xvi) Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that
the Company will be required to settle the
obligation, and a reliable estimate can be made
of the amount of the obligation.

The amount recognised as a provision is the
best estimate of the consideration required to
settle the present obligation at the end of the
reporting period, taking into account the risks
and uncertainties surrounding the obligation.

Onerous contracts

Present obligations arising under onerous
contracts are recognised and measured as
provisions. An onerous contract is considered
to exist where the Company has a contract
under which the unavoidable costs of meeting

the obligations under the contract exceed the
economic benefits expected to be received
from the contract.

(xvii) Contingent liabilities

Contingent liabilities are disclosed in notes
when there is a possible obligation that arises
from past events and whose existence will
be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future
events not wholly within the control of the
entity or a present obligation that arises from
past events where it is either not probable that
an outfl ow of resources will be req uired to settle
or a reliable estimate of the amount cannot
be made.

(xviii) Financial instruments

Investment in subsidiaries

The Company has accounted for its investments
in subsidiaries at cost less impairment.

Other financial assets and financial liabilities

Other financial assets and financial liabilities are
recognised when Company becomes a party to
the contractual provisions of the instruments.

Initial recognition and measurement:

Other financial assets and financial liabilities
are initially measured at fair value. Transaction
costs that are directly attributable to the
acquisition or issue of financial assets and
financial liabilities (other than financial assets
and financial liabilities at fair value through
profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the
acquisition of financial assets or financial
liabilities at fair value through profit or loss are
recognised immediately in statement of profit
and loss.

Subsequent measurement:

Financial assets at amortised cost: Financial
assets are subsequently measured at amortised
cost if these financial assets are held within
a business whose objective is to hold these
assets in order to collect contractual cash flows
and contractual terms of financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.

Financial assets at fair value through profit
or loss: Financial assets are measured at fair
value through profit or loss unless it measured
at amortised cost or fair value through other
comprehensive income on initial recognition.
The transaction cost directly attributable to the
acquisition of financial assets and liabilities at
fair value through profit or loss are immediately
recognised in the statement of profit and loss.

Financial liabilities are measured at amortised
cost using effective interest rate method. For
trade and other payables maturing within one
year from the balance sheet date, the carrying
amounts approximate fair value due to the
short maturity of these instruments.

Derecognition of financial assets and
liabilities:

The Company derecognises the financial
asset only when the contractual rights to
the cashflows from the asset expires or it
transfers the financial asset and substantially
all the risks and rewards of the ownership of
the asset to the other entity . If the Company
neither transfers nor retains substantially all
risks and rewards of ownership and continues
to control the transferred asset , the Company
recognizes its retained interest in the asset and
associated liability for the amounts it may have
to pay. If the Company retains substantially
all risks and rewards of the ownership of a
transferred financial asset, the Company
continues to recognize the financial asset and
also recognizes a collaterized borrowing for
the proceeds received. On derecognition of a
financial asset measured at amortised cost,
the difference between the asset’s carrying
amount and the sum of the consideration
received and receivable is recognised in profit
or loss. Financial liabilities are derecognised
when these are extinguished , that is when
the obligation is discharged, cancelled or has
expired.The difference between the carrying
amount of the financial liability derecognised
and the consideration paid and payable is
recognised in profit or loss.

Equity instruments

An equity instrument is a contract that
evidences residual interest in the assets of the
company after deducting all of its liabilities.
Equity instruments recognised by the Company
are recognised at the proceeds received net off
direct issue cost.

(xix) Operating Cycle

Based on the normal time between acquisition
of assets and their realisation in cash or cash
equivalents, the Company has determined
its operating cycle as 12 months. The above
basis is used for classifying the assets and
liabilities into current and non-current as the
case may be.

(xx) Cash Flow Statement

Cash flows are reported using the indirect
method, whereby profit / (loss) before tax is
adjusted for the effects of transactions of non¬
cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash
flows from operating, investing and financing
activities of the Company are segregated based
on the available information.

(xxi) Key sources of estimation uncertainty

In the application of the Company's accounting
policies, the directors of the Company are
required to make judgements, estimates and
assumptions about the carrying amounts
of assets and liabilities that are not readily
apparent from other sources. The estimates
and associated assumptions are based on
historical experience and other factors that are
considered to be relevant. Actual results may
differ from these estimates.

The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the
period in which the estimate is revised if the
revision affects only that period, or in the period
of the revision and future periods if the revision
affects both current and future periods.

The following are the key assumptions
concerning the future, and other key sources
of estimation uncertainty at the end of the
reporting period that may have a significant
risk of causing a material adjustment to the
carrying amounts of assets and liabilities within
the next financial year.

Impairment of goodwill and other non¬
financial assets

Determining whether the asset is impaired
requires to assess the recoverable amount of
the asset or Cash Generating Unit (CGU) which
is compared to the carrying amount of the asset
or CGU, as applicable. Recoverable amount is
the higher of fair value less costs of disposal
and value in use. Where the carrying amount

of an asset or CGU exceeds the recoverable
amount, the asset is considered impaired and
is written down to its recoverable amount.

Impairment of financial assets

The impairment provisions for financial
assets are based on assumptions about risk
of default and expected cash loss rates. The
Company uses judgement in making these
assumptions and selecting the inputs to the
impairment calculation, based on Company’s
past history, existing market conditions as well
as forward looking estimates at the end of each
reporting period.

Useful lives of property, plant and
equipment

The Company reviews the useful life of
property, plant and equipment at the end of
each reporting period. This assessment may
result in change in the depreciation expense
in future periods.

Defined benefit plans and compensated
absences:

The cost of the defined benefit plans,
compensated absences and the present value
of the defined benefit obligations 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.

Income taxes

Significant judgments are involved in
determining the provision for income taxes
including judgment on whether tax positions
are probable of being sustained in tax
assessments. A tax assessment can involve
complex issues, which can only be resolved
over extended time periods.

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
expected reversal of deferred tax liabilities and
projected future taxable income in making this
assessment. The amount of deferred tax assets
considered realisable, however, could reduce
in the near term if estimates of future taxable
income during the carry-forward period
are reduced.

Controlling parties assessment

The Company performs assessment for
identification of controlling parties. The
assessment involves judgements which
included consideration of controlling parties’
absolute size of holding in the Company,
determination of whether other parties are
acting on the investor’s behalf, determination
of whether parties have the practical ability to
exercise that right and the relative size of and
dispersion of the shareholdings owned by the
other shareholders. Based on assessment,
the Company is not controlled by any single
shareholder or group of shareholders.

Going Concern

The Management has prepared cash flow
forecasts for the next 12 months. The forecasts

include assumption such revenue projection,
increase in gross margin and EBTIDA due to
cost control measures and strategic focus to
maintain reduced inventory levels.

Inventory

The Company estimates the net realisable value
(NRV) of its inventories by taking into account
their estimated selling price, estimated cost of
completion, estimated costs necessary to make
the sale. Management reviews the inventory
age listing on a periodic basis. This review
involves comparison of the carrying value of the
aged inventory items with the respective net
realisable value. Inventories are written down
to NRV where such NRV is lower than their cost.

Litigations

The Company is a party to certain direct and
indirect tax disputes. Uncertain tax items for
which a provision is made relate principally to
the interpretation of tax legislation applicable
to arrangements entered into by the Company.
Due to the uncertainty associated with such tax
items, it is possible that, on conclusion of open
tax matters at a future date, the final outcome
may differ significantly.

Impairment assessment of goodwill allocated to the “Human API business” as at March 31, 2025:

The Management of the Company have performed annual impairment assessment of the goodwill by determining
the "value in use” of this Cash Generating Unit (CGU) as an aggregate of present value of cash flow projections
covering a five year period and the terminal value. Determination of value in use involves significant estimates and
assumptions that affect the reporting CGU’s expected future cash flows. These estimates and assumptions, primarily
include, but are not limited to, the revenue growth and profitability during the forecast period, the discount rate and
the terminal growth rate.

Considering the historical performance of this business since acquisition and based on the forward looking estimates,
including the changes in estimated future economic conditions, revisions were made to the cash flow projections
and other key assumptions such as discount rate and the terminal growth rate. The cash flows are discounted using
a post tax discount rate of 1700% (March 31, 2024: 16.00%). The terminal value of cash generating unit is arrived at
by extrapolating cash flows of latest forecasted year to perpetuity using a constant long-term growth rate of 3.00%
(March 31, 2024: 3.00%) p.a. which is consistent with the industry forecasts for the generic API market.

The above assessment did not result in impairment in the carrying amount of goodwill.

The table below shows the percentage movement in key assumptions that (individually) would be required to reach
the point at which the value in use approximates its carrying value.

Movement

Terminal growth rate 3.00% decrease

(3.00% decrease)

Post tax discount rate 6.90% increase

(6.45% increase)

Expected net revenue growth rates 6.30% decrease for short term and 3.0% decrease for long term

(9% decrease for short term and 3.0% decrease for long term)

The details given in brackets relate to previous year
NOTE NO. 8 OTHER INTANGIBLE ASSETS

Notes:

(i) The Company has presently, decided not to opt for the New Tax Regime inserted as section 115BAA of the
Income-tax Act, 1961 and enacted by the Taxation Laws (Amendment) Ordinance, 2019 (‘the Ordinance’) which
is applicable from Financial Year beginning April 1, 2019. The Company has accordingly applied the existing tax
rates in the financial statements for the year ended March 31, 2025

(ii) During Financial year 2017-18, the Company acquired the Human API and Commodity API businesses vide a
NCLT approved Scheme of demerger. For purposes of recognising tax expenses and deferred tax balances in the
books of account, the Company has considered Goodwill as non-tax deductible and the Company continued
to apply the initial recognition exemption under Ind AS 12 "Income taxes”.

(iii) The Company has significant carried forward losses under income tax act. While the Company expects to
increase operations in the future, in view of the significant carried forward losses and resulting impact on future
taxable profits, the Company has written off Deferred tax assets (including MAT credit entitlement) amounting
to 78.54 crores during the previous year ended March 31, 2024 and also, the Company has restricted the
recognized Deferred Tax Asset up to the amount of the Deferred Tax Liability.

(iv) Based on legal advice received by the Company, the Company has claimed in its income tax returns,
depreciation on Goodwill and Product Portfolios relating to both businesses acquired through the
aforesaid demerger. These claims were disallowed by the assessing officer. The Company has preferred
appeal with Commisisoner of income tax (appeals). Order against appeal had been passed vide order
dated April 18, 2024, confirming disallowance of depreciation on goodwill & product portfolio and
the Company has filed an appeal before the ITAT against it on May 06, 2024.The Company has not
recognised deferred tax assets in the books of account in respect of claims relating to depreciation on the
Goodwill relating to both the businesses and Product portfolio (relating to the Commodity API business).
While the Company has consistently taken a view as aforesaid in the books of account, the Company has
been legally advised that the claims made in the tax returns are tenable. As at March 31, 2025, the potential
unrecognised claims in respect of the above is amounting to '600.38 Crores ('591.22 crores as on March
31, 2024). The benefit of these tax credits will be evaluated and recognized in the year in which, based on
management’s best judgement, such credits are confirmed to be available for future set offs against taxable
profits. Also refer note 38, regarding income tax litigations.

(v) In addition to above, the Company has not recognised deferred tax assets '160.04 crores as on March 31, 2025
('173.93 crores as on March 31, 2024) relating to carried forward loss (including unabsorbed depreciation)
as there is no reasonable certainty that sufficient future taxable income will be available against which such
deferred tax asset can be realised.

Employee Stock Option Scheme (ESOP 2018)

The ESOP titled "Solara Employee Stock Option Plan 2018” (ESOP 2018) was approved by the shareholders and
stock exchanges. 1,228,778 options are covered under the plan which are convertible into equal number of equity
shares of the Company. The vesting period of these options range over a period of three years. The options must be
exercised within a period of 120 days from the date of vesting. The Company has granted 110,200 options (March
31, 2024: 250,000 options) under this plan during the current year.

Employee Stock Option Scheme (ESOP 2024)

The ESOP titled "Solara Employee Stock Option Plan 2024” (ESOP 2024) was approved by the shareholders and
stock exchanges.960,000 options are covered under the plan which are convertible into equal number of equity
shares of the Company. The vesting period of these options range over a period of three years. The options must be
exercised within a period of 120 days from the date of vesting. The Company has granted 350,000 options (March
31, 2024: Nil) under this plan during the current year.

During the current year, employee compensation costs of '2.68 Crores (Previous year: '0.60 Crores) relating to the
above referred Employee Stock Option Plans have been charged to the Statement of Profit and Loss.

Fair value of share options granted during the year

The fair value of the share options were priced using a Black-Scholes model of valuation at grant date.The assumptions
used in this model for calculating fair value of the ESOP granted during the year are as below:

Financial risk management objectives

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s
primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on
its financial performance. The primary market risk to the Company is foreign exchange risk. The Board of Directors
reviews and agrees policies for managing each of these risks, which are summarised below:

44.3 Foreign currency risk management

The Company is exposed to foreign exchange risk due to:

- debt availed in foreign currency

- exposure arising from transactions relating to purchases, revenues, expenses, etc., to be settled (within and outside
the group) in currencies other than the functional currency (i.e. Indian rupees).

The carrying amount of the Company’s foreign currency denominated monetary liabilities (payables) and assets
(receivables) as at the end of reporting period are as under:

Interest rate sensitivity analysis

Financial instruments affected by interest rate changes include secured long term loans from banks and secured
short term loans from banks. The impact of a 1% change in interest rates on the profit of an annual period will be '7.76
Crores (March 31, 2024: '9.99 Crores) assuming the loans at each year end remain constant during the respective
years. This computation does not involve a revaluation of the fair value of loans as a consequence of changes in
interest rates. The computation also assumes that an increase in interest rates on floating rate liabilities will not
necessarily involve an increase in interest rates on floating rate financial assets.

44.5 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Company. Credit Risk to the company primarily arises from trade receivables. Credit risk also arises from cash and
cash equivalents, financial instruments and deposits with banks and financial institutions and other financial assets.

The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the
risk of financial loss from defaults. The Company has an internal mechanism of determining the credit rating of
the customers and setting credit limits. Credit exposure is controlled by counterparty limits that are reviewed and
approved by the risk management committee annually. Ongoing credit evaluation is performed on the financial
condition of accounts receivable.

The Company is not significantly exposed to geographical credit risk as the counterparties operate across various
countries across the globe.

Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial
institutions with high credit ratings assigned by international and domestic credit rating agencies.

44.6 Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an
appropriate liquidity risk management framework 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 reserve borrowing facilities, by continuously monitoring forecast and actual
short term and long term cash flows, and by matching the maturity profiles of financial assets and liabilities.

(i) Explanation for variances exceeding 25%:

(a) Decrease in Debt-Equity ratio is due to decrease in current borrowings

(b) Increase in Debt Service Coverage ratio is on account of increase in Earnings Before Interest, Taxes,
Depreciation and Amortisation (EBITDA)

(c) Increase in Return on Equity ratio is on account of increase in Net profit (PAT)

(d) Increase in Trade receivables turnover ratio is on account of reduction in Trade receivables

(e) Decrease in Net capital turnover ratio is on account of decrease in Working capital

(f) Increase in Net profit ratio is on account of increase in Net profit (PAT)

(g) Increase in Return on capital employed ratio is on account of increase in Earnings Before Interest and Taxes
(EBIT)

Definitions:

Debt is defined as non-current borrowings, current maturities of non-current borrowings and current borrowings
and includes lease liabilities

Equity is defined as Equity share capital and Other equity.

Tangible Equity is defined as Equity share capital and Other equity less Goodwill less Intangible Assets
Earnings before interest,taxes, depreciation and amortisation (EBITDA) is defined as:

Profit for the year before exceptional items and taxes (add) Depreciation and Amortisation (add) Finance costs (less)
interest income

Debt repayment is defined as non-current borrowings repaid during the year
Interest payments is defined as interest paid on borrowings during the year
Net profit (PAT) is defined as Profit for the year after tax

Cost of goods sold is defined as Cost of materials consumed, Purchases of stock-in-trade and Changes in inventories
of finished goods and work-in-progress

Sales Turnover is defined as Sale of products and Sale of services
Earnings before interest and taxes (EBIT) is defined as:

The Code on Social Security, 2020 (the Code) has been enacted, which would impact the contributions by the
Company towards Provident Fund and Gratuity. The effective date from which the changes are applicable is yet to
be notified. The Company will complete its evaluation and will give appropriate impact in its financial statements in
the period in which the Code becomes effective and the related rules are published.

NOTE NO. 49 OTHER STATUTORY INFORMATION

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

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

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

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

(e) The Company has no transaction 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).

(f) The Company has borrowings from banks on the basis of security of current assets, the quarterly returns or
statements of current assets has been filed by the Company with banks are in agreement with the books
of accounts.

(g) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.

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

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

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

(i) 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,

With effect from 1 April 2023, the Ministry of Corporate Affairs (MCA) has made it mandatory for companies to
maintain an audit trail throughout the year for transactions impacting books of accounts.

The Company uses accounting software for maintaining the books of account which has a feature of recording audit
trail and has defined process to enable audit trail of books of accounts and has enabled the feature of recording audit
trail (edit log) facility except that in respect of accounting software used by the Company, audit trail feature was not
enabled for certain direct changes to tables at the application level for the period April 1, 2024 to March 31, 2025.
The Management is of the view that this does not have any impact on its Standalone Financial Statements for the
year ended March 31, 2025.

The audit trail that was enabled and operated for the year ended March 31, 2024, has been preserved by the
Company as per the statutory requirements for record retention.

NOTE NO. 51

There was a fire accident at the Company Puducherry facility on November 04, 2023 whereby 3 blocks out of the
total 76 blocks were impacted by the fire. The resultant fire caused injuries to 14 workers and 12 workers were
recovered and discharged while 2 succumbed to injuries despite maximum efforts put to recover them. The fire also
caused damages to the plant and equipment amounting to '2.25 crores, inventories amounting to '51.35 crores,
Goods and service tax reversal on inventory loss amounting to '752 crores and other expense such as medical
expenses etc. amounting '1.38 crores.The losses arising on account of the fire incident have been accounted under
exceptional item during the previous year ended March 31, 2024. There was disruption in the production at the
Puducherry facility for a brief period and production was resumed after receiving the statutory approvals post the
tire incident.The Company has submitted the initial insurance claims which are subject to assessment by the Insurers,
pending which, the claim has not been recognised in these standalone financial statements. The insurance claim
will be accrued once there is certainty of the amount expected to be reimbursed by the Insurers.

NOTE NO. 52

The Board of the Company had approved the transfer of 100% shareholding in Sequent Penems Private Limited,
a wholly owned subsidiary, through a circular resolution dated March 22, 2024. The share purchase agreement
was executed on March 28, 2024, for a cash consideration of '12.50 crores. The Company had a carrying value
of investment in this subsidiary of '14.30 crores. Hence, the Company has accounted for an impairment on the
nvestment in this subsidiary amounting to '1.80 crores during the previous year ended March 31, 2024. The shares
were transferred on April 25, 2024.

Due to the above sale, certain assets of the Company were no longer usable. Hence, the Company had written off
these assets, amounting to '2.53 crores and disclosed under exceptional items during the previous year ended
March 31, 2024.

NOTE NO. 53

The Company, vide its letter of offer dated May 09, 2024 offered upto 1,19,98,755 Equity shares of face value of
'10/- each at a price of '375 per Equity share (including Share premium of '365 per Equity share) for an amount
aggregating '449.95 crores to the existing share holders of the Company on right basis in the ratio of One Equity
share for every three Equity shares held by the Equity shareholders on the record date i.e May 15, 2024. Rights issue
has been done in accordance with Section 62(1)(a) of the Companies Act and other applicable laws. The Company
has allotted 1,19,98,755 Nos. of partly paid up equity shares on June 19, 2024.

Out of net proceeds from allotment, '118.61 crores is used against repayment of borrowings, '35.87 crores towards
general corporate purposes in line with terms of utilization mentioned in letter of offer.

Pursuant to the Rights issue, earnings per share (EPS) in repect of previous year have been adjusted as per Indian
Accounting Standard 33 “Earnings per share”, prescribed under Section 133 of the Companies Act, 2013.

The Board of Directors of the Company at its meeting held on January 24, 2025 had discussed a proposal to explore
‘demerger of the CRAMS and Polymers business into an independent listed entity’ and granted in-principle approval
for the same.

NOTE NO. 55

According to management’s evaluation of events subsequent to the balance sheet date there were no significant
adjusting events that occured other than those disclosed/given effect to, in these financial statements as of March
31, 2025.

NOTE NO. 56

On May 07, 2025, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards)
Amendment Rules, 2025. This notification has resulted into amendments in the "Indian Accounting Standard (Ind AS)
21 - The Effects of Changes in Foreign Exchange Rates ” which are applicable to the Company from April 01, 2025.The
Company is in the process of evaluating the impact of the this amendments on the Company’s financial statements.

NOTE NO. 57

All the amounts included in the standalone financial statements are rounded off to the neareast crores, except per
share data and unless stated otherwise. Further, due to rounding off, certain amounts are appearing as ‘0’.

For and on behalf of Board of Directors

Sandeep Rao M Mohan Sarat Kumar Pooja Jaya Kumar

Managing Director & Chief Executive Officer Executive Director Chief Financial Officer Company Secretary

DIN: 10838251 DIN: 03610282 Membership Number: A57415

Place : Bengaluru
Date : May 15, 2025