mortgaged as securities against the Secured Borrowings.

Terms and Description of Compulsorily Convertible Debentures:

Compulsorily Convertible debentures (CCD) outstanding as at March 31, 2022 is Nil. Each CCD has a par value of C151,000 and is convertible at the option of the CCD holder into Equity shares of the Company starting from December 19, 2019 in the ratio of hundred equity share of C2 each for every one CCD held. Any CCD not converted will be compulsory converted into equity shares on June 12, 2021 at a price of C1,510 per share. The CCD carry a coupon of 9.28% per annum, payable in 3 half-yearly installments. The basis of presentation of the liability and equity portions of these shares is explained in the summary of significant accounting policies. The CCDs allotted and the equity shares arising out of conversion of such CCDs shall not be disposed off for a period of 18 months from the date of trading approval.

During the previous year ended March 31, 2021, outstanding CCD were C1749.99 Crores.

Refer Note 52(a) for movement in CCDs.

The Company has utilised the borrowed funds for general business purposes.

Note:

All dividends from equity investments designated as at FVTOCI recognised for both the years relate to investments held at the end of each reporting period. There was no dividend income relating to investments derecognised during the reporting period.

Disaggregate Revenue Information

The table below presents disaggregated revenues from contracts with customers by major product and timing of transfer of goods or services for each of our business segments. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

37 EMPLOYEE BENEFITS:

Brief description of the Plans:

Other Long-Term Employee Benefit Obligations:

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long-term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Long-Term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution plans:

The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

Post-employment benefit plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

The Company''s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.

Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, equity, mutual funds and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The gratuity plan is a funded plan and the Company makes contributions to trust administered by the Company. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity/provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

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

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The liability for Leave Encashment (Non-Funded) as at year end is C12.10 Crores (Previous year: C12.10 Crores).

The liability for Long-term Service Awards (Non-Funded) as at year end is C0.26 Crores (Previous year: C0.26 Crores).

During the previous year, the Board of Directors (''Board'') of the Company at their meeting held on June 26, 2020, had inter alia, approved the sale of the major line of pharmaceutical business, (''Pharma Business''), including those held by the Company directly and through its wholly-owned subsidiaries, to Piramal Pharma Limited, a subsidiary of the Company (''PPL'').

This transaction was completed on October 6, 2020 on receipt of requisite approvals. The consideration received by the Company from PPL is C4,487 Crores and the excess of such consideration over the net assets, net of tax, has been transferred to capital reserve, the transaction being a common control transaction under IND AS 103 "Business Combinations".

Consequently, operations relating to the Pharma Business in respect of total income, total expenses and tax have been disclosed separately as Discontinued operations as part of the results.

39 Property, Plant & Equipment, Investment in Non-convertible Debentures, Other Financial Assets and identified/specified Inter Corporate Deposits, and specified standard receivables relating to subsidiaries are mortgaged/hypothecated to the extent of C6,119 Crores (As on March 31, 2021: C7,685 Crores) as a security against long-term secured borrowings as at March 31, 2022.

Property, Plant & Equipment, Investment in Non-convertible Debentures, Other Financial Assets and identified/specified Inter Corporate Deposits, and specified standard receivables relating to subsidiaries are mortgaged/hypothecated as a security to the extent of CNil (As on March 31, 2021: C110 Crores) against short-term secured borrowings as at March 31, 2022.

40

45 INVESTMENT PROPERTY

Investment property, recorded at a carrying value of C1,335.31 Crores, consists of land development rights acquired during the previous year ended March 31, 2021, without any restriction on its realisability and is being held for capital appreciation and eventual monetisation by exploring various options.

In accordance with Ind AS 113, the fair value of investment property is determined by the Company at C1,734 Crores (Previous year: C1,579 Crores) following the risk-adjusted discounted cash flow method and based on Level 3 inputs from an independent valuation expert, as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

46 The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18 and 21 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long-term operating plans and other strategic investment plans. The funding requirements are met through convertible and non-convertible debt securities or other long-term /shortterm borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The terms of the Secured and unsecured loans and borrowings contain certain financial covenants primarily requiring the Company to maintain certain financial ratios like Total Debt to Total Net Worth, Interest Coverage Ratio, Fixed Asset Cover ratio, Minimum net worth conditions, etc. The Company is broadly in compliance with the said covenants and the banks have generally waived/condoned such covenants.

47 RISK MANAGEMENT

The Company''s activities expose it to market risk, liquidity risk and credit risk.

The Company has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks.

The Senior Management along with a centralised treasury manages the liquidity and interest rate risk on the balance sheet.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

a) Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Senior Management along with centralised treasury is responsible for the management of the Company''s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

Note: This includes Non-convertible Debentures (C2,034 Crores), Market Linked Debentures (C708 Crores) and Commercial Papers (C4,006 Crores) where only credit rating has been obtained and which can be issued, if required, within a short period of time.

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of reporting period ends respectively has been considered.

In assessing whether the going concern assumption is appropriate, the Company has considered a range of factors relating to current and expected profitability, debt repayment schedule and potential sources of replacement financing. The Company has performed sensitivity analysis on such factors considered and based on current indicators of future economic conditions; there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Because of the uncertainties resulting from COVID-19, the impact of this pandemic may be different from those estimated as on the date of approval of these financial statements and the Company will continue to monitor any changes to the future economic conditions.

The balances disclosed in the table above are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as at March 31, 2022.

b) Interest Rate Risk Management

The Company is exposed to interest rate risk as it has assets and liabilities based on floating interest rates as well. Senior Management along with centralised treasury assess the interest rate risk run by it and provide appropriate guidelines to the treasury to manage the risk. The Senior Management along with centralised treasury reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The Senior Management along with centralised treasury reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to borrowings had been 100 basis points higher/lower and all other variables were held constant, the Company''s Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2022 would decrease/increase by NIL (Previous year: C1.00 Crores). This is attributable to the Company''s exposure to borrowings at floating interest rates.

If interest rates related to loans given/debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company''s Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2022 would increase/decrease by C29.19 Crores (Previous year: C41.70 Crores). This is attributable to the Company''s exposure to lendings at floating interest rates.

c) Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the balances sheet at fair value through Other Comprehensive Income.

The Company chose this presentation alternative because the investment were made for strategic purposes rather than with a view to make profit on subsequent sale.

d) Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt/payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports, for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

e) Accounting for cash flow hedge

The objective of hedge accounting is to represent, in the Company''s financial statements, the effect of the Company''s use of financial instruments to manage exposures arising from particular risks that could affect profit or loss. As part of its risk management strategy, the Company makes use of financial derivative instruments, such as foreign currency range forwards and forward exchange contracts for hedging the risk arising on account of highly probable foreign currency forecast sales.

The Company has a Board approved policy on assessment, measurement and monitoring of hedge effectiveness which provides a guideline for the evaluation of hedge effectiveness, treatment and monitoring of the hedge effective position from an accounting and risk monitoring perspective. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. The Company assesses hedge effectiveness on prospective basis. The prospective hedge effectiveness test is a forward-looking evaluation of whether or not the changes in the fair value or cash flows of the hedging position are expected to be highly effective in offsetting the changes in the fair value or cash flows of the hedged position over the term of the relationship.

For derivative contracts designated as hedge, the Company documents, at inception, the economic relationship between the hedging instrument and the hedged item, the hedge ratio, the risk management objective for undertaking the hedge and the methods used to assess the hedge effectiveness. The derivative contracts have been taken to hedge foreign currency fluctuations risk arising on account of highly probable foreign currency forecast sales.

The Company applies cash flow hedge to hedge the variability arising out of foreign exchange currency fluctuations on account of highly probable forecast sales. Such contracts are generally designated as cash flow hedges.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The forward exchange forward contracts are denominated in the same currency as the highly probable future sales, therefore the hedge ratio is 1:1. Further, the entity has excluded the foreign currency basis spread and takes such excluded element through the income statement. Accordingly, the Company designates only the spot rate in the hedging relationship.

Hedge effectiveness is assessed through the application of dollar offset method and designation of spot rate as the hedging instrument. The excluded portion of the foreign currency basis spread is taken directly through income statement.

The table below enumerates the Company''s hedging strategy, typical composition of the Company''s hedge portfolio, the instruments used to hedge risk exposures and the type of hedging relationship for the year ended March 31, 2022:

f) Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1. Pharma Trade Receivables

2. Financial Services business - i) Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others ; and

ii) Strategic Investment made in other corporate bodies.

Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Corporate Finance Groups are explained in the note below.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned by credit-rating agencies or mutual funds.

Financial Services Business

The Company is exposed to Credit Risk through its lending activity. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Wholesale lending:

The Company''s Risk management team has developed proprietary internal rating models to evaluate risk return trade-off for the loans and investments made by the Company. The output of traditional credit rating model is an estimate of probability of default. These models are different from the traditional credit rating models as they integrate both probability of default and loss given default into a single model.

Credit Risk Management

For wholesale lending business, credit risk management is achieved by considering various factors like:

• Cash flow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

• Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

• Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

• Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent. Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment.

Further, a periodic review of the performance of the portfolio is also carried out by the Group''s risk team. The Group''s risk team adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

Provision for Expected Credit Loss

The Company has assessed the credit risk associated with its financial assets for provision of Expected Credit Loss (ECL) as at the reporting dates. The Company makes use of various reasonable supportive forward-looking parameters which are both qualitative as well as quantitative while determining the change in credit risk and the probability of default. These parameters have been detailed out in Note No.vii of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

The Company has developed a PD Matrix after considering some parameters as stated below:

The key parameters for various scorecards are highlighted as follows -Real Estate products (Construction Finance, Structured Debt, LRD) -

(1) Developer Grade (2) Past Overdue History (3) Tenant profile (4) Status from monthly Asset Monitoring report (5) Stage of the project (6) Geography etc. . Some of the Parameters for Non-Real Estate products (Senior lending, mezzanine, project fiance etc.) - (1) Sponsor strength

(2) Overdues (3) Average Debt service coverage ratio (4) Regulatory Risk (5) Stability of EBITDA (6) Quality of underlying assets etc. Based on these parameters the Company has computed the PD.

The Company has also built in model scorecards to determine the internal LGD. However, due to lack of default history to statistically substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD. The Company also maintains Expected Credit Loss for undisbursed limits after applying the Credit conversion factor (CCF). CCF for these limits is computed based on historical disbursement trends observed across various products.

Impact of COVID-19 pandemic on the credit risk

The outbreak of COVID-19 pandemic across the globe and in India had contributed to a significant decline and volatility in the global and Indian financial markets and slowdown in the economic activities. The Company through it''s financial services segment offers long-term and short-term wholesale lending primarily to the real estate and infrastructure sector. In accordance with Reserve Bank of India (RBI) guidelines, the Company had proposed a moratorium benefit on the payment of principal instalments and/or interest, to all eligible borrowers classified as standard, even if overdue as on February 29, 2020 excluding the collections already made in the month of March 2020, basis approval by the management on

a case to case basis. Accordingly, for all such accounts where the moratorium is granted, the asset classification will remain standstill during the moratorium period. (i.e. the number of days past due shall exclude the moratorium period for the purposes of asset classification as per the Company''s policy).

The Company had ran a scenario analysis as on March 31, 2020 using proprietary algorithm-based risk models on the portfolio taking into account the possible impact related to COVID-19 pandemic and had estimated and recognised an additional expected credit loss of C303 Crores on certain financial assets, on account of the anticipated effect of the global health pandemic. During the year ended March 31, 2021 the Company had utilised/reversed provision of C162.84 Crores out of the above.

The Company has, based on available information (internal and external) and economic forecasts, estimated and applied management overlays, for the purpose of determination of the provision for impairment of financial assets. The management continued to consider macroeconomic overlay similar to its previous study.

As a result of uncertainties resulting from COVID-19, the impact of this pandemic may be different from those estimated as on the date of approval of these financial statements and the Company will continue to monitor any changes to the future economic conditions.

ii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 47(a)) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The Company generally ensures a security cover of more than 100% of the proposed facility amount. The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits. The collateral held by the Company varies on case to case basis and includes:

i) First/Subservient charge on the Land and/or Building of the project or other projects

ii) First/Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters/Promoter Undertakings

vi) Post dated/Undated cheques

vii) Pledge on investment in shares made by borrower entity.

iii) The credit impaired assets as at the reporting dates were secured by charge on land and building and project receivables amounting to:

48 In the previous year, the Company''s research and development centers at Mumbai, Ennore and Ahmedabad have been transferred to Piramal Pharma Ltd. pursuant to transfer of pharma business. (Refer Note 53(a))

g) In assessing the realisability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realise the benefits of these deductible differences. The amount of deferred tax asset considered realisable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values. Similarly in case of financial assets/liabilities maturing in the next 12 months and loans or borrowings with variable rates of interest, the Company considers carrying amount recognised in the financial statements to approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Investment in Preference Shares, Alternative Investment Funds, Debentures, Term Loans and Inter Corporate Deposits.

Valuation techniques used to determine the fair values:

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data.

iii. This includes listed equity instruments which are fair valued using quoted prices and closing NAV in the market.

iv. Investments in Alternative Investment Funds is valued basis the net asset value received from the fund house.

v. This includes forward exchange contracts whose fair value is determined using forward exchange rate at the balance sheet date.

vi. Discounted cash flow method basis contractual cash flow has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates. Credit risk adjustment has not been considered while arriving at the fair values.

vii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk. The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main level 3

inputs used for preference shares and debentures are as follows:

1. For Non-convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2. The current market borrowing rates of the Company are compared with relevant market matrices as at the reporting dates to arrive at the discounting rates

3. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

4. For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach - comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

f) Management uses its best judgement in estimating the fair value of its financial instruments (including impact on account of COVID-19). However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

52(a)(i) On December 19, 2019, 115,894 Compulsorily Convertible Debentures ("CCD") having face value of C151,000 per CCD were allotted to Caisse de depot et placement du Quebec for an aggregate amount of C1,749.99 Crores. Each CCD is convertible into 100 equity shares having face value of C2 each.

During the year ended March 31, 2022 , the Company has allotted 1,15,89,400 equity shares {face value of C2 each) pursuant to the compulsory conversion of these CCDs.

52(b)(i) On December 24, 2019, the Company offered 27,929,649 equity shares under Rights Issue at a price of ?1,300 per share (including premium of ?1,298 per share). Out of the aforesaid issue, 26,385,861 equity shares were allotted by the Company on January 29, 2020 and 1,535,944 Rights Equity shares have been reserved for the CCD Holder (as per regulation 74(1) of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018) and 7,844 Rights Equity Shares have been kept in abeyance.

Further, the Company on June 28, 2021 had allotted 1,535,944 right shares to the CCD Holder out of the portion reserved under the Right Issue made by the Company vide Letter of offer dated December 24, 2019.

(ii) On March 8, 2018, the Company had issued 8,310,275 equity shares under Rights Issue at a price of C2,380 per share (including premium of ?2,378 per share). Out of this rights issue, 11,298 and 7,485,574 equity shares were allotted by the Company during the year ended March 31, 2019 and year ended March 31, 2018, respectively.

During the three months ended June 30, 2019 and September 30, 2019, 213,392 and 66 equity shares, respectively, were allotted by the Company under Rights Issue at a price of C2,380 per share (including premium of ?2,378 per share) to the CCD holders out of the Right Equity shares reserved for them (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) and shares held in abeyance.

As on March 31, 2021, 24,573 Rights equity shares have been kept in abeyance. 575,372 Rights equity shares reserved for the CCD holders (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) have not been subscribed by them and these unsubscribed rights shall be dealt with by the Board of Directors of the Company, in accordance with the law and hence are considered to be dilutive in nature.

During the year ended March 31, 2022, the Board at its meeting held on February 10, 2022 had approved cancellation of the unsubscribed portion of the issued capital representing 575,372 equity shares of ?2 each aggregating to ?1,150,744, which was reserved in favour of the Compulsorily Convertible Debentures holders under rights issue of the Company. Consequently, the issued share capital stands at ?477,376,546/- consisting of 238,688,273 equity shares of face value of ?2 each fully paid.

(i) Transfer of Pharma Business:

The Board of Directors (''Board'') of the Company at their meeting held on June 26, 2020, had inter alia, approved the sale of the major line of pharmaceuticals business, (''Pharma business''), including those held by the Company directly and through its wholly-owned subsidiaries, to Piramal Pharma Ltd., a subsidiary of the Company (''PPL''). The transaction was completed on October 6, 2020 on receipt of requisite approvals. The consideration received by the Company from PPL is C4,487 Crores and the excess of such consideration the net assets, net of tax, has been transferred to capital reserve, the transaction being a common control transaction under Ind AS 103 "Business Combinations".

Consequently, operations relating to the Pharma Business in respect of total income, total expenses and tax have been disclosed separately as Discontinued Operations as part of the results. The previous periods have been restated in the standalone financial statements to give effect to the presentation requirements of Ind AS 105: "Non-current Assets Held for Sale and Discontinued Operations".

54 OTHER STATUTORY INFORMATION

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

(ii) The Company does not have any such transactions which is not recorded in the books of account that has been surendered 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).

(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 been declared as a wilful defaulter by any bank or financial institution (as defined under Companies Act, 2013) or consortium thereof, in accordance with the guidance on wilful defaulters issued by Reserve Bank of India.

(vii) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the act read with companies (Restriction on number of Layers) Rules, 2017.

(viii) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources of kind of funds) to any other person(s) of entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the intermediary shall land or invest in a party ("Ultimate Beneficiaries") identified by or on behalf of the Company. There are no funds received from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly land or invest in other persons or entites ("Ultimate beneficiaries") identified by or on behalf of the funding party or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(ix) Previous year''s figures have been regrouped/reclassified wherever necessary, to conform to current period''s classification in order to comply with the requirements of the amended Schedule III to the Companies Act, 2013 effective April 1, 2021.

Note: The Board of Directors (''Board'') of the Company at their meeting held on June 26, 2020, had inter alia, approved the sale of the major line of pharmaceuticals business, (''Pharma business''), including those held by the Company directly and through its wholly-owned subsidiaries, to Piramal Pharma Ltd. (PPL), a subsidiary of the Company. Consequently, operations relating to the Pharma Business in respect of total income, total expenses and tax have been disclosed separately as Discontinued Operations as part of the results. Accordingly, the ratios as reported for the current period are not comparable with the Ratios reported for previous period(s)/ year.

56 Vide Order dated June 7, 2021, the Mumbai bench of the Hon''ble National Company Law Tribunal ("NCLT") approved the Resolution Plan submitted by Piramal Capital & Housing Finance Limited ("PCHFL"), wholly-owned subsidiary of the Piramal Enterprises Limited, for the Corporate Insolvency resolution process of Dewan Housing Finance Limited ("DHFL") under Section 31 of the Insolvency and Bankruptcy Code, 2016. After receiving necessary approvals, PCHFL has discharged its obligation under the resolution plan by paying ? 34,250 Crores on September 28, 2021 through cash consideration of C14,717.47 Crores (of which C12,800 Crores paid out of acquired cash) and issue of Debentures of C19,532.53 Crores and further, pursuant to the Resolution plan, PCHFL merged into DHFL to conclude acquisition on September 30, 2021 (Implementation Date/acquisition date). As per Ind AS 103, purchase consideration has been allocated based on fair value of the assets acquired and liabilities assumed as on the acquisition date. Upon merger, the Company has received equity shares of DHFL in exchange for its equity investments in PCHFL.

57 In accordance with Ind AS 108 ''Operating Segments'', segment information has been given in the consolidated financial statements of the Company, which are presented in the same Annual Report and therefore, no separate disclosure on segment information is given in these financial statements.

58 The financial statements have been approved for issue by Company''s Board of Directors on May 26, 2022.

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Mar 31, 2021

The credit period on sale of goods generally ranges from 7 to 90 days (Previous Year: 7 to 150 days).

The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2021 of C162.87 Crores (as at March 31, 2020 of C683.79 Crores), the top 3 customers of the Company represent the balance of C42.03 Crores as at March 31, 2021 (as at March 31, 2020 - C116.13 Crores). There were four customers (Previous year: three customers) who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience, adjusted for forward looking information including the likelihood of increased credit risk considering emerging situations due to COVID-19 based on external sources of information. 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. The provision matrix at the end of the reporting period is as follows:

Terms and Description of Compulsorily Convertible Debentures:

Compulsorily Convertible debentures (CCD) outstanding as at March 31, 2021 is C1,749.99 Crores. Each CCD has a par value of C151,000 and is convertible at the option of the CCD holder into Equity shares of the Company starting from December 19, 2019 in the ratio of hundred equity share of C2 each for every one CCD held. Any CCD not converted will be compulsory converted into equity shares on June 12, 2021 at a price of C1,510 per share. The CCD carry a coupon of 9.28% per annum, payable in 3 half-yearly installments. The basis of presentation of the liability and equity portions of these shares is explained in the summary of significant accounting policies. The CCDs allotted and the equity shares arising out of conversion of such CCDs shall not be disposed off for a period of 18 months from the date of trading approval.

During the previous year ended March 31, 2020, outstanding CCD were C1,749.99 Crores.

Refer Note 52(a) for movement in CCDs.

37. EMPLOYEE BENEFITS:

Brief description of the Plans:

Other Long-term Employee Benefit Obligations:

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long-term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Long-term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution plans:

The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

Post-employment benefit plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

The Company''s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.

I n case of certain employees, Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Plan investment is a mix of investments in government securities, equity, mutual funds and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The gratuity plan is a funded plan and the Company makes contributions to trust administered by the Company. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity/provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

39. Property, Plant & Equipment, Brands and Trademarks, Investment in Non-Convertible Debentures, Inter Corporate Deposits, Other Financial Assets and specified receivables relating to subsidiaries are mortgaged/hypothecated to the extent of C7,685 Crores (As on March 31, 2020: C6,136.40 Crores) as a security against long-term secured borrowings as at March 31, 2021.

Plant & Equipment, Inventories, Trade receivables, Investment in Non-Convertible Debentures and Inter Corporate Deposits are hypothecated as a security to the extent of C110 Crores (As on March 31, 2020 C2,410.78 Crores) against short-term secured borrowings as at March 31, 2021.

45. INVESTMENT PROPERTY

Investment property, recorded at a carrying value of C1,297.63 Crores, consists of land development rights acquired during the year, without any restriction on its realisability and is being held for capital appreciation and eventual monetisation by exploring various options.

In accordance with Ind AS 113, the fair value of investment property is determined by the Company at C1,579 Crores following the risk-adjusted discounted cash flow method and based on Level 3 inputs from an independent valuation expert.

46 . The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 21 and 22 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long-term operating plans and other strategic investment plans. The funding requirements are met through convertible and non-convertible debt securities or other long-term /shortterm borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

a) Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Senior Management along with centralised treasury is responsible for the management of the Company''s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to FCNR borrowings had been 25 basis points higher/lower and all other variables were held constant, and other borrowings had been 100 basis points higher/lower and all other variables were held constant, the Company''s Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2021 would decrease/increase by NIL for FCNR Borrowing (Previous year: C0.60 Crores) and C1.00 Crore (Previous year: C35.85 Crores) for other borrowings totalling to C1.00 Crore (Previous year: C36.45 Crores) respectively. This is attributable to the Company''s exposure to borrowings at floating interest rates.

If interest rates related to loans given/debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company''s Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2021 would increase/decrease by C41.70 Crores (Previous year: C108.77 Crores). This is attributable to the Company''s exposure to lendings at floating interest rates.

c) Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the balances sheet at fair value through Other Comprehensive Income.

Equity price sensitivity analysis (Refer note 4):

The table below summarises the impact of increases/decreases (pre-tax) on the Company''s Equity and OCI for the year. Analysis is based on the assumption that equity index had increased/decreased by 5% with all the other variables held constant, and these investments moved in the line with the index.

d) Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt/payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports, for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on

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e) Accounting for cash flow hedge

The objective of hedge accounting is to represent, in the Company''s financial statements, the effect of the Company''s use of financial instruments to manage exposures arising from particular risks that could affect profit or loss. As part of its risk management strategy, the Company makes use of financial derivative instruments, such as foreign currency range forwards and forward exchange contracts for hedging the risk arising on account of highly probable foreign currency forecast sales.

The Company has a Board approved policy on assessment, measurement and monitoring of hedge effectiveness which provides a guideline for the evaluation of hedge effectiveness, treatment and monitoring of the hedge effective position from an accounting and risk monitoring perspective. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. The Company assesses hedge effectiveness on prospective basis. The prospective hedge effectiveness test is a forward looking evaluation of whether or not the changes in the fair value or cash flows of the hedging position are expected to be highly effective in offsetting the changes in the fair value or cash flows of the hedged position over the term of the relationship.

For derivative contracts designated as hedge, the Company documents, at inception, the economic relationship between the hedging instrument and the hedged item, the hedge ratio, the risk management objective for undertaking the hedge and the methods used to assess the hedge effectiveness. The derivative contracts have been taken to hedge foreign currency fluctuations risk arising on account of highly probable foreign currency forecast sales.

The Company applies cash flow hedge to hedge the variability arising out of foreign exchange currency fluctuations on account of highly probable forecast sales. Such contracts are generally designated as cash flow hedges.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The forward exchange forward contracts are denominated in the same currency as the highly probable future sales, therefore the hedge ratio is 1:1. Further, the entity has excluded the foreign currency basis spread and takes such excluded element through the income statement. Accordingly, the Company designates only the spot rate in the hedging relationship.

Hedge effectiveness is assessed through the application of dollar offset method and designation of spot rate as the hedging instrument. The excluded portion of the foreign currency basis spread is taken directly through income statement.

The table below enumerates the Company''s hedging strategy, typical composition of the Company''s hedge portfolio, the instruments used to hedge risk exposures and the type of hedging relationship for the year ended March 31, 2021:

f) Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1. Pharma Trade Receivables

2. Financial Services business -

i) Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others; and

ii) Strategic Investment made in other corporate bodies.

Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Corporate Finance Groups are explained in the note below.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned by credit-rating agencies or mutual funds.

Financial Services Business

The Company is exposed to Credit Risk through its lending activity. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Wholesale lending:

The Company''s Risk management team has developed proprietary internal rating models to evaluate risk return trade-off for the loans and investments made by the Company. The output of traditional credit rating model is an estimate of probability of default. These models are different from the traditional credit rating models as they integrate both probability of default and loss given default into a single model.

Credit Risk Management

For wholesale lending business, credit risk management is achieved by considering various factors like:

• Cash flow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

• Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

• Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

• Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent. Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment.

Based on the above assessment the risk team categorises the deals in to the below Risk Grades

Risk Grading I	Description Extremely good loan
ii	Good loan
iii	Moderate loan
IV	Weak loan
V	Extremely weak loan

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

Provision for Expected Credit Loss

The Company has assessed the credit risk associated with its financial assets for provision of Expected Credit Loss (ECL) as at the reporting dates. The Company makes use of various reasonable supportive forward looking parameters which are both qualitative as well as quantitative while determining the change in credit risk and the probability of default. These parameters have been detailed out in Note No.vii of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

The Company provides for expected credit loss based on the following:

Category - Description Assets for which credit risk has not significantly increased from initial recognition	Stages Stage 1	Basis for Recognition of Expected Credit Loss 12 month ECL
Assets for which credit risk has increased significantly but not credit impaired	Stage 2	Life time ECL
Assets for which credit risk has increased significantly and credit impaired	Stage 3	Loss Given Default (LGD)

For the year ended March 31, 2021 and March 31, 2020 the Company has developed a PD Matrix after considering some parameters as stated below:

The key parameters for various scorecards are highlighted as follows -Real Estate products (Construction Finance, Structured Debt, LRD) - (1) Developer Grade (2) Past Overdue History (3) Tenant profile (4) Status from monthly Asset Monitoring report (5) Stage of the project (6) Geography etc. Some of the Parameters for Non-Real Estate products (Senior lending, mezzanine, project fiance etc.) - (1) Sponsor strength (2) Overdues (3) Average Debt service coverage ratio (4) Regulatory Risk (5) Stability of EBITDA (6) Quality of underlying assets etc. Based on these parameters the Company has computed the PD.

The Company has also built in model scorecards to determine the internal LGD. However, due to lack of default history to statistically substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD. The Company also maintains Expected Credit Loss for undisbursed limits after applying the Credit conversion factor (CCF). CCF for these limits is computed based on historical disbursement trends observed across various products.

Impact of COVID-19 pandemic on the credit risk

The outbreak of COVID-19 pandemic across the globe and in India has contributed to a significant decline and volatility in the global and Indian financial markets and slowdown in the economic activities. The Company through it''s financial services segment offers long-term and short-term wholesale lending primarily to the real estate and infrastructure sector. In accordance with Reserve Bank of India (RBI) guidelines, the Company had proposed a moratorium benefit on the payment of principal instalments and/or interest, to all eligible borrowers classified as standard, even if overdue as on February 29, 2020 excluding the collections already made in the month of March 2020, basis approval by the management on a case to case basis. Accordingly, for all such accounts where the moratorium is granted, the asset classification will remain standstill during the moratorium period. (i.e. the number of days past due shall exclude the moratorium period for the purposes of asset classification as per the Company''s policy).

The Company had ran a scenario analysis as on March 31, 2020 using proprietary algorithm-based risk models on the portfolio taking into account the possible impact related to COVID-19 pandemic.

Further the Company has, based on available information estimated and applied management overlays in the previous year, for the purpose of determination of the provision for impairment of financial assets. The management continued to consider macroeconomic overlay similar to its previous study. Given the uncertainty over the potential macro-economic impact, the Company''s management has considered internal and external information and economic forecasts up to the date of approval of these financial statements.

During the quarter and year ended March 31, 2020, the Company has estimated and recognised an additional expected credit loss of C303 Crores on certain financial assets, on account of the anticipated effect of the global health pandemic. As a result of uncertainties resulting from COVID-19, the impact of this pandemic may be different from those estimated as on the date of approval of these financial statements and the Company will continue to monitor any changes to the future economic conditions.

Accordingly, the provision for expected credit loss on financial assets as at March 31, 2021 includes potential impact on account of the pandemic. Based on the current indicators of future economic conditions, the Company considers this provision to be adequate.

iii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 47(a)) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The Company generally ensures a security cover of more than 100% of the proposed facility amount. The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits. The collateral held by the Company varies on case to case basis and includes:

i) First/Subservient charge on the Land and/or Building of the project or other projects

ii) First/Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters/Promoter Undertakings

vi) Post dated/Undated cheques

vii) Pledge on investment in shares made by borrower entity

48 . The Company conducts research and development to find new sustainable chemical routes for pharmaceutical & herbal products. The Company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients.

The Company''s research and development centers at Mumbai, Ennore and Ahmedabad have been transferred to Piramal Pharma Ltd. pursuant to transfer of pharma business. (Refer Note 53(a))

In assessing the realisability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realise the benefits of these deductible differences. The amount of deferred tax asset considered realisable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

The Company during the previous year has exercised the option of lower tax permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019 (''the Amendment Act''). Accordingly, the Company has recognised provision for income tax for the year ended March 31, 2020 basis the rate provided in the said Amendment Act. The Company has re-measured the opening balance of Deferred Tax Assets (net) including Minimum Alternate Tax (MAT) as at April 1, 2019 and accounted net tax expense of C385.62 Crores relating to the same in the previous year.

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Investment in Preference Shares, Alternative Investment Funds, Debentures, Term Loans and Inter Corporate Deposits.

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. The fair value of the optionally convertible debentures has been calculated by using price to earnings method observed for comparable peers in the industry.

iii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data.

iv. This includes listed equity instruments which are fair valued using quoted prices and closing NAV in the market.

v. Investments in Alternative Investment Funds is valued basis the net asset value received from the fund house.

vi. This includes forward exchange contracts whose fair value is determined using forward exchange rate at the balance sheet date.

vii. Discounted cash flow method basis contractual cash flow has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates. Credit risk adjustment has not been considered while arriving at the fair values.

viii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk. The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main

level 3 inputs used for preference shares and debentures are as follows:

1. For Non-Convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2. For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach - comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

f) Management uses its best judgement in estimating the fair value of its financial instruments (including impact on account of COVID-19). However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

52(a) (i) On December 19, 2019, 115,894 Compulsorily Convertible Debentures ("CCD") having face value of C151,000 per CCD were allotted to Caisse de depot et placement du Quebec for an aggregate amount of C1,749.99 Crores. Each CCD is convertible into 100 equity shares having face value of C2 each.

(ii) On October 25, 2017, 464,330 Compulsorily Convertible Debentures ("CCD") having face value of C107,600 per CCD were allotted to the CCD holders for an aggregate amount of C4,996.19 Crores. Each CCD was convertible into 40 equity shares of C2 each.

225.000 equity shares were allotted by the Company pursuant to optional conversion of 5,625 CCDs by the CCD holders and

4.162.000 equity shares were allotted by the Company pursuant to optional conversion of 104,050 CCDs by the CCD holders during the year ended March 31, 2018 and March 31, 2019, respectively. During the three months ended June 30, 2019, 548,120 equity shares were allotted by the Company pursuant to optional conversion of 13,703 CCDs and 13,638,080 Equity shares were allotted pursuant to compulsory conversion of outstanding 340,952 CCDs on maturity, respectively.

52(b) (i) On December 24, 2019, the Company offered 27,929,649 equity shares under Rights Issue at a price of C1,300 per share (including premium of C1,298 per share). Out of the aforesaid issue, 26,385,861 equity shares were allotted by the Company on January 29, 2020 and 1,535,944 Rights Equity shares have been reserved for the CCD Holder (as per regulation 74(1) of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018) and 7,844 Rights Equity Shares have been kept in abeyance.

(ii) On March 8, 2018, the Company had issued 8,310,275 equity shares under Rights Issue at a price of C2,380 per share (including premium of C2,378 per share). Out of this rights issue, 11,298 and 7,485,574 equity shares were allotted by the Company during the year ended March 31, 2019 and year ended March 31, 2018, respectively.

During the three months ended June 30, 2019 and September 30, 2019, 213,392 and 66 equity shares, respectively, were allotted by the Company under Rights Issue at a price of C2,380 per share (including premium of C2,378 per share) to the CCD holders out of the Right Equity shares reserved for them (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) and shares held in abeyance.

As on March 31, 2021, 24,573 Rights equity shares have been kept in abeyance. 575,372 Rights equity shares reserved for the CCD holders (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) have not been subscribed by them and these unsubscribed rights shall be dealt with by the Board of Directors of the Company, in accordance with the law and hence are considered to be dilutive in nature.

The National Company Law Tribunal had approved a "Scheme of Amalgamation" ("Scheme") of Piramal Phytocare Limited ("Transferor company"), an associate of the Company, with the Company and its respective shareholders vide it''s order dated November 4, 2019. Pursuant to the necessary filings with Registrar of Companies, Mumbai, the Scheme has become effective from December 2, 2019 with the appointed date of April 1, 2018. As prescribed by the Scheme, 305,865 equity shares of the Company of C2/- each were issued to the shareholders of Transferor Company on December 13, 2019, as a consideration in the ratio of 1 fully paid up equity share of C2 each of the Company for every 70 equity shares of C10 each held in transferor Company.

The amalgamation has been accounted for under the "pooling of interest" method referred to in Appendix C of Ind AS 103 - Business Combinations of Entities under Common Control, as prescribed by the Scheme. Accordingly, all the assets, liabilities and reserves of transferor company as on April 1, 2018 have been aggregated with those of the Company at their respective book values. The comparative financial information in the financial statements of the Company have been restated for the accounting impact of merger, as if the merger had occurred from the beginning of the comparative period. The difference of C21.35 Crores between the net value of assets, liabilities and reserves of the transferor company acquired and the sum of (a) the face value of new shares issued and allotted pursuant to merger and (b) the carrying value of investment of the Company in equity shares of transferor Company being cancelled has been transferred to capital reserve of the Company, as prescribed by the Scheme. The impact of merger is not significant on the financial statements and EPS of the Company.

53. (A) DISCONTINUED OPERATIONS

(i) Transfer of Pharma Business:

The Board of Directors (''Board'') of the Company at their meeting held on June 26, 2020, had inter alia, approved the sale of the major line of pharmaceuticals business, (''Pharma business''), including those held by the Company directly and through its wholly-owned subsidiaries, to Piramal Pharma Ltd., a subsidiary of the Company (''PPL''). The transaction was completed on October 6, 2020 on receipt of requisite approvals. The consideration received by the Company from PPL is C4,487 Crores and the excess of such consideration the net assets, net of tax, has been transferred to capital reserve, the transaction being a common control transaction under Ind AS 103 "Business Combinations".

Consequently, operations relating to the Pharma Business in respect of total income, total expenses and tax have been disclosed separately as Discontinued Operations as part of the results. The previous periods have been restated in the standalone financial statements to give effect to the presentation requirements of Ind AS 105: "Non-Current Assets Held for Sale and Discontinued Operations"

4. I n accordance with Ind AS 108 ''Operating Segments'', segment information has been given in the consolidated financial statements of the Company, which are presented in the same Annual Report and therefore, no separate disclosure on segment information is given in these financial statements.

5 . he financial statements have been approved for issue by Company''s Board of Directors on May 13, 2021.

---

Mar 31, 2019

1. GENERAL INFORMATION

“Piramal Enterprises Limited (PEL) (including its subsidiaries) is one of India’s large diversified companies, with a presence in Pharmaceuticals, Healthcare Insights & Analytics and Financial Services

In Pharmaceuticals, through an end-to-end manufacturing capabilities across its manufacturing facilities and a large global distribution network, the Company sells a portfolio of niche differentiated pharmaceutical products and provides an entire pool of pharmaceutical services (including in the areas of injectable, HPAPI etc.). The Company is also strengthening its presence in the Consumer Product segment in India .

In Financial Services, Group provides comprehensive financing solutions to various companies. It provides both wholesale and retail funding opportunities across sectors. In real estate, the platform provides housing finance and other financing solutions across the entire capital stack ranging from early stage private equity, structured debt, senior secured debt, construction finance, and flexi lease rental discounting. The wholesale business in non-real estate sector includes separate verticals -Corporate Finance Group (CFG) and Emerging Corporate Lending (ECL). CFG provides customized funding solutions to companies across sectors such as infrastructure, renewable energy, roads, industrials, auto components etc. while ECL focuses on lending towards Small and Medium Enterprises (SMEs). The Group has also launched Distressed Asset Investing platform that will invest in equity and/or debt in assets across sectors (other than real estate) to drive restructuring with active participation in turnaround The Group also has strategic alliances with top global funds such as APG Asset Management, Bain Capital Credit, CPPIB Credit Investment Inc. and Ivanhoe Cambridge (CDPQ) The Group has long term equity investments in Shriram Group, a leading financial conglomerate in India.

Healthcare Insights & Analytics business, Decision Resources Group, is the premier provider of healthcare analytics, data & insight products and services to the world’s leading pharma, biotech and medical technology companies and enables them to take informed business decisions.

PEL is a public limited Company incorporated and domiciled in India and has its registered office at Mumbai, India. It is listed on the BSE Limited and the National Stock Exchange of India Limited in India.”

Note: To the extent of debentures (including interest) redeemable within 12 months of the reporting date, the amount has been presented as part of current investments as per the requirements of Schedule III . The balance amount has been presented as non-current .

@ During the previous year, a total of Rs.3,500 Crores (approx) has been invested in Piramal Finance Limited (PFL) including Rs.1,700 Crores by way of conversion of loan into equity. Piramal Finance Limited (PFL) and Piramal Capital Limited (PCL), both wholly owned subsidiaries of the Company, merged with an appointed date of March 31, 2018 with Piramal Housing Finance Limited (PHFL), a step down wholly owned subsidiary of the Company, through a scheme of Merger by Absorption approved by the National Company Law Tribunal on April 6, 2018 and filed with the Registrar of Companies on May 23, 2018, the effective date.

As per the scheme,

a) equity shareholders of PFL are to be allotted 483 fully paid up equity shares of Rs.10/- each of PHFL to be issued for every 100 equity shares of Rs.10/- each held by them in PFL. Fractional entitlements, if any, to the shares will be rounded off to the nearest whole number.

b) equity shareholders of PFL are to be allotted 1 fully paid up equity shares of Rs.10/- each of PHFL to be issued for every 5 equity shares of Rs.2/- each held by them in PCL. Fractional entitlements, if any, to the shares will be rounded off to the nearest whole number.

As a result of above scheme, a total of 18,044,517,320 shares were alloted during the year which were pending allotment as on March 31, 2018.

Subsequent to amalgamation, name of merged company was changed to Piramal Capital and Housing Finance Limited w.e.f. June 12, 2018.

During the year, the company converted its loan to PHL Fininvest Private Limited (“Fininvest”) into shares resulting into allotment of 149,273,985 equity shares of Rs.10 each at Rs.73.69 per share in Fininvest to the Company

@@@ During the year, the company converted its loan to Piramal Holdings (Suisse) SA (“PHSA”) into shares resulting into allotment of 174,171,431 Class B Non-voting shares of CHF 1 each at par in PHSA to the Company.

@@@@ During the year, the company converted its loan (including interest) to DRG Analytics & Insights Private Limited into shares resulting into allotment of 33,007 equity shares of Rs.10 each at Rs.8,374 per share in DRG Analytics & Insights Private Limited to the Company.

** India Resurgence ARC Private Limited (formerly known as Piramal Assets Reconstruction Private Limited) was a wholly owned subsidiary of the Company till July 18, 2017. On July 19, 2017, the Company has entered into a Joint Venture agreement with Bain Capital Credit India Investments (a company existing under the laws of the Republic of Mauritius) to sell its 50% stake in India Resurgence ARC Private Limited to the latter. The contractual arrangement states that the Company and the other shareholder shall nominate one director each to the board in addition to the two independent directors. For any meeting of the board, the quorum shall be two directors provided that one director from each party is present. This gives both the parties a joint control over India Resurgence ARC Private Limited.

Hence, the investment in India Resurgence ARC Private Limited is considered as investment in Joint Venture.”

*** India Resurgence Asset Management Business Private Limited (formerly known as PEL Asset Resurgence Advisory Private Limited) was a wholly owned subsidiary of the Company till February 6, 2018. On February 7, 2018, the Company has entered into a Joint Venture agreement with Bain Capital Mauritius (a private limited company incorporated in Mauritius) to sell its 50% stake in India Resurgence Asset Management Business Private Limited to the latter. The contractual arrangement states that the Company and the other shareholder shall nominate one director each to the board in addition to the two independent directors. For any meeting of the board, the quorum shall be two directors provided that one director from each party is present. This gives both the parties a joint control over India Resurgence Asset Management Business Private Limited. Hence the investment in India Resurgence Asset Management Business Private Limited is considered as investment in Joint Venture.

Note:

1 . Refer Note 40 for the inventories hypothecated as security against borrowings .

2. The cost of inventories recognised as an expense during the year was Rs.916.85 Crores (Previous year Rs.938.08 Crores).

3. The cost of inventories recognised as an expense includes Rs.2.05 Crores (Previous year reversal of Rs.0.02 Crores) in respect of write downs of inventory to net realisable value and a reversal of Rs.1.34 Crores (Previous year reversal of Rs.0.14 Crores) in respect of provisions for slow moving/non moving/expired/near expiry products.

The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis .

Of the Trade Receivables balance as at March 31, 2019 of Rs.646.58 Crores (as at March 31, 2018 of Rs.520.07 Crores), the top 3 customers of the Company represent the balance of Rs.235.60 Crores as at March 31, 2019 (as at March 31, 2018 - Rs.124.04 Crores). There were two customers (Previous year : One customer) who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. 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. The provision matrix at the end of the reporting period is as follows:

If the trade receivables (discounted) are not paid at maturity, the bank has right to request the Company to pay the unsettled balance. As the Company has not transferred the risks and rewards relating to these customers, it continues to recognize the full carrying amount of the receivables and has recognized the cash received on the transfer as a secured borrowing (Refer Note 22).

At the end of the reporting period, the carrying amount of the trade receivables that have been transferred but have not been de-recognized amounted to Rs.0.79 Crores (Previous year Rs.1.56 Crores) and the carrying value of associated liability is Rs.0.79 Crores (Previous year Rs.1.56 Crores) (Refer Note 22).

(iv) Terms and Rights attached to equity shares

Equity Shares:

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

On July 31, 2018, a Dividend of Rs.25 per equity share (total dividend of Rs.451.50 Crores and dividend distribution tax of Rs.91.27 Crores) was paid to holders of fully paid equity shares.

On April 26, 2019, a Dividend of Rs.28 per equity share (Face value of Rs.2/- each) amounting to Rs.557.92 Crores (Dividend Distribution Tax thereon of Rs.114.68 Crores) has been recommended by the Board of Directors which is subject to approval of the Shareholders. The amounts calculated are based on the number of shares likely to be entitled for dividend as estimated on April 26, 2019.

The coupon rate for the above debentures are in the range of 8.20 % to 9.40 % per annum (Previous Year : 8.20 % to 9.43 % per annum)

Terms and Description of Compulsorily Convertible Debentures:

Compulsorily convertible debentures outstanding as at March, 31 2019 is Rs.3,816.09 Crores (As at March 31, 2018-’ 4,935.66 Crores) . Each debenture has a par value of Rs.107,600 and is convertible at the option of the debenture holder into Equity shares of the Company starting from October 25, 2017 on the basis of forty equity share of Rs.2/- each for every one Debenture held. Any debenture not converted will be compulsorily converted into equity shares on April 19, 2019 at a price of Rs.2,690 per share. The debentures carry a coupon of 7.80% per annum, payable half-yearly in arrears on April 24, 2018, October 21, 2018 and April 19, 2019. The basis of presentation of the liability and equity portions of these shares is explained in the summary of significant accounting policies.

Refer Note 52(a) for movement in CCDs.

Disaggregate Revenue Information

The table below presents disaggregated revenues from contracts with customers by major product and timing of transfer of goods or services for each of our business segments. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cashflows are affected by industry, market and other economic factors.

During the year, the Company has capitalized borrowing costs of Rs. Nil (Previous year Rs.22.44 Crores) relating to projects, included in Capital Work in Progress. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Company’s general borrowings during the year, in this case Nil (Previous year 8.75%).

Note:

Details in respect of Corporate Social Responsibility Expenditure:

- Gross amount required to be spent during the year - Rs.16.24 Crores (Previous year Rs.14.06 Crores)

- Amount spent during the year on Revenue Expenditure - Rs.31.20 Crores (Previous year Rs.28.56 Crores)

- Amount spent during the year on Capital Expenditure - Rs. Nil (Previous year Rs. Nil)

In June 2018, the Company’s wholly owned subsidiary, Piramal Holdings (Suisse) SA (referred to as “PHSA”) sold its entire ownership interest in its wholly owned subsidiary Piramal Imaging SA. Consequently, the Company’s cost of equity investment in PHSA amounting to Rs.1,287.96 Crores have been provided for.

2. EMPLOYEE BENEFITS :

Brief description of the Plans:

Other Long Term Employee Benefit Obligations:

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise. Long Term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution Plans:

The Company’s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contribution to such plans.

Post-employment Benefit Plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India .

The Company’s Gratuity Plan is administered by an insurer and the investments are made in various schemes of the trust. The Company funds the plan on a periodical basis .

In case of certain employees, Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, equity, mutual funds and other debt instruments .

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The gratuity plan is a funded plan and the Company makes contributions to trust administered by the Company. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident Fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets .

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

The Provident Fund has a surplus that is not recognised on the basis that future economic benefits are not available to the Company in the form of a reduction in future contributions or a cash refund due to local regulations.

The Company has no legal obligation to settle the deficit in the funded plan (Gratuity), if any, with an immediate contribution or additional one off contributions.

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose .

In case of certain employees, the Provident Fund contribution is made to a Trust administered by the Company. In terms of the Guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident fund liability based on the assumptions listed above and determined that there is no shortfall at the end of each reporting period.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis .

In case of certain employees, Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

Weighted average duration of the defined benefit obligation is 7 years (Previous year 7 years)

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

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The liability for Leave Encashment (Non - Funded) as at year end is Rs.37.82 Crores (Previous year Rs.34.98 Crores)

The liability for Long term Service Awards (Non - Funded) as at year end is Rs.2.36 Crores (Previous year Rs.2.12 Crores)

3. RELATED PARTY DISCLOSURES

1. List of related parties

A. Controlling Entities

The Ajay G. Piramal Foundation @

Piramal Phytocare Limited Senior Employees Option Trust @

The Sri Krishna Trust through its Trustees, Mr.Ajay Piramal and Dr.(Mrs.) Swati A. Piramal @

Aasan Info Solutions (India) Private Limited @

Piramal Welfare Trust through its Trustee, Piramal Corporate Services Limited @

PRL Realtors LLP @

Anand Piramal Trust@

Nandini Piramal Trust@

@There are no transactions during the year.

** held through Piramal Dutch Holdings N.V @ held through Piramal Systems & Technologies Private Limited

$ held through Piramal Dutch IM Holdco B.V.

$$ held through Piramal Fund Management Private Limited

@@ On June 25, 2018, Piramal Holdings (Suisse) SA, sold its entire ownership in these subsidiaries ( Refer Note 35)

* held through Piramal Holdings (Suisse) SA *

* held through Piramal Dutch Holdings N.V.

*** merger of Piramal Finance Limited and Piramal Capital Limited with the step down subsidiary Piramal Housing Finance Limited.

@ held through Piramal Systems & Technologies Private Limited

$ held through Piramal Dutch IM Holdco B.V.

$$ held through Piramal Fund Management Private Limited

With effect from March 21, 2018, as a result of the overall restructuring of the Corporate Social Responsibility subsidiaries of the Company, the below entities have been ceased to be the subsidiaries of the Company. Further, these entities ceased to be a part of the promoter group of the Company, pending requisite approval.

Piramal Udgam Data Management Solutions (Udgam)###

Piramal Foundation for Educational Leadership (PFEL)###

Piramal Swasthya Management and Research Institute (formerly known as “Health Management and Research Institute”) (PSMRI)

Piramal Foundation (formerly known as Piramal Healthcare Foundation) ###

These CSR companies (###) incorporated under section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013), being limited by guarantee (not having share capital) and PSMRI (being a society) are engaged in Corporate Social Responsibility activities. Based on the control assessment carried out by the company, the same is not consolidated as per INDAS 110 .

Other Intermediates:

Shriram Transport Finance Company Limited (Shriram Transport)

Shriram City Union Finance Limited (Shriram City Union)

D. Other related parties

Entities controlled by Key Management Personnel :

Aasan Corporate Solutions Private Limited (Aasan Corporate Solutions)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Glass Limited (PGL)

PRL Developers Private Limited (PRL)

PRL Agastya Private Limited Piramal Water Private Limited

Employee Benefit Trusts :

Staff Provident Fund of Piramal Healthcare Limited (PPFT)

E. Key Management Personnel

Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal

Ms . Nandini Piramal

Mr. Vijay Shah

F. Relatives of Key Management Personnel

Mr. Anand Piramal [Son of Mr. Ajay G. Piramal and Dr. (Mrs.) Swati A. Piramal]

Mr. Peter De Young [husband of Ms. Nandini Piramal]

G. Non Executive/Independent Directors

Dr. R. A. Mashelkar

Mr. Gautam Banerjee

Mr. Goverdhan Mehta

Mr. N. Vaghul

Mr. S . Ramadorai

Mr. Deepak Satwalekar

Mr. Keki Dadiseth

Mr Siddharth N Mehta

Ms. Arundhati Bhattacharya (w.e.f. October 25, 2018)

Interest rates charged to subsidiaries are made at market rates comparable with prevailing rates in the respective geographies. All other transactions were made on normal commercial terms and conditions and at market rates.

During the year ended March 31, 2019, the Company transferred certain financial assets of Rs.2,207.72 Crores (Previous Year : Rs.3,001.67 Crores) and certain financial liabilities of Rs. NIL (Previous Year : Rs.1,272.19 Crores) to Piramal Capital and Housing Finance Limited and financial assets of Rs.694.41 Crores (Previous Year : Rs. NIL) to PHL Fininvest Private Limited, both wholly owned subsidiaries, for an aggregate consideration of Rs.2,902.13 Crores (Previous Year: Rs.1,729.48 Crores). Accordingly Profit/ (Loss) after Tax for the year ended March 31, 2019 is not comparable with the Profit/ (Loss) after Tax of the previous year.

*Excludes transactions with related parties in their capacity as shareholders.

4. Property, Plant & Equipment, Brands and Trademarks, Investment in Non Convertible Debentures, Inter Corporate Deposits, Other Financial Assets and specified receivables relating to a wholly owned subsidiary are mortgaged / hypothecated to the extent of Rs.10,002.70 Crores (As on March 31, 2018 : Rs.4,596 Crores) as a security against long term secured borrowings as at March 31, 2019.

Plant & Equipment, Inventories, Trade receivables, Investment in Non Convertible Debentures and Inter Corporate Deposits are hypothecated as a security to the extent of Rs.1,096.67 Crores (As on March 31, 2018 Rs.548.94 Crores) against short term secured borrowings as at March 31, 2019.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

5 . The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

6 . The Company’s significant operating lease arrangements are mainly in respect of residential / office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Note 34.

These lease arrangements are for a period ranging from one year to five years and are in most cases renewable by mutual consent, on mutually agreeable terms .

7 . The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 22 and 23 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through non convertible debt securities or other long-term /short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The terms of the Secured and unsecured loans and borrowings contain certain financial covenants primarily requiring the Company to maintain certain financial ratios like Total Debt to Total Net Worth, Interest Coverage Ratio, Fixed Asset Cover ratio, Minimum net worth conditions, etc. The Company is broadly in compliance with the said covenants and the banks have generally waived / condoned such covenants.

8. RISK MANAGEMENT

The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks. The Senior Management along with a centralized treasury manages the liquidity and interest rate risk on the balance sheet .

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements

a. Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due .

The Senior Management along with centralized treasury is responsible for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

Note: This includes Non-Convertible Debentures, Inter Corporate Deposits and Commercial Papers where only credit rating has been obtained and which can be issued, if required, within a short period of time. Further, the facilities related to Commercial Papers are generally rolled over .

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of reporting period ends respectively has been considered.

b. Interest Rate Risk Management

The Company is exposed to interest rate risk as it has assets and liabilities based on floating interest rates as well. Senior Management along with centralised treasury assess the interest rate risk run by it and provide appropriate guidelines to the treasury to manage the risk . The Senior Management along with centralised treasury reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The Senior Management along with centralised treasury reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analysis below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to FCNR borrowings had been 25 basis points higher/lower and all other variables were held constant,and other borrowings had been 100 basis points higher /lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2019 would decrease/increase by Rs.1 . 99 Crores for FCNR Borrowing (Previous year Nil) and Rs.24. 98 Crores for other borrowings totalling to Rs.26.97 Crores (Previous year Rs.22.75 Crores) respectively. This is attributable to the Company’s exposure to borrowings at floating interest rates.

If interest rates related to loans given / debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2019 would increase/decrease by Rs.117.42 Crores (Previous year Rs.84.50 Crores). This is attributable to the Company’s exposure to lendings at floating interest rates.

c. Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the balance sheet at fair value through Other Comprehensive Income .

Equity price sensitivity analysis:

The table below summarises the impact of increases/decreases (pre-tax) on the Company’s Equity and OCI for the period. Analysis is based on the assumption that equity index had increased/decreased by 5% with all the other variables held constant, and these investments moved in the line with the index.

The Company has designated the following securities as FVTOCI Investments:

Shriram City Union Finance Limited Shriram Transport Finance Company Limited

The Company chose this presentation alternative because the investment were made for strategic purposes rather than with a view to make profit on subsequent sale, and there are no plans to dispose of these investments.

d. Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure (Foreign Currency (FC)) and takes measures to hedge the exposure based on prevalent macro-economic conditions.

e. Accounting for cash flow hedge

The objective of hedge accounting is to represent, in the Company’s financial statements, the effect of the Company’s use of financial instruments to manage exposures arising from particular risks that could affect profit or loss. As part of its risk management strategy, the Company makes use of financial derivative instruments, such as foreign currency range forwards and forward exchange contracts for hedging the risk arising on account of highly probable foreign currency forecast sales .

The Company has a Board approved policy on assessment, measurement and monitoring of hedge effectiveness which provides a guideline for the evaluation of hedge effectiveness, treatment and monitoring of the hedge effective position from an accounting and risk monitoring perspective. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. The Company assesses hedge effectiveness on prospective basis. The prospective hedge effectiveness test is a forward looking evaluation of whether or not the changes in the fair value or cash flows of the hedging position are expected to be highly effective in offsetting the changes in the fair value or cash flows of the hedged position over the term of the relationship.

For derivative contracts designated as hedge, the Company documents, at inception, the economic relationship between the hedging instrument and the hedged item, the hedge ratio, the risk management objective for undertaking the hedge and the methods used to assess the hedge effectiveness. The derivative contracts have been taken to hedge foreign currency fluctuations risk arising on account of highly probable foreign currency forecast sales .

(i) Forward Exchange Contract

The Company applies cash flow hedge to hedge the variability arising out of foreign exchange currency fluctuations on account of highly probable forecast sales. Such contracts are generally designated as cash flow hedges.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The forward exchange forward contracts are denominated in the same currency as the highly probable future sales, therefore the hedge ratio is 1:1. Further, the entity has excluded the foreign currency basis spread and takes such excluded element through the income statement. Accordingly, the Company designates only the spot rate in the hedging relationship.

Hedge effectiveness is assessed through the application of dollar offset method and designation of spot rate as the hedging instrument. The excluded portion of the foreign currency basis spread is taken directly through income statement.

(During the year : Nil) During the previous year, the Company has taken foreign currency floating rate borrowings which are linked to LIBOR. For managing the foreign currency risk and interest rate risk arising from changes in LIBOR on such borrowings, the Company had entered into cross-currency interest rate swap (CCIRS) for the entire loan liability. The Company had designated the CCIRS (hedging instrument) and the borrowing (hedged item) into a hedging relationship and applies hedge accounting.

Under the terms of the CCIRS, the Company pays interest at the fixed rate to the swap counterparty in INR and receives the floating interest payments based on LIBOR in foreign currency. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying and fixed rates) are matching and the interest cash flows are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument and hedged item have values that generally move in the opposite direction.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

The date on which CCIRS and the borrowings were designated into hedging relationship is later than the date on which the respective contracts were entered into. This timing difference resulted into hedge ineffectiveness to a certain extent, the effect of which was recognised in the Statement of Profit and Loss in the previous year.”

f. Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1 . Pharma Trade Receivables

2 . Financial Services business -

i) Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others ; and

ii) Strategic Investment made in other corporate bodies.

Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Corporate Finance Groups are explained in the note below.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned by credit-rating agencies or mutual funds.

Financial Services Business

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The risk management team has developed proprietary internal rating model to evaluate risk return trade-off for the loans and investments done by the Company. The output of traditional credit rating model is an estimate of Probability of Default (PD). These models are different from the traditional credit rating models as they integrate both PD and Loss Given Default (LGD) into a single model. “

Credit Risk Management

Credit risk management is achieved by considering various factors like :

- Cash flow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

- Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

- Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

- Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent . Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment .

Based on the above assessment the risk team categorises the deals in to the below Risk Grades

- Good Deals with very high risk adjusted returns

- Investment Grade Deals with high risk adjusted returns

- Management Review Grade Deals with risk adjusted returns required as per lending policy

- Not Advisable Grade Deals with lower than required risk adjusted returns

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management .

Provision for Expected Credit Loss

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding looking parameters, which are both qualitative and quantitative. These parameters have been detailed in Note no.vi of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (UnderPerforming) Asset (3) Default (Non-Performing) Asset (Credit Impaired).

Macroeconomic information (such as regulatory changes, market interest rate or growth rates) is incorporated as part of the internal rating model.

In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 30 days past due

For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days over dues. This is also as per the rebuttable presumption provided by the standard.”

The Company provides for expected credit loss based on the following:

Category - Description Basis for Recognition of Expected Credit Loss

Stage 1 - Standard (Performing) Assets 12 month ECL

Stage 2 - Significant Credit Deteriorated Assets Life time ECL

Stage 3 - Default (Non-Performing) Assets (Credit Impaired) Life time ECL

The Company has developed a PD Matrix consisting of various parameters suitably tailored for various facilities like grade of the borrower, past overdue history, status from monthly asset monitoring report, deal IRR, deal tenure remaining etc.

Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, since there has been no default history to substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD.

iii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 47(a) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The Company generally ensures a security cover of 100-200% of the proposed facility amount . The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits . The collateral held by the Company varies on case to case basis and includes:

i) First / Subservient charge on the Land and / or Building of the project or other projects

ii) First / Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters / Promoter Undertakings

vi) Post dated / Undated cheques

vii) Pledge on investment in shares made by borrower entity

As at the reporting date, the ratio of value of the collateral held as security for the credit impaired financial assets to the exposure at default for these assets ranges from 0% to 85% .

9. The Company conducts research and development to find new sustainable chemical routes for pharmaceutical & herbal products. The company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients.

The Company has research and development centers in Mumbai, Ennore and Ahmedabad.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.

The tax rate used for the reconciliations above is the corporate tax rate of 34.944% for the year 2018-19 and 34.608% for the year 2017-18 payable by corporate entities in India on taxable profits under tax law in Indian jurisdiction.

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

The Company has calculated its tax liability for current domestic taxes after considering MAT. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward and set-off against future tax liabilities computed under normal tax provisions. The Company was required to pay MAT during the current and previous year and accordingly, a deferred tax asset of Rs.391.47 Crores and Rs.421.74 Crores has been recognized in the statement of financial position as of March 31, 2018 and 2019, respectively, which can be carried forward for a period of 15 years from the year of recognition.

b) Fair Value Hierarchy and Method of Valuation

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

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Investment in Preference Shares, Alternative Investment Funds, Debentures, Term Loans and Inter Corporate Deposits.

Valuation techniques used to determine the fair values:

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. The fair value of the optionally convertible debentures has been calculated by using price to earnings method observed for comparable peers in the industry.

iii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data .

iv. This includes listed equity instruments and mutual funds which are fair valued using quoted prices and closing NAV in the market.

v. This includes forward exchange contracts, cross currency interest rate swap, etc. The fair value of the forward exchange contract is determined using forward exchange rate at the balance sheet date. The fair value of cross currency interest rate swap is calculated as the present value of future cash flow based on observable yield curves and forward exchange rates.

vi. Discounted cash flow method has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

vii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk.The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

1) For Non Convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2) For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cashflow method has been used. For computation of equity value, market approach - comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

f) Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end

10 (a) On October 25, 2017, 464,330 Compulsorily Convertible Debentures (“CCD”) having face value of Rs.107,600 per CCD were allotted to the CCD holders for an aggregate amount of Rs.4,996.19 Crores. Each CCD is convertible into 40 equity shares of Rs.2 each. Out of this, 225,000 equity shares were allotted by the Company pursuant to optional conversion of 5,625 CCDs by the CCD holders in the previous year.

During the year ended March 31, 2019, 4,162,000 equity shares were allotted by the Company pursuant to optional conversion of 104,050 CCDs by the CCD holders.

Subsequent to March 31, 2019:

i) 548,120 Equity shares were allotted by the Company pursuant to optional conversion of 13,703 CCDs; and

ii) 13,638,080 Equity shares were allotted pursuant to compulsory conversion of outstanding 340,952 CCDs on maturity.

(b) On March 8, 2018, the Company had issued 8,310,275 Equity shares under Rights Issue at a price of Rs.2,380 per share (including premium of Rs.2,378 per share). Out of the aforesaid issue, 11,298 and 7,485,574 equity shares were allotted by the Company during the year ended March 31, 2019 and year ended March 31, 2018, respectively.

Subsequent to March 31, 2019, 17,585 Equity shares were allotted by the Company under Rights Issue at a price of Rs.2,380 per share (including premium of Rs.2,378 per share) to the CCD holders out of the Right Equity shares reserved for them (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009).

Earnings per share (Basic and Diluted) for the year ended March 31, 2018 has been retrospectively adjusted for effect of Rights Issue stated above .

As on March 31, 2019, 788,764 Rights Equity shares have been reserved for the CCD Holders (as per regulation 53 of erstwhile Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) and 24,639 Rights Equity Shares have been kept in abeyance. Of the said 788,764 reserved equity shares, CCD holders did not exercise the right to subscribe for 154,377 Rights Equity shares. These unsubscribed rights and also those arising in future, if any, shall be dealt with, in accordance with the law, post conversion of all the outstanding CCDs into equity shares and hence are considered to be dilutive in nature. Consequent to the loss for the year ended March 31, 2019, after exceptional item, potential equity shares are considered as anti-dilutive and hence diluted EPS is the same as basic EPS.

(d) Rs.4.18 Crores was received towards application of 17,585 Rights Shares (Reserved for Compulsory Convertible Debenture Holders) which were pending for allotment as on March 31, 2019.

11. In accordance with Ind AS 108 ‘Operating Segments’, segment information has been given in the consolidated financial statements of the Company, which are presented in the same Annual Report and therefore, no separate disclosure on segment information is given in these financial statements.

12. The Board of Directors on May 28, 2018 had approved a “Scheme of Amalgamation” (“Scheme”) of Piramal Phytocare Limited, an associate of the Company, with the Company and its respective shareholders. The Scheme has been approved by the equity shareholders of the Company in their meeting convened as per the directions of the National Company Law Tribunal on April 2, 2019. The Scheme is subject to approval of regulatory authorities.

13. The financial statements have been approved for issue by Company’s Board of Directors on April 26, 2019.

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Mar 31, 2018

1. GENERAL INFORMATION

Piramal Enterprises Limited (PEL) (including its subsidiaries) is one of India’s large diversified companies, with a presence in Healthcare, Healthcare Insights & Analytics business and Financial Services.

In Pharmaceuticals, through an end-to-end manufacturing capabilities across its manufacturing facilities and a large global distribution network, the Company sells a portfolio of niche differentiated pharma products and provides an entire pool of pharma services (including in the areas of injectable, HPAPI etc.). The Company is also strengthening its presence in the Consumer Product segment in India.

In Financial Services, PEL provides comprehensive financing solutions to real estate companies. Corporate Finance Group (CFG) provides senior and mezzanine growth capital to various businesses across varied sectors that are integral part of India’s growth story. The Company has also launched Distressed Asset Investing platform that will invest in equity and/or debt in assets across sectors (other than real estate) to drive restructuring with active participation in turnaround. The Company has recently launched a retail housing finance vertical. The Company also has strategic alliances with top global funds such as APG Asset Management, Bain Capital Credit, CPPIB Credit Investment Inc. and Ivanhoe Cambridge (CDPQ). The Company has long-term equity investments in Shriram Group, a leading financial conglomerate in India.

Healthcare Insights & Analytics business, Decision Resources Group, is the premier provider of healthcare analytics, data & insight products and services to the world’s leading pharma, biotech and medical technology companies and enables them to take informed business decisions

PEL is a public limited Company incorporated and domiciled in India and has its registered office at Mumbai, India. It is listed on the BSE Limited and the National Stock Exchange of India Limited in India.

2a. Critical accounting judgements and key sources of estimation uncertainties

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

Fair Valuation

Some of the Company’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset and liability, the Company uses market observable data to the extent it is available. When Level 1 inputs are not available, the Company engages third party qualified external valuer to establish the appropriate valuation techniques and inputs to the valuation model.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 50.

Expected Credit Loss

When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and credit assessment and including forward-looking information.

The inputs used and process followed by the Company in determining the increase in credit risk have been detailed in Note 46f.

Impairment loss in Investments carried at cost

The Company conducts impairment reviews of investments in subsidiaries/ associates/ joint arrangements whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable or tests for impairment annually. Determining whether an asset

is impaired requires an estimation of the recoverable amount, which requires the Company to estimate the value in use which base on future cash flows and a suitable discount rate in order to calculate the present value.

Useful life of Assets

Property, plant and equipment and Intangible Assets represent a significant proportion of the assets of the Company. Depreciation and amortisation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

Deferred Taxes

Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted at the reporting date. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

Defined benefit plans

The cost of the defined benefit plans and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. 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.

*Amounts are below the rounding off norm adopted by the Company.

Note: To the extent of debentures (including interest) redeemable within 12 months of the reporting date, the amount has been presented as part of current investments as per the requirements of Schedule III. The balance amount has been presented as non-current.

**India Resurgence ARC Private Limited (formerly known as Piramal Assets Reconstruction Private Limited) was a wholly-owned subsidiary of the Company till July 18, 2017. On July 19, 2017, the Company has entered into a Joint Venture agreement with Bain Capital Credit India Investments (a company existing under the laws of the Republic of Mauritius) to sell its 50% stake in India Resurgence ARC Private Limited to the latter. The contractual arrangement states that the Company and the other shareholder shall nominate one director each to the board in addition to the two independent directors. For any meeting of the board, the quorum shall be two directors provided that one director from each party is present. This gives both the parties a joint control over India Resurgence ARC Private Limited.

Hence, the investment in India Resurgence ARC Private Limited is considered as investment in Joint Venture.

***India Resurgence Asset Management Business Private Limited (formerly known as PEL Asset Resurgence Advisory Private Limited) was a wholly-owned subsidiary of the Company till February 6, 2018. On February 7, 2018, the Company has entered into a Joint Venture agreement with Bain Capital Mauritius (a private limited company incorporated in Mauritius) to sell its 50% stake in India Resurgence Asset Management Business Private Limited to the latter. The contractual arrangement states that the Company and the other shareholder shall nominate one director each to the board in addition to the two independent directors. For any meeting of the board, the quorum shall be two directors provided that one director from each party is present. This gives both the parties a joint control over India Resurgence Asset Management Business Private Limited.

Hence the investment in India Resurgence Asset Management Business Private Limited is considered as investment in Joint Venture.

@During the year, a total of Rs.3,500 Crores (approx) has been invested in Piramal Finance Limited (PFL) including Rs.1,700 Crores by way of conversion of loan into equity.

Piramal Finance Limited (PFL) and Piramal Capital Limited (PCL), both wholly-owned subsidiaries of the Company, merged with an appointed date of March 31, 2018 with Piramal Housing Finance Limited (PHFL), a step down wholly-owned subsidiary of the Company, through a scheme of Merger by Absorption approved by the National Company Law Tribunal on April 6, 2018 and filed with the Registrar of Companies on May 23, 2018, the effective date.

As per the scheme,

a) equity shareholders of PFL are to be allotted 483 fully paid up equity shares of Rs.10/- each of PHFL to be issued for every 100 equity shares of Rs.10/- each held by them in PFL. Fractional entitlements, if any, to the shares will be rounded off to the nearest whole number.

b) equity shareholders of PFL are to be allotted 1 fully paid up equity shares of Rs.10/- each of PHFL to be issued for every 5 equity shares of Rs.2/- each held by them in PCL. Fractional entitlements, if any, to the shares will be rounded off to the nearest whole number.

As a result of above scheme, a total of 18,044,517,320 shares are pending to be alloted as on March 31, 2018.

#Shrilekha Business Consultancy Private Limited

The Company had a 74.95% interest in a Joint Operation called Shrilekha Financial Services which was set up as a partnership together with Shriram Ownership Trust and its nominees to invest in Shriram Capital Limited. Shrilekha Financial Services holds 26.68% in Shriram Capital Limited.

The principal place of business of the joint operation is in India.

Shrilekha Financial Services was converted into a private limited company, Shrilekha Business Consultancy Private Limited on January 9, 2017. Hence, with effect from January 9, 2017, the investment in Shrilekha Business Consultancy Private Limited was considered as investment in Joint Venture.

The credit period on sale of goods generally ranges from 7 to 150 days.

The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2018 of Rs.520.07 Crores (as at March 31, 2017 of Rs.513.07 Crores), the top 3 customers of the Company represent the balance of Rs.124.04 Crores as at March 31, 2018 (as at March 31, 2017 - Rs.163.72 Crores). There was only one customer who represents more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. 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. The provision matrix at the end of the reporting period is as follows:

If the trade receivables (discounted) are not paid at maturity, the bank has right to request the Company to pay the unsettled balance. As the Company has not transferred the risks and rewards relating to these customers, it continues to recognize the full carrying amount of the receivables and has recognised the cash received on the transfer as a secured borrowing (Refer Note 21).

At the end of the reporting period, the carrying amount of the trade receivables that have been transferred but have not been de-recognised amounted to Rs.1.56 Crores (Previous year Rs.20.59 Crores) and the carrying value of associated liability is Rs.1.56 Crores (Previous year Rs.20.59 Crores) (Refer Note 21).

Fixed Deposit amounting to Rs.148.00 Crores represents balance held with bank from Right Issue proceeds pending utilisation. Except this, there are no repatriation restrictions with regard to Cash and Cash Equivalents as at the end of the reporting period and prior periods.

(i) Terms and Rights attached to equity shares Equity Shares:

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

On August 1, 2017, a Dividend of Rs.21 per equity share (total dividend of Rs.362.38 Crores and dividend distribution tax of Rs.72.82 Crores) was paid to holders of fully paid equity shares.

On May 28, 2018, a Dividend of Rs.25 per equity share (Face value of Rs.2/- each) amounting to Rs.451.48 Crores (Dividend Distribution Tax thereon of Rs.92.80 Crores) has been recommended by the Board of Directors which is subject to approval of the Shareholders. The amounts calculated are based on the shares existing as on May 28, 2018.

Terms and Description of Compulsorily Convertible Debentures

Compulsorily convertible debentures outstanding as at March 31, 2018 is Rs.4,935.66 Crores (As at March 31, 2017: Nil) . Each debenture has a par value of Rs.107,600 and is convertible at the option of the debenture holder into Equity shares of the Company starting from October 25, 2017 on the basis of forty equity share of Rs.2/- each for every one Debenture held. Any debenture not converted will be compulsorily converted into equity shares on April 19, 2019 at a price of Rs.2,690 per share. The debentures carry a coupon of 7.80% per annum, payable half-yearly in arrears on April 24, 2018, October 21, 2018 and April 19, 2019. The basis of presentation of the liability and equity portions of these shares is explained in the summary of significant accounting policies.

Refer Note 36 for movement in CCDs.

3 (a) On October 25, 2017, 464,330 Compulsorily Convertible Debentures (‘CCD’) having face value of Rs.107,600 per CCD were allotted to the CCD holders for an aggregate amount of Rs.4,996.19 Crores. Each CCD is convertible into 40 equity shares of Rs.2 each. During the year, 225,000 Equity shares were allotted by the Company upon exercise of options by the CCD holders.

Subsequent to March 31, 2018, 318,840 equity shares were allotted by the Company upon exercise of options by the CCD holders.

3 (b) During the year, the Company issued 8,310,275 Equity shares under Rights Issue at a price of Rs.2,380 per share (including premium of Rs.2,378 per share). Out of the aforesaid issue, 7,485,574 equity shares were allotted by the Company on March 8, 2018 and 797,748 Rights Equity shares have been Reserved for the CCD Holders (as per regulation 53 of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009) and 26,953 Rights Equity Shares have been kept in abeyance.

4 EMPLOYEE BENEFITS:

Brief description of the Plans:

Other Long-Term Employee Benefit Obligations:

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long-term employee benefits. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Long Term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution plans:

The Company’s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

Post-employment benefit plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.

In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The gratuity plan is a funded plan and the Company makes contributions to trust administered by the Company. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity/provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis. In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety etc. within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

Weighted average duration of the defined benefit obligation is 7 years (Previous Year : 7 years).

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

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The liability for Leave Encashment (Non-Funded) as at year end is Rs.34.98 Crores (As at March 31, 2017 - Rs.30.93 Crores).

The liability for Long-term Service Awards (Non-Funded) as at year end is Rs.2.12 Crores (As at March 31, 2017 - Rs.2.09 Crores).

5 RELATED PARTY DISCLOSURES

1. List of related parties A. Controlling Entities

The Ajay G. Piramal Foundation®

Piramal Phytocare Limited Senior Employees Option Trust (Formerly known as Piramal Life Sciences Limited Senior Employees Stock Option Trust through its Trustees, Mr. P.K. Gothi and Mr. Suhail Nathani)@

The Sri Krishna Trust through its Trustees, Mr. Ajay Piramal and Dr. (Mrs.) Swati A. Piramal (Previously held through its Corporate Trustees,

Piramal Management Services Private Limited)@

Aasan Info Solutions (India) Private Limited@

Piramal Welfare Trust (Formerly known as The Piramal Enterprise Executives Trust) through its Trustee, Piramal Corporate Services Limited@

PRL Realtors LLP@

@There are no transactions during the year.

Other Intermediates:

Shriram Transport Finance Company Limited (Shriram Transport) (w.e.f. July 21, 2015)

Shriram City Union Finance Limited (Shriram City Union) (w.e.f. July 21, 2015)

Shriram Life Insurance Company Limited (Shriram Life) (w.e.f. July 21, 2015)@

Shriram General Insurance Company Limited (w.e.f. July 21, 2015)@

Shriram Credit Company Limited (w.e.f. July 21, 2015)@

Bharat Re-insurance Brokers Private Limited (w.e.f. July 21, 2015)@

Shriram Overseas Investment Private Limited (w.e.f. July 21, 2015)@

Shriram Investments Holdings Limited (w.e.f. July 21, 2015)@

@There are no transactions during the year with the above companies

D. Other related parties

Entities controlled by Key Management Personnel:

Aasan Corporate Solutions Private Limited (Formerly known as Aasan Developers Private Limited) (Demerged from Piramal Estates) (Aasan Developers)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Glass Limited (PGL)

Piramal Forging Private Limited (Piramal Forging)

Piramal Security Private Limited (Piramal Security)

Piramal Hospitality Private Limited (Piramal Hospitality)

Topzone Mercantile Company LLP (Topzone)

PRL Developers Private Limited (PRL)

Piramal Water Private Limited PRL Agastya Private Limited

Employee Benefit Trusts:

Staff Provident Fund of Piramal Healthcare Limited (PPFT)

Piramal Healthcare Limited Employees Group Gratuity Assurance Scheme

E. Key Management Personnel and their relatives

Mr. Ajay G. Piramal Dr. (Mrs.) Swati A. Piramal Ms. Nandini Piramal Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

F. Non-Executive/Independent Directors

Dr. R. A. Mashelkar Mr. Gautam Banerjee Mr. Goverdhan Mehta Mr. N. Vaghul Mr. S. Ramadorai Mr. Deepak Satwalekar Mr. Keki Dadiseth Mr. Siddharth N. Mehta

*Amounts are below the rounding off norms adopted by the Company.

Interest rates charged to subsidiaries are made at market rates comparable with prevailing rates in the respective geographies. All other transactions were made on normal commercial terms and conditions and at market rates.

During the year, the Company has transferred a portion of its lending portfolio comprising of Loan book assets of Rs.3,001.67 Crores (Previous year Rs.13,950.27 Crores) and Borrowings of Rs.1,272.19 Crores (Previous Year : Rs.12,510.58 Crores), forming part of its financial services business to its wholly-owned subsidiary Piramal Finance Limited (formerly known as Piramal Finance Private Limited), for a net consideration of Rs.1,729.48 Crores (Previous Year : Rs.1,439.69 Crores). Accordingly, the results for the year ended March 31, 2018 are not comparable with the previous year.

Compensation of key managerial personnel

The remuneration of directors and other members of key managerial personnel during the year was as follows:

6. Property, Plant & Equipment, Brands and Trademarks, Investment in Non-Convertible Debentures, Inter Corporate Deposits and Other Financial Assets are mortgaged/hypothecated to the extent of Rs.4,596 Crores (As on March 31, 2017 and Rs.2,653.38 Crores) as a security against long-term secured borrowings as at March 31, 2018.

Inventories, Trade receivables, Investment in Non-Convertible Debentures and Inter Corporate Deposits are hypothecated as a security to the extent of Rs.548.94 Crores (As on March 31, 2017 Rs.118.50 Crores) against short-term secured borrowings as at March 31, 2018.

7. Disclosures as required by the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’) are as under:

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

8. The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

9. The Company’s significant operating lease arrangements are mainly in respect of residential/office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under ‘Other Expenses’ in Note 34.

These lease arrangements are for a period ranging from one year to fifteen years and are in most cases renewable by mutual consent, on mutually agreeable terms.

10. Earnings Per Share (EPS) - EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. The earnings and weighted average numbers of equity shares used in calculating basic and diluted earnings per equity share are as follows:

Basic and diluted earnings per share for year ended March 31, 2017 have been retrospectively adjusted for effect of Rights Issue. Further, considering the effect of conversion of CCDs into equity shares, the Earnings Per Share (Basic and Diluted) for the year ended March 31, 2018 is not comparable with that of the earlier period.

11. CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 21 and 22 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long-term operating plans and other strategic investment plans. The funding requirements are met through non-convertible debt securities or other long-term/short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The terms of the Secured and unsecured loans and borrowings contain certain financial covenants primarily requiring the Company to maintain certain financial ratios like Total Debt to Total Net Worth, Interest Coverage Ratio, Fixed Asset Cover ratio, Minimum net worth conditions, etc. The Company is broadly in compliance with the said covenants and the banks have generally waived/condoned such covenants.

12. RISK MANAGEMENT

The Company’s activities expose it to market risk, liquidity risk and credit risk.

The Company has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks.

Board has approved the Asset Liability Management Policy and the formation of Asset Liability Management Committee (ALCO). The ALCO includes the Company’s senior management and an external industry expert. It defines the strategy for managing liquidity and interest rate risks in the business.

a) Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy. The Asset Liability Management Committee (ALCO) is responsible for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

Note: This includes Non-Convertible Debentures and Commercial Papers where only credit rating has been obtained and which can be issued, if required, within a short period of time. Further, the facilities related to Commercial Papers are generally rolled over.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of reporting period ends respectively has been considered.

The following table details the Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on nonderivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis. Hence, maturities of the relevant assets have been considered below.

The balances disclosed in the table above are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

b) Interest Rate Risk Management

The Company is exposed to interest rate risk as it has assets and liabilities based on floating interest rates as well. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to borrowings had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2018 would decrease/increase by Rs.22.75 Crores (Previous year Rs.10.71 Crores) respectively. This is attributable to the Company’s exposure to borrowings at floating interest rates.

If interest rates related to loans given/debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2018 would increase/decrease by Rs.84.50 Crores (Previous year Rs.47.84 Crores). This is attributable to the Company’s exposure to lendings at floating interest rates.

c) Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the Balance Sheet at fair value through Other Comprehensive Income.

Equity price sensitivity analysis:

The table below summarises the impact of increases/decreases (pre-tax) on the Company’s Equity and OCI for the period. Analysis is based on the assumption that equity index had increased/decreased by 5% with all the other variables held constant, and these investments moved in the line with the index.

The Company has designated the following securities as FVTOCI Investments:

Shriram City Union Finance Limited Shriram Transport Finance Company Limited

The Company chose this presentation alternative because the investment were made for strategic purposes rather than with a view to make profit on subsequent sale, and there are no plans to dispose of these investments.

d) Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt/payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function.

The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports, for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes measures to hedge the exposure based on prevalent macroeconomic conditions.

e) Accounting for cash flow hedge

The Company has taken foreign currency floating rate borrowings which are linked to LIBOR. For managing the foreign currency risk and interest rate risk arising from changes in LIBOR on such borrowings, the Company has entered into cross-currency interest rate swap (CCIRS) for the entire loan liability. The Company has designated the CCIRS (hedging instrument) and the borrowing (hedged item) into a hedging relationship and applies hedge accounting.

Under the terms of the CCIRS, the Company pays interest at the fixed rate to the swap counterparty in INR and receives the floating interest payments based on LIBOR in foreign currency. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying and fixed rates) are matching and the interest cash flows are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument and hedged item have values that generally move in the opposite direction.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

The date on which CCIRS and the borrowings were designated into hedging relationship is later than the date on which the respective contracts were entered into. This timing difference resulted into hedge ineffectiveness to a certain extent, the effect of which was recognised in the Statement of Profit and Loss in the previous year.

f) Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1. Pharma Trade Receivables

2. Financial Services business - i) Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others; and

ii) Strategic Investment made in other corporate bodies.

Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Strategic Investment Groups are explained in the note below.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Risk management team has developed proprietary internal rating model to evaluate risk return trade-off for the loans and investments done by the Company. The output of traditional credit rating model is an estimate of Probability of Default (PD). These models are different from the traditional credit rating models as they integrate both PD and Loss Given Default (LGD) into a single model.

Credit Risk Management

Credit risk management is achieved by considering various factors like:

- Cash flow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

- Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

- Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

- Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent. Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment.

Based on the above assessment the risk team categorises the deals in to the below Risk Grades:

- Good Deals with very high risk adjusted returns

- Investment Grade Deals with high risk adjusted returns

- Management Review Grade Deals with risk adjusted returns required as per lending policy

- Not Advisable Grade Deals with lower than required risk adjusted returns

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned by credit-rating agencies or mutual funds.

Provision for Expected Credit Loss

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding looking parameters, which are both qualitative and quantitative. These parameters have been detailed in Note no. vi of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired).

Macroeconomic information (such as regulatory changes, market interest rate or growth rates) is incorporated as part of the internal rating model.

In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 30 days past due.

For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

The Company has developed a PD Matrix consisting of various parameters suitably tailored for various facilities like grade of the borrower, past overdue history, status from monthly asset monitoring report, deal IRR, deal tenure remaining etc.

Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, since there has been no default history to substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD.

iii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 46(a) ) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The Company generally ensures a security cover of 100-200% of the proposed facility amount. The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits. The collateral held by the Company varies on case to case basis and includes:

i) First/Subservient charge on the Land and/or Building of the project or other projects

ii) First/Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters/Promoter Undertakings

vi) Post dated/Undated cheques

vii) Pledge on investment in shares made by borrower entity

As at the reporting date, the ratio of value of the collateral held as security for the credit impaired financial assets to the exposure at default for these assets is assessed as Nil.

13. The Company conducts research and development to find new sustainable chemical routes for pharmaceutical & herbal products. The Company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients.

The Company has research and development centers in Mumbai, Ennore and Ahmedabad.

Details of additions to Property Plant & Equipments & Intangibles under Development and qualifying Revenue Expenditure for Department of Scientific & Industrial Research (DSIR) approved research and development facilities/division of the Company at Mumbai, Ennore and Ahmedabad for the year are as follows:

Provision for Onerous contracts for the previous year represents the amounts provided for contracts where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Provision for Grants - Committed represent expected contributions to be paid in FY 2018-19.

Provision for litigation/disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters under litigation. Future cash outflows are determinable only on receipt of judgements/decisions pending with various forums/authorities.

Deferred tax assets and liabilities are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilised business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.

The tax rate used for the reconciliations above is the corporate tax rate of 34.608% for the year 2017-18 and 2016-17 payable by corporate entities in India on taxable profits under tax law in Indian jurisdiction.

In assessing the realisability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this, the Company believes that it is probable that the Company will realise the benefits of these deductible differences. The amount of deferred tax asset considered realisable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

As at March 31, 2017, the Company had recognised Deferred Tax Asset of Rs.50.28 Crores on unused tax losses , considering profits in the past 2 years and reasonable certainty of realisation of such deferred tax asset in the future years. This was utilised during the current year.

The Company has calculated its tax liability for current domestic taxes after considering MAT. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward and set-off against future tax liabilities computed under normal tax provisions. The Company was required to pay MAT during the current and previous year and accordingly, a deferred tax asset of Rs.383.11 Crores and Rs.391.47 Crores has been recognised in the statement of financial position as of March 31, 2017 and 2018 respectively, which can be carried forward for a period of 15 years from the year of recognition.

b) Fair Value Hierarchy and Method of Valuation

This Section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Investment in Preference Shares, Alternative Investment Funds, Debentures, Term Loans and Inter Corporate Deposits.

Valuation techniques used to determine the fair values:

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. The fair value of the optionally convertible debentures has been calculated by using price to earnings method observed for comparable peers in the industry.

iii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data.

iv. This includes listed equity instruments and mutual funds which are fair valued using quoted prices and closing NAV in the market.

v. This includes forward exchange contracts and cross currency interest rate swap. The fair value of the forward exchange contract is determined using forward exchange rate at the balance sheet date. The fair value of cross currency interest rate swap is calculated as the present value of future cash flow based on observable yield curves and forward exchange rates.

vi. Discounted cash flow method has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

vii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk.The discounting factor used has been arrived at after adjusting the rate of interest for the financial liabilities by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

c) Fair value measurements for financial assets measured at FVTPL using significant unobservable inputs (level 3)

The following table presents the changes in level 3 items for the year ended March 31, 2018 and March 31, 2017.

d) Valuation Process

The Company engages external valuation consultants to fair value below mentioned financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

1. For Non-Convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2. For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach -comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

e) Sensitivity for instruments measured at FVTPL:

f) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

14. In accordance with Ind AS 108 ‘Operating Segments’, segment information has been given in the consolidated financial statements of the Company, which are presented in the same Annual Report and therefore, no separate disclosure on segment information is given in these financial statements.

15. Subsequent to March 31, 2018, Board of Directors have approved a ‘Scheme of Amalgamation’ (‘Scheme’) of Piramal Phytocare Limited, an associate of the Company with the Company and its respective shareholders. The Scheme is subject to approval of shareholders and other regulatory authorities as applicable.

16. Subsequent to March 31, 2018, the Board of Directors have approved a proposal to initiate a transfer of certain assets and liabilities forming part of Company’s financial services business, to its wholly-owned subsidiaries, for a net consideration not exceeding Rs.2,950 Crores, in one or more tranches, which is expected to be concluded by December 31, 2018.

17. The financial statements have been approved for issue by Company’s Board of Directors on May 28, 2018.

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Mar 31, 2017

1. GENERAL INFORMATION

Piramal Enterprises Limited (PEL) is one of India’s large diversified companies, with a presence in Healthcare, Healthcare Information Management and Financial Services.

In Healthcare, PEL is one of the leading players globally in CRAMS (custom research and manufacturing services) as well as in the critical care segment of inhalation and injectable anaesthetics. It also has a strong presence in the OTC segment in India.

PEL’s Healthcare Information Management business, Decision Resources Group, is amongst the top 20 US market research organizations which provide information services to the healthcare industry.

In Financial Services, PEL, including through its subsidiaries, provides comprehensive financing solutions to real estate companies. Structured Finance Group (SFG) also provides senior and mezzanine growth capital to various businesses across varied sectors that are integral part of India’s growth story. The Company also has strategic alliances with top global funds such as CPPIB Credit Investment Inc., APG Asset Management and Bain Capital Credit. PEL also has long term equity investments in Shriram Group, a leading financial conglomerate in India.

PEL is listed on the BSE Limited and the National Stock Exchange of India Limited in India.

2a. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTIES

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

Fair Valuation:

Some of the company’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset and liability, the company uses market observable data to the extent it is available. When Level 1 inputs are not available, the company engages third party qualified external valuers to establish the appropriate valuation techniques and inputs to the valuation model.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 51.

Expected Credit Loss:

When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the company’s historical experience and credit assessment and including forward-looking information.

The inputs used and process followed by the company in determining the increase in credit risk have been detailed in Note 46f.

Impairment loss in Investments carried at cost:

The Company conducts impairment reviews of investments in subsidiaries / associates / joint arrangements whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable or tests for impairment annually. Determining whether an asset is impaired requires an estimation of the recoverable amount, which requires the Company to estimate the value in use which base on future cash flows and a suitable discount rate in order to calculate the present value.

Useful life of Assets:

Property, plant and equipment and Intangible Assets represent a significant proportion of the assets of the Company. Depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

Deferred Taxes

Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted at the reporting date. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Defined benefit plans:

The cost of the defined benefit plans and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. 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 Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2017 of Rs.513.07 Crores (as at March 31, 2016 of Rs.423.37 Crores and as at April 1, 2015 - Rs.341.22 Crores), the top 3 customers of the Company represent the balance of Rs.163.72 Crores as at March 31, 2017 (as at March 31, 2016 - Rs.137.47 Crores and as at April 1, 2015 - Rs.160.10 Crores). There are no other customers who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes in to account historical credit loss experience and adjusted for forward-looking information. 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. The provision matrix at the end of the reporting period is as follows:

If the trade receivables (discounted) are not paid at maturity, the bank has right to request the Company to pay the unsettled balance. As the Company has not transferred the risks and rewards relating to these customers, it continues to recognize the full carrying amount of the receivables and has recognized the cash received on the transfer as a secured borrowing (Refer Note 21).

At the end of the reporting period, the carrying amount of the trade receivables that have been transferred but have not been de-recognized amounted to Rs.20.59 Crores (Previous year Rs.66.30 Crores) and the carrying value of associated liability is Rs.20.59 Crores (Previous year Rs.66.30 Crores) (Refer Note 21).

(iv) Terms and Rights attached to equity shares Equity Shares:

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

On August 17, 2015, a dividend of Rs.20 per share (total dividend Rs.345.13 Crores and dividend distribution tax of Rs.70.26 crores) was paid to holders of fully paid equity shares. On March 21, 2016, a dividend of Rs.17.50 per share (total dividend of Rs.301.99 Crores and dividend distribution tax of Rs.61.48 crores) was paid to holders of fully paid equity shares.

A Dividend of Rs.21 per equity share (1050% of the face value of Rs.2/- each) amounting to Rs.362.38 Crores (Dividend Distribution Tax thereon of Rs.73.78 Crores) has been recommended by the Board of Directors which is subject to approval of the Shareholders.

During the year, the Company has capitalized borrowing costs of Rs.14.26 Crores (Previous year Rs.NIL) relating to projects, included in Capital Work in Progress. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Company’s general borrowings during the year, in this case 9.00% (Previous year NIL).

a) During the previous year, the Company had sold certain properties having a written down value of ‘11.07 crores for Rs.81.30 crores resulting in a net gain of Rs.70.23 crores

b) During the previous year, the Company sold its clinical research business known as PCR business. Property Plant & Equipment of this division along with the employees were transferred on a slump sale basis as a part of the transaction for a consideration of Rs.4.64 crores, resulting in a loss of Rs.2.60 crores.

3 EMPLOYEE BENEFITS :

Brief description of the Plans:

Other Long Term Employee Benefit Obligations

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year.

Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise. Long Term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution plans

The Company’s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

Post-employment benefit plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.

In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

The Company has no legal obligation to settle the deficit in the funded plan (Gratuity) with an immediate contribution or additional one off contributions. The Company intends to continue to contribute the defined benefit plans in line with the actuary’s latest recommendations.

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

In case of certain employees, the Provident Fund contribution is made to a Trust administered by the Company. In terms of the Guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident fund liability based on the assumptions listed above and determined that there is no shortfall at the end of each reporting period.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis. In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

Weighted average duration of the defined benefit obligation is 7 years (Previous year 6 years)

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

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The liability for Leave Encashment (Non - Funded) as at year end is Rs.30.93 crores (As at March 31, 2016 - Rs.27.67 crores, As at April 1, 2015 - Previous year Rs.24.89 Crores)

The liability for Long term Service Awards (Non - Funded) as at year end is Rs.2.09 crores (As at March 31, 2016 - Rs.1.97 crores, As at April 1, 2015 -Previous year Rs.0.88 Crores)

4 INFORMATION IN ACCORDANCE WITH THE REQUIREMENTS OF INDIAN ACCOUNTING STANDARD 24 ON RELATED PARTY DISCLOSURES.

1. List of related parties

A. Controlling Entities

The Ajay G. Piramal Foundation @

Piramal Life Sciences Limited - Senior Employees Stock Option Trust through its Trustee, Mr. Ajay G Piramal@

The Sri Krishna Trust through its Trustees, Mr.Ajay Piramal and Dr.(Mrs.) Swati A. Piramal (Previously held through its Corporate Trustees, Piramal Management Services Private Limited) @

Aasan Info Solutions (India) Private Limited @

Piramal Welfare Trust (Formerly known as The Piramal Enterprise Executives Trust) through its Trustee, Piramal Corporate Services Limited @

PRL Realtors LLP @

@There are no transactions during the year.

B. Subsidiaries

The Subsidiary companies including step down subsidiaries :

Other Intermediates:

Shriram Transport Finance Company Limited (Shriram Transport) (w.e.f. July 21, 2015)

Shriram City Union Finance Limited (Shriram City Union) (w.e.f. July 21, 2015)

Shriram Life Insurance Company Limited (Shriram Life) (w.e.f. July 21, 2015)

Shriram General Insurance Company Limited (w.e.f. July 21, 2015) @

Shriram Credit Company Limited (w.e.f. July 21, 2015) @

Bharat Re-insurance Brokers Private Limited (w.e.f. July 21, 2015) @

Shriram Overseas Investment Private Limited (w.e.f. July 21, 2015) @

Shriram Investments Holdings Limited (w.e.f. July 21, 2015) @

@ There are no transactions during the year with the above companies

D. Other related parties

Entities controlled by Key Management Personnel

Aasan Corporate Solutions Private Limited (Formerly known as Aasan Developers Private Limited) (Demerged from Piramal Estates) (Aasan Developers)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Glass Limited (PGL)

Piramal Forging Private Limited (Piramal Forging)

Piramal Security Private Limited (Piramal Security)

Piramal Hospitality Private Limited (Piramal Hospitality)

Topzone Mercantile Company LLP (Topzone)

PRL Developers Private Limited (PRL)

Piramal Water Private Limited PRL Agastya Private Limited Employee Benefit Trusts

Staff Provident Fund of Piramal Healthcare Limited (PPFT)

Piramal Healthcare Limited Employees Group Gratuity Assurance Scheme

E. Key Management Personnel and their relatives

Mr. Ajay G. Piramal Dr. (Mrs.) Swati A. Piramal Ms. Nandini Piramal Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

F. Non Executive/Independent Directors

Dr. R. A. Mashelkar Mr. Gautam Banerjee Mr. Goverdhan Mehta Mr. N. Vaghul Mr. S. Ramadorai Mr. Deepak Satwalekar Mr. Keki Dadiseth Mr. Siddharth N Mehta

5 Property, Plant & Equipment, Capital Work In Progress, Brands and Trademarks, Non Convertible Debentures, Inter Corporate Deposits and Other Financial Assets amounting Rs.2653.38 Crores (As on March 31, 2016 Rs.2,436.74 Crores and as on April 1, 2015 Rs.463.83 Crores) are mortgaged / hypothecated as a security against long term secured borrowings as at March 31, 2017.

Inventories and Trade receivables amounting Rs.118.5 Crores (As on March 31, 2016 Rs.203.25 Crores and as on April 1, 2015 Rs.124.92 Crores) are hypothecated as a security against short term secured borrowings as at March 31, 2017.

6 Miscellaneous Expenditure in Note 34 includes Auditors’ Remuneration in respect of:

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

7 The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to SEBI Listing Regulations, 2015:

8 The Company’s significant operating lease arrangements are mainly in respect of residential / office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Note 34.

These lease arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

9 Earnings Per Share (EPS) - EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding

10 CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 21 and 22 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through non convertible debt securities or other long-term /short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The terms of the Secured and unsecured loans and borrowings contain certain financial covenants primarily requiring the Company to maintain certain financial ratios like Total Debt to Total Net Worth, Interest Coverage Ratio, Fixed Asset Cover ratio, Minimum net worth conditions, etc. The Company is broadly in compliance with the said covenants and the banks have generally waived / condoned such covenants.

11 RISK MANAGEMENT

The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks. Board has approved the Asset Liability Management Policy and the formation of Asset Liability Management Committee (ALCO). The ALCO includes the Company’s senior management and an external industry expert. It defines the strategy for managing liquidity and interest rate risks in the business.

a. Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy. The Asset Liability Management Committee (ALCO) is responsible for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of reporting period ends respectively has been considered. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The following table details the Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis. Hence, maturities of the relevant assets have been considered below.

b. Interest Rate Risk Management

The Company is exposed to interest rate risk as it has assets and liabilities based on floating interest rates as well. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to borrowings had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2017 would decrease/increase by Rs.10.71 Crores (Previous year Rs.28.95 Crores). This is mainly attributable to the Company’s exposure to borrowings at floating interest rates.

If interest rates related to loans given / debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2017 would increase/decrease by Rs.47.84 Crores (Previous year Rs.41.98 Crores). This is mainly attributable to the Company’s exposure to lendings at floating interest rates.

c. Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the balances sheet at fair value through Other Comprehensive Income.

Equity price sensitivity analysis:

The table below summarises the impact of increases/decreases on the Company’s Equity and OCI for the period. Analysis is based on the assumption that equity index had increased/decreased by 5% with all the other variables held constant, and these investments moved in the line with the index.

The Company has designated the following securities as FVTOCI Investments:

Shriram City Union Finance Limited Shriram Transport Finance Company Limited

The Company chose this presentation alternative because the investment were made for strategic purposes rather than with a view to profit on subsequent sale, and there are no plans to dispose of these investments.

d. Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports, for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

e. Accounting for cash flow hedge

The Company has taken foreign currency floating rate borrowings which are linked to LIBOR. For managing the foreign currency risk and interest rate risk arising from changes in LIBOR on such borrowings, the company has entered into cross-currency interest rate swap (CCIRS) for the entire loan liability. The Company has designated the CCIRS (hedging instrument) and the borrowing (hedged item) into a hedging relationship and applies hedge accounting.

Under the terms of the CCIRS, the Company pays interest at the fixed rate to the swap counterparty in INR and receives the floating interest payments based on LIBOR in foreign currency. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying and fixed rates) are matching and the interest cashflows are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument and hedged item have values that generally move in the opposite direction.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

The date on which CCIRS and the borrowings were designated into hedging relationship is later than the date on which the respective contracts were entered into. This timing difference has caused hedge ineffectiveness to a certain extent (where applicable), the effect of which has been recognised in profit or loss under the head Exchange gain/loss.

f. Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1. Pharma Trade Receivables

2. Financial Services business Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Strategic Investment Groups are explained in the note below.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Risk management team has developed proprietary internal rating models to evaluate risk return trade-off for the loans and investments done by the Company. These models integrate probability of default and loss given default in to a single model and provide necessary inputs to the decision making committee.

Credit Risk Management

Credit risk management is achieved by considering various factors like :

- Cashflow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

- Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

- Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

- Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent. Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment.

Based on the above assessment the risk team categorises the deals in to the below Risk Grades

- Good Deals with very high risk adjusted returns

- Investment Grade Deals with high risk adjusted returns

- Management Review Grade Deals with risk adjusted returns required as per lending policy

- Not Advisable Grade Deals with lower than required risk adjusted returns

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned credit-rating agencies or mutual funds.

Provision for Expected Credit Loss

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking parameters, which are both qualitative and quantitative. These parameters have been detailed in Note no.vi of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). Macroeconomic information (such as regulatory changes, market interest rate or growth rates) is incorporated as part of the internal rating model. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 30 days past due. For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

As at April 1, 2015, a combination of both internal and external Probability of Default (PD) has been used by the Company since the asset portfolio was at a very nascent stage. The internal PD has been computed by dividing the default observed during the year with the number of investments present on the book at the start of the year. For External PD the Company has relied upon the 10 year PD data from external rating agency. For Loss given default (LGD), the Company has relied on internal and external information.

For the year ended March 31, 2017 and March 31, 2016 the Company has developed a PD Matrix after considering some parameters as stated below :

(1) Grade of the Borrower (2) Past Overdue History (3) Repeat Deal with the Borrower (4) Status from monthly Asset Monitoring report (5) Deal IRR (6) Deal Tenure remaining. Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, since there has been no default history to substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD.

iii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 26) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The credit risk management policy of the Company prescribes a security cover of 200% of the proposed facility amount. The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits. The collateral held by the Company varies on case to case basis and includes:

i) First / Subservient charge on the Land and / or Building of the project or other projects

ii) First / Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters / Promoter Undertakings

vi) Post dated / Undated cheques

As at the reporting date, the ratio of value of the collateral held as security for the credit impaired financial assets to the exposure at default for these assets is higher than 1.

iv) The credit impaired assets as at the reporting dates were secured by charge on land and building and project receivables amounting to:

12 The Company conducts research and development to find new sustainable chemical routes for pharmaceutical & herbal products. The company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients.

The Company has research and development centers in Mumbai, Ennore and Ahmedabad.

Details of additions to Property Plant & Equipment & Intangibles under Development and qualifying Revenue Expenditure for Department of Scientific & Industrial Research (DSIR) approved research and development facilities / division of the Company at Mumbai, Ennore and Ahmedabad (with effect from September 23, 2016) for the year are as follows;

During the year ended March 31, 2015, the Company had decided to curtail investments in New Chemical Entity research.

Accordingly, Costs and write-downs associated with the scale-down incurred during the previous year, disclosed under Exceptional Income / (Expenses) (Refer Note 35), are mentioned below:

Provision for Onerous contracts represents the amounts provided for contracts where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Provision for Grants - Committed represent expected contributions to be paid in FY 2017-18 & 2018-19.

Provision for litigation / disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters under litigation. Future cash outflows are determinable only on receipt of judgments/decisions pending with various forums/authorities.

13 INCOME TAXES RELATING TO OPERATIONS

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.

The tax rate used for the reconciliations above is the corporate tax rate of 34.608% (for the year 2016-17 and 2015-16) payable by corporate entities in India on taxable profits under tax law in Indian jurisdiction.

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

As at March 31, 2017, the Company has recognized Deferred Tax Asset of Rs.50.28 Crores on unused tax losses, considering profits in the past 2 years and reasonable certainty of realisation of such deferred tax asset in the future years. Deferred tax asset amounting to Rs.559.72 crores (excluding the amount already recognised to the extent of Deferred Tax Liabilities amounting Rs.57.49 Crores) and Rs.262.33 crores as at April 1, 2015 and March 31, 2016, respectively in respect of unused tax losses was not recognized by the Company, considering that the Company had a history of tax losses for recent years and these losses expire in various years through fiscal 2022.

The Company has calculated its tax liability for current domestic taxes after considering MAT. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward and set-off against future tax liabilities computed under normal tax provisions. The Company was required to pay MAT during the current and previous year and accordingly, a deferred tax asset of Rs.236.30 crores and Rs.146.82 crores has been recognized in the statement of financial position as of March 31, 2016 and 2017 respectively, which can be carried forward for a period of 10 years (15 years w.e.f. current year) from the year of recognition.

14a. Transition to Ind AS Overall principle

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2015 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and Exemptions availed:

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

Ind AS Optional Exemptions:

Deemed cost for property, plant and equipment and other intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

Designation of previously recognized financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basisofthe facts and circumstancesatthe date of transition to Ind AS. The Company has designated certain investments in equity share as held at FVOCI on the basis of the facts and circumstances that existed at the transition date.

Determining whether an arrangement contains a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

Ind AS Mandatory Exceptions:

Estimates:

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

A. Investment in preference shares carried at FVPL;

B. Investment in debt instruments carried at FVPL; and

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

Derecognition of financial assets and financial liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

The Company has determined the classification of Financial Assets in terms of whether they meet the amortized cost criteria, FVPL criteria or FVOCI criteria based on the facts and circumstances that existed as of transition date.

Impairment of financial assets:

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date.

Notes

a) Under previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary. Under INDAS, these financial assets have been classified as FVTOCI.On the date of transition to Ind AS,these financial assets have been measured at their fair value which is higher than the cost as per previous GAAP, resulting in an increase in the carrying amount by Rs.759.83 crores as at March 31,2016 and by Rs.1,452.47 croresas at April1,2015. Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2016. This increased other reserves by Rs.759.83 Crores as at 31 March 2016 (1 April 2015 - Rs.1452.47 Crores) and Other Comprehensive Income for the year ended March 31, 2016 decreased by Rs.692.64 Crores.

b) Under previous GAAP, there was no specific guidance on accounting for interest free rental deposits. Whereas in Ind AS, the prepaid rent is measured as the difference between the initial carrying amount of the deposit determined in accordance with Ind AS 109 and the amount of deposit given. The Company had given interest free security deposit of Rs.3.00 crores as on March 31, 2015 and the fair value on initial recognition was estimated to be Rs.2.05 crores. The difference of Rs.0.95 crores has been treated as prepaid rent under Ind AS and is recognised in Statement of Profit and Loss over the period of lease. After initial recognition, the rental deposit has been subsequently carried at amortized cost i.e. interest based on market rate has been recognised under the effective interest rate method as part of finance cost. The net effect of these changes is a decrease in total equity of Rs.0.03 crores as at March 31, 2016 and Rs.0.01 crores as at April 1, 2015 and Profit for the year ended March 31, 2016 decreased by Rs.0.02 Crores.

c) Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value and subsequently at the higher of i) amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 and the amount initially recognised less when appropriate, the cumulative amount of income recognised in accordance with principles of Ind AS 18. Under previous GAAP, these were not recognised in the balance sheet. As these financial guarantee have been given towards loans taken by its Company entities, notional financial guarantee commission income has been recognized with the corresponding increase in the investment in the respective Company entities resulting into increase in investment by Rs.42.92 crores as at March 31, 2016 and Rs.28.02 crores as at April 1, 2015 with corresponding increase in Equity and Profit for the year ended March 31, 2016 increased by Rs.14.9 Crores.

d) Under Previous GAAP, borrowings were recorded at cost and transaction costs were charged to Statement of Profit and Loss as and when incurred. Under Ind AS, transaction cost incurred towards origination of borrowings is required to be deducted from the carrying amount of borrowings on initial recognition. These cost are recognised in the Statement of Profit and Loss over the tenure of the borrowing as part of interest expense by applying effective interest rate method. Accordingly, borrowings as at March 31, 2016 have been reduced by Rs.12.21 crores and Rs.3.84 crores as at April 1, 2015. The total equity increased by an equivalent amount and the profit for the year ended March 31, 2016 increased by Rs.8.37 Crores.

e) Under previous GAAP, premium paid for derivative contracts was amortized over the term of the derivative contracts whereas under Ind AS the derivative contracts are measured at FVTPL. Thus, the unamortized premium as of March 15 has been charged off to retained earnings and Derivative contracts have been recognized at Fair value resulting into net increase in Total Equity as on April 1, 2015 by Rs.7.73 Crores and as on March 31, 2016 by Rs.8.77 Crores. The profit for the year ended March 31, 2016 increased by Rs.1.14 Crores on account of the same.

f) Under Previous GAAP, dividend on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue was recognised in the financial statement as a liability. Under Ind AS, such dividends are recognised when the same is approved by the members in a general meeting. The effect of this change is an increase in total equity as at March 31, 2016 of Rs.NIL and Rs.415.39 crores as at April 1, 2015 but does not affect the profit before tax and total profit for the year ended March 31, 2016 and March 31, 2015.

g) Under previous GAAP, investments, term loans and inter-corporate deposits were carried at cost whereas under IND AS investments are measured based on entity’s business model for managing the financial assets and contractual cash flow characteristics of the financial asset. The investments, term loans and inter-corporate deposits that meet the business model and contractual cash flow tests are measured at amortised cost and interest income is recognised as per effective interest rate method. Those investments, term loans and inter-corporate deposits that do not meet the business model and contractual cash flow test are measured at Fair Value. Thus considering the criteria of IND AS the investment, term loans and Inter-corporate deposits have decreased by Rs.143.32 crores as at March 31, 2016 and Rs.11.10 crores as at April 1, 2015. The total equity decreased by an equivalent amount. The profit for the year ended March 31, 2016 decreased by Rs.132.22 Crores on account of the same.

h) Under previous GAAP, the unrealized foreign exchange gains/losses on net investments were transferred to Foreign Currency Translation Reserve. However under Ind AS, such gains/losses should be recognized in statement of Profit & Loss in separate financial statements. Accordingly, the profit for the year ended March 31, 2016 increased by Rs.32.08 Crores.

i) Under Previous GAAP, provision for doubtful loans and receivables was calculated using incurred loss model. Under Ind AS, the provision on financial assets and commitments, including trade receivables needs to be calculated using the expected credit loss model. Accordingly, an additional provision was recognized as at March 31, 2016 of Rs.80.50 crores and Rs.58.80 crores as at April 1, 2015. As a result, the total equity was decreased by Rs.80.50 Crores and Rs.58.80 Crores as on March 31, 2016 & April 1, 2015 and the profit for the year ended March 31, 2016 decreased by Rs.21.70 Crores.

j) Deferred taxes have been recognised on adjustments made on transition to Ind AS.

k) Under Previous GAAP, no provision was accounted for Constructive obligations. Under Ind AS, provisions need to be accounted (at discounted value) for the Constructive obligations. Accordingly, an additional provision for Grants - Committed was recognised at Rs.28.83 crores as at March 31, 2016 and Rs.24.29 crores as at April 1, 2015 resulting in decrease in Total Equity on the respective dates. The unwinding of discounts in this case amounted Rs.4.54 Crores during the year ended March 31, 2016 resulting in decrease in profit for the year ended March 31, 2017 by equivalent amount.

l) Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Rs.1.60 Crores. There is no impact on the total equity as at March 31, 2016.

m) Under Previous GAAP, there was no clear guidance on treatment of lease incentives. Under Ind AS, In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases. Accordingly, the total equity as on March 31, 2016 and the profit for the year ended March 31, 2016 decreased by Rs.7.93 Crores.

n) Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

The adjustments are primarily on account of Bank overdraft now considered as Cash and Cash Equivalents and other Ind AS reclassifications.

b) Fair Value Hierarchy and Method of Valuation

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

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Debentures, Term Loans and Inter Corporate Deposits.

Valuation techniques used to determine the fair values:

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. The fair value of the optionally convertible debentures has been calculated by using price to earnings method observed for comparable peers in the industry.

iii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data.

iv. This includes listed equity instruments and mutual funds which are fair valued using quoted prices and closing NAV in the market.

v. This includes forward exchange contracts and cross currency interest rate swap. The fair value of the forward exchange contract is determined using forward exchange rate at the balance sheet date. The fair value of cross currency interest rate swap is calculated as the present value of future cash flow based on observable yield curves and forward exchange rates.

vi. Discounted cash flow method has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

vii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk.

d) Valuation Process

The Company engages external valuation consultants to fair value financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

1) For Non Convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2) For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach - comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

f) Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

15 In accordance with Ind AS 108 ‘Operating Segments’, segment information has been given in the consolidated financial statements of the Company, which are presented in the same annual report and therefore, no separate disclosure on segment information is given in these financial statements.

16 The details of Specified Bank Notes (as defined in the MCA notification GSR 308(E) dated March 31, 2017) held and transacted during the period from November 8, 2016 to December 30, 2016 are as follows:

17 During the previous year, the Company identified a fraud committed by an employee in one of its divisions. The Company initiated an internal investigation in the matter. Based on the results of the investigation, it was concluded that the employee had misrepresented to various customers and raised forged invoices and credit notes to the extent of Rs.3.18 crores during the previous year. The Company had filed a criminal complaint with appropriate authorities and is pursuing the matter further. The Company had taken appropriate measures and had further strengthened internal processes and controls to prevent such cases. During the current year, the Company has recovered an amount of Rs.1.80 crores from such customers.

18 The Board

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Mar 31, 2016

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company*) is engaged in the business of Pharmaceuticals including Research and Development, Financial Services and Information Management through its subsidiaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through its overseas subsidiaries and other distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. The Scheme of Amalgamation ("the Scheme") of Oxygen Bio Research Private Limited ("02H"), Piramal Pharmaceutical Development Services Private Limited ("PPDSPL") and PHL Capital Private Limited ("PHL Capital") (collectively referred to as "transferor companies") with the Company, under Sections 391 to 394 of the Companies Act, 1956 was sanctioned by the Hon''ble High Courts of Gujarat and Bombay on November 11, 2014 and November 28,2014 respectively. The Scheme became effective on December 12,2014 and December 27,2014 upon filing of the said orders with the Registrar of Companies, Gujarat and Maharashtra respectively.

Consequently, all the assets and liabilities of transferor companies were transferred to and vested in the Company with effect from April 01,2014 ("the Appointed Date").

The amalgamation was accounted for under the "pooling of interest" method referred to in Accounting Standard 14 - Accounting for Amalgamation, as prescribed by the Scheme.

Accordingly, all the assets, liabilities and other reserves of transferor companies as on April 01,2014 were aggregated with those of the Company at their respective book values. As prescribed by the Scheme no consideration was paid as the transferor Companies were wholly owned step down subsidiaries of the Company. Accordingly, the resultant difference amounting to Rs. 2,339.14 Crores was credited to capital reserve account during the previous year.

3 EMPLOYEE BENEFITS:

Brief description of the Plans:

The Company has various schemes for long-term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long-term Service Award. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Company''s defined benefit plans include Provident Fund (in case of certain employees), Gratuity, Leave Encashment and Long-term Service Award.

4. The Company has with effect from October 1,2015 reclassified the foreign currency loans given to certain foreign subsidiaries as long term loans forming part of the Company''s net investment in an non-integral foreign operation. Accordingly, the Company has accounted for the exchange gain on revaluation of these loans amounting to Rs. 32.08 Crores (Previous year NIL) in Foreign Exchange Translation Reserve during the year.

5. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures.

1. List of related parties

A. Controlling Companies

The Ajay G. Piramal Foundation

Piramal Healthcare Limited-Senior Employee Option Schemed

Piramal Enterprises Limited-Trustees of Piramal Enterprises Executive Trusty

Piramal Life Sciences Limited - Senior Employees Stock Option Trust

The Sri Krishna Trust through its Trustees, Mr.Ajay Piramal and Dr.(Mrs.)Swati A. Piramal (Previously held through its Corporate Trustees, Piramal Management Services Private Limited)

There are no transactions during the year.

B. Subsidiary Companies/ Step down subsidiaries /Jointly Controlled Entities/ Associates and its intermediates Located in India

Allergan India Private Limited (Allergan)

Convergence Chemicals Private Limited (Convergence)

Novus Cloud Solutions Private Limited (q.(Upto April 1, 2015)

Zebra Management Services Private Limited (J), (w.e.f. April 1, 2015)

PEL Finhold Private Limited

PEL Asset Resurgence Advisory Private Limited (w.e.f. February 22, 2016)

Piramal Asset Reconstruction Private Limited (w.e.f. January 29, 2016)

Piramal Consumer Products Private Limited (w.e.f. March 23, 2016)

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Finance Private Limited (formerly known as PHL Finance Private Limited (PHL Finance)) (Piramal Finance)

Piramal Foundation for Educational Leadership (PFEL)

Piramal Fund Management Private Limited (formerly known as Indiareit Fund Advisors Private Limited) (Piramal Fund)

Piramal Healthcare Foundation

Piramal Investment Advisory Services Private Limited (PIASPL)

Piramal Swasthya Management and Research Institute (formerly known as "Health Management and Research Institute") (PSMRI)

Piramal Systems & Technologies Private Limited (Piramal Systems)

Piramal Udgam Data Management Solutions (Udgam)

Shrilekha Financial Services (Partnership firm) (Shrilekha)

Shriram Capital Limited (Shriram Capital)

Shriram Transport Finance Company Limited (w.e.f.July 21, 2015) (Shriram Transport)

Shriram City Union Finance Limited (w.e.f.July 21, 2015) (Shriram City Union)

Shriram Life Insurance Company Limited (w.e.f.July 21, 2015) (Shriram Life)

Shriram General Insurance Company Limited (w.e.f.July 21, 2015)

Shriram Credit Company Limited (w.e.f.July 21, 2015) ft

Bharat Re-insurance Brokers Private Limited (w.e.f.July 21, 2015)

Shriram Overseas Investment Private Limited (w.e.f.July 21, 2015)

Shriram Investments Holdings Limited (w.e.f.July 21, 2015)

Located Outside India

Activate Networks Inc. ##

Bluebird Aero Systems Limited

Coldstream Laboratories Inc**

Decision Resources Group Asia Limited ##

Decision Resources Group UK Limited ##

Decision Resources Inc. (formerly Decision Resources LLC) **

Decision Resources International Inc. ##

DR/ Decision Resources LLC##

DR/MRG Holdings LLC##ft

DRG Analytics & Insights Private Limited (w.e.f. May 11, 2015) ##

DRG Holdco Inc (w.e.f. August 26, 2015) (DRG Holdco) **

DRG UK Holdco Limited ##

Healthcare Business Insights LLC (w.e.f. May 14, 2015) ##

Indiareit Investment Management Company*

Millennium Research Group ##

PEL-DRG Dutch Holdco BV (w.e.f. March 7, 2016)

Piramal Asset Management Private Limited (formerly known as ''INDIAREIT Asset Management Private Limited'') #

Piramal Critical Care Deutschland GmbH **

Piramal Dutch Holdings N.V. (Dutch Holdings)

Piramal Dutch IM Holdco BV (w.e.f. March 7, 2016)

Piramal Imaging GmbH *

Piramal Imaging SA*

Piramal IPP Holdings LLC (w.e.f. November 6, 2015) **

Piramal Technologies SA $

Piramal Critical Care Inc (PCCI) **

Piramal Critical Care Italia, SPA*

Piramal Critical Care Limited (formerly known as Piramal Life Sciences (UK) Limited) ** ft

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) **

Piramal Healthcare Inc. **

Piramal Healthcare Pension Trustees Limited **

Piramal Healthcare UK Limited (Piramal Healthcare UK) **

Piramal Holdings (Suisse) SA (Piramal Holdings)

Piramal Imaging Limited (formerly known as Oxygen Healthcare Limited) (Imaging UK) *

Piramal International

Piramal Pharma Inc**

Sigmatic Limited ##

Held through Shrilekha

Held through Shriram Capital

* Held through Piramal Holdings (Suisse) SA

** Held through Piramal Dutch Holdings N.V.

# Held through Piramal Fund Management Private Limited

$ Held through Piramal Systems & Technologies Private Limited

## Held through Decision Resources Inc

(^.Thereare no transactions during the year with the above companies.

C. Other related parties where common control exists

Aasan Developers and Constructions Private Limited (Demerged from Piramal Estates) (Aasan Developers)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Glass Limited (PGL)

Piramal Phytocare Limited (formerly known as Piramal Life Sciences Limited (PPL))

Piramal Realty Private Limited

Piramal Water Private Limited

Piramal Forging Private Limited (Piramal Forging)

Piramal Security Private Limited (Piramal Security)

Piramal Hospitality Private Limited (Piramal Hospitality)

Topzone Mercantile Company LLP (Topzone)

D. Key Management Personnel and their relatives

Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal

Ms. Nandini Piramal

Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

6. The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to SEBI Listing Regulations, 2015: Amounts outstanding as at the year-end were:

7. The Company''s significant operating lease arrangements are mainly in respect of residential / office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 30.

These lease arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 32.01 Crores (Previous Year Rs. 27.41 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of non-cancellable operating leases have been mentioned below:

8. The Company conducts research and development to find new sustainable chemical routes for pharmaceutical and herbal products. The Company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients. The Company has research and development centres in Mumbai, Ennore and Ahmedabad.

9. During the year, the Company identified a fraud committed by an employee in one of its divisions. The Company initiated an internal investigation in the matter. Based on the results of the investigation, it was concluded that the employee had misrepresented to various customers and raised forged invoices and credit notes to the extent of Rs. 3.18 Crores. The Company has filed a criminal complaint with appropriate authorities and will pursue the matter further. The Company has taken appropriate measures and has further strengthened internal processes and controls to prevent such cases.

10. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

---

Mar 31, 2014

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company'') is engaged in Pharmaceutical business including its Research and Development, Financial Services and Information Management business through its subsidiaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through various distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2.1 Rights, preferences and restrictions attached to shares

Equity Shares:

The Company has one class of equity shares having a par value of Rs. 21- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3.1 As per Section 117C of the Companies Act, 1956 the Company has not created Debenture Redemption Reserve during the year for Redeemable Non Convertible Debentures in the absence of profit.

C An erstwhile Contractor had made a claim before arbitration panel for Rs.7.85 Crores on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation with the Company, for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere has filed a counter claim of Rs.38.26 Crores on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs. 3.00 Crores (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

4. Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees'' State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include Provident fund (in case of certain employees), Gratuity, Pension, Leave Encashment and Long Term Service Award.

J. Expected employer''s contribution for the next year is Rs. 4.17 Crores (Previous Year Rs. 3.18 Crores) for Gratuity and Pension.

K. The liability for Leave Encashment (Non - Funded) as at year end is Rs. 18.03 crores (Previous year Rs. 19.48 Crores) (Refer Note 8 and 11).

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

5. In accordance with Accounting Standard-17 ''Segment Reporting'', segment information has been given in the consolidated financial statements of Piramal Enterprises Limited, and therefore, no separate disclosure on segment information is given in these financial statements.

6. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures.

1. List of related parties

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited (upto August 6, 2013)*

The Ajay G. Piramal Foundation

PHL Holdings Private Limited (upto July 2, 2013)* (Refer Note 34)

Piramal Healthcare Limited - Senior Employee Option Scheme*

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust *

Piramal Management Services Private Limited (Corporate Trustee of The Sri Krishna Trust)(w.e.f June 20,2013)*

*There are no transactions during the year.

B. Subsidiary Companies / Step down subsidiaries / Controlled Entities /Associates

- Located in India

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Pharmaceutical Development Services Private Limited (PPDSPL) #

Oxygen Bioresearch Private Limited # @

PHL Capital Private Limited (PHL Capital) #

Piramal Finance Private Limited (formerly known as PHL Finance Private Limited (PHL Finance))*

PHL Infrastructure Finance Company Private Limited (PHL Infra)

Piramal Fund Management Private Limited (formerly known as Indiareit Fund Advisors Private Limited) # @

Piramal Systems & Technologies Private Limited (Piramal Systems)

Piramal Investment Advisory Services Private Limited (w.e.f June 13, 2013) # @

Piramal Udgam Data Management Solutions (w.e.f March 19, 2014) (Udgam)

Piramal Foundation for Education Leadership (w.e.f March 19, 2014) (PFEL)

Health Management and Research Institute (HMRI)

- Located Outside India

Piramal International @

Piramal Holdings (Suisse) SA (Piramal Holdings)

Piramal Pharma Inc**

Piramal Healthcare Inc. **

Piramal Investment Holdings (Canada) Inc.* @

(Upto August 31, 2013 - merged with Piramal Healthcare (Canada) Limited)

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Piramal Imaging Limited (formerly known as Oxygen Healthcare Limited)* @

Piramal Critical Care Italia, SPA*

Piramal Critical Care Inc (PCCI) **

Minrad EU ** @

Indiareit Investment Management Company # @

Piramal Technologies SA $ @

Piramal Imaging SA*

Piramal Imaging GmbH * @

Piramal Dutch Holdings N.V. @

Piramal Critical Care Deutschland GmbH * @

Piramal Resources Inc. (upto December 18, 2013 being the date of dissolution) @

DRI Holdco lnc**@

(Upto June 19, 2013 - merged with Decision Resources Inc.)

AMR/Arlington Medical Resources LLC $$ ## @

Arlington Medical International Inc $$ ## @

Biotrends Research Group LLC $$ ## @

Decision Resources Inc ** @

Decision Resources LLC(DRL) (Upto June 17,2013) ##

Decision Resources International Inc. ## @

Decision Resources Group UK Limited ## @

DR/ Decision Resources LLC ## @

DR/MRG Holdings LLC ## @

DRG UK Holdco Limited ## @

Fingertip Formulary LLC $$ ## @

Healthleaders LLC $$ ## @

Manhattan Research LLC $$ ## @

Pharmastrat LLC $$ ## @

Millennium Research Group Inc. ## @

Sigmatic Limited ## @

Decision Resources Group Asia Limited ## @

INDIAREIT Asset Management Private Limited (w.e.f August 26, 2013) # @

Bluebird Aero Systems Limited $ @

* Held through Piramal Holdings (Suisse) SA ** Held through Piramal Dutch Holdings N.V.

# Held through PHL Infrastructure Finance Company Private Limited $ Held through Piramal Systems & Technologies Private Limited ## Held through Decision Resources Inc

$$ Upto December 30, 2013 - Merged with Decision Resources Inc. @ There are no transactions during the year with the above Companies.

Note - Piramal Foundation for Education Leadership and Piramal Udgam Data Management Solutions are registered under section 25 of the Companies Act, 1956 and are limited by guarantee and not by shares. Piramal Enterprises Limited and its nominees are the members of these Companies.

Health Management & Research Institute is a society. The majority of the members of its governing body comprises nominees of Piramal Enterprises Limited

C. Other related parties where common control exists Piramal Glass Limited (PGL)

Piramal Phytocare Limited (formerly known as Piramal Life Sciences Limited (PPL))

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Realty Private Limited *

India Venture Advisors Private Limited (India Venture)*

Allergan India Private Limited (Allergan)

* There are no transactions during the year.

D. Investing parties with whom the Company is a JV Partner Allergan Pharmaceuticals (Ireland) Ltd. Inc. (Allergan Ireland) Allergan Inc. (Holding Company of JV partner)*

* There are no transactions during the year.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) SwatiA. Piramal

Ms. Nandini Piramal

Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

8 The Company''s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 30.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 27.17 Crores (Previous Year Rs. 24.79 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

9 As a globally integrated healthcare Company, Piramal Enterprises is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of the Company focuses on the discovery and development of innovative small molecule medicines that matter to patients in the therapy areas of Oncology and Metabolic Disorders. The Company''s state-of-the-art Research Centre in Mumbai has comprehensive capabilities spanning target identification all the way through clinical development.

The unit has made significant progress, with an R&D pipeline having several molecules in different phases of development. After successful pre-clinical studies, the Company makes application to requisite regulatory authorities for conducting phase I/II/III studies. Currently major development programs are in phase I/I I studies. In Oncology, P276, P1446, P7170 and PL225B are in phase I/II studies. In Diabetes and Metabolic Disorder, P1736, P11187 and P7435 are in Phase I/I I studies.

10 During the year, the Company has received Rs. 2,665.83 Crores (Previous Year Rs. 925 Crores) through discounting of receivables. Finance charges on the same amounting to Rs. 178.32 Crores (Previous YearRs.48.94Crores) has been disclosed under "Finance Cost".

11 In view of the inadequacy of profits for the year ended March 31, 2013, Managerial remuneration paid to the Executive Directors amounting to Rs. 11.69 crores required approval from the Central Government which was received during the current year and this amount has been charged to the Statement of Profit and Loss during the year. During the Current year, the Company had applied for approval from the Central Government for the payment of remuneration to the Executive Directors w.e.f. April 1, 2013, against which the Central Government had approved remuneration of Rs. 1.48 crores to each Executive Director. The Company has filed applications to the Central Government for review of the said approvals and pending approval of the Central Government for the remuneration paid and in light of the inadequacy of profits in the current year, an amount of Rs. 9.03 crores paid is considered as an advance to Directors (held in trust).

12 The Company assesses all investments in Debentures, Term loans and Inter-corporate Deposits given for their recoverability and accordingly, makes provisions on these Assets of Financial Services Segment in respect of likely non-performing assets, as considered necessary. As a matter of prudence, the Company has provided for such assets based on past experience, emerging trends and estimates. This Provision has been separately disclosed as a Provision on Assets of Financial Services under Note 30 - Other Expenses.

13. Subsequent to the year-end :

a) the Company has divested its entire equity stake, comprising of 45,425,328 shares, in Vodafone India Limited to Prime Metals Limited, an indirect subsidiary of Vodafone Group Pic, for a total consideration of Rs. 8,900.00 Crores;

b) the Company has acquired an effective 20% equity stake in Shriram Capital Limited, a financial services company, for an aggregate consideration of Rs. 2,014.20 Crores; and

c) the Company has agreed to acquire 9.99% of the post-diluted equity share capital of Shriram City Union Finance Limited, by way of subscription to fresh shares pursuant to a preferential allotment, for an aggregate consideration of Rs. 790.00 Crores.

14 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. The figures for the previous year are not comparable with that of the current year on account of merger of PHL Holdings Private Limited during the year (Refer Note 34).

---

Mar 31, 2013

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company'') is engaged in pharmaceutical business including its research and development. The Company has diversified into Financial Services and Information Management business through its subsidaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through various distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. An erstwhile Contractor had made a claim before arbitration panel for Rs. 7.85 Crores on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere has filed a counter claim of Rs. 38.26 Crores on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs. 3.00 Crores (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

3. Income Tax

In view of the tax / book losses under Income Tax, the Company has not provided for Income Tax/MAT. However, Current Tax includes Prior Period Tax on account of additional provision made on long term capital gain on sale of Domestic formulation business and for certain matters in disputes with Income Tax Department pertaining to earlier years.

4. The Board of Directors of the Company approved the Scheme of Amalgamation and Arrangement between PHL Holdings Private Limited (''PHPL'') and Piramal Enterprises Limited and their respective shareholders and creditors with effect from Appointed Date - January 01, 2013.

The said scheme has been approved by shareholders of both the Companies. Pursuant to the schemer-existing equity shares held by PHPL in the Company will stand cancelled and equivalent number of equity shares will be issued by the Company to the shareholders of PHPL as consideration. All costs arising out of or incurred in connection with and implementing this Scheme shall be borne by PHPL and / or its shareholders and no costs shall be borne by the Company. Further, there would not be any impact of the above scheme on the financial position of the Company.

The Scheme is currently pending for sanction with the Hon''ble Bombay High Court.

5, Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include Provident fund, Gratuity, Pension, Leave Encashment and Long Term Service Award.

6. In accordance with Accounting Standard-17 ''Segment Reporting'', segment information has been given in the consolidate financial statements of Piramal Enterprises Limited, and therefore, no separate disclosure on segment information is give in these financial statements.

7. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures prescribed by th Companies (Accounting Standards) Rules, 2006 (as amended).

1. List of related parties

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited *

The Ajay G. Piramal Foundation*

Paramount Pharma Private Limited* (upto October 30, 2012)

BMK Laboratories Private Limited (upto October 30, 2012)

Cavaal Fininvest Private Limited* (upto October 30, 2012)

PHL Holdings Private Limited (formerly Known as Piramal International Private Limited)

Piramal Healthcare Limited - Senior Employee Option Scheme*

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust *

*There are no transactions during the year.

B. Subsidiary Companies/ Step down subsidiaries

- Located in India

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Pharmaceutical Development Services Private Limited (PPDSPL)

Oxygen Bioresearch Private Limited #

PHL Capital Private Limited (PHL Capital)

PHL Finance Private Limited (PHL Finance) $

PHL Infrastructure Finance Company Private Limited (PHL Infra) $

Indiareit Fund Advisors Private Limited $ @

Piramal Systems & Technologies Private Limited (Piramal Systems)

- Located Outside India

Piramal International @

Piramal Holdings (Suisse) SA (Piramal Holdings) ''

Piramal Pharma Inc (Formerly known as NPIL Pharma Inc, USA )*

Piramal Healthcare Inc.

Piramal Investment Holdings (Canada) Inc.*

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (France) Limited * @ (upto August 7, 2012)

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Oxygen Healthcare Limited, UK (Oxygen Healthcare) *

Piramal Critical Care Italia, SPA* @

Piramal Critical Care Inc (PCCI) **

Minrad EU **@

Indiareit Investment Management Company, Mauritius $ @

Piramal Technologies SA ## @

Piramal Imaging SA * @

Piramal Imaging GmbH * @ (formerly known as "Piramal Molecular Imaging Development GmbH") Piramal Dutch Holdings N.V. (w.e.f October 17, 2012) @

Piramal Critical Care Deutschland GmbH (w.e.f April 16, 2012) *

Piramal Resources Inc. (w.e.f. May 22, 2012) **@

DRI Holdco Inc (w.e.f. June 7, 2012) **@

AMR/Arlington Medical Resources LLC (w.e.f. June 7, 2012) **@

Arlington Medical International Inc (w.e.f. June 7, 2012) **@

Biotrends Research Group LLC (w.e.f. June 7, 2012) **@

Decision Resources Inc (w.e.f. June 7, 2012) ** @

Decision Resources LLC (w.e.f. June 7, 2012) (DRL) **

Decision Resources International Inc. (w.e.f. June 7, 2012) **@

Decision Resources Group UK Limited (w.e.f. November 21, 2012) **@

DR/ Decision Resources LLC (w.e.f. June 7, 2012) **@

DR/MRG Holdings LLC (w.e.f. June 7, 2012) **@

DRG UK Holdco Limited (w.e.f. November 21, 2012) **@

Fingertip Formulary LLC (w.e.f. June 7, 2012) **@

Healthleaders LLC (w.e.f. June 7, 2012) **@

Manhattan Research LLC (w.e.f. June 7, 2012) **@

Pharmastrat LLC (w.e.f. June 7, 2012) **@

Millenium Research Group (w.e.f. June 7, 2012) **@

Sigmatic Limited (w.e.f. December 03, 2012) **@

* Held through Piramal Holdings (Suisse) SA

** Held through Piramal Healthcare Inc.

# Held through Piramal Pharmaceutical Development Services Private Limited.

$ Held through PHL Capital Private Limited.

## Held through Piramal Systems and Technologies Private Limited.

@ There are no transactions during the year with the above Companies.

C. Other related parties where common control exists *

Piramal Glass Limited (PGL)

Piramal Life Sciences Limited (PLSL)

Piramal Corporate Services Private Limited (formerly known as "Piramal Enterprises Limited") (PCSPL) Piramal Estates Private Limited (formerly known as Piramal Realty Limited) (Piramal Estates)

India Venture Advisors Private Limited* (India Venture)

Allergan India Private Limited (Allergan)

Piramal Foundation for Educational Leadership (PFEL)

Health Management and Research Institute (HMRI)

* There are no transactions during the year.

D. Investing parties with whom the Company is a JV Partner Allergan Inc.*

* There are no transactions during the year with the above company.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal Ms. Nandini Piramal Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

8. The Company''s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 31.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 19.43 Crores (Previous Year Rs. 13.36 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

9. During the year, the Company has received Rs. 925.00 Crores (Previous Year Rs. 1,854.44 Crores) through discounting of receivables. Finance charges on the same amounting to Rs. 48.94 Crores (Previous Year Rs. 111.74 Crores) has been disclosed under "Finance Cost".

10. In view of inadequacy of profits for the year ended March 31, 2013, managerial remuneration paid to Directors amounting to Rs. 11.69 Crores requires approval from Central Government which is being sought. Pending above, the amount paid is considered as an advance to Directors (held in trust).

11. As a globally integrated healthcare Company, Piramal Enterprises is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of Piramal Enterprises had set up a state-of-the-art research centre in Goregaon, Mumbai in 2004 and embarked upon an ambitious programme to discover and develop new chemical entities (NCEs) in select therapeutic areas, including Cancer, Inflammation, Diabetes / Metabolic Disorders and Infectious Diseases. The Company has leveraged India''s bio-diversity and vast pool of knowledge in traditional medicine to source new drug leads, and pursued dedicated medicinal chemistry efforts to discover NCEs to treat unmet medical needs. The Company is also taking herbal medication to the world by applying modern science and clinical validation techniques while preserving the holistic properties of natural medicine.

The Drug Discovery and Development Unit of Piramal Enterprises has made significant progress, with an R&D pipeline having several molecules in different phases of development. After successful pre-clinical studies, the Company makes application to requisite regulatory authorities for conducting phase I/I I/I 11 studies. Currently major development programs are in phase I/ll studies. In Oncology, P1446 and P276 are in phase I/ll study. In Diabetes and Metabolic Disorder, P1736 and P2202 are in Phase II study.

12. The figures for the year ended March 31, 2012 have been regrouped, wherever necessary.

---

Mar 31, 2012

1. GENERAL INFORMATION

Piramal Healthcare Limited (the 'Company') is engaged mainly in pharmaceutical business including its research and development. Recently the Company has diversified into financial services business by investing through subsidiaries in Real Estate Investment Trust and other Non Banking Finance Companies. The Company has manufacturing plants in India and sells in Domestic as well as International market through independent retailers and through clearing & forwarding agent. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. The scheme of demerger of New Chemical Entity (NCE) of Piramal Life Sciences Limited (PLSL) into the Company on a going concern basis was sanctioned by the Hon'ble High Court of Bombay on November 25, 2011. The said scheme became effective on December 14, 2011 (the Effective Date), with an appointed date with effect from April 01, 2011.

2.1 Pursuant to the said scheme, the Company has issued one Equity Share of Rs 2/- each of the Company for four equity shares of Rs 10/- each held in PLSL, thereby allotting 53,52,585 Equity Shares to the shareholders of PLSL amounting to Rs 1.07 Crores. The shares were issued to shareholders on December 30, 2011 being a record date.

2.2 PLSL has carried on the business and activities relating to R&D NCE Unit in trust from the Appointed Date to the Effective Date. It has incurred revenue expenditure of Rs 137.62 Crores and spent an amount of Rs 15.49 Crores on Assets (net of liabilities) from the Appointed Date to the Effective Date. These amounts have been adjusted against the amounts receivable from PLSL to the extent of Rs 155.20 Crores. Balance amount of Rs 2.09 Crores has been received by the Company from PLSL in March 2012.

2.3 As a globally integrated healthcare company, Piramal Healthcare is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of Piramal Healthcare has set up a state-of-the-art research centre in Goregaon, Mumbai in 2004 and embarked upon an ambitious programme to discover and develop new chemical entities (NCEs) in select therapeutic areas, including Cancer, Inflammation, Diabetes / Metabolic Disorders and Infectious Diseases. The company has leveraged India's bio-diversity and vast pool of knowledge in traditional medicine to source new drug leads, and pursued dedicated medicinal chemistry efforts to discover NCEs to treat unmet medical needs. The Company is also taking herbal medication to the world by applying modern science and clinical validation techniques while preserving the holistic properties of natural medicine.

The Drug Discovery and Development unit of Piramal Healthcare has made significant progress, with an R&D pipeline having several molecules in different phases of development including one molecule in phase IV.

After successful pre-clinical studies, the company makes application to requisite regulatory authorities for conducting phase I/II/III studies. The company enters into agreement with different Clinical Research Organisations (CROs) for conducting Phase I and Phase II/III studies on human volunteers. The expenses related to phase I studies are relating to design and testing of a new or improved materials, products or processes and payments made to CROs. These expenses are recognized as an intangible asset and are carried forward under Intangible assets under development until the completion of the project as it is expected that such assets will generate future economic benefits.

Currently major development programs are in phase I/II studies. In Oncology, P1446 and P276 are in phase I/II study. In Diabetes and Metabolic Disorder, P1736-05 and P2202 are in Phase II study. In Inflammation, Tinefcon has completed Phase II study, Tinefcon - Psoriasis is in Phase IV studies. In infectious disease, PP9706642 is in phase II studies. The company has the product development option whereby it can sell/transfer it at development stage or engage a partner for further development. For certain studies, on development, the company will be entitled for milestone payments.

3.1 Rights, preferences and restrictions attached to shares Equity Shares:

The company has one class of equity shares having a par value of Rs 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3.2 The Company had decided to buyback 41,802,629 equity shares during the financial year 2010-11 of which 4,10,97,100 equity shares were bought back through tender offer during the financial year 2010-11 aggregating amount of Rs 2,465.83 Crores, by utilizing Securities Premium Account and General Reserve to the extent of Rs 143.33 Crores and Rs 2,314.28 Crores respectively. Capital Redemption Reserve has been created out of General Reserve for Rs 8.22 Crores being the nominal value of shares bought back in terms of Section 77AA of the Companies Act, 1956. In compliance with the Foreign Exchange Management Act, 1999, buyback of 7,05,529 equity shares belonging to one overseas corporate body was then kept in abeyance pending Reserve Bank of India (RBI) approval.

During the year, on receipt of approval from RBI the Company has bought back the remaining 7,05,529 equity shares for an aggregate amount of Rs 42.33 Crores, by utilizing General Reserve of Rs 42.19 Crores. Capital Redemption Reserve has been created out of General Reserve for Rs 0.14 Crores being the nominal value of shares bought back in compliance with Section 77AA of the Companies Act, 1956.

4.1 As per Section 117C of the Companies Act, 1956 the Company has created Debenture Redemption Reserve during the year for Secured Redeemable Non Convertible Debentures issued in earlier year.

(a) Notes on Secured Loans

1. The Non-Convertible Debentures are secured on the movable properties of the Company (excluding working capital goods) and on the immovable properties of the Company situated at Gujarat, Mahad, Pithampur, Digwal and Bangalore.

2. Satisfaction of charges in respect of certain repaid loans are still awaited.

5. CONTINGENT LIABILITIES AND COMMITMENTS

A Contingent liabilities

1 Claims against the company not acknowledged as debt:

Demand dated June 5, 1984 the Government 0.61 0.61 has asked for payment to the credit of the Drugs Prices Equalization Account, the difference between the common sale price and the retention price on production of Vitamin 'A'Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 not accepted by the Company. The Company has been legally advised that the demand is untenable.

2 Guarantees issued to Government authorities 1,089.36 966.83 and limited companies including guarantees issued on behalf of subsidiaries and performance guarantees.

3 Others

i. Appeals filed in respect of disputed demands:

Income Tax

- where the Company is in appeal 420.71 213.25

- where the Department is in appeal 171.08 178.93

Sales Tax 14.37 12.87

Central / State Excise 11.05 13.10

Labour Matters 0.29 0.24 Stamp Duty 4.05 4.05

Legal Cases 7.07 7.07

ii. Bills Discounted 24.00 21.70

iii. Unexpired Letters of Credit 13.21 9.02 Note: Future cash outflows in respect of 1

and 3(i) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

B Commitments

a. Estimated amount of contracts remaining 11.57 14.51 to be executed on capital account and not

provided for;

b. Other Commitments

7,05,529 Shares kept in Abeyance for - 42.33

Buyback of shares

Commitment to invest in non-convertible 157.00 -

debentures

Loan Commitments 19.00 -

6. Income Tax

6.1 Current Tax

Provision for income tax has been made on the basis of Section 115JB of the Income Tax Act, 1961 (Minimum Alternate Tax).

6.2 MAT Credit Entitlement

Prior Period tax credit of Rs 17.70 Crores is on account of increase in MAT credit entitlement pertaining to earlier period which is now available and utilized for AY 2011-12.

6.3 Deferred Tax

The Company has acquired carried forward tax losses of Rs 771.47 Crores on account of de-merger of NCE unit of Piramal Life Sciences Limited (PLSL) into the Company. The Company has not recognized deferred tax on the same in absence of virtual certainty for availability of taxable profits in the foreseeable future.

7. Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees. The Company's defined contribution plans are Superannuation, Employees State Insurance Fund and Employees' Pension Scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company's defined benefit plans include Provident Fund, Gratuity, Pension, Leave Encashment and Long Term Service Award.

II. Disclosures for defined benefit plans based on actuarial reports as on March 31, 2012.

The Guidance on implementing Accounting Standard (AS - 15)(Revised 2005) "Employee Benefits" issued by Accounting Standards Board (ASB) states that provident funds set up by the employers which require the interest short fall to be met by the employers needs to be treated as defined benefit plan.

In terms of Guidance Note issued by The Institute of Actuaries of India, the actuary has provided a valuation of PF liability based on the assumptions listed below and determined that there is no shortfall as at March 31, 2012.

Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach:

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

J. Expected employer's contribution for the next year is Rs.1.77 Crores (Previous Year Rs.3.18 Crores) for Gratuity and Pension.

PK. The liability for Leave Encashment (Non - Funded) as at year end is Rs.16.00 Crores. (Previous year Rs.11.49 Crores)

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

8. The Company is engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations) which is considered the Primary reportable business segment. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India and within India.

9. Related Party Disclosures:

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited * (w.e.f. December 30, 2011)

The Ajay G. Piramal Foundation*

Paramount Pharma Private Limited*

BMK Laboratories Private Limited Cavaal Fininvest Private Limited*

PHL Holdings Private Limited (formerly Known as Piramal International Private Limited)* (w.e.f. September 29, 2011) Piramal Management Services Private Limited* (upto September 29, 2011)

Piramal Healthcare Limited - Employee Option Scheme* (PHL ESOP)

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust (w.e.f. December 30, 2011)*

*There are no transactions during the year with the above Companies.

B. Subsidiary Companies

PHL Fininvest Private Limited (PHL Fin invest)

Piramal Diagnostic Services Private Limited (PDSL) (upto August 20, 2010, consequent to divestment of shareholding) Piramal Pharmaceutical Development Services Private Limited (PPDSPL)

Oxygen Bio Research Private Limited #

Piramal International©

Piramal Holdings (Switzerland) Limited (Piramal Holdings)

NPIL Pharma Inc, USA *

Piramal Healthcare Inc.

Piramal Investment Holdings (Canada) Inc.*

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (France) Limited * @

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Oxygen Healthcare Limited, UK (Oxygen Healthcare) *

Piramal Critical Care Italia, SPA * @

Piramal Critical Care Inc (PCCI) **

Minrad EU (France) **@

PHL Capital Private Limited (PHL Capital) (w.e.f. May 25, 2011)

PHL Finance Private Limited (PHL Finance) (w.e.f. July 27, 2011) $

PHL Infrastructure Finance Company Private Limited (PHL Infra) (w.e.f. September 16, 2011) $@ Indiareit Fund Advisors Private Limited (w.e.f. August 12, 2011) $ @

Piramal Systems & Technologies Private Limited (Piramal Systems) (w.e.f. November 29, 2011) Indiareit Investment Management Company,Mauritius (w.e.f. March 12, 2012) $ @

Piramal Technologies SA (w.e.f. March 13, 2012) ## @

Piramal Imaging SA (w.e.f. February 6, 2012) * @

Piramal Molecular Imaging Development GmbH (w.e.f. February 27, 2012) * @

* Held through Piramal Holdings (Switzerland) Limited.

** Held through Piramal Healthcare Inc.

* Held through Piramal Pharmaceutical Development Services Private Limited.

$ Held through PHL Capital Private Limited.

## Held through Piramal Systems and Technologies Private Limited.

@ There are no transactions during the year with the above Companies.

C. Other related parties where common control exists Piramal Glass Limited (PGL)

Piramal Life Sciences Limited (PLSL)

Piramal Enterprises Limited (PEL)

Piramal Estates Private Limited (formerly known as Piramal Realty Limited) (Piramal Estates) India Venture Advisors Private Limited* (India Venture)

Allergan India Private Limited (Allergan)

Arkray Piramal Medical Private Limited (Arkray) (upto September 30, 2010)

* There are no transactions during the year with the above Company.

D. Investing parties with whom the Company is a JV Partner Allergan Inc.*

ARKRAY Inc.*

* There are no transactions during the year with the above companies.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal

Mr. N. Santhanam (upto December 31, 2011)

Ms. Nandini Piramal

Mr. Vijay Shah (w.e.f. January 1, 2012)

b) During the year the Company has advanced interest free loans aggregating to Rs 86.00 Crores (Previous Year Rs 91.10 Crores) [maximum outstanding during the year Rs 91.10 Crores (Previous Year Rs 91.10 Crores)] to Piramal Pharmaceuticals Development Services Private Limited.

c) The Company has advanced interest-bearing loans aggregating to Rs NIL (Previous Year Rs 347.00 Crores) [maximum outstanding during the year Rs NIL (Previous Year Rs 347.00 Crores)] to Piramal Life Sciences Limited. (Refer Note 3.2)

10. The Company's significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 32.

11. There are no Derivative contracts outstanding as on March 31, 2012.

12. Recoveries deducted from expenses are on account of sharing of common expenses with Subsidiaries and Group Companies.

13. Details of additions to fixed assets and Revenue Expenditure for Department of Scientific & Industrial Research (DSIR) approved research and development facilities / division of the Company for the year ended March 31, 2012 are as follows;

14. During the year, the following investments were made by the Company;

a. 340,530,000 equity shares of Rs 10/- each amounting to Rs 340.53 Crores in PHL Capital Private Limited

b. 10,000 equity shares of Rs 10/- each amounting to Rs 0.01 Crores in Piramal Systems and Technologies Private Limited

c. 45,425,328 equity shares (10.97%) in Vodafone India Limited of Rs 10/- each acquired from ETHL Communications Holdings Limited for cash consideration of Rs 5,864.37 Crores.

15. During the year, the Company has received Rs 1,854.44 Crores through discounting of receivables. Finance charges on the same amounting to Rs 111.74 Crores has been disclosed under "Finance Cost".

Note:

1. Includes products processed by third parties.

2. Stocks are net of breakages and unsaleable stock.

3. Opening stocks, purchases & closing stocks are net of physician samples.

4. In terms of Press Note No. 4 (1994 Series) dated October 25, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India and Notification No. S.O 137 (E) dated March 1, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of Bulk Drugs and Formulations.

5. The Pharmaceuticals business comprises of Manufacturing and trading of bulk drugs and formulations.

16. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31,2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements except for accounting for dividend on investments in subsidiaries.

17. The figures for the year ended March 31, 2012 are not comparable to the previous year ended March 31, 2011 on account of the demerger of R&D NCE unit of PLSL into the Company (Refer Note 3).

---

Mar 31, 2011

1. An erstwhile Contractor had made a claim before arbitration panel for Rs.78.5 Million on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999 -2000. Canere has filed a counter claim of Rs. 382.6 Million on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs.30.0 Million (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

2. The Company had entered into Business Transfer Agreement (BTA) with Abbott Healthcare Private Limited (Abbott), dated May 21, 2010 for sale of its Domestic formulation business ("Business") to Abbott on slump sale basis for net cash consideration for Rupee equivalent of USD 3.8 Billion of which Rupee equivalent of USD 2.2 Billion is received and balance Rupee equivalent of USD 1.6 Billion is receivable on deferred payment basis equally over the next four years. The transaction was concluded on September 07, 2010. The Company recognised a profit of Rs.159,946.2 Million on account of sale of the Business.

3. a. During the year the Company has sold its 97.5% holding (3,859,200 Equity Shares) of Piramal Diagnostic Services P r iv ate L i m ited ( P DSP L) to Super R el i g a re L im ited (SR L) for con s ider at ion of R s. 3, 629.7 M i l l ion . T he con s ider at ion has been discharged by cash of Rs.663.5 Million, Equity Shares of Super Religare Limited of Rs.1,316.2 Million (5,069,902 Rs.10/- each at a premium of Rs.249.62/-) and 16,500 10% cumulative redeemable non-convertible debentures of Rs.100,000/- each valuing Rs.1,650.0 Million for its 97.5% share in PDSPL. In addition SRL has assumed a liability of the Companys outstanding loan of Rs.2,277.1 Million in PDSPL. The Company recognized profit of Rs.2,783.0 Million on account of sale of the investment in the subsidiary.

b. Pursuant to the terms of Shareholders Agreement dated July 13, 2010, entered between the Company and Super Religare Limited (SRL), and pursuant to Promoters of SRL exercising their call option in accordance with the said agreement, the Company has sold its entire shareholding in SRL (as per Note 6(a) above), comprising 5,069,902 Equity Shares of Rs.10/- each, for a total consideration of Rs. 1,376.4 Million. The Company has recognized profit of Rs. 60.2 Million on account of sale of the investment in SRL Equity Shares.

4. The Company decided to buyback upto 4,18,02,629 equity shares of the face-value of Rs. 2/- each at a price of Rs.600/- per share aggregating to Rs.25,081.6 Million from the shareholders of the Company through a Tender Offer, in accordance with Section 77A of the Companies Act, 1956 and the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 as amended.

The Company has bought back 4,10,97,100 equity shares through Tender Offer for an aggregate amount of Rs.24,658.3 Million, by utilizing Share Premium Account and General Reserve to the extent of Rs.1,433.3 Million and Rs.23,142.8 Million respectively. Capital Redemption Reserve has been created out of General Reserve for Rs.82.2 Million being the nominal value of shares bought back in terms of Section 77AA of the Companies Act, 1956.

In compliance with the Foreign Exchange Management Act, 1999, extinguishment of 7,05,529 shares belonging to one overseas corporate body have been kept in abeyance pending Reserve Bank of India (RBI) approval. Consequently, on receipt of RBI approval the shares will be bought back.

5. The Company held 7,500,000 equity shares as investment in Biosyntech Inc., Canada valued at Rs.223.2 Million which has filed for bankruptcy protection under the Bankruptcy and Insolvency Act, Canada.

Pending final liquidation order from the Court, the management is of the opinion that there is permanent diminution in the value amounting to Rs.223.2 Million and hence the same has been provided in the financial statements.

6. The Board of Directors has approved to shift its manufacturing operation of Vitamins and Fine Chemicals from its Thane Unit to Digwal & Mahad unit. Consequently it has been decided to shut down Thane plant effective September 30, 2010. The total closure cost of the plant (including VRS) is Rs.407.0 Million which has been provided in the financial statements.

7. As per Section 117C of the Companies Act, 1956 the Company has created Debenture Redemption Reserve for Secured Redeemable Non Convertible Debentures issued during the previous year and reversed Debenture Redemption Reserve for Secured Redeemable Non Convertible Debentures redeemed during the year.

8. The Current tax includes capital gain tax on sale of Domestic Formulations Business and sale of Investment in PDSPL of Rs. 36,699.9 Million.

9. (a) Major components of Deferred Tax Assets and Liabilities arising are:

(b) The Company has utilised the MAT Credit Entitlement outstanding in the books of Rs. 1,213.2 Million against the tax payable for the year ended March 31, 2011 (Refer Schedule 11).

(c) Prior Period Tax of Rs. 95.2 Million is on account of MAT credit adjusted.

10. Employee Benefits :

The disclosures required as per the revised AS-15 are as under:

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Companys defined contribution plans are Provident fund, Superannuation, Employees State Insurance Fund and Employees Pension Scheme (under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Companys defined benefit plans include Gratuity, Pension, Leave Encashment and Long Term Service Award. The Guidance on implementing Accounting Standard (AS – 15)(Revised 2005) "Employee Benefits" issued by Accounting Standards Board (ASB) states that provident funds set up by the employers which require the interest short fall to be met by the employers needs to be treated as defined benefit plan. However, as at the year end no shortfall remains unprovided for. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

11. a. The Company is mainly engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations) which is considered the Primary reportable business segment as per Accounting Standard (AS 17) "Segment Reporting" issued by the Institute of Chartered Accountants of India. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India and within India.

b. Income from Investments represents the income earned on the temporary investments made out of proceeds from sale of the Domestic For mu l at ion Business and the holding in Piramal Diag nostic Serv ices Private Limited . These temporary investments have been made due to surplus funds available in the interim and shall be deployed in businesses in due course.

12. Related Party Disclosures, as required by Accounting Standard (AS 18) – "Related Parties Disclosures" issued by the Institute of Chartered Accountants of India are given below:

b) During the year the Company has advanced interest free loans aggregating to Rs. 911.0 Million (Previous Year Rs. 368.9 Million) [maximum outstanding during the year Rs. 911.0 Million (Previous Year Rs. 473.3 Million)] to Piramal Pharmaceuticals Development Services Private Limited.

c) The Company has advanced interest-bearing loans aggregating to Rs. 3,470.0 Million (Previous Year Rs. NIL) [maximum outstanding during the year Rs. 3,470.0 Million (Previous Year Rs. 707.5 Million)] to Piramal Life Sciences Limited.

13. The Companys significant leasing arrangements are mainly in respect of residential / office premises, computer and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Schedule 18.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 130.0 Million (Previous Year Rs. 231.7 Million) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

14. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

15. There are no Derivative contracts outstanding as on March 31, 2011.

16. Earning Per Share (EPS) – EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:

17. The Companys intangible assets, other than Computer Software, comprise of Brands and Trademarks, Copyrights,

Technical Knowhow & Business IPR, Licenses and US FDA / TGA approvals acquired by the Company over the years. No internally generated intangible assets have been recognised in the books of accounts.

18. Recoveries deducted from expenses are on account of sharing of common expenses with Associate and Subsidiaries.

19. Details of additions to fixed assets and Revenue Expenditure for Department of Scientific & Industrial Research approved research and development facilities/division of the company for the year ended March 31, 2011 are as follows;

Note:

1 . Components and Spare referred to in Para 4D(C) of Schedule VI of the Companies Act, 1956 are assumed to be those incorporated in goods produced and not those used for maintenance of Plant & Machinery.

2. The Consumption figures are ascertained on the basis of Opening Stock plus Purchases less Closing Stock and are therefore after adjustment of excesses and shortages ascertained in physical count, unserviceable items etc.

1. Includes products processed by third parties.

2. Includes production for captive consumption of Bulk Drugs 98328 kgs (PY 91850 kgs) & Vitamins 110.27 mmu (PY 138.33 mmu)

3. Stocks are net of breakages & unsaleable stock.

4. Opening stocks, production, purchases & closing stocks are net of physician samples.

5. Licensed Capacity is not indicated as Industrial Licensing for all Bulk Drugs, Intermediates and their Formulations stands abolished in terms of Press Note No.4 (1994 series) dated 25th October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India.

6. Excludes free samples issued.

7. Variation in quantity/value is on account of change in product mix.

8. In terms of Press Note No. 4 (1994 series) dated October 25, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India, and Notification No. S.O 137 (E) dated March 1, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of Bulk Drugs and Formulations.

9. The Pharmaceuticals business comprises of Manufacturing and trading of bulk drugs and formulations.

10. Installed capacities of the formulation factories of the Company (except where continuous processes are involved) are on a triple shift basis are certified by the Management and have not been verified by the Auditors, this being a technical matter.

20. The figures for the year ended March 31, 2010 have been regrouped, wherever necessary.

21. The figures for the year ended March 31, 2011 are not comparable to the previous year ended March 31, 2010 on account of the sale of Domestic formulation business referred in note 5 above.