Preliminary Placement Document

Subject to Completion

Not for Circulation and Strictly Confidential

Serial Number: [●]

ZYDUS WELLNESS LIMITED

Registered Office: Zydus Corporate Park, Scheme no. 63, Survey no. 536, Khoraj (Gandhinagar), Near Vaishnodevi Circle, S.G. Highway, Ahmedabad - 382 481

Telephone: +91 79 7180 0000; E-mail: investor.greivance@zyduswellness.com; Website: www.zyduswellness.in; CIN: L15201GJ1994PLC023490

Zydus Wellness Limited (our “Company” or the “Issuer”) was originally incorporated as “Carnation Health Foods Limited” under the Companies Act, 1956 pursuant to a

certificate of incorporation dated November 1, 1994 issued by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Our Company commenced its business on November

25, 1994, pursuant to a certificate of commencement of business issued the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Subsequently, the name of our Company

was changed to “Carnation Nutra-Analogue Foods Limited”, pursuant to a fresh certificate of incorporation consequent upon change of name issued by the Registrar of

Companies, Gujarat, Dadra and Nagar Haveli dated December 6, 1995. Subsequently, the name of our Company was changed to “Zydus Wellness Limited” pursuant to a fresh

certificate of incorporation consequent upon change of name issued by the Registrar of Companies, Gujarat at Ahmedabad (“RoC”) dated January 5, 2009. For details with

respect to changes to the name of our Company, see “General Information” beginning on page 193.

Issue of up to [●] equity shares of face value ₹10 each of our Company (“Equity Shares”) at a price of ₹[●] per Equity Share (the “Issue Price”), including a premium of ₹[●]

per Equity Share, aggregating up to ₹[●] lakhs (the “Issue”). For further details, see “Summary of the Issue” beginning on page 32.

THIS ISSUE IS BEING UNDERTAKEN IN RELIANCE UPON CHAPTER VI OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF

CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (THE “SEBI ICDR REGULATIONS”) AND SECTION 42 OF THE

COMPANIES ACT, 2013 AND OTHER APPLICABLE PROVISIONS OF THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER, EACH AS

AMENDED (“COMPANIES ACT”)

OUR COMPANY HAS PREPARED THIS PRELIMINARY PLACEMENT DOCUMENT SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH

THE ISSUE. THE ISSUE AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO ELIGIBLE QIBS (AS

DEFINED HEREINAFTER) IN RELIANCE UPON SECTION 42 OF THE COMPANIES ACT, AND OTHER APPLICABLE PROVISIONS OF THE COMPANIES

ACT AND CHAPTER VI OF THE SEBI ICDR REGULATIONS. THIS PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE

INVESTOR. THE ISSUE DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER

PROSPECTIVE INVESTOR OR CLASS OR CATEGORY OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN ELIGIBLE QIBs. THIS

PRELIMINARY PLACEMENT DOCUMENT SHALL BE CIRCULATED ONLY TO SUCH ELIGIBLE QIBs WHOSE NAMES ARE RECORDED BY OUR

COMPANY PRIOR TO MAKING AN INVITATION TO SUBSCRIBE TO THE EQUITY SHARES.

YOU MAY NOT AND ARE NOT AUTHORISED TO (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2)

REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE ANY PUBLIC ADVERTISEMENTS

OR UTILISE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY

DISTRIBUTION OR REPRODUCTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO

COMPLY WITH THIS INSTRUCTION MAY RESULT IN VIOLATION OF THE COMPANIES ACT, THE SEBI ICDR REGULATIONS OR OTHER

APPLICABLE LAWS OF INDIA AND OF OTHER JURISDICTIONS.

INVESTMENTS IN EQUITY SHARES INVOLVE A HIGH DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THE ISSUE

UNLESS THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED

TO CAREFULLY READ THE SECTION “RISK FACTORS” BEGINNING ON PAGE 39 BEFORE MAKING AN INVESTMENT DECISION RELATING TO THE

ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES OF AN

INVESTMENT IN THE EQUITY SHARES TO BE ISSUED PURSUANT TO THIS PRELIMINARY PLACEMENT DOCUMENT AND THE PLACEMENT

DOCUMENT (AS DEFINED HEREINAFTER). PROSPECTIVE INVESTORS SHALL CONDUCT THEIR OWN DUE DILIGENCE ON THE EQUITY SHARES

AND OUR COMPANY. IF YOU DO NOT UNDERSTAND THE CONTENTS OF THIS PRELIMINARY PLACEMENT DOCUMENT AND/OR THE PLACEMENT

DOCUMENT, YOU SHOULD CONSULT AN AUTHORISED FINANCIAL ADVISOR AND/OR LEGAL ADVISOR.

The Equity Shares are listed on BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”, and together with BSE, the “Stock Exchanges”). The closing

price of the outstanding Equity Shares on BSE and NSE as on September 22, 2020 was ₹1,767.50 and ₹1,782.70 per Equity Share, respectively. In-principle approvals pursuant

to Regulation 28(1)(a) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing

Regulations”), for listing of the Equity Shares to be issued pursuant to the Issue, have been received from BSE and NSE on September 23, 2020. Our Company shall make

applications to the Stock Exchanges for obtaining the final listing and trading approvals for the Equity Shares to be issued pursuant to the Issue. The Stock Exchanges assume

no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to be issued pursuant to the Issue

for trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or of the Equity Shares.

A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) has been delivered to the Stock Exchanges

and a copy of the Placement Document (which shall also include disclosures prescribed under Form PAS-4) will be delivered to the Stock Exchanges in due course. Our Company

shall also make requisite filings with the RoC, within the stipulated timeframe prescribed under the Companies Act and the PAS Rules (as defined hereinafter), as amended. This

Preliminary Placement Document has not been reviewed by SEBI, the Stock Exchanges, RoC or any other regulatory or listing authority and is intended only for use by Eligible

QIBs (as defined hereinafter). This Preliminary Placement Document has not been and will not be filed as a prospectus with the RoC, will not be circulated or distributed to the

public in India or any other jurisdiction, and the Issue will not constitute a public offer in India or any other jurisdiction.

Invitations, offers and sales of Equity Shares to be issued pursuant to the Issue shall only be made pursuant to this Preliminary Placement Document together with the Application

Form, the Placement Document and the Confirmation of Allocation Note (as defined hereinafter). For further details, see “Issue Procedure” beginning on page 151. The

distribution of this Preliminary Placement Document or the disclosure of its contents, without our Company’s prior consent, to any person, other than Eligible QIBs and persons

retained by Eligible QIBs to advise them with respect to their purchase of Equity Shares, is unauthorised and prohibited. Each prospective investor, by accepting delivery of this

Preliminary Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Preliminary Placement Document or any documents referred to in

this Preliminary Placement Document.

The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and will only be offered and

sold outside the United States in “offshore transactions” as defined in, and pursuant to, Regulation S under the U.S. Securities Act (“Regulation S”).

The information on our Company’s website or any website directly or indirectly linked to our Company’s website or the website of the BRLM (as defined hereinafter) or any of

its respective affiliates does not constitute nor form part of this Preliminary Placement Document and prospective investors should not rely on such information contained in, or

available through, any such websites for their investment in this Issue.

This Preliminary Placement Document is dated September 23, 2020.

BOOK RUNNING LEAD MANAGER

J.P. MORGAN INDIA PRIVATE LIMITED

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TABLE OF CONTENTS

NOTICE TO INVESTORS .................................................................................................................................. 1

REPRESENTATIONS BY INVESTORS .......................................................................................................... 3

OFFSHORE DERIVATIVE INSTRUMENTS .................................................................................................. 9

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES .......................................................................... 10

PRESENTATION OF FINANCIAL AND OTHER INFORMATION ......................................................... 11

INDUSTRY AND MARKET DATA ................................................................................................................. 13

FORWARD-LOOKING STATEMENTS ........................................................................................................ 14

ENFORCEMENT OF CIVIL LIABILITIES .................................................................................................. 16

EXCHANGE RATES INFORMATION .......................................................................................................... 17

DEFINITIONS AND ABBREVIATIONS ........................................................................................................ 18

SUMMARY OF BUSINESS .............................................................................................................................. 24

SUMMARY OF THE ISSUE ............................................................................................................................ 32

SELECTED FINANCIAL INFORMATION ................................................................................................... 34

RISK FACTORS ................................................................................................................................................ 39

MARKET PRICE INFORMATION ................................................................................................................ 59

USE OF PROCEEDS ......................................................................................................................................... 62

CAPITALISATION STATEMENT ................................................................................................................. 63

CAPITAL STRUCTURE ................................................................................................................................... 64

RELATED PARTY TRANSACTIONS ............................................................................................................ 67

DIVIDENDS ........................................................................................................................................................ 68

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS .................................................................................................................................................... 69

INDUSTRY OVERVIEW .................................................................................................................................. 90

OUR BUSINESS ............................................................................................................................................... 127

ORGANISATIONAL STRUCTURE ............................................................................................................. 141

BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL ................................................... 142

SHAREHOLDING PATTERN OF OUR COMPANY ................................................................................. 148

ISSUE PROCEDURE ...................................................................................................................................... 151

PLACEMENT ................................................................................................................................................... 164

SELLING RESTRICTIONS ........................................................................................................................... 166

THE SECURITIES MARKET OF INDIA ..................................................................................................... 169

DESCRIPTION OF THE EQUITY SHARES ............................................................................................... 173

STATEMENT OF SPECIAL TAX BENEFITS ............................................................................................ 178

LEGAL PROCEEDINGS ................................................................................................................................ 184

INDEPENDENT STATUTORY AUDITORS ............................................................................................... 192

GENERAL INFORMATION .......................................................................................................................... 193

FINANCIAL STATEMENTS ......................................................................................................................... 195

DECLARATION .............................................................................................................................................. 307

SAMPLE APPLICATION FORM .................................................................................................................. 310

1

NOTICE TO INVESTORS

Our Company has furnished and accepts full responsibility for all of the information contained in this Preliminary

Placement Document and confirms that to the best of its knowledge and belief, having made all reasonable

enquiries, this Preliminary Placement Document contains all information with respect to our Company, our

Subsidiaries and the Equity Shares which is material in the context of the Issue. The statements contained in this

Preliminary Placement Document relating to our Company, Subsidiaries and the Equity Shares are, in all material

respects, true, accurate and not misleading, and the opinions and intentions expressed in this Preliminary

Placement Document with regard to our Company, Subsidiaries and the Equity Shares are honestly held, have

been reached after considering all relevant circumstances and are based on reasonable assumptions and

information presently available to our Company. There are no other facts in relation to our Company, Subsidiaries

and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this

Preliminary Placement Document misleading in any material respect. Further, our Company has made all

reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements.

The BRLM has not separately verified all of the information contained in this Preliminary Placement Document

(financial, legal or otherwise). Accordingly, neither the BRLM nor any of its shareholders, employees, counsel,

officers, directors, representatives, agents or affiliates make any express or implied representation, warranty or

undertaking, and no responsibility or liability is accepted by the BRLM and/or any of its shareholders, employees,

counsel, officers, directors, representatives, agents, associates or any other affiliates as to the accuracy or

completeness of the information contained in this Preliminary Placement Document or any other information

(financial, legal or otherwise) supplied in connection with our Company, our Subsidiaries and the Equity Shares.

Each person receiving this Preliminary Placement Document acknowledges that such person has not relied either

on the BRLM or on any of its shareholders, employees, counsel, officers, directors, representatives, agents,

associates or any other affiliates in connection with such person’s investigation of the accuracy of such

information or such person’s investment decision, and each such person must rely on its own examination of our

Company, our Subsidiaries and the merits and risks involved in investing in the Equity Shares issued pursuant to

the Issue.

No person is authorised to give any information or to make any representation not contained in this Preliminary

Placement Document and any information or representation not so contained must not be relied upon as having

been authorised by or on behalf of our Company or by or on behalf of the BRLM. The delivery of this Preliminary

Placement Document at any time does not imply that the information contained in it is correct as of any time

subsequent to its date.

The Equity Shares to be issued pursuant to the Issue have not been approved, disapproved or recommended

by any regulatory authority in any jurisdiction, including the United States Securities and Exchange

Commission (“SEC”), any other federal or state authorities in the United States or the securities authorities

of any non-United States jurisdiction or any other United States or non-United States regulatory authority.

No authority has passed on or endorsed the merits of the Issue or the accuracy or adequacy of this

Preliminary Placement Document. Any representation to the contrary is a criminal offence in the United

States and may be a criminal offence in other jurisdictions.

The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior consent

of our Company to any person, other than Eligible QIBs specified by the BRLM or its representatives, and those

retained by Eligible QIBs to advise them with respect to their purchase of the Equity Shares is unauthorised and

prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to

observe the foregoing restrictions and not further distribute or make any copies of this Preliminary Placement

Document or any documents referred to in this Preliminary Placement Document. Any reproduction or

distribution of this Preliminary Placement Document, in whole or in part, and any disclosure of its contents to any

other person is prohibited.

The distribution of this Preliminary Placement Document and the issue of Equity Shares may be restricted in

certain jurisdictions by applicable laws. As such, this Preliminary Placement Document does not constitute, and

may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such

offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. In

particular, except for India, no action has been taken by our Company and the BRLM that would permit an offering

of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, where action for

that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and

neither this Preliminary Placement Document nor any offering material in connection with the Equity Shares may

2

be distributed or published in or from any country or jurisdiction, except under circumstances that will result in

compliance with any applicable rules and regulations of any such country or jurisdiction. For a description of the

restrictions applicable to the offer and sale of the Equity Shares in the Issue in certain jurisdictions, see “Selling

Restrictions” beginning on page 166.

The Equity Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered

or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act and applicable state securities laws.

In making an investment decision, the prospective investors must rely on their own examination of our Company,

our Subsidiaries, the Equity Shares and the terms of the Issue, including the merits and risks involved. Prospective

investors should not construe the contents of this Preliminary Placement Document as legal, business, tax,

accounting or investment advice. Prospective investors should consult their own counsel and advisors as to

business, investment, legal, tax, accounting and related matters concerning the Issue. In addition, our Company

or the BRLM is not making any representation to any investor, purchaser, offeree or subscriber of the Equity

Shares regarding the legality of an investment in the Equity Shares by such offeree or subscriber under applicable

legal, investment or similar laws or regulations. The prospective investors of the Equity Shares should conduct

their own due diligence on the Equity Shares and our Company.

Each investor, purchaser, offeree or subscriber of the Equity Shares in the Issue is deemed to have acknowledged,

represented and agreed that it is an Eligible QIB and is eligible to invest in India and in our Company under

applicable law, including Chapter VI of the SEBI ICDR Regulations, Section 42 of the Companies Act and other

provisions of the Companies Act, and that it is not prohibited by SEBI or any other regulatory, statutory or judicial

authority, in India or any other jurisdiction, from buying, selling or dealing in securities including the Equity

Shares. Each investor, purchaser, offeree or subscriber of the Equity Shares in the Issue also acknowledges that it

has been afforded an opportunity to request from our Company and review information relating to our Company

and the Equity Shares.

This Preliminary Placement Document contains summaries of certain terms of certain documents, which

summaries are qualified in their entirety by the terms and conditions of such documents.

The information on our Company’s website, www.zyduswellness.in, or the websites of our Subsidiaries or any

website directly or indirectly linked to the website of our Company or our Subsidiaries or on the website of the

BRLM or any of its affiliates, does not constitute nor form part of this Preliminary Placement Document.

Prospective investors should not rely on any such information contained in, or available through, any such

websites.

PRODUCT CLASSIFICATION PURSUANT TO SECTION 309B OF THE SECURITIES AND

FUTURES ACT (CHAPTER 289 OF SINGAPORE)

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act

(Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations

2018 of Singapore (the ”CMP Regulations 2018”), the Company has determined, and hereby notifies all relevant

persons (as defined in Section 309A(1) of the SFA), that the Equity Shares are ‘prescribed capital markets

products’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS

Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on

Recommendations on Investment Products).

NOTICE TO INVESTORS IN CERTAIN OTHER JURISDICTIONS

For information to investors in certain other jurisdictions, see “Selling Restrictions” beginning on page 166. The

Company agrees to comply with any undertakings given by it from time to time in connection with the Equity

Shares to the Stock Exchanges and, without prejudice to the generality of foregoing, shall furnish to the Stock

Exchanges all such information as the rules of the Stock Exchanges may require in connection with the listing of

the Equity Shares on the Stock Exchanges.

Any information about the Company available on any website of the SEBI, the Company or the BRLM,

other than this Preliminary Placement Document, shall not constitute a part of this Preliminary Placement

Document and no investment decision should be made on the basis of such information.

3

REPRESENTATIONS BY INVESTORS

References herein to “you” or “your” is to a prospective investor in the Issue. By Bidding for and/or subscribing

to any Equity Shares in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to

our Company and the BRLM, as follows:

• You are a “Qualified Institutional Buyer” as defined in Regulation 2(1)(ss) of the SEBI ICDR

Regulations and not excluded pursuant to Regulation 179(2)(b) of the SEBI ICDR Regulations, having a

valid and existing registration under applicable laws and regulations of India, and undertake to (i) acquire,

hold, manage or dispose of any Equity Shares that are Allotted (hereinafter defined) to you in accordance

with Chapter VI of the SEBI ICDR Regulations, the Companies Act and all other applicable laws; and (ii)

comply the SEBI ICDR Regulations, the Companies Act and all other applicable laws, including any

reporting obligations, requirements/ making necessary filings, if any, in connection with the Issue or

otherwise accessing capital markets;

• You are eligible to invest in India under applicable law, including the FEMA Rules (as defined hereinafter),

and have not been prohibited by SEBI or any other regulatory authority, statutory authority or otherwise,

from buying, selling, or dealing in securities or otherwise accessing capital markets in India;

• If you are not a resident of India, but a QIB, you are an Eligible FPI (and are not an individual, corporate

body or a family office), having a valid and existing registration with SEBI under the applicable laws in

India or a multilateral or bilateral development financial institution, and are eligible to invest in India under

applicable law, including the FEMA Rules, and any notifications, circulars or clarifications issued

thereunder, and have not been prohibited by SEBI or any other regulatory authority, from buying, selling,

dealing in securities or otherwise accessing the capital markets. You confirm that you are not an FVCI;

• You will provide the information as required under the Companies Act, the PAS Rules and applicable SEBI

ICDR Regulations and rules for record keeping by our Company, including your name, complete address,

phone number, e-mail address, permanent account number (if applicable) and bank account details and

such other details as may be prescribed or otherwise required even after the closure of the Issue;

• If you are Allotted Equity Shares, you shall not, for a period of one year from the date of Allotment, sell

the Equity Shares so acquired except on the floor of the Stock Exchanges;

• You are aware that this Preliminary Placement Document and the Placement Document will not be filed as

a prospectus with the RoC under the Companies Act, the SEBI ICDR Regulations or under any other law

in force in India and, no Equity Shares will be offered in India or overseas to the public or any members of

the public in India or any other class of investors, other than Eligible QIBs. This Preliminary Placement

Document (which includes disclosures prescribed under Form PAS-4) has not been reviewed, verified or

affirmed by the RBI, SEBI, the Stock Exchanges, the RoC or any other regulatory or listing authority and

is intended only for use by Eligible QIBs;

• This Preliminary Placement Document has been filed, and the Placement Document will be filed, with the

Stock Exchanges and this Preliminary Placement Document and the Placement Document will be displayed

on the websites of our Company and the Stock Exchanges;

• You are permitted to subscribe for and acquire the Equity Shares under the laws of all relevant jurisdictions

that apply to you and that you have fully observed such laws and you have necessary capacity, have

obtained all necessary consents, governmental or otherwise, and authorisations and complied and shall

comply with all necessary formalities, to enable you to participate in the Issue and to perform your

obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you

are acting, all necessary consents and authorisations to agree to the terms set out or referred to in this

Preliminary Placement Document), and will honour such obligations;

• You are aware that, our Company, the BRLM or any of their respective shareholders, directors, officers,

employees, counsel, representatives, agents or affiliates are not making any recommendations to you or

advising you regarding the suitability of any transactions it may enter into in connection with the Issue and

your participation in the Issue is on the basis that you are not, and will not, up to the Allotment, be a client

of the BRLM. The BRLM or any of its shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates do not have any duties or responsibilities to you for providing the

4

protection afforded to their clients or customers or for providing advice in relation to the Issue and are not,

in any way, acting in any fiduciary capacity;

• You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations

by our Company or its agents (the “Company Presentations”) with regard to our Company or the Issue;

or (ii) if you have participated in or attended any Company Presentations: (a) you understand and

acknowledge that the BRLM may not have knowledge of the statements that our Company or its agents

may have made at such Company Presentations and is therefore unable to determine whether the

information provided to you at such Company Presentations may have included any material misstatements

or omissions, and, accordingly you acknowledge that the BRLM has advised you not to rely in any way on

any information that was provided to you at such Company Presentations, and (b) confirm that you have

not been provided any material or price sensitive information relating to our Company and the Issue that

was not publicly available;

• Your decision to subscribe to the Equity Shares to be issued pursuant to the Issue has not been made on the

basis of any information, which is not set forth in this Preliminary Placement Document;

• You are subscribing to the Equity Shares to be issued pursuant to the Issue in accordance with applicable

laws and by participating in this Issue, you are not in violation of any applicable law, including but not

limited to the SEBI Insider Trading Regulations, the Securities and Exchange Board of India (Prohibition

of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, as amended,

and the Companies Act;

• You understand that the Equity Shares issued pursuant to the Issue shall be subject to the provisions of the

Memorandum of Association and Articles of Association of our Company and will be credited as fully paid

and will rank pari passu in all respects with the existing Equity Shares including the right to receive

dividend and other distributions declared.

• All statements other than statements of historical fact included in this Preliminary Placement Document,

including, without limitation, those regarding us or our financial position, business strategy, plans and

objectives of management for future operations (including development plans and objectives relating to

our business), are forward-looking statements. You are aware that, such forward-looking statements

involve known and unknown risks, uncertainties and other important factors that could cause actual results

to be materially different from future results, performance or achievements expressed or implied by such

forward-looking statements. Such forward-looking statements are based on numerous assumptions

regarding our present and future business strategies and environment in which we will operate in the future.

You should not place undue reliance on forward-looking statements, which speak only as at the date of this

Preliminary Placement Document. None of our Company, the BRLM or any of its shareholders, directors,

officers, employees, counsel, representatives, agents or affiliates assume any responsibility to update any

of the forward-looking statements contained in this Preliminary Placement Document;

• You are aware and understand that the Equity Shares are being offered only to Eligible QIBs on a private

placement basis and are not being offered to the general public, or any other category other than Eligible

QIBs, and the Allotment of the same shall be at the sole discretion of our Company, in consultation with

the BRLM;

• You are aware that in terms of the requirements of the Companies Act, upon Allocation, our Company will

be required to disclose names and percentage of post-Issue shareholding of the proposed Allottees in the

Placement Document, as applicable. However, disclosure of such details in relation to the proposed

Allottees in the Placement Document will not guarantee Allotment to them, as Allotment in the Issue shall

continue to be at the sole discretion of our Company, in consultation with the BRLM;

• You are aware that if you are Allotted more than 5% of the Equity Shares in the Issue, our Company shall

be required to disclose your name and the number of the Equity Shares Allotted to you to the Stock

Exchanges and the Stock Exchanges will make the same available on their website and you consent to such

disclosures;

• You have been provided a serially numbered copy of this Preliminary Placement Document and have read

it in its entirety, including in particular, “Risk Factors” beginning on page 39;

• In making your investment decision, you have (i) relied on your own examination of us, the Equity Shares

5

and the terms of the Issue, including the merits and risks involved, (ii) made and will continue to make

your own assessment of us, the Equity Shares and the terms of the Issue, based solely on and in reliance of

the information contained in this Preliminary Placement Document and no other disclosure or

representation by our Company or any other party, (iii) consulted your own independent counsel and

advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local laws

(including tax laws), (iv) received all information that you believe is necessary or appropriate in order to

make an investment decision in respect of us and the Equity Shares, and (v) relied upon your own

investigation and resources in deciding to invest in the Issue;

• Neither the Company nor the BRLM nor any of its shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates have provided you with any tax advice or otherwise made any

representations regarding the tax consequences of purchase, ownership and disposal of the Equity Shares

(including but not limited to the Issue and the use of the proceeds from the Equity Shares);

• You will obtain your own independent tax advice from a reputable service provider and will not rely on the

BRLM or any of its shareholders, directors, officers, employees, counsel, representatives, agents or

affiliates when evaluating the tax consequences in relation to the Equity Shares (including in relation to

limited to the Issue and the use of the proceeds from the Equity Shares). You waive, and agree not to assert

any claim against us or the BRLM or any of its shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a result of any

tax audits by tax authorities, wherever situated;

• You are a sophisticated investor and have such knowledge and experience in financial, business and

investment matters as to be capable of evaluating the merits and risks of an investment in the Equity Shares.

You are experienced in investing in private placement transactions of securities of companies in a similar

nature of business, similar stage of development and in similar jurisdictions. You and any managed

accounts for which you are subscribing for the Equity Shares (i) are each able to bear the economic risk of

the investment in the Equity Shares, (ii) will not look to our Company and/or the BRLM or any of their

respective shareholders, directors, officers, employees, counsel, advisors, representatives, agents or

affiliates for all or part of any such loss or losses that may be suffered in connection with the Issue, including

losses arising out of non-performance by our Company of any of its respective obligations or any breach

of any representations and warranties by our Company, whether to you or otherwise, (iii) are able to sustain

a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the

investment in the Equity Shares, (v) have no reason to anticipate any change in your or their circumstances,

financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part

of the Equity Shares; and (vi) are seeking to subscribe to the Equity Shares in the Issue for your own

investment and not with a view to resell or distribute. You are aware that investment in Equity Shares

involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment;

• If you are acquiring the Equity Shares to be issued pursuant to this Issue for one or more managed accounts,

you represent and warrant that you are authorised in writing, by each such managed account to acquire such

Equity Shares for each managed account and hereby make the representations, warranties,

acknowledgements, undertakings and agreements herein for and on behalf of each such account, reading

the reference to “you” to include such accounts;

• You are not a ‘promoter’ of our Company as defined under the SEBI ICDR Regulations, and are not a

person related to any of our Promoters, either directly or indirectly and your Bid (hereinafter defined) does

not directly or indirectly represent any of our Promoters or members of our Promoter Group (as defined

under the SEBI ICDR Regulations) or persons or entities related thereto;

• You have no rights under a shareholders’ agreement or voting agreement entered into with the Promoters

or members of the Promoter Group, no veto rights or right to appoint any nominee director on the Board

of Directors of our Company, other than the rights, if any, acquired in the capacity of a lender not holding

any Equity Shares, the acquisition of which shall not deem you to be a Promoter or a person related to the

Promoter;

• You agree in terms of Section 42 of the Companies Act and Rule 14 of the PAS Rules, that our Company

shall make necessary filings with the RoC as may be required under the Companies Act;

• You will have no right to withdraw your Bid or revise your Bid downwards after the Bid/ Issue Closing

6

Date (as defined hereinafter);

• You are eligible to Bid for and hold the Equity Shares so Allotted, together with any Equity Shares held by

you prior to the Issue. You further confirm that your aggregate holding after the Allotment of the Equity

Shares shall not exceed the level permissible as per any applicable law;

• The Bid made by you would not ultimately result in triggering an open offer under the SEBI Takeover

Regulations as defined herein) and you shall be solely responsible for compliance with all other applicable

provisions of the SEBI Takeover Regulations;

• Your aggregate equity shareholding in our Company, together with other Allottees that belong to the same

group or are under common control as you, pursuant to the Allotment under the Issue shall not exceed 50%

of the Issue Size. For the purposes of this representation:

(a) Eligible QIBs “belonging to the same group” shall mean entities where (a) any of them controls,

directly or indirectly, through its subsidiary or holding company, not less than 15% of the voting

rights in the other; (b) any of them, directly or indirectly, by itself, or in combination with other

persons, exercise control over the others; or (c) there is a common director, excluding nominee and

independent directors, amongst an Eligible QIB, its subsidiary or holding company and any other

Eligible QIBs; and

(b) ‘Control’ shall have the same meaning as is assigned to it under Regulation 2(1)(e) of the SEBI

Takeover Regulations;

• You shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time

that the final listing and trading approvals for such Equity Shares to be issued pursuant to this Issue, are

issued by the Stock Exchanges;

• You are aware that (i) applications for in-principle approval, in terms of Regulation 28(1)(a) of the SEBI

Listing Regulations, for listing and admission of the Equity Shares to be issued pursuant to the Issue and

for trading on the Stock Exchanges, were made and an in-principle approval has been received by our

Company from each of the Stock Exchanges, and (ii) the application for the final listing and trading

approval will be made only after Allotment. There can be no assurance that the final listing and trading

approvals for listing of the Equity Shares, to be issued pursuant to this Issue, will be obtained in time or at

all. Neither our Company nor the BRLM nor any of their respective shareholders, directors, officers,

employees, counsel, representatives, agents or affiliates shall be responsible for any delay or non-receipt

of such final listing and trading approvals or any loss arising from such delay or non-receipt;

• You are aware and understand that the BRLM has entered into a Placement Agreement with our Company

whereby the BRLM has, subject to the satisfaction of certain conditions set out therein, undertaken to use

their reasonable efforts to procure subscription for the Equity Shares on the terms and conditions set forth

therein;

• You understand that the contents of this Preliminary Placement Document are exclusively the responsibility

of our Company, and that neither the BRLM nor any person acting on its behalf or any of the counsel or

advisors to the Issue has or shall have any liability for any information, representation or statement

contained in this Preliminary Placement Document or any information previously published by or on behalf

of our Company and will not be liable for your decision to participate in the Issue based on any information,

representation or statement contained in this Preliminary Placement Document or otherwise. By accepting

a participation in the Issue, you agree to the same and confirm that the only information you are entitled to

rely on, and on which you have relied in committing yourself to acquire the Equity Shares is contained in

this Preliminary Placement Document, such information being all that you deem necessary to make an

investment decision in respect of the Equity Shares, you have neither received nor relied on any other

information, representation, warranty or statement made by or on behalf of the BRLM or our Company or

any other person, and the BRLM or our Company or any of their respective affiliates, including any view,

statement, opinion or representation expressed in any research published or distributed by them, the BRLM

and its affiliates will not be liable for your decision to accept an invitation to participate in the Issue based

on any other information, representation, warranty, statement or opinion;

• You understand that the BRLM or any of its shareholders, directors, officers, employees, counsel,

7

representatives, agents or affiliates do not have any obligation to purchase or acquire all or any part of the

Equity Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or

incurred by you for any reason whatsoever in connection with the Issue, including the non-performance by

our Company or any of its obligations or any breach of any representations or warranties by us, whether to

you or otherwise;

• You are able to purchase the Equity Shares in accordance with the restrictions described in “Selling

Restrictions” beginning on page 166 and you have made, or are deemed to have made, as applicable, the

representations, warranties, acknowledgements, undertakings and agreements in “Selling Restrictions”

beginning on page 166;

• You understand that the Equity Shares have not been and will not be registered under the U.S. Securities

Act or with any securities regulatory authority of any state of the United States and accordingly, may not

be offered or sold within the United States, except in reliance on an exemption from the registration

requirements of the U.S. Securities Act.

• If you are outside the United States, you are subscribing for the Equity Shares in an “offshore transaction”

as defined in Regulation S, and are not our Company’s or the BRLM’ affiliate or a person acting on behalf

of such an affiliate;

• You are not acquiring or subscribing for the Equity Shares as a result of any “directed selling efforts” (as

defined in Regulation S) and you understand and agree that offers and sales are being made in reliance on

an exemption to the registration requirements of the U.S. Securities Act.

• You agree that any dispute arising in connection with the Issue will be governed by and construed in

accordance with the laws of Republic of India, and the courts in Ahmedabad, India shall have exclusive

jurisdiction to settle any disputes which may arise out of or in connection with this Preliminary Placement

Document and the Placement Document.

• Each of the representations, warranties, acknowledgements and agreements set out above shall continue to

be true and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares

in the Issue;

• You agree to indemnify and hold our Company, the BRLM and their respective directors, officers,

employees, affiliates, associates, controlling persons and representatives harmless from any and all costs,

claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any

breach of the foregoing representations, warranties, acknowledgements and undertakings made by you in

this Preliminary Placement Document. You agree that the indemnity set out in this paragraph shall survive

the resale of the Equity Shares by, or on behalf of, the managed accounts;

• You acknowledge that this Preliminary Placement Document does not, and the Placement Document shall

not confer upon or provide you with any right of renunciation of the Equity Shares offered through the

Issue in favour of any person;

• You will make the payment for subscription to the Equity Shares pursuant to this Issue from your own bank

account. In case of joint holders, the monies shall be paid from the bank account of the person whose name

appears first in the application;

• You are aware that in terms of the SEBI FPI Regulations and the FEMA Rules, the total holding by each

FPI including its investor group (which means multiple entities registered as FPIs and directly or indirectly

having common ownership of more than fifty percent or common control) shall be below 10% of the total

paid-up equity share capital of our Company on a fully diluted basis and the total holdings of all FPIs put

together shall not exceed the sectoral cap applicable to our Company. In terms of the FEMA Rules, for

calculating the total holding of FPIs in a company, holding of all registered FPIs shall be included. Hence,

Eligible FPIs may invest in such number of Equity Shares in this Issue such that (i) the individual

investment of the FPI in our does not exceed 10% of the post-Issue paid-up Equity Share capital of our

Company on a fully diluted basis and (ii) the aggregate investment by FPIs in our Company does not exceed

the sectoral cap applicable to our Company. In case the holding of an FPI together with its investor group

increases to 10% or more of the total paid-up Equity Share capital, on a fully diluted basis, such FPI together

with its investor group shall divest the excess holding within a period of five trading days from the date of

8

settlement of the trades resulting in the breach. If however, such excess holding has not been divested

within the specified period of five trading days, the entire shareholding of such FPI together with its investor

group will be re-classified as FDI, subject to the conditions as specified by SEBI and the RBI in this regard

and compliance by our Company and the investor with applicable reporting requirements and the FPI and

its investor group will be prohibited from making any further portfolio investment in our Company under

the SEBI FPI Regulations;

• You confirm that neither is your investment as an entity of a country which shares land border with India

nor is the beneficial owner of your investment situated in or a citizen of such country (in each which case,

investment can only be through the Government approval route), and that your investment is in accordance

with Press Note No. 3 (2020 Series), dated April 17, 2020, issued by the Department for Promotion of

Industry and Internal Trade, Government of India, and Rule 6 of the FEMA Rules;

• You are aware and understand that you are allowed to place a Bid for Equity Shares. Please note that

submitting a Bid for Equity Shares should not be taken to be indicative of the number of Equity Shares that

will be Allotted to a successful Bidder. Allotment of Equity Shares will be undertaken by our Company, in

its absolute discretion, in consultation with the BRLM.

• You represent that you are not an affiliate of our Company or the BRLM or a person acting on behalf of

such affiliate.

• Our Company, the BRLM, their respective affiliates, directors, officers, employees, controlling persons

and others will rely on the truth and accuracy of the foregoing representations, warranties,

acknowledgements and undertakings, and are irrevocable. It is agreed that if any of such representations,

warranties, acknowledgements and undertakings are no longer accurate, you will promptly notify our

Company and the BRLM; and

• You will make all necessary filings with appropriate regulatory authorities, including the RBI, as required

pursuant to applicable laws.

9

OFFSHORE DERIVATIVE INSTRUMENTS

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of

Regulation 21 of the SEBI FPI Regulations, an Eligible FPI including affiliates of the BRLM, which is registered

as a Category I FPI, may issue, subscribe to or otherwise deal in offshore derivative instruments (as defined under

the SEBI FPI Regulations as any instrument, by whatever name called, which is issued overseas by a FPI against

securities held by it in India, as its underlying, and all such offshore derivative instruments are referred to herein

as “P-Notes”), and persons who are eligible for registration as Category I FPIs can subscribe to or deal in such P-

Notes provided that in the case of an entity that has an investment manager who is from the Financial Action Task

Force member country, such investment manager shall not be required to be registered as a Category I FPI. The

above-mentioned category I FPIs may receive compensation from the purchasers of such instruments. In terms of

Regulation 21 of SEBI FPI Regulations, P-Notes may be issued only by such persons who are registered as

Category I FPIs and they may be issued only to persons eligible for registration as Category I FPIs, subject to

exceptions provided in the SEBI FPI Regulations and compliance with ‘know your client’ requirements, as

specified by SEBI and subject to compliance with such other conditions as may be specified by SEBI from time

to time. An Eligible FPI shall also ensure that no transfer of any instrument referred to above is made to any

person unless such FPIs are registered as Category I FPIs and such instrument is being transferred only to person

eligible for registration as Category I FPIs subject to requisite consents being obtained in terms of Regulation 21

of SEBI FPI Regulations. P-Notes have not been and are not being offered or sold pursuant to this Preliminary

Placement Document. This Preliminary Placement Document does not contain any information concerning P-

Notes or the issuer(s) of any P-Notes, including without limitation, any information regarding any risk factors

relating thereto.

Subject to certain relaxations provided under Regulation 22(4) of the SEBI FPI Regulations, investment by a

single FPI including its investor group (multiple entities registered as FPIs and directly or indirectly, having

common ownership of more than 50% or common control,) is not permitted to be 10% or above of our post-Issue

Equity Share capital on a fully diluted basis (“Investment Restrictions”). The SEBI has, vide a circular dated

November 5, 2019, issued the operational guidelines for FPIs, designated depository participants and eligible

foreign investors (the “FPI Operational Guidelines”), to facilitate implementation of the SEBI FPI Regulations.

In terms of such FPI Operational Guidelines, the Investment Restrictions shall also apply to subscribers of P-

Notes and two or more subscribers of P-Notes having common ownership, directly or indirectly, of more than

50% or common control shall be considered together as a single subscriber of the P-Notes. Further, in the event a

prospective investor has investments as an FPI and as a subscriber of P-Notes, the Investment Restrictions shall

apply on the aggregate of the FPI investments and P-Notes positions held in the underlying company.

Further, in accordance with Press Note No. 3 (2020 Series), dated April 17, 2020, issued by the Department for

Promotion of Industry and Internal Trade, Government of India, investments where the entity is of a country

which shares land border with India or where the beneficial owner of the Equity Shares is situated in or is a citizen

of a country which shares land border with India, can only be made through the Government approval route, as

prescribed in the Consolidated FDI Policy dated August 28, 2017. These investment restrictions shall also apply

to subscribers of P-Notes.

Affiliates of the BRLM which are Eligible FPIs may purchase, to the extent permissible under law, the Equity

Shares in the Issue, and may issue P-Notes in respect thereof. Any P-Notes that may be issued are not securities

of our Company and do not constitute any obligation of, claims on or interests in our Company. Our Company

has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the

preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are the

sole obligations of, third parties that are unrelated to our Company. Our Company and the BRLM do not make

any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in

connection with any P-Notes. Any P-Notes that may be issued are not securities of the BRLM and does not

constitute any obligations of or claims on the BRLM.

Bidders interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to

the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-

Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any

disclosure related thereto. Prospective investors are urged to consult their own financial, legal, accounting

and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued

in compliance with applicable laws and regulations.

.

10

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of this Preliminary Placement Document has been submitted to each of the Stock Exchanges.

The Stock Exchanges do not in any manner:

(1) warrant, certify or endorse the correctness or completeness of the contents of this Preliminary Placement

Document; or

(2) warrant that the Equity Shares to be issued pursuant to the Issue, will be listed or will continue to be listed

on the Stock Exchanges; or

(3) take any responsibility for the financial or other soundness of our Company, its Promoters, its management

or any scheme or project of our Company;

and it should not, for any reason be deemed or construed to mean that this Preliminary Placement Document has

been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire

any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have

any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person

consequent to or in connection with, such subscription/acquisition, whether by reason of anything stated or

omitted to be stated herein, or for any other reason whatsoever.

11

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Conventions

In this Preliminary Placement Document, unless otherwise specified or the context otherwise indicates or implies,

references to “you”, “your”, “bidders”, “offeree”, “purchaser”, “subscriber”, “recipient”, “investors”, “prospective

investors” and “potential investor” are to the Eligible QIBs pursuant to this Issue, references to “our Company”,

the “Company”, or the “Issuer” are to Zydus Wellness Limited on a standalone basis and references to “our”,

“us”, “we”, or “Group” are to Zydus Wellness Limited together with our Subsidiaries, on a consolidated basis.

Currency and Units of Presentation

In this Preliminary Placement Document, references to ‘US$’, ‘USD’ and ‘U.S. dollars’ are to the legal currency

of the United States of America, references to ‘₹’, ‘INR’, ‘Rs.’, ‘Indian Rupees’ and ‘Rupees’ are to the legal

currency of Republic of India. All references herein to the ‘US’ or ‘U.S.’ or the ‘United States’ are to the United

States of America and its territories and possessions. All references herein to “India” are to the Republic of India

and its territories and possessions and all references herein to the ‘Government’ or ‘GoI’ or the ‘Central

Government’ or the ‘State Government’ are to the Government of India, central or state, as applicable.

References to the singular also refer to the plural and one gender also refers to any other gender, wherever

applicable. All the numbers in this Preliminary Placement Document have been presented in lakhs, unless stated

otherwise, in line with the current of presentation used in our Audited Consolidated Financial Statements.

In this Preliminary Placement Document, references to “lakh(s)” represent “100,000”, “million” represents “10

lakhs” or “10,00,000”, “crore(s)” represents “1,00,00,000” or “10 million” or “100 lakhs”, and “billion” represents

“1,00,00,00,000” or “1,000 million” or “100 crore”.

Except as otherwise set out in this Preliminary Placement Document, certain monetary thresholds have been

subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic

aggregation of the figures which precede them.

Page Numbers

Unless otherwise stated, all references to page numbers in this Preliminary Placement Document are to page

numbers of this Preliminary Placement Document.

Financial Data and Other Information

The financial year of our Company commences on April 1 of each calendar year and ends on March 31 of the

following calendar year, and, unless otherwise specified or if the context requires otherwise. The terms “Fiscal”,

“Fiscals” or “Fiscal year”, refer to the 12 month period ending March 31 of that particular year.

Unless stated otherwise or unless the context requires otherwise, the financial data in this Preliminary Placement

Document is derived from the Audited Consolidated Financial Statements and Unaudited Interim Financial

Results. The Audited Consolidated Financial Statements and Unaudited Interim Financial Results have been

prepared in accordance with Indian Accounting Standards (“Ind AS”), notified under the Companies (Indian

Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment)

Rules, 2016, prescribed under section 133 of the Companies Act, 2013, read with the relevant rules issued

thereunder and the other accounting principles generally accepted in India and guidance notes specified by the

Institute of Chartered Accountants of India, which have been included in this Preliminary Placement Document.

The Unaudited Interim Financial Results have been subjected to limited review by our Previous Statutory Auditors

and they have issued their report dated July 31, 2020, based on their limited review conducted in accordance with

Standard on Review Engagement (SRE) 2410 issued by the Institute of Chartered Accountants of India (“ICAI”).

The Audited Consolidated Financial Statements should be read along with the respective audit reports, and the

Unaudited Interim Financial Results should be read along with the limited review report issued thereon. Further,

our Unaudited Interim Financial Results are not necessarily indicative of results that may be expected for the full

financial year or any future reporting period. For further information, see “Financial Statements” on page 195.

12

M/s. Dhirubhai Shah & Co. LLP, Chartered Accountants, the Previous Statutory Auditors, have audited the

Audited Consolidated Financial Statements and Unaudited Interim Financial Results, and have issued the audit

report and review report respectively, thereon.

Recently, at their AGM held on August 27, 2020, the shareholders of our Company appointed M/s. Mukesh M.

Shah & Co., Chartered Accountants, Statutory Auditors of our Company for a period of five years.

Our Company acquired 100% shareholding in Heinz on January 30, 2019. On account of the impact of such

material acquisition, our audited consolidated financial statements for Fiscal 2020 is not comparable with the

audited consolidated financial statements of Fiscals 2019 and 2018. For details, see “Management’s Discussion

and Analysis of Financial Condition and Results of Operations” and “Financial Statements” beginning on pages

69 and 195, respectively.

Our Company presents its financial statements under Ind AS. Ind AS differs from accounting principles with

which prospective investors may be familiar in other countries, including generally accepted accounting principles

followed in the U.S. (“U.S. GAAP”) or International Financial Reporting Standards (“IFRS”). Our Company

does not attempt to quantify the impact of U.S. GAAP or IFRS on the financial data included in this Preliminary

Placement Document, nor does our Company provide a reconciliation of its audited consolidated financial

statements to IFRS or U.S. GAAP. Accordingly, the degree to which the Audited Consolidated Financial

Statements and Unaudited Interim Financial Results included in this Preliminary Placement Document will

provide meaningful information is entirely dependent on the reader’s familiarity with the respective Indian

accounting policies and practices. Any reliance by persons not familiar with Indian accounting practices on the

financial disclosures presented in this Preliminary Placement Document should accordingly be limited.

Prospective investors are advised to consult their advisors before making any investment decision.

Certain figures contained in this Preliminary Placement Document, including financial information, have been

subject to rounding adjustments. Any discrepancies in any table between the totals and the sum of the amounts

listed are due to rounding off. In certain instances, (i) the sum or percentage change of such numbers may not

conform exactly to the total figure given, and (ii) the sum of the figures in a column or row in certain tables may

not conform exactly to the total figure given for that column or row. Unless otherwise specified, all financial

numbers in parenthesis represent negative figures.

Non-GAAP financial measures

As used in this Preliminary Placement Document, a non-GAAP financial measure is one that purports to measure

historical or future financial performance, financial position or cash flows, but excludes or includes amounts that

would not be so adjusted in the most comparable Ind AS measures. From time to time, reference is made in this

Preliminary Placement Document to such “non-GAAP financial measures,” primarily EBITDA, or earnings

before interest, taxes and depreciation and amortization. Our management believes that EBITDA and other non-

GAAP financial measures provide investors with additional information about our performance, as well as ability

to incur and service debt and make capital expenditures and are measures commonly used by investors. The non-

GAAP financial measures described herein are not a substitute for Ind AS (or IFRS) measures of earnings and

may not be comparable to similarly titled measures reported by other companies due to differences in the way

these measures are calculated. In addition, you should note, that other companies in the real estate development

industry may calculate and present these data in a different manner and, therefore, you should use caution in

comparing our data with data presented by other companies, as the data may not be directly comparable.

13

INDUSTRY AND MARKET DATA

Unless stated otherwise, industry and market data used in this Preliminary Placement Document has been obtained

or derived from publicly available information as well as other industry publications and sources. Further, certain

information in “Industry Overview” and “Our Business” beginning on pages 90 and 127, respectively, of this

Preliminary Placement Document have also been obtained or derived from industry data sourced from the Industry

Reports. Unless stated otherwise statistical information, industry and market data, information regarding our

position in the market, growth rates and other related data included in this Preliminary Placement Document

pertaining to the various sectors in which we operate has been reproduced from the Industry Reports.

This information is subject to change and cannot be verified with complete certainty due to limits on the

availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey.

Information included in this Preliminary Placement Document from the CRISIL Report is subject to the following

disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing the report

(Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data). However,

CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible

for any errors or omissions or for the results obtained from the use of Data / Report. The Report is not a

recommendation to invest / divest in any entity covered in the Report and no part of the Report should be construed

as an expert advice or investment advice or any form of investment banking within the meaning of any law or

regulation. CRISIL especially states that it has no liability whatsoever to the subscribers / users / transmitters/

distributors of the Report. Without limiting the generality of the foregoing, nothing in the Report is to be construed

as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the

necessary permission and/or registration to carry out its business activities in this regard. Zydus Wellness Limited

will be responsible for ensuring compliances and consequences of non-compliances for use of the Report or part

thereof outside India. CRISIL Research operates independently of and does not have access to information

obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their

regular operations, obtain information of a confidential nature. The views expressed in the Report are that of

CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of the Report may be

published/reproduced in any form without CRISIL’s prior written approval.”

Neither we nor the Book Running Lead Manager have independently verified this data, nor do we or the Book

Running Lead Manager make any representation regarding the accuracy or completeness of such data. In many

cases, there is no readily available external information (whether from trade or industry associations, government

bodies or other organizations) to validate market-related analysis and estimates, so we have relied on internally

developed estimates. Similarly, while we believe our internal estimates to be reasonable, such estimates have not

been verified by any independent sources, and neither we nor the Book Running Lead Manager can assure

potential Investors as to their accuracy. The extent to which the market and industry data used in this Preliminary

Placement Document is meaningful depends on the reader’s familiarity with and understanding of the

methodologies used in compiling such data. Further, the calculation of certain statistical and/ or financial

information/ ratios specified in the sections titled “Business”, “Risk Factors”, “Management’s Discussions and

Analysis of Results of Operations and Financial Condition” and otherwise in this Preliminary Placement

Document may vary from the manner such information is calculated under and for purposes of, and as specified

in, the Industry Reports. Data from these sources may also not be comparable. Accordingly, no investment

decision should be made solely on the basis of such information. Such data involves risks, uncertainties and

numerous assumptions and is subject to change based on various factors, including those discussed in “Risk

Factors – Industry information included in this Preliminary Placement Document has been derived from industry

reports. We cannot guarantee the accuracy or completeness of facts and other statistics with respect to India, the

Indian economy and cosmeceutical industry contained in this Preliminary Placement Document.” beginning on

page 52.

14

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Preliminary Placement Document that are not statements of historical fact

constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by

terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘goal’, ‘intend’,

‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘seek to’, ‘should’, ‘will’, ‘would’, ‘will likely

result’, ‘is likely’, ‘are likely’, ‘believe’, ‘expect’, ‘expected to’, ‘will continue’, ‘will pursue’, ‘will achieve’, or

other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or

goals are also forward-looking statements. However, these are not the exclusive means of identifying forward-

looking statements.

The forward-looking statements appear in a number of places throughout this Preliminary Placement Document

and include statements regarding the intentions, beliefs or current expectations of our Company concerning,

amongst other things, the expected results of operations, financial condition, liquidity, prospects, growth,

strategies and dividend policy of our Company and the industry in which we operate. In addition even if the result

of operations, financial conditions, liquidity and dividend policy of our Company, and the development of the

industry in which we operate, are consistent with the forward-looking statements contained in this Preliminary

Placement Document, those results or developments may not be indicative of results or developments in

subsequent periods.

All statements regarding our expected financial conditions, results of operations, business plans and prospects are

forward-looking statements. These forward-looking statements include statements as to our business strategy,

revenue and profitability (including, without limitation, any financial or operating projections or forecasts), new

business and other matters discussed in this Preliminary Placement Document that are not historical facts. These

forward-looking statements contained in this Preliminary Placement Document (whether made by us or any third

party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that

may cause our actual results, performance or achievements of our Company to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking statements or other

projections. By their nature, certain of the market risk disclosures are only estimates and could be materially

different from what actually occurs in the future. As a result, actual future gains, losses or impact on net interest

income and net income could materially differ from those that have been estimated, expressed or implied by such

forward looking statements or other projections. All forward-looking statements are subject to risks, uncertainties

and assumptions about our Company that could cause actual results to differ materially from those contemplated

by the relevant forward-looking statement.

Important factors that could cause our actual results, performances and achievements to be materially different

from any of the forward-looking statements include, among others:

1. Our business has been affected by the COVID-19 pandemic;

2. If we fail to keep pace with the rapid changes in the industry and market, it will result in a decline in demand

for our products and revenues;

3. Introducing new product variants may not always be successful;

4. The availability of look-alikes, counterfeit products, primarily in our domestic market, manufactured by other

companies and passed off as our products, could adversely affect our goodwill and results of operations; and

5. The value of our brands, and our sales, could be adversely impacted by negative publicity.

Additional factors that could cause our actual results, performance or achievements to differ materially include,

but are not limited to, those discussed under the sections “Risk Factors”, “Management’s Discussion and Analysis

of Financial Condition and Results of Operations”, “Industry Overview” and “Our Business” and beginning on

pages 39, 69, 90 and 127, respectively.

The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of

our management, as well as the assumptions made by, and information currently available to, our management.

Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time,

we cannot assure the prospective investors that such expectations will prove to be correct. Given these

uncertainties, the prospective investors are cautioned not to place undue reliance on such forward-looking

15

statements. In any event, these statements speak only as of the date of this Preliminary Placement Document or

the respective dates indicated in this Preliminary Placement Document, and neither we nor the BRLM undertake

any obligation to update or revise any of them, whether as a result of new information, future events changes in

assumptions or changes in factors affecting these forward looking statements or otherwise. If any of these risks

and uncertainties materialise, or if any of our underlying assumptions prove to be incorrect, our actual results of

operations or financial condition could differ materially from that described herein as anticipated, believed,

estimated or expected. All subsequent forward-looking statements attributable to us are expressly qualified in their

entirety by reference to these cautionary statements.

16

ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a limited liability company incorporated under the laws of India. All our Directors and Key

Management Personnel named in this Preliminary Placement Document, are residents of India and most of the

assets of our Company are located in India. As a result, it may be difficult or may not be possible for the

prospective investors outside India to affect service of process upon our Company or such persons in India, or to

enforce against them judgments of courts outside India.

India is not a signatory to any international treaty in relation to the recognition or enforcement of foreign

judgments. However, recognition and enforcement of foreign judgments is provided for under Section 13 and

Section 44A, respectively, of the Code of Civil Procedure, 1908, as amended (“Civil Procedure Code”). Section

13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly

adjudicated upon between the same parties or parties litigating under the same title, except:

(a) where the judgment has not been pronounced by a court of competent jurisdiction;

(b) where the judgment has not been given on the merits of the case;

(c) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of

international law or a refusal to recognise the law of India in cases in which such law is applicable;

(d) where the proceedings in which the judgment was obtained were opposed to natural justice;

(e) where the judgment has been obtained by fraud; and

(f) where the judgment sustains a claim founded on a breach of any law then in force in India.

Section 44A of the Civil Procedure Code provides that a foreign judgment rendered by a superior court (within

the meaning of that section) in any jurisdiction outside India which the Government has by notification declared

to be a reciprocating territory, may be enforced in India by proceedings in execution as if the judgment had been

rendered by a district court in India. Under Section 14 of the Civil Procedure Code, a court in India will, upon the

production of any document purporting to be a certified copy of a foreign judgment, presume that the foreign

judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record but such

presumption may be displaced by proving want of jurisdiction. However, Section 44A of the Civil Procedure

Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or

other charges of a like nature or in respect of a fine or other penalties and does not include arbitration awards.

Each of the United Kingdom, United Arab Emirates, Singapore and Hong Kong, amongst others has been declared

by the Government to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code,

but the United States of America has not been so declared. A foreign judgment of a court in a jurisdiction which

is not a reciprocating territory may be enforced only by a fresh suit upon the foreign judgment and not by

proceedings in execution. The suit must be filed in India within three years from the date of the foreign judgment

in the same manner as any other suit filed to enforce a civil liability in India. Accordingly, a judgment of a court

in the United States may be enforced only by a fresh suit upon the foreign judgment and not by proceedings in

execution.

It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought

in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount

of damages awarded as excessive or inconsistent with public policy of India and it is uncertain whether an Indian

court would enforce foreign judgments that would contravene or violate Indian law. Further, any judgment or

award denominated in a foreign currency would be converted into Indian Rupees on the date of such judgment or

award and not on the date of payment. A party seeking to enforce a foreign judgment in India is required to obtain

approval from the RBI to repatriate outside India any amount recovered, and any such amount may be subject to

income tax pursuant to execution of such a judgment in accordance with applicable laws.

17

EXCHANGE RATES INFORMATION

Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency

equivalent of the Rupee price of the Equity Shares traded on the Stock Exchanges. These fluctuations will also

affect the conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth information, for the period indicated with respect to the exchange rates between the

Rupee and the U.S. dollar (in ₹ per US$), for the periods indicated. The exchange rates are based on the reference

rates released by the RBI and Financial Benchmark India Private Limited (“FBIL”), which are available on the

website of the RBI and FBIL. No representation is made that any Rupee amounts could have been, or could be,

converted into U.S. dollars at any particular rate, the rates stated below, or at all.

On September 21, 2020, the exchange rate was `73.32 to US$ 1. (source: www.fbil.org.in)

(₹ per US$)

Period End(1) Average(2) High(3) Low(4)

Fiscal Ended:

March 31, 2020 75.39 70.88 76.15 68.37

March 31, 2019 69.17 69.89 74.39 64.93

March 31, 2018 65.04 64.45 65.76 63.35

Month Ended

August 31, 2020 74.60 74.67 75.09 73.35

July 31, 2020 74.77 74.99 75.58 74.68

June 30, 2020 75.53 75.73 76.21 75.33

May 31, 2020 75.64 75.66 75.93 75.39

April 30, 2020 75.12 76.24 76.81 75.12

March 31, 2020 75.39 74.35 76.15 72.24

(Source: www.rbi.org.in and www.fbil.org.in)

1. The price for the period end refers to the price as on the last trading day of the respective annual or

monthly periods.

2. Average of the official rate for each Working Day of the relevant period.

3. Maximum of the official rate for each Working Day of the relevant period.

4. Minimum of the official rate for each Working Day of the relevant period.

Notes:

• If the reference rate is not available on a particular date due to a public holiday or being Saturday or

Sunday, exchange rates of the previous Working Day have been disclosed.

• The reference rates are rounded off to two decimal places.

18

DEFINITIONS AND ABBREVIATIONS

This Preliminary Placement Document uses the definitions and abbreviations set forth below which you should

consider when reading the information contained herein. The following list of certain capitalised terms used in

this Preliminary Placement Document is intended for the convenience of the reader / prospective investor only

and is not exhaustive.

Unless otherwise specified, the capitalised terms used in this Preliminary Placement Document shall have the

meaning as defined hereunder. Further, any references to any statute, rules, guidelines, regulations, agreement,

document or policies shall include amendments made thereto, from time to time.

The words and expressions used in this Preliminary Placement Document but not defined herein, shall have, to

the extent applicable, the meaning ascribed to such terms under the Companies Act, the SEBI ICDR Regulations,

the SCRA, the Depositories Act, or the rules and regulations made thereunder. Notwithstanding the foregoing,

terms used in the section “Industry Overview”, “Statement of Special Tax Benefits”, “Legal Proceedings” and

“Financial Statements” beginning on pages 90, 178, 184 and 195, respectively, shall have the meaning given to

such terms in such sections.

General terms

Term Description

“Issuer”/”Company”/”our Company” Zydus Wellness, a public limited company incorporated under the Companies

Act, 1956 and having its Registered Office (as hereinafter defined) at Zydus

Corporate Park, Scheme no. 63, Survey no. 536, Khoraj (Gandhinagar), Near

Vaishnodevi Circle, S.G. Highway, Ahmedabad – 382 481

“we”, “Group”, “us” or “our” Unless the context otherwise indicates or implies, refers to our Company together

with our Subsidiaries

Company related terms

Term Description

“Articles” or “Articles of Association” Articles of association of our Company, as amended from time to time

“Audit Committee” The audit committee of our Board of Directors

“Audited Consolidated Financial

Statements”

Our audited consolidated financial statements as of and for the year ended March

31, 2020, March 31, 2019 and 2018 together with comparative/ corresponding

information as of and for the year ended March 31, 2020, March 31, 2019 and

March 31, 2018 prepared under Ind AS as prescribed under Section 133 of the

Act read with the Companies (Indian Accounting Standards) Rules, 2015, as

amended

“Board of Directors” or “Board” The board of directors of our Company or any duly constituted committee

thereof

“Company Secretary and Compliance

Officer”

Dhanraj Dagar, the company secretary and compliance officer of our Company

“Corporate Social Responsibility

Committee”

The corporate social responsibility committee of our Board of Directors

“Director(s)” Director(s) on the Board of our Company

“Equity Share(s)” The equity shares of our Company, each having a face value of `10

“Finance and Administration

Committee”

The finance and administration of our Board, constituted through a resolution of

our Board dated August 27, 2020, comprising of Dr. Sharvil P. Patel, Chairman,

Tarun Arora, and Ganesh Nayak

“Heinz” Erstwhile Heinz India Private Limited

“Non-executive Director” A Director, not being an Executive Director or an Independent Director

“Non-executive Chairman” The non-executive chairman of our Company, being Sharvil Patel

“Independent Director(s)” The independent Director(s) of our Company, being Dharmishtaben Raval,

Kulin Lalbhai, Savyasachi Sengupta and Srivishnu Nandyala

“Key Management Personnel” Key management personnel of our Company, as disclosed in “Board of

Directors and Key Management Personnel” beginning on page 142

“MOA”/ “Memorandum of

Association”

Memorandum of association of our Company, as amended from time to time

“Nominee Director” The nominee director of our Company, Ashish Bhargava

“Nomination and Remuneration

Committee”

The nomination and remuneration committee of our Board of Directors

19

Term Description

“Previous Statutory Auditors” The previous statutory auditors of our Company, being M/s. Dhirubhai Shah &

Co. LLP, Chartered Accountants

“Promoters” The promoters of our Company in terms of the SEBI ICDR Regulations and the

Companies Act, being Pankaj Patel, Dr. Sharvil Patel and Cadila Healthcare

Limited and Zydus Family Trust

“Promoter Group” Unless the context requires otherwise, the promoter group of our Company as

identified in accordance with Regulation 2(1)(pp) of the SEBI ICDR Regulations

“Registered Office” The registered office of our Company, located at Zydus Corporate Park, Scheme

no. 63, Survey no. 536, Khoraj (Gandhinagar), Near Vaishnodevi Circle, S.G.

Highway, Ahmedabad - 382 481

“Risk Management Committee” The risk management committee of our Board of Directors

“RoC” or “Registrar of Companies” Registrar of Companies, Gujarat at Ahmedabad

“Shareholder(s)” The holder(s) of Equity Shares of our Company, unless otherwise specified in

the context thereof.

“Stakeholders’ Relationship

Committee”

The stakeholders’ relationship committee of our Board of Directors

“Statutory Auditors” The current statutory auditors of our Company, being M/s. M/s. Mukesh M. Shah

& Co., Chartered Accountants

“Subsidiaries” Subsidiaries of our Company as of the date of this Preliminary Placement

Document, in accordance with the Companies Act, 2013 and the applicable

accounting standards, namely: (i) Liva Investment Limited; (ii) Liva Nutritions

Limited; (iii) Zydus Wellness Products Limited (formerly known as Zydus

Nutritions Limited); and (iv) Zydus Wellness International DMCC

“Unaudited Interim Financial Results” The consolidated profit and loss statements for the three months period ended

June 30, 2019 and June 30, 2020, and the explanatory notes prepared in

accordance with Ind AS

“Whole-time Director and CEO” The whole-time Director and chief executive officer of our Company, being

Tarun Arora

Issue related terms

Term Description

“Allocated” or “Allocation” The allocation of Equity Shares by our Company following the determination of

the Issue Price to Eligible QIBs on the basis of the Application Forms submitted

by them, in consultation with the BRLM and in compliance with Chapter VI of

the SEBI ICDR Regulations

“Allot” or “Allotment” or “Allotted” Unless, the context otherwise requires, allotment of Equity Shares to be issued

pursuant to the Issue

“Allottees” Eligible QIBs to whom Equity Shares are issued and Allotted pursuant to the

Issue. An indicative format of such form is set forth in “Sample Application

Form” beginning on page 310

“Application Form” The form (including any revisions thereof) which will be submitted by an Eligible

QIB for registering a Bid in the Issue during the Bid/ Issue Period

“Bid(s)” Indication of an Eligible QIB’s interest, including all revisions and modifications

thereto, as provided in the Application Form, to subscribe for the Equity Shares,

pursuant to the Issue. The term “Bidding” shall be construed accordingly

“Bid Amount” The aggregate amount determined by multiplying the price per Equity Share

indicated in the Bid by the number of Equity Shares Bid for by Eligible QIBs and

payable by the Eligible QIBs in the Issue on submission of the Application Form

“Bid/Issue Closing Date” [●] 2020, the date after which our Company (or BRLM on behalf of our

Company) shall cease acceptance of Application Forms and the Bid Amount

“Bid/Issue Opening Date” September 23, 2020, the date on which our Company (or the BRLM on behalf of

our Company) shall commence acceptance of the Application Forms and the Bid

Amount

“Bid/Issue Period” Period between the Bid/ Issue Opening Date and the Bid/ Issue Closing Date,

inclusive of both days during which Eligible QIBs can submit their Bids along

with the Bid Amount

“Bidder” Any prospective investor, being an Eligible QIB, who makes a Bid pursuant to

the terms of this Preliminary Placement Document and the Application Form

“Book Running Lead Manager” or

“BRLM”

J.P. Morgan India Private Limited

20

Term Description

“CAN” or “Confirmation of Allocation

Note”

Note or advice or intimation to Bidders confirming Allocation of Equity Shares

to such Successful Bidders after discovery of the Issue Price and shall include

details of amount to be refunded, if any, to such Bidders

“Closing Date” The date on which Allotment of Equity Shares pursuant to the Issue shall be made,

i.e. on or about [●], 2020

“Designated Date” The date of credit of Equity Shares to the Allottees’ demat accounts pursuant to

the Issue, as applicable to the relevant Allottees

“Eligible FPI” FPIs that are eligible to Bid for Equity Shares to be Allotted in this Issue in terms

of applicable laws, other than individuals, corporate bodies and family offices

“Eligible QIB(s)” A qualified institutional buyer, as defined in Regulation 2(1)(ss) of the SEBI

ICDR Regulations who are not excluded pursuant to Regulation 179(2)(b) of the

SEBI ICDR Regulations and not restricted from participating in the Issue under

applicable law.

In addition, Eligible QIBs are QIBs who are: outside the United States (to whom

Equity Shares are being offered in “offshore transactions”, as defined in, and in

reliance on Regulation S and the applicable laws of the jurisdiction where those

offers and sales are made.

“Escrow Account” Special non-interest bearing, no-lien, current bank account without any cheques

or overdraft facilities, opened with the Escrow Bank in the name and style of

“Zydus Wellness Limited – Escrow account - Equity share issue FY 2020-21,

subject to the terms of the Escrow Agreement, into which the Bid Amount shall

be deposited by Eligible QIBs and from which refunds, if any, shall be remitted

to unsuccessful Bidders, as set out in the Application Form

“Escrow Agreement” Agreement dated September 23, 2020 entered into amongst our Company, the

Escrow Bank and the BRLM for collection of the Bid Amounts and for remitting

refunds, if any, of the amounts collected, to the Bidders

“Escrow Bank” ICICI Bank Limited

“Floor Price” The floor price of ₹1,775.85 per Equity Share, calculated in accordance with

Chapter VI of the SEBI ICDR Regulations. Our Company may offer a discount

of not more than 5% on the Floor Price in accordance with and in terms of

Regulation 176 of the SEBI ICDR Regulations

“Issue” The issue, offer and Allotment of the Equity Shares to Eligible QIBs, pursuant to

Chapter VI of the SEBI ICDR Regulations and the applicable provisions of the

Companies Act

“Issue Price” `[●] per Equity Share

“Issue Size” The issue of up to [●] Equity Shares aggregating up to `[●] lakhs

“Mutual Fund” A mutual fund registered with SEBI under the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996

“Net Proceeds” The net proceeds from the Issue, after deducting Issue related expenses, as

applicable

“Placement Agreement” Agreement dated September 23, 2020 entered into amongst our Company and the

BRLM

“Placement Document” The placement document to be issued by our Company in accordance with

Chapter VI of the SEBI ICDR Regulations and Section 42 of the Companies Act

and rules made thereunder

“Preliminary Placement Document” This preliminary placement document dated September 23, 2020, for this Issue

issued in accordance with Chapter VI of the SEBI ICDR Regulations and Section

42 of the Companies Act and the rules thereunder

“QIBs” or “Qualified Institutional

Buyers”

Qualified institutional buyers as defined under Regulation 2(1)(ss) of the SEBI

ICDR Regulations

“QIP” Qualified institutions placement under Chapter VI of the SEBI ICDR Regulations

and Section 42 of the Companies Act and rules made thereunder

“Refund Amount” The aggregate amount to be returned to the Bidders, who have not been Allocated

Equity Shares for all or a part of the Bid Amount submitted by such Bidder

pursuant to the Issue

“Relevant Date” September 23, 2020, which is the date of the meeting of the Finance and

Administration Committee of the Board, a committee duly authorised by our

Board, deciding to open the Issue

“Stock Exchanges” Collectively, the BSE Limited and the National Stock Exchange of India Limited

“Successful Bidders” The Bidders who have Bid at or above the Issue Price, duly paid the Bid Amount

along with the Application Form and who are Allocated Equity Shares pursuant

to the Issue

21

Term Description

“Wilful Defaulter” An entity or person categorised as a wilful defaulter by any bank or financial

institution or consortium thereof, in terms of Regulation 2(1)(lll) of the SEBI

ICDR Regulations

“Working Day” Any day other than second and fourth Saturday of the relevant month or a Sunday

or a public holiday or a day on which scheduled commercial banks are authorised

or obligated by law to remain closed in India

Industry Related Terms

Term Description

“AWACS” Advanced Working Action and Correction System

“CAGR” Compound annual growth rate

“CFA” Carry forward agents

“CRISIL Report” The industry report issued by CRISIL (formerly known as Credit Rating

Information Services of India Limited) titled “An assessment of the FMCG

sector with special focus on sugar substitutes, health food drinks, glucose-based

powder and skin care products industries in India” dated September 2020

“CSO” The Central Statistics Office

“CVD” Cardiovascular disease

“DCA” The Drugs and Cosmetics Act, 1940

“DCGI” Drug Controller General of India

“DIY” Do It Yourself

“DMR Bill” Drugs and Magic Remedies (Objectionable Advertisements) (Amendment)

Bill, 2020

“EBITDA” Earnings before interest, tax, depreciation and amortization

“F&B” Food and beverages

“FDA” Food and Drug Administration

“FMGC” Fast-Moving Consumer Goods

“FSSAI” Food Safety and Standards Authority of India

“FSSC” The Foundation Food Safety System Certification

“GCMMF” Gujarat Cooperative Milk Marketing Federation

“GDP” Gross domestic product

“GFSI” Global Food Safety Initiative

“HFD” Health Food Drink

“HORECA” Hotel, Restaurant and Catering

“HUL” Hindustan Unilever Ltd.

“IDF” International Diabetes Federation

“IMF” International Monetary Fund

“Industry Reports” Together, the CRISIL Report, Nielsen Report, AWACS MAT data (July 2020)

and Kantar Worldpanel India (Household Purchase Panel) in All India Urban +

Rural (March 2019 to February 2020)

“ISMA” Indian Sugar Mill Association

“MAT” Moving annual total

“MoSPI” Ministry of Statistics and Programme Implementation

“MSME” Micro, Small, and Medium Enterprises

“MUFA” Mono saturated fatty acids

“NCDs” Non-communicable diseases

“NCPCDCS” National Programme for Prevention and Control of Cancer, Diabetes,

Cardiovascular Disease and Stroke

“NFHS” National Family Heath Safety

“Nielsen” The Nielsen Holdings PLC, an American information, data and measurement

firm delivering the Nielsen Report

“Nielsen Report” The “Zydus Wellness Products Ltd. calculation based on data reported

by Nielsen through its Retail Index Service for the Prickly Heat Powders,

value for the 12-month ending July 31, 2020, for the India (U+R)

market. (Copyright © 2020, The Nielsen Company.)” and/or the “Zydus

22

Term Description

Wellness Products Ltd. calculation based on data reported by Nielsen

through its Retail Index Service for the Glucose Powders & Tablets

category, Glucose Powders segment, value for the 12-month ending July

31, 2020, for the India (U+R) market. (Copyright © 2020, The Nielsen

Company.)”

“OPBDIT” Operating profit before depreciation, interest and tax

“OTC” Over the counter

“PAT” Profit after tax

“PBDITI” Profit before depreciation, interest, and tax

“PIPs” Program Implementation Plans

“PUFA” Poly unsaturated fatty acids

“R&D” Research and Development

“RoCE” Return on capital employed

“SKU” Stock Keeping Units

“SOP” Standard Operating Procedures

“UN” United Nations

Conventional and General Terms/Abbreviations

Term Description

“AGM” Annual general meeting

“AIF(s)” Alternative investment funds, as defined and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investment Funds)

Regulations, 2012

“AS” Accounting Standards issued by ICAI, as required under the Companies Act

“AY” Assessment year

“BSE” BSE Limited

“CDSL” Central Depository Services (India) Limited

“CEO” Chief executive officer

“CFO” Chief financial officer

“CIN” Corporate Identity Number

“CSR” Corporate social responsibility

“Civil Procedure Code” The Code of Civil Procedure, 1908

“Companies Act / Companies

Act, 2013”

The Companies Act, 2013 and the rules, regulations, circulars, modifications

and clarifications thereunder, to the extent notified

“Companies Act, 1956” The erstwhile Companies Act, 1956 along with the rules made thereunder

“Depositories Act” The Depositories Act, 1996

“Depository” A depository registered with SEBI under the Securities and Exchange Board of

India (Depositories and Participant) Regulations, 2018

“Depository Participant” A depository participant as defined under the Depositories Act

“DIN” Director Identification Number

“EGM” Extraordinary general meeting

“FDI” Foreign direct investment

“FDI Policy” Consolidated FDI policy issued by the Department for Promotion of Industry

and Internal Trade (formerly Department of Industrial Policy and Promotion),

Ministry of Commerce and Industry, GoI by circular D/o IPP F. No. 5(1)/2017-

FC-1 of 2017, with effect from August 28, 2017

“FEMA” The Foreign Exchange Management Act, 1999 and the regulations issued

thereunder

“FEMA Rules” The Foreign Exchange Management (Non Debt Instruments) Rules, 2019

“Financial year” or “Fiscal Year” or

“FY” or “Fiscal”

Unless otherwise stated, the period of 12 months commencing on April 1 of a

year and ending on March 31 of the next year

“Form PAS-4” Form PAS-4 as prescribed under the Companies (Prospectus and Allotment of

Securities) Rules, 2014, as amended.

“FPI” Foreign portfolio investors as defined under the SEBI FPI Regulations and

includes a person who has been registered under the SEBI FPI Regulations.

“Fugitive Economic Offender” An individual who is declared a fugitive economic offender under Section 12 of

the Fugitive Economic Offenders Act, 2018

“FVCI” Foreign venture capital investors as defined and registered with SEBI under the

23

Term Description

Securities and Exchange Board of India (Foreign Venture Capital Investors)

Regulations, 2000

“GAAP” Generally accepted accounting principles

“GoI” or “Government” Government of India, unless otherwise specified

“HUF” Hindu undivided family

“ICAI” The Institute of Chartered Accountants of India

“IFRS” International Financial Reporting Standards of the International Accounting

Standards Board

“Ind AS” Indian accounting standards converged with IFRS, as notified by the Ministry

of Corporate Affairs through the Indian Accounting Standards Rules in its

general statutory rules dated February 16, 2015

“IPR” Intellectual property rights

“IT” Information technology

“No.” Number

“NRI” or “Non-Resident Indian” A person resident outside India who is a citizen of India as defined under the

Foreign Exchange Management (Deposit) Regulations, 2016 or is an ‘Overseas

Citizen of India’ cardholder within the meaning of section 7(A) of the

Citizenship Act, 1955.

“NSDL” National Securities Depository Limited

“NSE” National Stock Exchange of India Limited

“p.a.” Per annum

“PAS Rules” Companies (Prospectus and Allotment of Securities) Rules, 2014

“RBI” Reserve Bank of India

“Regulation S” Regulation S under the U.S. Securities Act

“₹” or “Rs.” or “Rupees” or “INR” Indian Rupees, the legal currency of the Republic of India

“SCRA” Securities Contracts (Regulation) Act, 1956

“SCRR” Securities Contracts (Regulation) Rules, 1957

“SEBI” Securities and Exchange Board of India

“SEBI Act” The Securities and Exchange Board of India Act, 1992

“SEBI AIF Regulations” The Securities and Exchange Board of India (Alternative Investment Funds)

Regulations, 2012

“SEBI FPI Regulations” The Securities and Exchange Board of India (Foreign Portfolio Investors)

Regulations, 2019

“SEBI Insider Trading Regulations” The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 2015

“SEBI Listing Regulations” The Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015

“SEBI ICDR Regulations” The Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2018

“SEBI Merchant Banker Regulations” The Securities and Exchange Board of India (Merchant Bankers) Regulations,

1992

“SEBI Takeover Regulations” The Securities and Exchange Board of India (Substantial Acquisition of Shares

and Takeovers) Regulations, 2011

“SECC Regulations” Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)

Regulations, 2018

“Stock Exchanges” BSE and NSE, taken together

“STT” Securities transaction tax

“TDS” Tax deducted at source

“U.S.$”, “U.S. dollar”, or “USD” United States Dollar, the legal currency of the United States

“USA”, “U.S.”, or “United States” The United States of America, its territories and possessions (including Puerto

Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the

Northern Mariana Islands and the District of Columbia).

“U.S. Securities Act” The United States Securities Act of 1933

“VCF” Venture capital fund

24

SUMMARY OF BUSINESS

Overview

Our Company is one of the leading consumer health and wellness product manufacturing company with over 25

years of operational experience. We develop, manufacture and market a broad range of products, including under

the market leading brands Glucon-D, SugarFree, NYCIL, and other well-known brands like Complan, EverYuth,

Nutralite and Sugarlite. We believe that, our business combines healthcare, nutrition and cosmeceutical products

to provide quality wellness products. Our products in sugar substitute segment, fat spread segments, various

skincare segments such as peel offs and face scrub and other healthcare segments enjoy leading positions.

Headquartered in Ahmedabad, India, we enjoy a pan-India marketing and distribution network comprising more

than 1,700 distributors and approximately 2,000 “feet-on-street” representatives who facilitate the distribution of

our products to retailers across India.

We have a diversified portfolio with our product basket consisting of eight products used for various purposes

such as sugar substitutes, butter substitutes, health drinks, nutrition supplements, skin and personal care, products.

We believe that we are well positioned to sustain our existing leadership positions in key markets as well as exploit

significant growth opportunities that exist in the expanding FMCG sector, both in India and abroad.

We manufacture our products through five manufacturing facilities across four states in India (one in Gujarat,

Uttar Pradesh, Uttarakhand and two at Sikkim). The quality of our manufacturing facilities is evidenced by the

quality of certifications and accreditations, including the FSSC 22000 and ISO 22000, that our facilities have

obtained from various local and international accreditation agencies validating our process and quality

consistency. Our manufacturing facilities are supported by, our R&D facilities located in Gujarat and Maharashtra

with capabilities that enable us to support our growth strategy by developing new products and processes, which

enhance our range of products and their variants in the market, to cater to evolving consumer trends and

preferences.

We are further supported by our distribution capabilities, which include 20 cold chain warehouses, 25 ambient

warehouses, more than 1,700 distributors and 23 carry forward agents (“CFAs”). We believe that our structured

distribution network enables us to facilitate sales to address different consumer demands. Our products are

primarily sold by distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies,

institutional channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department),

CPC (Central Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores). Supplies are made available either

through distributors or directly by the Company. We have received a number of industry awards in recent years,

including Frost and Sullivan India Manufacturing Excellence Awards 2019 for Zydus Wellness Sikkim. We are a

part of the Zydus Cadila Group and our association provides us with a competitive edge on account of the goodwill

enjoyed by the Zydus Cadila Group. Cadila Healthcare Limited (“Cadila”), our corporate promoter is ranked 5th

in Indian pharmaceutical industry with a 4.18% market share in July 2020 (Source: AWACS July MAT 2020), and

revenue of ₹142,531 million with an EBITDA margin of 19.5% in Fiscal 2020. Cadila, is also promoted by Pankaj

Patel and Dr. Sharvil Patel, who have both been instrumental in the growth of our business. Our Promoters together

with the Promoter Group hold 67.85% of the shareholding of our Company as on June 30, 2020.

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Our total income from operations in Fiscal 2020 was ₹1,76,682 lakhs, derived principally from the sale of branded

products. Over a period of three years from Fiscal 2018 to Fiscal 2020, our total income from operations has

grown at a CAGR of 84.1%. The last three months ended June 30, 2020 have witnessed a consolidated revenue

decline of 13.4%, as compared to the same period in the prior year. During the period of three years from Fiscal

2018 to Fiscal 2020, our PAT grew from ₹13,651 lakhs to ₹14,172 lakhs, registering a CAGR of 1.9%. The PAT

for Fiscal 2020 includes exceptional items pertaining to various expenses amounting to ₹4,420 lakhs incurred due

to integration of the business acquired from Heinz India Private Limited (“Heinz”). The CAGR growth excluding

this exceptional item would be 16.7%. For the three months ended June 30, 2020, the PAT was ₹8,920 lakhs,

registering a growth of 10.9% over the same period from the previous year. The acquisition was completed on

January 30, 2019. For a discussion on the acquisition of Heinz and its economic impact on our Company’s

financials, please refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and

Results of Operations” beginning on page 69.

Our History and Parentage

Our Company traces its beginning to November 1, 1994 as Carnation Health Foods Limited, the manufacturer

and marketer of Nutralite, a butter substitute and low-fat table spread. Our name was changed to Carnation Nutra

– Analogue Foods Limited in 1995. In 2006, Cadila acquired 61.56% controlling stake capital of our Company,

and we became a subsidiary of Cadila. In 2008, pursuant to the approval by the High Court of Gujarat to the

composite scheme of arrangement, the consumer products division of Cadila, consisting of ‘SugarFree’ and

‘EverYuth’ products, was demerged to form our Company. Following the de-merger, the product portfolio of our

Company comprised of Nutralite, SugarFree and EverYuth. Subsequently, our name was changed to Zydus

Wellness Limited on January 5, 2009. On October 24, 2018, we entered into an agreement (jointly with Cadila)

to acquire 100% equity shares of Heinz. Pursuant to the Heinz acquisition, our portfolio brands expanded to

comprise of Glucon-D, NYCIL, Complan and Sampriti.

Competitive Advantages/Our Strengths

We are a people-centric and value-driven organization, and we have identified the following sources of

competitive advantages that present the right recipe for growth.

Compelling market fundamentals and consumer dynamics

We believe that the market fundamentals and consumer dynamics in India are conducive to our future growth. For

example, India’s GDP increased at a CAGR of 7% to Rs 146 trillion from Rs 87 trillion between fiscals 2012 and

2020 (Source: CRISIL Report), and the FMCG industry grew at a 8% CAGR between fiscals 2017 and 2020,

backed by strong growth especially in the food and beverages (F&B) segment (which grew at 12% CAGR)

(Source: CRISIL Report). The F&B industry accounted for more than 50% of the overall FMCG industry as of

Fiscal 2020 (Source: CRISIL Report). The factors contributing to the growth of the FMCG industry are increased

urbanization and a rise in disposable income, an underpenetrated rural market, government support, an increase

in the number of working women, an improvement in supply chain infrastructure and innovation in product mix

(Source: CRISIL Report).

At present, sugar holds more than a 99% share in the Indian sweetener market industry, with sugar substitutes

holding less than 1%. Although the proportion of sugar substitutes in India’s sweetener market is currently

negligible, it is expected to gain share in future as Indian consumers seek alternatives to avoid obesity, diabetes

and serious health problems (Source: CRISIL Report). Diabetes is considered a particularly serious threat to global

health and is among the top ten causes of death, globally; India was the second largest country, preceded only by

China, in terms of numbers of adults with diabetes in 2019 (Source: CRISIL Report). Given the growing diabetic

population, the increasing prevalence of lifestyle diseases, a rising number of health-conscious consumers, the

sugar substitute industry is estimated to grow at 8 – 9% CAGR between Fiscals 2020 to 2025. Our Company holds

a dominant market share in the sugar substitute industry through our branded products such as SugarFree and

Sugarlite (Source: CRISIL Report).

Similarly, in the health food drink industry, children account for the majority of consumers of Indian health food

drinks, with a share of approximately 80%, while toddlers account for 8 – 9% and adults account for approximately

10 -12%. Complan, our branded product offering, is a key player in this market and has gained market share on

account of innovative strategies deployed by our Company (Source: CRISIL Report). The innovative strategies

that helped our Company gain market share are (i) launching Complan in sachets, which increased rural

consumption on account of a preference in rural India to buy smaller packets over large ones, (ii) entering the

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toddler category with the launch of Complan Nutrigro, and (iii) introducing new flavours and variants of Complan

Nutrigro i.e. vanilla, chocolate and badam kheer for enhanced taste. As consumer disposable income continues to

increase further, and consumers become more inclined to adopting healthy food habits, we believe we are well

positioned to capitalize on the market growth in such categories owing to our Company’s well-established supply

chain network and strong focus on innovation across product lines. For further details on our various branded

products, please refer to the section entitled “Industry Overview” beginning on page 90 of this Preliminary

Placement Document.

Portfolio of several market and popular leading brands

We have a portfolio of strong brands that occupy leadership positions in their respective product market segments

in India and overseas with a high brand recall value for our products We focus on branded products, and our key

brands and brand extensions are set out in the chart below.

Source: Market rank data for Glucon-D and NYCIL sourced from Nielsen Report; For SugarFree, report as per Nielsen as of MAT December

2019.

We believe that a strong and reputed brand is a key attribute in our industry, which increases customer confidence

and influences a purchase decision. Our flagship product ‘SugarFree’ has a strong identity especially in the urban,

semi-urban and rural markets in India with a market share of 93.6% (Source: report as per Nielsen as of MAT

December 2019). NYCIL, our prickly heat powder commands a market share of 32.8% (Source: Nielsen Report).

Glucon-D, our glucose powder commands a market share of 56.1% (Source: Nielsen Report). Furthermore,

‘Nutralite’ is a key player in the margarine industry (Source: CRISIL Report).

In addition, keeping in mind changing consumer preferences we have also introduced new products to appeal to

health-conscious consumers who seek to avoid artificial flavours, excessive calories from sugar and butter, we

have recently launched ‘Sugarlite’, 100% natural blended sugar, SugarFree Green (100% natural Stevia based

sugar substitute), SugarFree Green Veda (ayurvedic sweet drops), Nutralite Mayonnaise range, Nutralite flavours

(in the butter substitute category). Similarly, in the skin category, under the ‘EverYuth’ brand, we have introduced

range of tan-removal products, neem scrub, lemon cherry face wash in the recent past. We believe that the

development and launch of these product concepts in a short span of time demonstrates our ability to roll out and

execute sales and marketing initiatives to introduce new products and meet consumers’ expectations.

Strong distribution network with presence across multiple channels

We have a pan-India presence and operations spanning across business verticals - healthier food alternatives and

skin care, and hence are not dependent on any particular region. Our widespread domestic presence not only

mitigates the risk of dependence on certain regions, but also helps us to leverage our brand value. We have

established a strong distribution network in India comprising more than 1,700 distributors and approximately

2,000 “feet-on-street” representatives, who facilitate the distribution of our products to retailers across India. Our

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distribution capabilities include 20 cold chain warehouses and 25 ambient warehouses. Our products are primarily

sold by distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies,

institutional channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department),

CPC (Central Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores). Supplies are made either through

distributors or directly by the Company. As on August 31, 2020, our distribution network included 23 CFAs and

more than 1,700 distributors across India, to whom we sell directly. In addition, our distributors also engage

several other distributors and sub-distributors who distribute our products to a number of retail outlets.

Furthermore, with a view to grow our distribution presence and ensure separate brand visibility, we have

established dedicated distribution networks for all our products except Nutralite. Since Nutralite is a cold chain

product, there is separate cold chain distribution network for the same. Our sales and distribution network are

strategically spread across different regions in India and has an especially strong outreach in certain semi-urban

and rural markets, where we expect growth to be more significant. We work closely with distributors to understand

consumer preferences, to receive feedback on our products and that of our competition, which enables us to

formulate an effective strategy for sales, marketing and pricing. Our distribution network is also well integrated

with our marketing and promotional activities, and helps in strengthening our brand image, especially in rural

markets where the reach of mainstream media is typically limited. We believe that the initiatives that we have

taken as outlined below will drive change and enable our business to become more efficient and cost effective.

Initiatives taken to improve “Go to Market” capabilities:

1. Reducing the number of distributors post acquisition of Heinz to transition to distributors who can handle

large capacities and support our distribution network and reduce cost; and

2. Resizing and restructuring the method of last mile delivery by allocating best-beat plan which helps us

optimise routing for our last mile field delivery team. Generally, our products are delivered through

distributors. Undertaking last-mile delivery using best-beat plan increases efficiency and makes it more

cost-effective by allowing our field team to choose the best route that effectively cater to more number of

distributors who are likely to give orders for our Company’s products.

Stable and well-established supply chain with high quality manufacturing facilities

We believe that our extensive network of distribution agents and suppliers spread across India enables us to

effectively deliver our products at competitive prices in a timely manner. We believe we have developed an

effective strategy for procurement of raw materials and an effective delivery strategy that helps us attract new

customers and retain our existing customer base. Retention of our existing customer base with stable demand and

brand recall value of our products, allows us to maintain margins, as we are able to adjust the price of our products

to reflect any increase in production and distribution costs.

Our manufacturing facilities are equipped with advanced equipment and modern technology and we maintain high

standards of quality for each of our manufacturing facilities located in Ahmedabad, Aligarh, Sitarganj and Sikkim

by adhering to global food safety management compliance standards and implementing self-inspection strategies.

Majority of our manufacturing facilities is accredited with the FSSC 22000 given by the GFSI, a division of the

Consumer Goods Forum, and the accreditations are given after a thorough audit of SOP and protocols. Our plants

at Ahmedabad and Sikkim have been awarded gold medals in the National Awards for Manufacturing

Competitiveness, 2019. Furthermore, our Sikkim plant won a gold award at the Indian Manufacturing Excellence

Awards, 2019. Maintaining high standards of safety and quality enable us to effectively participate in meeting the

changing needs of our customers. We also have a dedicated team on site to continuously monitor recent changes

in the regulatory requirements and evaluate their likely impact on the Company. This enables us to take proactive

measures rather than reactive; and to mitigate any possible risks of regulatory actions.

Strong focus on innovation across products and agile actions during the COVID-19 crisis

We devote significant attention and resources for product innovations. We endeavour to foster a culture of

scientific promotion and experimentation wherein our employees are encouraged to constructively challenge

status quo and assume leadership and responsibility. For example, the COVID-19 pandemic in India in March

2020 triggered a nationwide lockdown, in the immediate aftermath of the lockdown, the demand and consumption

of FMCG and household products increased significantly, owing to panic buying by consumers. In response, our

teams underwent competency building training programs to gain better insight into consumer needs, and we

created opportunities from the situation and took the following actions:

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1. Apex Committee: we created a war room comprising of leadership team to have rapid information

exchange and active decision making;

2. Sales operation: we built a focused team to manage and innovate ways to work around the challenge to get

business back to normal;

3. Supply chain and manufacturing: we developed ways to engage clearing and forwarding agents and open

factories with the help from regulatory authorities to keep the arteries of our business flowing; and

4. People and IT infrastructure: we mobilized the information technology backbone of our Company to enable

‘work from home’ for employees in certain functions and created a “central assistance cell” to keep people

motivated and focused on running the business through the crisis.

To contribute and support India’s fight against COVID-19, we also spearheaded Project Urja, a national outreach

programme by our field team for police/ enforcement/ sanitation frontline workers to provide free distribution of

Glucon-D across various towns in India. Realizing that consumer preference was shifting to digital purchase

options due to the COVID-19 pandemic, we leveraged e-commerce platforms by setting up telesales channels for

retailers across many cities in India.

In addition, during the COVID-19 crisis, we innovated and launched the following five products:

1. NYCIL hand sanitizers: a ‘herbal hand sanitizer’, enriched with neem and aloe vera to ensure hand hygiene.

2. Complan Nutrigro: a scientifically formulated milk protein-based health drink for toddlers, with a balance

of 50% whey protein and 50% casein. Our product is marketed and distributed leveraging doctor’s

recommendation and prescription.

3. Nutralite chocospread: a healthy variant of chocolate, enriched with calcium and protein from roasted

quinoa.

4. Glucon-D ImmunoVolt: a powder mix containing vitamin C, D, zinc and glucose in orange and strawberry

flavours to boost immunity.

5. Complan Sachet: in order to address the stock-keeping unit portfolio gap, we launched the Complan sachets

in the northern and western regions of India to participate in the sachet market.

Track record of strong financial performance

Our business has demonstrated attractive financial performance over the last three fiscal years. From Fiscal 2018

to Fiscal 2020, our total income from operations grew from ₹52,114 lakhs to ₹1,76,682 lakhs, representing a

CAGR of 84.1%; our EBITDA before exceptional items grew from ₹12,526 lakhs to ₹32,106 lakhs, representing

a CAGR of 60.1%.

Our robust financial performance is principally due to (i) the growth and expansion of our product portfolio, (ii)

improvements in our operating efficiency, including management of costs and expenses, (iii) the growth of our

“Go to Market” capabilities, (iv) expansion operations beyond India to international territories, (v) enhancement

of the market share of our business from e-commerce and modern trade channels, and (vi) inorganic growth by

way of acquisition.

Our financial performance has also been strengthened by the acquisition of 100% shareholding in Heinz. Our

strategic acquisition of Heinz supplemented our business verticals, augmented growth of our product portfolio,

and increased our sales volume and market share. The acquisition of Heinz enabled us to become one of the

leading consumer wellness companies in India. We achieved this by successfully integrating Heinz into our

Company’s operations in the following manner:

1. Human resources integration: we rationalized various positions (direct and indirect) in the combined entity

structure and harmonized policies across various levels;

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2. Supply chain synergies delivered value through cost savings: we reduced logistics costs through warehouse

and clearing and forwarding enhancement by consolidating the number of CFAs post the acquisition of

Heinz. We optimized from nine branches to six branches, increased efficiency by reducing distributor

count, while continuing to expand our product outreach;

3. Stronger IT backbone and digital footprint: we implemented SAP® mechanism to integrate our business

with Heinz, by bringing in industry best practices to the acquired business including standard operating

procedure, in a phased manner, resulting in efficiency and distribution enhancement; and

4. Seller and outlet coverage integration: we launched Project Shakti to identify active and unique outlets of

distribution, thereby adding complementary avenues of large general trade channels to our existing

pharmacy distribution channel.

Experienced board of directors and management team and strong parentage

We believe that a strong employee base is a key competitive advantage. As at June 30, 2020, we employed a work

force of over 1,153 full-time employees in India and abroad. Our senior management team has wide and relevant

industry experience; 504 out of 1,153 team members have been with us for over 8 years and above. The skills and

diversity our employees give us the flexibility to respond best to the needs to customers. We are dedicated to the

development of expertise and know-how of our employees and continue to invest in them through training and

skill building.

Our Board is headed by the Non-executive Chairman, Dr. Sharvil Patel, who has extensive knowledge and

expertise in the FMCG sector, manufacturing, marketing and business management. Our Whole-time Director and

Chief Executive Officer, Mr. Tarun Arora, was previously associated with Danone Narang Beverages as General

Manager. Dr. Sharvil Patel and Mr. Tarun Arora provide strategic leadership to our Company and are closely

involved in our operations. We believe that our management team’s in-depth understanding of target markets and

consumer demand and preferences has enabled us to continue to grow our business and expand our operations.

Our well-qualified and experienced management team has played a key role in the development of good corporate

governance, effective internal controls and accounting policies, strong employee relations, and stable supply chain

relationships.

Business Strategy

India’s FMCG sector has changed dramatically in recent years. An increasing demand for healthier lifestyles and

the willingness to consume products with health benefits have changed the consumption and demand patterns for

these products. Our overall business goal is to leverage our core strengths in innovation, scientific promotion and

a “good-for-you” portfolio that would help us maintain and build upon our position as a leading FMCG player in

product categories in which we operate.

We believe that the three pillars to drive our growth forward are:

1. Accelerate growth of core brands: innovate to focus on portfolio diversification and expansion with an aim

to recruit new consumers with differentiated ‘Go to Market’ propositions.

2. Build international presence: using our Dubai subsidiary, Zydus Wellness International DMCC (“Zydus

DMCC”) as a base, we aim to leverage our brands to build scale and enter new markets internationally

with relevant offering of products.

3. Leverage M&A to significantly grow scale: we have already demonstrated a successful integration of the

Heinz acquisition, which will enable our Company to accelerate the growth of its brand portfolio with the

help of synergies of the combined entity.

To achieve these goals, we intend to implement the following key strategies:

1. Innovation fuelled growth on the back of Company’s strong research and development capabilities to launch

products with differentiated offering that suit customer needs;

2. Expand geographical presence by offering products tailored to the needs of customers in those markets and

leveraging an international distributor franchise model; and

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3. Seek bolt-on acquisitions that can fill in the product gaps and best fit in with our plans of health and wellness

portfolio.

Innovation led organic growth and penetration of brands through increased distribution and operation

We aim to grow our existing business in a number of ways. With the changing demands of consumers and a shift

towards a healthier lifestyle over the past decade, we expect an increase in the use of mobile analytics, artificial

intelligence and cloud technology, which will help the FMCG sector to transform and drive the next phase of

growth. We intend to increase our initiatives in R&D in order to attain innovation driven growth with an increase

in our capability and enhancement of our differentiated product portfolio in both domestic and export markets.

Our R&D and manufacturing initiatives are determined by market demand and driven by technological updates.

We aim to digitise fast, customise and improve customer experience by taking the following steps:

1. Launch Sales Force Automation (SFA) application on mobile for our sales team that will connect to

BoTree’s distributor management system (DMS) and help distributors to manage orders effectively and

thereby reduce time taken to deliver our products. DMS is a software tool installed in the distributor’s

computer system by which the distributor sells our products. This system provides us with real time data

on sales being effected to trade through different channels, thereby assisting our management take decisions

on ground level to counter competition, increase distribution and availability of our products and take other

suitable measures;

2. Implement business analytics and predictive analytics that will provide (i) price insights – know what price

point will draw customers and increase profitability, (ii) customer insights – sell what customers want at

their preferred point of purchase, (iii) sales insights – adopt new ways to sell based on how customers are

buying, (iv) marketing insights – deliver personalised promotions and optimise marketing spend, and (v)

supply chain insights – optimise inventory levels with minimal stock-outs. Armed with deeper insights into

consumer behaviour, we will be able to direct research and development investment, improve the

effectiveness of marketing and maximise supply chain efficiencies; and

3. Apply demand forecasting and planning using SAP Integrated Business Planning (IBP); a cloud-based

planning software for supply chain management that would use real-time information to predict how much

of a specific product are customers likely to purchase during a specific time period. Accurate demand

forecasting and planning can help us evaluate the level of customer demand and accordingly manufacture

supply orders. Moreover, it can help us reduce costs associated with inventory lying unused in our

warehouse.

We also intend to expand our e-commerce business, which has become an important distribution medium in the

health and wellness sector. As the e-commerce sector matures, we believe e-commerce platforms combined with

modern trade channels and communications will likely become a major component of product distribution and

may have a profound impact on the health and wellness industry and the supply chain. The COVID-19 crisis has

affected the development of our e-commerce capabilities positively. We launched Project Garuda at the peak of

the COVID-19 crisis and engaged with third party logistics vendors to revive last mile connectivity. We have also

partnered with 1mg website to sell our products at a discounted rate for our employees. We aim to widen our

geographical outreach and bridge the gap between our Company and the consumers by strengthening and

investing in our e-commerce distribution model. All our Company’s products are available at various e-commerce

platforms like Amazon, Flipkart, Grofers, Big Basket, Nykaa, Udaan, Jio Mart etc.

To support our plans for increasing sales volume, we intend to expand and integrate our distribution network by

optimizing our distribution operations and increasing product supply to under-penetrated markets, particularly

semi-urban and rural areas. We aim to focus on the optimal utilization of our existing distribution infrastructure

by implementing effective brand and product promotion strategies through intensive interaction with distributors,

effective involvement of our sales team at points of sale, and expanding the range of product offerings in certain

markets and areas to specifically cater to regional and local consumer preferences.

Finally, we plan to support our organic growth plans by continuing to focus on increasing our operations and

improving operational effectiveness at our production facilities. Higher operational effectiveness results in greater

production volumes and higher sales, and therefore allows us to spread fixed costs over a higher number of units

sold, thereby increasing profit margins. We plan to continue to focus on investing in innovation, automation,

modern technology and equipment to continually upgrade our products including the quality of our products to

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address changing customer preferences as well as to improve operational efficiency. We intend to continue to

launch other innovative products that are relevant for our consumers.

International expansion by creating geographical footprints in emerging markets like SAARC, Middle East

and Africa and South East Asia

While historically we have had a strong presence in the Indian market, as our Company continues to expand its

footprints in new international markets to access a more diversified customer base, we incorporated Zydus DMCC,

a wholly owned subsidiary in Dubai, UAE during Fiscal 2020, which acts as a distributor for the Company.

Through this subsidiary, we aspire to grow our portfolio of products in 23 countries and enter new markets as

well. Our Company manages majority of its international operations through Zydus DMCC. During Fiscal 2020,

our Company entered new markets such as New Zealand and Kenya to build our international business. Our

Company also enhanced its portfolio with the launch of Complan products in countries such as UAE, Bahrain,

Qatar, Mauritius Oman, Saudi Arabia and Kuwait, as we launched Nutralite products in Malaysia as well. We plan

to expand into new geographical markets within South East Asia, New Zealand and the Middle East where we see

opportunities in the business segments in which we operate.

Inorganic opportunities

We have identified inorganic growth as one of the avenues for our future growth and accordingly, undertook the

acquisition of Heinz in 2019. We believe that we have demonstrated a track record of building new emerging

categories, with differentiated product propositions. We intend to continue to make acquisitions that are

complementary in nature and enter into strategic relationships in the future as part of our strategy in India and

overseas as a means to expand our operations, enhance our competitive position and capitalise on potential

operational synergies. We continuously evaluate acquisition opportunities that arise in business segments in which

we operate, both in India and overseas.

We continue to focus on growing our business through inorganic channels to expand our capabilities, product

offerings, and geographical reach. The acquisition of Heinz is an example of a successful integration that has

helped our Company increase market share for some of our brands namely Complan, SugarFree and NYCIL,

enabled access to new clients and helped us enter high-growth geographies in a cost-effective manner. While

targeting a robust topline growth, we will continue to realign our portfolio in favour of our focus brands. We

believe that strategic acquisitions are effective catalysts for business growth and consider tactical considerations

to make investments that are complementary to our existing operations. In addition, we have systems to manage

back office matters and facilitate increased connectivity and functionality, because we aim to expand our

operations.

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SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with,

and is qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary Placement

Document, including the sections “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and

“Description of the Equity Shares” beginning on pages 39, 62, 164, 151 and 173, respectively.

Issuer Zydus Wellness Limited

Face Value ₹10 per Equity Share

Issue Price ₹[●] per Equity Share (including a premium of `[●] per Equity Share)

Floor Price ₹1,775.85 per Equity Share, calculated on the basis of Regulation 176

of the SEBI ICDR Regulations. In terms of the SEBI ICDR

Regulations, the Issue Price cannot be lower than the Floor Price.

Our Company may offer a discount of up to 5% on the Floor Price in

accordance with the approval of the Shareholders accorded through

their special resolution dated September 19, 2020 and in terms of

Regulation 176(1) of the SEBI ICDR Regulations.

Issue Size Issue of up to [●] Equity Shares, aggregating up to ₹[●] lakhs.

A minimum of 10% of the Issue Size, i.e., up to [●] Equity Shares shall

be available for Allocation to Mutual Funds only and the balance [●]

Equity Shares shall be available for Allocation to all Eligible QIBs,

including Mutual Funds. In case of under-subscription in the portion

available for Allocation to Mutual Funds, such undersubscribed

portion may be Allotted to other Eligible QIBs.

Date of Board resolution authorizing the Issue August 27, 2020

Date of shareholders’ resolution authorizing the

Issue

September 19, 2020

Dividend See “Description of Equity Shares” and “Dividends” on pages 173 and

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Eligible Investors Eligible QIBs, to whom this Preliminary Placement Document and the

Application Form are delivered and who are eligible to bid and

participate in the Issue.

For further details, see “Issue Procedure” and “Selling Restrictions”

beginning on pages 151 and 166, respectively. The list of Eligible

QIBs to whom this Preliminary Placement Document and Application

Form is delivered has been determined by our Company in

consultation with the BRLM.

Equity Shares issued and outstanding

immediately prior to the Issue

5,97,86,144 fully paid-up Equity Shares

Equity Shares issued and outstanding

immediately after the Issue

[●] Equity Shares

Issue Procedure This Issue is being made only to Eligible QIBs in reliance on Section

42 of the Companies Act, read with Rule 14 of the PAS Rules, and all

other applicable provisions of the Companies Act and Chapter VI of

the SEBI ICDR Regulations. For further details, see “Issue Procedure”

beginning on page 151

Listing and Trading Our Company has obtained in-principle approvals dated September 23,

2020 from BSE and NSE in terms of Regulation 28(1)(a) of the SEBI

Listing Regulations for listing of the Equity Shares to be issued

pursuant to the Issue.

Our Company will make applications to each of the Stock Exchanges

after Allotment and credit of Equity Shares to the beneficiary account

with the Depository Participant to obtain final listing and trading

approval for the Equity Shares, to be issued pursuant to this Issue.

Lock-up For details of the lock-up, see “Placement – Lock-up” beginning on

page 164.

33

Transferability Restrictions The Equity Shares Allotted pursuant to this Issue shall not be sold for

a period of one year from the date of Allotment, except on the floor of

a recognised stock exchange. For details in relation to other transfer

restrictions, see “Selling Restrictions” beginning on page 166.

Use of Proceeds The gross proceeds from the Issue will be aggregating to

approximately ₹[●] lakhs. The net proceeds from the Issue, after

deducting Issue related expenses is expected to be approximately ₹[●]

lakhs.

See “Use of Proceeds” beginning on page 62 for information regarding

the use of Net Proceeds from the Issue.

Risk Factors See “Risk Factors” beginning on page 39 for a discussion of risks you

should consider before investing in the Equity Shares.

Indian Taxation See “Statement of Special Tax Benefits” beginning on page 178

Closing Date The Allotment of the Equity Shares, expected to be made on or about

[●], 2020.

Ranking and dividends The Equity Shares to be issued pursuant to the Issue shall be subject to

the provisions of the Memorandum of Association and Articles of

Association and shall rank pari passu with the existing Equity Shares

of our Company, including rights in respect of dividends.

The Shareholders who hold Equity Shares as on the relevant record

date will be entitled to participate in dividends and other corporate

benefits, if any, declared by our Company after the Bid/Issue Closing

Date, in compliance with the Companies Act, SEBI Listing

Regulations and other applicable laws and regulations. Shareholders

may attend and vote in shareholders’ meetings in accordance with the

provisions of the Companies Act. Please see sections “Dividends” and

“Description of the Equity Shares” beginning on pages 68 and 173,

respectively.

Security Codes/ Symbols for the Equity Shares ISIN INE768C01010

BSE Code 531335

NSE Symbol ZYDUSWELL

34

SELECTED FINANCIAL INFORMATION

Certain non-GAAP financial measures and certain other statistical information relating to our operations and

financial performance have been included in this section and elsewhere in this Preliminary Placement Document.

We compute and disclose such financial measures and such other statistical information relating to our operations

and financial performance as we consider such information to be useful measures of our business and financial

performance, and because such measures are frequently used by securities analysts, investors and others to

evaluate the operational performance of our business, which provides such financial measures and other

statistical and operational information when reporting their results. Such financial measures and such other

statistical information relating to our operations and financial performance may not be computed on the basis of

any standard methodology that is applicable across the industry and therefore may not be comparable to financial

measures and statistical information of similar nomenclature that may be computed and presented by other

companies.

The following selected financial information is extracted from and should be read in conjunction with, the Audited

Consolidated Financial Statements and Unaudited Interim Financial Results of our Company, prepared in

accordance with Companies Act and Ind AS and the applicable rules thereunder, included elsewhere in this

Preliminary Placement Document. You should refer to “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” and “Financial Statements” beginning on pages 69 and 195, respectively,

for further discussion and analysis of the Audited Consolidated Financial Statements of our Company. Wherever

comparatives have been included in this section, such comparatives have been derived from the comparatives in

the Audited Consolidated Financial Statements.

[The remainder of this page has been left intentionally left blank]

35

SUMMARY OF AUDITED CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2020, MARCH

31, 2019, AND MARCH 31, 2018

(₹ in lakhs)

Particulars As at March

31, 2020

As at March

31, 2019

As at March

31, 2018

ASSETS:

Non-Current Assets

Property, plant and equipment 18,877 20,742 8,090

Capital work-in-progress 353 1,031 24

Right-of-use assets 1,590 - -

Goodwill 3,92,002 3,81,974 2,282

Other intangible assets 54,883 54,026 16

Financial assets:

Other financial assets 977 667 134

Other non-current assets 465 4,054 233

Deferred tax asset [net] 12,079 10,299 7,410

Assets for tax [net] 163 3,289 -

4,81,389 4,76,082 18,189

Current Assets

Inventories 29,234 23,307 3,506

Financial assets:

Investments 11,041 4,610 14,755

Trade receivables 11,820 9,604 875

Cash and cash equivalents 5,448 13,815 2,959

Bank balance other than cash and cash equivalents 2,794 2,614 38,413

Other current assets 17,242 15,820 4,196

77,579 69,770 64,704

Total 5,58,968 5,45,852 82,893

EQUITY AND LIABILITIES:

Equity

Equity share capital 5,766 5,766 3,907

Other equity 3,40,300 3,32,862 65,212

Non-controlling Interests - - 1,316

3,46,066 3,38,628 70,435

Liabilities:

Non-current liabilities

Financial liabilities:

Borrowings 1,50,000 1,50,000 -

Lease liabilities 64 - -

Other financial liabilities 51 63 57

Provisions 2,437 2,283 77

Other non-current liabilities 168 252 125

Deferred tax liabilities (net) - - 30

1,52,720 1,52,598 289

Current liabilities

Financial liabilities:

Borrowings 1,905 6,925 2,500

Trade payables:

Due to Micro, Small and Medium Enterprises 654 989 133

Due to other than Micro, Small and Medium Enterprises 48,458 38,240 7,732

Lease Liabilities 14 - -

Other financial liabilities 4,277 3,948 564

Other current liabilities 3,390 3,174 922

Provisions 1,484 1,074 130

Current tax liabilities [net] - 276 188

60,182 54,626 12,169

Total 5,58,968 5,45,852 82,893

36

SUMMARY OF AUDITED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE

FISCALS ENDED MARCH 31, 2020, MARCH 31, 2019 AND MARCH 31, 2018

(₹ in lakhs)

Particulars

For the year

ended March

31, 2020

For the year

ended March

31, 2019

For the year

ended March

31, 2018

REVENUE:

Revenue from operations 1,76,682 84,282 52,114

Other income 1,071 3,888 3,506

Total income 1,77,753 88,170 55,620

EXPENSES:

Cost of materials consumed 75,382 29,263 16,018

Purchases of stock-in-trade 8,249 3,002 10

Changes in inventories of finished goods, work-in-Progress

and stock-in-trade (5,754) (2,428) 61

Excise duty on sales - - 852

Employee benefits expense 17,469 8,560 5,664

Finance costs 13,991 3,009 170

Depreciation and amortisation expense 2,639 1,251 888

Other expenses 49,230 27,405 16,983

Total expenses 1,61,206 70,062 40,646

Profit before exceptional items and tax 16,547 18,108 14,974

Exceptional items (4,420) (1,045) -

Profit before tax

Less: Tax expense:

Current tax (265) 3,109 3,071

Deferred tax (1,780) (3,170) (1,748)

Total Tax Expenses (2,045) (61) 1,323

Profit for the year 14,172 17,124 13,651

Other Comprehensive Income

Items that will not be reclassified to profit or loss:

Re-measurement gains on post-employment defined benefit

plans, net of tax 201 2 11

Items that will be reclassified to profit or loss:

Exchange differences on transaction of financial statement of a

foreign subsidiary 17 - -

Other Comprehensive Income for the year [net of tax] 218 2 11

Total Comprehensive Income for the Year [net of tax] 14,390 17,126 13,662

Net profit attributable to:

Owners of the parent 14,172 16,914 13,390

Non-controlling interests - 210 261

Other Comprehensive Income Attributable to:

Owners of the parent 218 2 11

Non-controlling interests - - -

Basic & diluted earnings per equity share [EPS] [in ₹] 24.58 40.10 34.27

37

SUMMARY OF AUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE FISCALS

ENDED 31 MARCH 2020, MARCH 31, 2019 AND MARCH 31, 2018

(₹ in lakhs)

Particulars

For the year

ended March

31, 2020

For the year

ended March

31, 2019

For the year

ended March

31, 2018

Cash flows from operating activities

Profit before tax 12,127 17,063 14,974

Adjustments to reconcile the profit for the year to net cash

generated from operating activities:

Depreciation and amortisation expense 2,639 1,251 888

Loss on sale of assets [net] 2 - 2

Profit on sale of investments [net] (522) (1,842) -

Interest income (535) (2,039) (3,060)

Fair value gain on financial instrument at fair value

through statement of profit and Loss (14) (7) (104)

Interest expense 13,991 3,009 170

Profit elimination of acquired business - (1,139) -

Changes in operating assets and liabilities; net of effects from

acquisitions:

Increase in trade receivables (1,898) (703) (479)

Increase in other assets (3,493) (3,877) (4,619)

[Increase] / Decrease in inventories (5,927) 24 (322)

Increase in trade payables and other liabilities 9,287 8,501 617

Re-measurement of Employees benefits [net] 428 2,312 11

Change in Non- controlling interest - (1,316) -

Cash generated from operations 26,085 21,237 8,078

Direct taxes paid [net of refunds] (160) (6,299) (1,172)

Net cash from operating activities 25,925 14,938 6,906

Cash flows from investing activities:

Purchase of property, plant and equipment and other intangible

assets (2,463) (1,707) (788)

Proceeds from sale of property, plant and equipment 13 1 11

Purchase of Non-Current Investments in a subsidiary [net] - (4,64,292) -

Profit from sale of current investments 522 1,842 -

Proceeds from sale of current investments - 10,153 -

Investment in mutual funds [net] (6,417) - (11,650)

Proceeds from fixed deposit [net] - 35,799 -

Investment in Fixed Deposit [net] (513) - 3,456

Interest received 535 2,039 3,059

Net cash used in investing activities (8,323) (4,16,165) (5,912)

Cash flows from financing activities:

Proceeds from issued of equity share capital - 1,859 (12)

Proceeds from share premium - 2,55,641 -

Proceeds of Long term borrowing - 1,50,000 -

Current borrowings [net] (5,020) 4,425 -

Interest paid (14,006) (3,009) -

Dividends paid (5,758) (3,121) (170)

Tax on dividend paid (1,185) (642) -

Net cash (used in)/ generated financing activities (25,969) 4,05,153 (182)

Net (decrease)/ increase in cash and cash equivalents (8,367) 3,926 812

Cash and cash equivalents at the beginning of the year 13,815 2,959 2,147

Cash and cash equivalents of acquired Business - 6,930 -

Cash and cash equivalents at the end of the year 5,448 13,815 2,959

38

SUMMARY OF UNAUDITED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE

THREE MONTHS PERIOD ENDED JUNE 20, 2020 AND JUNE 30, 2019

(₹ in lakhs)

Particulars For the three months

ended June 30, 2020

For the three months

ended June 30, 2019

REVENUE:

Revenue from Operations 53,737 62,025

Other Income 182 303

Total Income 53,919 62,328

EXPENSES:

Cost of materials consumed 10,945 12,926

Purchases of stock-in-trade 4,027 3,349

Changes in inventories of finished goods, work-in-Progress and

stock-in-trade

8,858 9,020

Excise duty on sales - -

Employee benefits expense 5,266 4,842

Finance costs 3,460 3,485

Depreciation, amortisation and impairment expenses 642 1,035

Advertisement and promotion expenses 4,914 9,719

Other expenses 7,492 7,298

Total Expenses 45,604 51,674

Profit before exceptional items and tax 8,315 10,654

Exceptional items - 2,670

Profit before Tax 8,315 7,984

Less: Tax Expense:

Current Tax - -

Deferred Tax (605) (56)

Total Tax Expenses (605) (56)

Profit for the year 8,920 8,040

Other Comprehensive Income

Items that will not be reclassified to profit or loss:

Re-measurement gains on post-employment defined benefit plans

(net of tax)

25 (5)

Items that will be reclassified to profit or loss:

Exchange differences on transaction of financial statement of a

foreign subsidiary

(1) -

Other Comprehensive Income for the year (net of tax) 24 (5)

Total Comprehensive Income for the year (net of Tax) 8,944 8,035

Net profit attributable to:

Owners of the parent 8,944 8,035

Non-controlling interests - -

Other Comprehensive Income attributable to:

Owners of the parent 24 (5)

Non-controlling interests - -

Total Comprehensive Income attributable to:

Owners of the parent 8,944 8,035

Non-controlling interests - -

Basic and diluted earnings per equity share (EPS is not

annualised)(2) (in `)

15.47 13.95

39

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider the risk factors and

all the information set forth in this Preliminary Placement Document, including the risk described below before

making an investment decision. This section should also be read together with the sections titled “Our Business”,

“Industry Overview”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations

- Factors affecting our Financial Results”, and “Financial Statements” on pages 127, 90, 69 and 195 respectively,

as well as the other financial information included in this Preliminary Placement Document.

The risks and uncertainties described below are not the only risks and uncertainties we currently face. These risks

and additional risks and uncertainties not known to us or that we currently deem immaterial may also have an

adverse effect on our business, prospects, financial condition, cash flows and results of operation, the trading

price of, and the value of your investment in our Equity Shares could decline or fall significantly, and you may

lose all or part of your investment. To the extent the COVID-19 pandemic adversely affects our business and

financial results, it may also have the effect of heightening many of the other risks described in this section. In

making an investment decision, you must rely on your own examination of our Company and the terms of this

Issue, including the merits and risks involved.

Certain information in this section includes extracts from the CRISIL Report. Neither our Company, the Lead

Manager nor any other person connected with the Issue has independently verified such industry and third-party

information. For more information, please see “Industry Overview” on page 90.

This Preliminary Placement Document also contains forward-looking statements that involve risks and

uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements

as a result of certain factors including the considerations described below and elsewhere in this Preliminary

Placement Document. See, “Forward Looking Statements” on page 14.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Our business has been affected by the COVID-19 pandemic.

In December 2019, the first case of a novel strain of coronavirus, COVID-19, was identified in the People’s

Republic of China (China). The pandemic has since spread worldwide and there have been increased initial

infection and fatality rates across the world. On March 11, 2020, the World Health Organization declared the

COVID-19 outbreak a pandemic. As of the date of this Preliminary Placement Document, more than 30 million

cases have been confirmed worldwide and infection rates in certain countries, including India, the United States

and Brazil, remain exceptionally high.

Due to the outbreak of COVID-19 and related lock-down, a significant number of industries and national

economies, as well as general consumer sentiment, have been negatively affected. Moreover, global capital

markets experienced steep declines and liquidity disruptions at the beginning of the pandemic, and investor

sentiment remains volatile. These negative trends are likely to continue until levels of infection are materially

reduced around the world.

The global impact of the COVID-19 pandemic has been rapidly evolving and public health officials and

governmental authorities have reacted by taking measures, including in the regions in which we operate, such as

prohibiting people from assembling in heavily populated areas, instituting quarantines, restricting travel, issuing

lockdown orders and restricting the types of businesses that may continue to operate, among many others. In order

to contain the spread of the infection, in India, the Government of India initially announced a 21-day country-

wide lockdown starting on March 25, 2020, which was subject to successive extensions since then.

The COVID-19 pandemic has impacted our business, financial condition and results of operations. For example,

production activities at our plants across India were disrupted, and our operations at our plants and our distribution

channels were substantially shut down for a certain period, as we sought to comply with local regulations and

ensure the health of our employees. Our production volumes declined beginning in April 2020 but began to

normalize in May and June 2020 as the lock-down was eased. Furthermore, some of our suppliers were shut down

due to lock down, which affected their ability to provide us with certain raw materials and other components

needed to sell our products. These closures and restrictions have resulted in a decline in our Group’s revenue and

profitability for the three months ended June 30, 2020. Due to seasonality of our business we expect a reduction

in our in our cash and cash equivalent as at September 30, 2020 as compared to March 31, 2020.

40

While India has eased certain lockdown measures, the trajectory of the eventual outcome remains uncertain and

contingent on the future path of the viral outbreak and the effectiveness of measures to counter it. Going forward,

the COVID-19 pandemic may affect our business, results of operations and financial condition in a number of

ways, such as:

• result in a complete or partial closure of, or disruptions or restrictions on our ability to conduct, our

manufacturing operations and R&D activities, resulting from government action;

• impact our ability to travel, pursue partnerships and other business transactions and delay shipments of our

products;

• affect our ability to source key raw materials as a result of the temporary or permanent closure of the facilities

of suppliers of our key raw materials;

• affect the availability of labour, which could result in a slowdown in our operations and delay the

construction of new projects;

• affect our ability to access debt and equity capital on acceptable terms, or at all; and

• increase our vulnerability to cyber-security threats and potential breaches, including phishing attacks,

malware, and impersonation tactics, resulting from the increase in numbers of employees working from

home.

Given the uncertainties regarding the continued spread of COVID-19, it is difficult to predict the future economic

effect of the virus on the global economy, or to what extent our business will be affected. We cannot assure you

that, for example, further outbreaks will not result in our suppliers experiencing liquidity or other issues that

affects their ability to provide us with materials, our production facilities being re-closed, or materially fewer sales

due to lower consumer demand. Any material changes in the financial markets, the global economy or regional

economies as a result of the COVID-19 pandemic may materially and adversely affect our business, financial

condition or results of operations. Furthermore, as COVID-19 adversely affects our business and results of

operations, it may also have the effect of exacerbating many of the other risks described in this “Risk Factors”

section.

If we fail to keep pace with the rapid changes in the industry and market, it will result in a decline in demand

for our products and revenues.

The industry in which we operate are characterised by rapid change and frequent new product introductions.

Demand for our products depends on consumer-related factors such as demographics, local preferences, food

consumption trends, the level of consumer confidence in the products as well as on macroeconomic factors such

as purchasing power and the condition of the economy. There has been a shift towards healthier dietary options

in recent times, particularly in the metropolitan and tier-I cities in India in which we have significant operations.

Our success depends, on our ability to anticipate the tastes and dietary habits of our consumers and to offer

affordable products that appeal to their needs and preferences in a timely manner. Customer preferences in this

market are difficult to predict, and changes in those preferences or the introduction of new products by our

competitors could put our products at a competitive disadvantage. We are susceptible to reduced consumer demand

for our products as well. Any delay in our reactions to changes in market conditions may affect the competitiveness

of our products, thereby reducing our market share, which will result in a decline in our revenues.

Introducing new product variants may not always be successful.

Introducing new products in our business is key to maintaining and increasing our revenue and market share. We

may be unable to quickly introduce products for technical or operational reasons, and even if we are successful in

introducing products, we face significant risks, as well as the possibility of unexpected consequences, including:

• the acceptance of the new product initiatives by our customers may not be as high as we anticipate;

• sales of the new products to our customers may not be as high as we anticipate for a number of factors

including product pricing;

41

• our marketing strategies for the new products may be less effective than planned and may fail to effectively

reach the targeted consumer base or engender the desired consumption and the rate of purchases by our

consumers may not be as high as we anticipate;

• we may incur costs exceeding our expectations as a result of the continued development and launch of the

new products;

• we may experience a decrease in sales of certain of our existing products as a result of the introduction of

related new products; or

• any delays or other difficulties impacting our ability, or the ability of our third-party manufacturers and

suppliers, to manufacture, distribute and ship products in a timely manner in connection with launching the

new product initiatives.

Each of the risks referred to above could delay or impede our ability to achieve our growth objectives or we may

not be successful in achieving our growth objectives at all, through these means, which could have a material

adverse effect on our business, results of operations and financial condition.

The availability of look-alikes, counterfeit products, primarily in our domestic market, manufactured by other

companies and passed off as our products, could adversely affect our goodwill and results of operations.

We are exposed to the risk that entities in India and elsewhere could pass off their products as ours by imitating

our brand name, packaging material and attempting to create counterfeit products, including spurious or pirated

products. For example, certain entities could imitate our brand name, packaging material or attempt to create look-

alike products. Similarly, we may be unable to protect our trade secrets, including recipes and product

compositions, which if obtained by counterfeiters, could be used to create products that are substantially similar

to ours. This would not only reduce our market share due to replacement of demand for our products, whereby we

may not be able to recover our initial development costs or experience loss in revenues but could also harm the

reputation of our brands. The measures we take to protect our brands and other intellectual property include relying

on Indian laws and initiating legal proceedings, may not be adequate to prevent unauthorised use of them by third

parties. Furthermore, the application of laws governing intellectual property rights in India is uncertain and

evolving and could involve substantial risks to us. Detecting and protecting against the unauthorised use of our

products, technology and proprietary rights is expensive, difficult and, in some cases, impossible. The proliferation

of unauthorized copies of our products, and the time lost in defending claims and complaints about spurious

products could decrease the revenue we receive from our products and have a material adverse effect on our

reputation, business, financial condition and results of operations.

The value of our brands, and our sales, could be adversely impacted by negative publicity.

Our success depends on our ability to maintain the brand image of our existing products and effectively build up

brand image for new products and brand extensions. Product quality issues, real or imagined, or allegations of

product defects, even when false or unfounded, could tarnish the image of the affected brands and may cause

consumers to choose other products. Many factors, some of which are beyond our control, are important to

maintaining and enhancing our brands, including maintaining or improving consumer satisfaction and the

popularity of our products and increasing brand awareness through various brand building initiatives such as

advertising media, including television, cinema, and newspaper. Any negative publicity regarding us, our brands

or our products, including those arising from concerns regarding quality, or any other event affecting product or

service quality or otherwise, could adversely affect our reputation, results of operations and financial condition.

Our trademarks may not be adequately protected.

We depend on our brands and their brand equity. Many of our brands have been registered in India under the Trade

Marks Act, 1999. However, we have applied for, but not yet obtained registration of some of our brands, such as

‘Nutralite’, ‘SugarFree’ and ‘Sugarlite’, and applications for registration are pending. We may not be able to

prevent infringement of our trademarks and a passing off action may not provide sufficient protection until such

time that this registration is granted.

We are also exposed to the risk that other entities may pass off their products as ours by imitating our brand name,

packaging material and attempting to create counterfeit products. We believe that there may be other companies

or vendors which operate in the unorganised segment using our tradename or brand names. Any such activities

could harm the reputation of our brand and sales of our products, which could in turn adversely affect our financial

42

performance and the market price of the Equity Shares. The measures we take to protect our intellectual property

include relying on Indian laws and initiating legal proceedings, which may not be adequate to prevent unauthorised

use of our intellectual property by third parties. Furthermore, the application of laws governing intellectual

property rights in India is uncertain and evolving and could involve substantial risks to us. Notwithstanding the

precautions we take to protect our intellectual property rights, it is possible that third parties may copy or otherwise

infringe on our rights, which may have an adverse effect on our business, results of operations, cash flows and

financial condition.

Furthermore, we have not yet obtained overseas trademark registration for some of our brands, under which we

sell products abroad. We have international IP agents who keep watch on our priority listed countries to prevent

infringement of our trademarks and a passing off action, but we cannot guarantee they will fully protect us

sufficiently. Additionally, we may be required to litigate to protect our brands, in order to strengthen our business

operations.

While we take care to ensure that we comply with the intellectual property rights of others, we cannot determine

with certainty whether we are infringing any existing third-party intellectual property rights which may force us

to alter our offerings. Detecting and protecting against the unauthorised use of our products, technology and

proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future

to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and

scope of the proprietary rights of others. We may also be susceptible to claims from third parties asserting

infringement and other related claims. If similar claims are raised in the future, these claims could result in costly

litigation, divert management’s attention and resources, subject us to significant liabilities and require us to enter

into potentially expensive settlement proceedings royalty or licensing agreements or to cease certain offerings,

and there is no guarantee that we would be successful. Furthermore, many of our current and potential competitors

have the ability to dedicate substantially greater resources to protecting their technology or intellectual property

rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing

upon or misappropriating our intellectual property, which could result in a substantial loss of our market share.

Failure to successfully identify and conclude acquisitions or manage the integration of the businesses acquired

or the performance of such businesses being below expectations may cause profitability and operations to

suffer.

We have identified inorganic growth as one of our avenues for growth. We have in the past made and may in the

future make acquisitions and enter into strategic relationships as part of our strategy in India and overseas that we

believe fit within our business model and can address the needs of our existing and potential customers. For

example, on January 30, 2019, we completed the acquisition of 100% shareholding in Heinz, which was a

transformational strategic acquisition to supplement our business verticals, grow and further strengthen our

product portfolio, increase our sales volume and increase our market share, and which required significant

integration efforts following the acquisition, particularly to integrate operational policies, processes and

accounting systems.

We may not be able to identify or conclude appropriate or viable acquisitions in a timely manner and we may not

be able to complete such acquisitions on favourable terms, if at all. Furthermore, the acquisitions may not

necessarily contribute to our profitability and may divert management attention or require us to assume a high

level of debt or contingent liabilities. In addition, we may experience difficulty in integrating operations and

harmonizing cultures leading to a non-realization of anticipated synergies or efficiencies from such acquisitions.

These difficulties could disrupt our ongoing business, distract our management and employees and increase our

expenses.

We may make further acquisitions or investments, including in geographies in which we do not currently operate,

to expand our access to a larger client base, acquire new service offerings, or enhance our technical or research

capabilities. We may face difficulties as a result of entering into new markets where we have limited or no direct

prior experience or where competitors may have stronger market positions. We might fail to realise the expected

benefits or strategic objectives of any such acquisition that we may undertake.

In addition, any investment in additional capacity or in a joint venture, or the acquisition of new licenses,

technologies or companies by us in the future, could result in the incurrence of debt and contingent liabilities (as

well as unanticipated costs and expenses associated with any undisclosed and/ or potential liabilities) and an

increase in interest expense, or in our use of available cash on hand to finance any such investment. This could

have an adverse impact on our cash flows in the longer term and our ability to finance our overall operations.

43

As part of the continuous evaluation of the performance of all of our businesses, we may also sell businesses or

product lines. Divestitures involve risks, including difficulties in the separation of operations, services, products

and personnel, the diversion of management’s attention from other business concerns, the disruption of our

business, the potential loss of key employees and the retention of uncertain environmental or other contingent

liabilities related to the divested business. We cannot assure you that we will be successful in managing these or

any other significant risks that we encounter in divesting a business or product line.

We face significant competition.

We operate in a competitive retail environment, both in India and in our international operations, which is highly

fragmented among several market participants. There are several strategies adopted by our competitors to increase

their market shares through advertising, pricing, channel discounts, quality, service, multi-location operations,

new product introductions and distribution reach, among others.

In order to protect our existing market share or capture market share in this highly competitive retail environment,

we may be required to increase expenditure for advertising, promotions and to introduce and establish new

products. Due to inherent risks in the marketplace associated with advertising and new product introductions,

including uncertainties about trade and consumer acceptance, increased expenditure may not prove successful in

maintaining or enhancing our market share and could result in lower profitability. In addition, we may incur

increased credit and other business risks as a result of competing for customers in a highly competitive retail

environment.

Barriers to entry for the market segments in which we operate are generally low. We anticipate these low barriers

to entry, combined with forecast growth potential in the health and wellness industry, will lead to increased

competition both from established players as well as from new entrants in the industry. This could include attrition

of our staff to our competitors or our staff establishing competitive enterprises. In addition, we compete against a

number of multinational manufacturers and marketers, some of which are larger and have substantially greater

resources than us, and which may therefore have the ability to spend more aggressively on advertising and

marketing and have more flexibility to respond to changing business and economic conditions than us.

Furthermore, manufacturers that do not currently compete with us could expand their product portfolios to include

products that would compete directly with ours. Additionally, as we further expand our presence in other markets,

we face competitive pressures from low-cost producers in jurisdictions, and price pressures may increase. Also,

consolidation among existing health and wellness companies may reduce our current or potential consumer base.

In such a case, as fewer health and wellness companies share the market, pricing pressure is likely to increase.

In the event we are unable to keep pace with our current or future competition on any of the above factors, our

business and financial performance could be adversely affected.

A slowdown or shutdown in our manufacturing operations or the under-utilisation of our manufacturing

facilities could have an adverse effect on our business, results of operations and financial condition.

Our business is dependent upon our ability to manage our manufacturing facilities in (one in Gujarat, Uttar

Pradesh, Uttarakhand and two at Sikkim), which are subject to various operating risks, including those beyond

our control, such as the COVID-19 pandemic related operating disruptions, the breakdown and failure of

equipment or industrial accidents and severe weather conditions and natural disasters. Any significant malfunction

or breakdown of our machinery may entail significant repair and maintenance costs and cause delays in our

operations. If we are unable to repair the malfunctioning machinery in a timely manner or unable to repair or at

all, our operations may get suspended until we procure machinery to replace the same. Further, we may also be

exposed to public liability from the end consumer for defects in the quality of the products stored in our premises.

Disruptions in our manufacturing activities could delay production or require us to shut down our manufacturing

facilities. Any contravention of or non-compliance with the terms of various regulatory approvals applicable to

our manufacturing facilities may also require us to cease, or limit, production until such non-compliance is

remedied to the satisfaction of relevant regulatory authorities. Although we have not experienced any significant

disruptions at our manufacturing facilities in the past, we cannot assure you that there will not be any significant

disruptions in our operations in the future (on account of COVID-19 or otherwise). In addition, we may be required

to carry out planned shutdowns of our facilities for maintenance, statutory inspections and testing, or may shut

down certain facilities for capacity expansion and equipment upgrades. We may also face protests from local

citizens at our existing facilities or while setting up new facilities, which may delay or halt our operations.

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Although we employ routine safety procedures in the operations of our facilities and maintain what we consider

to be adequate insurance, there is a risk that an accident may occur in any of our facilities in the future. An accident

may result in destruction of property or equipment, environmental damage, production or delivery delays, or may

lead to suspension of our operations and/or imposition of liabilities. Any such accident may result in litigation,

the outcome of which is difficult to assess or quantify, and the cost to defend litigation can be significant. As a

result, the costs to defend any action or the potential liability resulting from any such accident or death or arising

out of any other litigation, and any negative publicity associated therewith, may have a negative effect on our

business, financial condition and results of operations.

We do not maintain long-term contracts with our third-party suppliers, and our business may be adversely

affected by a shortfall in supply, or increase in price of, raw materials.

We require certain raw materials such as milk, dextrose monohydrate, refined palm oil, arachis oil, and crystal

sugar for our manufacturing operations. Substantially all our raw materials are purchased from third parties. We

do not have any long-term supply contracts with any of our suppliers with respect to our raw material requirements

and typically place orders with them in advance of our anticipated requirements. We utilise a variety of agricultural

raw materials in our products, including dairy products, and the availability of these products is subject to many

risks, including agricultural disease, insect or animal infestation, adverse weather conditions, adverse ground

conditions and natural and other disasters. Certain agricultural raw materials are available only at specific times

during a year due to the seasonality of growing periods and harvest times in India. In addition, the available

amounts of raw materials may not adjust in response to increasing demand.

Furthermore, raw materials are subject to price volatility caused by factors, including commodity market

fluctuations, the quality and availability of supply, currency fluctuations, consumer demand and changes in

governmental agricultural programs. Raw material price increases result in corresponding increases in our raw

material costs. We also face a risk that one or more of our existing suppliers may discontinue their supplies to us,

and any inability on our part to procure raw materials from alternate suppliers in a timely fashion, or on terms

acceptable us, may adversely affect our operations.

We rely on the adequate and timely availability of key input materials. Any significant change in the cost structure

or disruption in supply may affect the pricing and supply of products. If we are not able to increase our product

prices to significantly offset increased raw material costs, or if unit volume sales are significantly reduced, it could

have a negative impact on our profitability. This may adversely affect our business and financial performance. For

example, milk is the key raw material used for manufacturing two of our branded products, Complan and Sampriti

Ghee. Any unexpected increase in cost of milk could decrease our margins for these two products, if we are unable

to increase our product prices enough to offset these increased costs. With respect to Sampriti ghee, we can reduce

margin risk by increasing the product price, because the price of ghee is dependent on the source of milk (i.e. cow

milk or buffalo milk). However, the same does not apply for Complan, as the price of Complan is heavily

dependent on market competitors and demand for the product. Accordingly, we may be adversely affected by

increase in price of the raw material and fluctuation in demand of the product.

We depend heavily on our channel partners such as distributors and retailers and failure to manage the

distribution network efficiently will adversely affect our performance.

We have developed a strong network of distributors and retailers both in India and certain overseas markets. To

sell products to our end consumers, we use modern trade channels which comprise super-markets and hyper-

markets, convenience stores and general trade channels that include smaller retail stores, pharmacies, cosmetic

stores, grocery stores. We are dependent on these channel partners for the distribution of our products and our

ability to expand and grow our product reach significantly depends on the reach and effective management of our

distribution network. We also utilise online marketplaces and e-commerce systems to increase our products market

penetration and reach. We continuously seek to increase our reach by appointing new distributors targeted at

different customer groups in various geographical segments. We cannot assure you that we will be able to

successfully identify or appoint new distributors or effectively manage our existing distribution network. If the

terms offered to such distributors by our competitors are more favourable than those offered by us, distributors

may decline to distribute our products and terminate their arrangements with us. There can be no assurance that

we will be successful in continuing to receive uninterrupted, high quality of service from these channel partners

for all our current and future products.

Furthermore, our competitors may have exclusive arrangements with distributors and therefore our distributors

may be unable to stock and distribute our products, which may limit our ability to expand our distribution network.

45

While we offer our distributors certain incentive schemes to distribute our products, we may not be able to

effectively implement them across our distribution network. We may also face disruptions in the delivery of our

products for various reasons beyond our control, including poor handling by distributors of our products,

transportation bottlenecks, natural disasters and labour issues, which could lead to delayed or lost deliveries. If

our distributors fail to distribute our products in a timely manner, or adhere to the terms of the distribution

agreement, or if our distribution agreements are terminated, our business and results of operations may be

adversely affected.

We rely on third-party manufacturers to produce certain of our products.

We enter into contracts with third party manufacturers to produce some of our products, such as NYCIL. As a

result, we are subject to the risk that these third parties will not perform their obligations or manufacture products

not adhering to quality standards. If this occurs, or if third-party contract manufacturers deliver products (or

components of products) that have a manufacturing defect or do not comply with our specified quality standards

and technical specifications, we may have to enter into new contracts with other third-parties at a higher cost or

suffer schedule disruptions and reduced brand recall value. In addition, most of our co-manufacturing agreements

include provisions allowing our counterparty to terminate the agreement without cause with three to six months’

notice. If our third-party manufacturers terminate their agreements with us, or are not able to perform their

obligations due to bankruptcy, winding up or any injunction, we may incur additional costs in finding a

replacement service provider or experience significant delays in delivering products to distributors and ultimately

customers, which could have a material adverse impact on our business and financial performance.

As a manufacturing business, our success depends on the continuous supply and transportation of our products

from our manufacturing units to our distributors and customers.

Food and skincare products have a limited shelf life and the improper storage or delay in transportation may result

in spoilage. We depend on third-party air or sea borne freight, rail and trucking to deliver our products from our

manufacturing facilities to our distributors and customers. We are exposed to fluctuations in transportation costs.

Also, if the terms offered to such logistic providers by our competitors are more favourable than those offered by

us, we may have to increase their prices which can adversely impact our profitability. Disruptions of transportation

services because of weather-related problems, strikes, inadequacies in the road infrastructure and port facilities,

or other events, such as the interruptions caused by COVID-19, could impair our procurement of raw materials

and our ability to supply our products to our customers. Any such disruptions could materially and adversely affect

our business, financial condition and results of operations.

Our inability to manage growth could disrupt our business and reduce our profitability.

A principal component of our strategy is to continue to grow by expanding the size and geographical scope of our

existing businesses, as well as the development of new businesses. This growth strategy will place significant

demands on our management, financial and other resources. It will require us to continuously develop and improve

our operational, financial and internal controls. Continuous expansion increases the challenges involved in

financial management, recruitment, training and retaining high quality human resources, preserving our culture,

values and entrepreneurial environment, and developing and improving our internal administrative infrastructure.

Any inability on our part to manage such growth could disrupt our business prospects, impact our financial

condition and adversely affect our results of operations.

We may be unable to grow our business in semi-urban and rural markets, which may adversely affect our

business prospects and results of operations.

While we currently have a pan-India distribution network to cater to our customers, we seek to grow our product

reach to new geographies. We intend to increase the availability of our products in smaller towns in India, since

we believe that these markets offer a significant growth opportunity for us. We intend to employ differentiated

marketing initiatives such as micro marketing, wherein disproportionate investments are proposed to be made in

selected geographical segments, with a stress on capturing a higher market share. To this end, we propose to

increase our brand’s media presence and marketing activities in these identified geographical segments and

provide a corresponding thrust to sales by making greater investments in focussed areas, so as to gain a higher

market share. However, we cannot assure you that we will be able to grow our business in these markets. Poor

infrastructure and logistical challenges in these regions may restrict us from expanding our presence in these

regions or increasing the penetration of our products. Furthermore, retail consumers in these regions are typically

price conscious and we may be unable to compete effectively with the products of our competitors. Also, general

46

disposable income levels may not continue to rise as anticipated by us, which may lead to a decline in the sales of

our products. If we are unable to grow our business in semi-urban and rural markets effectively, our business

prospects, results of operations and financial condition may be adversely affected.

Certain of our products have geographic customer concentration, and a loss of customers in these regions

would negatively affect our business prospects, results of operations and financial condition.

Certain of our products, in particular Glucon-D, NYCIL and Complan, have customers that are predominantly

concentrated in certain parts of India, namely, in Eastern, Southern and Northern states. Because of this client

concentration, there is a risk that if demand falls in these regions, or if we are for any reason unable to sell our

products there, we may experience a particularly significant decline in revenue, and there can be no assurance that

we will be able to replace these sales, which would negatively affect our business prospects, results of operations

and financial condition.

The loss of certain independent certification and accreditation of our products and the manufacturing practices

that we have adopted could harm our business.

Our manufacturing plant at Sikkim is accredited with the International Organization for Standardization (ISO)

22000 which provides a layer of reassurance within the global food supply chain, helping our products cross

borders and bringing consumers products that they can trust. All our other plants are certified with the Foundation

Food Safety System Certification (FSSC) 22000. The FSSC 22000 is a GFSI (Global Food Safety Initiative)

recognized food safety certification that allows our customers to have confidence in our food safety measures and

benefit from our processes deployed to control and minimize food safety hazards. We rely on independent

certification of our products and must comply with the requirements of these independent organizations or

certification authorities. We could lose the certifications and accreditations for certain of our products, if we are

not able to adhere to the quality standards and specifications required under such certifications and accreditations.

The loss of any independent certification and manufacturing practices, may lead to loss of significant customers

for our products which could have a material adverse effect on our reputation, business, financial condition and

results of operations.

We may not be able to correctly assess the demand for our products, which may adversely affect our business,

financial condition and results of operations.

Our production and distribution processes require us to anticipate the demand for our products based on the

feedback received from our own marketing personnel, distributors and partners. Accurate assessment of market

demand requires significant investment in our sales and marketing network and training of marketing personnel.

There is no guarantee that our estimate of market demand in India or foreign countries in which we sell our

products will be accurate. In the event that we overestimate the demand for our products, we may have expended

resources in manufacturing excess products and paid taxes, insurance costs, distribution expenses, storage and

warehousing and other related expenditures. Our products have a limited expiry period and in the event of excess

production, we might have to bear the cost of expiry and destruction of these goods. In the event that we

underestimate the market demand or fail to order a sufficient volume of supplies and input materials from our

third-party suppliers, we may be unable to meet customer demand and lose out on sales opportunities that our

competitors may capitalise on. Similarly, if we fail to manage investment levels appropriately, we may be unable

to meet demand, which could lead to a loss of interest and sales in our products. Failure to meet customer demand

may also occur because existing manufacturing facilities and other equipment do not have sufficient capacity, or

we have an inaccurate level of inventory holding. Accordingly, any incorrect assessment of the demand for our

products may adversely affect our business, financial condition and results of operations.

We are subject to risks associated with our international operations, which could negatively affect our sales to

customers in foreign countries as well as our operations and assets in such countries.

We derived a portion of our revenue from customers located outside India, and we anticipate that these sales will

represent an increasing proportion of our revenue over time. In addition, we have assets located outside India and

use non-Indian third-party suppliers. As a result, we are subject to numerous risks and uncertainties relating to

international sales and operations, including but not limited to:

• difficulties and costs associated with complying with, and enforcing remedies under, a variety of laws,

treaties and regulations;

47

• different regulatory structures and unexpected changes in regulatory environments; political and economic

instability, including the possibility of civil unrest;

• tax rates that may exceed those in India and earnings that may be subject to withholding requirements,

incremental taxes upon repatriation and potentially negative consequences from changes in tax laws;

• the imposition of tariffs, quotas, trade barriers, other trade protection measures and import or export licensing

requirements;

• increased costs, disruptions in shipping or reduced availability of freight transportation; and

• the impact of currency exchange rate fluctuations between the Rupee and foreign currencies.

• The occurrence of any of these events in the markets where we operate or in other developing markets could

jeopardize or limit our ability to transact business in those markets and could adversely affect our revenues

and operating results.

Our success depends on experience and skill of our management team and an inability to retain and attract

qualified personnel, it may adversely affect our business.

Our success is substantially dependent on the expertise and services of our management team. The loss of the

services of key management personnel may have an adverse effect on our business, financial condition and results

of operations. Furthermore, an increase in the rate of attrition of experienced employees, would adversely affect

our growth strategy. We operate in a highly dynamic industry and there can be no assurance that we will be

successful in recruiting and retaining a sufficient number of personnel with requisite skills to replace those

personnel who leave. Furthermore, our inability to attract and retain fresh talent could also hamper our ability to

grow.

Increases in the price or inadequate supply of energy or water may adversely affect our manufacturing

operations, results of operations and cash flows.

Energy accounts for a significant portion of the cost for a number of activities connected with our business, such

as operation of our production facilities. Energy prices, particularly for petroleum-based sources, are volatile and

an increase in energy prices could lead to an increase in transportation costs for us and our suppliers and customers

as well as increasing the cost of operating our production facilities. Any such increase in costs could decrease our

margins if we are unable to increase our product prices enough to offset these increased costs. Such energy cost

increases, and margin erosion could have an adverse effect on our results of operations and cash flows.

Additionally, we source almost all the electricity requirements for our manufacturing facilities from local utilities.

Similarly, we rely on local utilities for access to water to meet our operational needs.

If supply of water or electricity is not available for any reason, we will need to rely on alternative sources, which

may not be able to consistently meet our requirements. The cost of electricity purchased from alternative sources

could be significantly higher, thereby adversely affecting our cost of production and profitability. Furthermore, if

for any reason sufficient electricity or water is not available, we may need to shut down our plants until an adequate

supply is restored, which could have a material adverse effect on our business, financial condition or results of

operations.

Goodwill and acquisition related other intangibles that we carry on our balance sheet could give rise to

significant impairment charges in the future.

The amount of goodwill and other intangible assets in our consolidated financial statements could increase

significantly, particularly due to acquisitions. Goodwill and acquisition related other intangibles are subject to

impairment review at least annually. Impairment testing under Ind AS may lead to impairment charges in the

future. Any significant impairment charges could have a material adverse effect on our results of operations.

We may face labor disruptions that would interfere with business our operations and which could have a

material adverse effect on our business, financial condition or results of operations.

We operate in a labour intensive industry and hire contract labour in relation to our business operations. If our

relationships with our employees or workmen deteriorate, or the relationships of the independent contractors and

their personnel, we may be exposed to the risk of strikes, work stoppages and other industrial actions. As of June

30, 2020, we employed more than 1,150 full-time employees in India and abroad. We have entered and may

48

continue to enter into agreements with unions or works councils under which we incur certain obligations or agree

to certain limitations or conditions for a period of time with respect to certain personnel, workplaces, departments

or product lines. If a greater percentage of our work force becomes unionized, our labor costs could increase.

In addition, we could face strikes or other industrial action, and such negative developments in labor relations

could have a material adverse effect on our business. We regularly negotiate wages and salaries on terms that have

historically allowed us to offer services at competitive prices. Any appreciable increase in the negotiated wages

of our workforce could result in an increase in our labor costs, and such cost increase could adversely affect our

financial performance.

Labor unrest or work stoppages could affect operations regardless of whether the workforce is unionized or subject

to a collective bargaining arrangement. If a strike or other action by labor were to cause a work stoppage or other

slowdown at one or more of our production facilities, we could experience a significant disruption of our

operations and could have to pay penalties for late delivery of our products. Labor unrest or strikes associated

with our operations could also damage our reputation with customers or in the market generally. In addition, any

such developments at the facilities of any of our principal customers or suppliers could adversely affect our

business. Any of these developments, alone or in combination, could have a material adverse effect on our

business, financial condition or results of operations.

Furthermore, we also depend on third-party contractors for the provision of various services associated with our

business. Such third-party contractors and their employees/workmen may also be subject to similar labour

legislations. Although we do not engage these labourers directly, we may be held responsible for any wage

payments to be made to such labourers in the event of default by such third-party contractors to pay the labourers’

wage payments. Any requirement to fund their wage requirements may have an adverse impact on our results of

operations and financial condition. In the event of any non-compliance by contractors with statutory requirements,

legal proceedings may also be initiated against us. These factors could adversely affect our business, financial

position, results of operations and cash flows.

If we fail to maintain an effective system of internal controls, we may not be able to successfully manage, or

accurately report, our financial risks.

Effective internal controls are necessary for us to prepare reliable financial reports and effectively avoid fraud.

Moreover, any internal controls that we may implement, or our level of compliance with such controls, may

deteriorate over time, due to evolving business conditions. We cannot assure you that deficiencies in our internal

controls will not arise in the future, or that we will be able to implement, and continue to maintain, adequate

measures to rectify or mitigate any such deficiencies in our internal controls. Any inability on our part to

adequately detect, rectify or mitigate any such deficiencies in our internal controls may adversely affect our ability

to accurately report, or successfully manage, our financial risks, and to avoid fraud, which may in turn adversely

affect our business, financial condition or results of operations.

Our investments in research and development activities may not yield expected results and such expenditure

could adversely affect our operating results.

We continue to make significant investments in research and development activities. These efforts may not yield

profitable results or may not be successful at all. These expenditures could adversely affect our operating results

if not offset by revenue increases. We believe that we must continue to dedicate a significant amount of resources

to our research and development efforts to maintain our competitive position. Since revenues from such initiatives

typically occur in periods subsequent to the periods in which the costs are incurred for the development, delayed

revenues may cause periodic fluctuations in our operating results.

An inability to raise adequate additional capital on acceptable terms may impact our growth plans.

We may require additional capital for implementation of our strategies, including acquisitions. The

implementation of these strategies may have to be financed through incremental capital either in the form of debt

or equity where internal accruals and existing lines of credit do not suffice. Market conditions may not be

conducive for us to raise such incremental capital on terms acceptable to us. This could impact our growth plans

and our financial performance.

49

If we are unable to collect our dues or receivables, our results of operations and cash flows could be adversely

affected.

Our business depends on our ability to successfully obtain payments from our customers of the amounts they owe

us for goods sold. We evaluate the financial condition of our customers. We maintain provisions against

receivables. Actual losses on customer balances could differ from those that we currently anticipate and as a result

we might need to adjust our provisions. There is no guarantee that we will accurately assess the creditworthiness

of our customer and our customers will make payment on time or at all.

We rely extensively on our operational support systems, including on our information technology systems in

managing our supply chain, production process, logistics and other integral parts of our business, failure of

which could adversely affect our business, financial conditions and results of operations.

The importance of information technology systems to our business is paramount. We are reliant on our information

technology systems in connection with order booking, procurement of raw materials, accounting, production and

distribution.

Furthermore, these systems are potentially vulnerable to damage or interruption from a variety of sources, which

could result in a material adverse effect on our operations. Disruption or failure of our IT systems could have a

material adverse effect on our operations. A large-scale IT malfunction could disrupt our business or lead to

disclosure of sensitive company information. Our ability to keep our business operating depends on the proper

and efficient operation and functioning of various IT systems, which are susceptible to malfunctions and

interruptions (including those due to equipment damage, power outages, computer viruses and a range of other

hardware, software and network problems). A significant or large-scale malfunction or interruption of one or more

of our IT systems could adversely affect our ability to keep our operations running efficiently and affect product

availability, particularly in the country, region or functional area in which the malfunction occurs, and wider or

sustained disruption to our business cannot be excluded. In addition, it is possible that a malfunction of our data

system security measures could enable unauthorized persons to access sensitive business data, including

information relating to our intellectual property or business strategy. Such malfunction or disruptions could cause

economic losses.

Any failure in our information technology systems could result in business interruption, adversely impacting our

reputation and weakening of our competitive position and could have a material adverse effect on our financial

condition and results of operations.

Our ability to adopt new technology to respond to new and enhanced products poses a challenge in our

business. The cost of implementing new technologies for our operations could be significant and could

adversely affect our business, results of operations, cash flows and financial condition.

The industry in which we operate is subject to significant changes and rapid technological advancement, with the

constant introduction of new and enhanced products. Our success will depend in part on our ability to respond to

technological advances and emerging standards and practices on a cost effective and timely basis. We cannot

assure you that we will be able to successfully make timely and cost-effective enhancements and additions to our

infrastructure, keep up with technological improvements in order to meet our customers’ needs or that the

technology developed by others will not render our products less competitive or attractive. Our failure to

successfully adopt such technologies in a cost effective and a timely manner could increase our costs and lead to

us being less competitive in terms of our prices or quality of products we sell. Further, implementation of new or

upgraded technology may not be cost effective, which may adversely affect our business, results of operations,

cash flows and financial condition.

Our business is subject to cyclical volatility.

We have historically experienced seasonality in terms of certain of our sales. For example, the delay or shift in

seasons may impact business of some of our brands like Glucon-D and NYCIL, which are largely dependent on

onset of a warm summer season in India (and similarly can be disrupted by mild summer or early monsoon). As

a result, we can experience fluctuations in our product inventory levels and revenue throughout the year. In

addition, seasonality may be difficult to observe in our financial results during periods in which we acquire

businesses. We expect this seasonality to continue, which may cause fluctuations in our operating results and

financial metrics. If our quarterly operating results or outlook fall below the expectations of research analysts or

investors, the price of the Equity Shares could decline substantially.

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Product liability and other civil claims and costs incurred as a result of product recalls could have a material

adverse effect on our business.

Due to the nature of our business, we face an inherent business risk of exposure to product liability or recall claims

in the event that our products fail to perform as expected or any such failure results, or is alleged to result, in

bodily injury or property damage or both. Any actual or alleged contamination or deterioration of our products,

whether deliberate or accidental, could result in legal liability, damage to our reputation and may adversely affect

our business prospects and consequently our financial performance. The risk of contamination or deterioration

exists at each stage of the production cycle, including during the production, storage and delivery of raw materials,

packaging, storage and delivery to our customers and the storage and shelving of our products by our stockists,

distributors and retailers until final consumption by consumers. While we follow stringent quality control

processes and quality standards at each stage of the production cycle, there can be no assurance that our products

will not be contaminated or suffer deterioration. Furthermore, given the nature of our business, we are subject to

various consumer litigations which are pending before various forums. While these matters are not in the ordinary

course of business, we may have to spend significant costs or resources to defend any such claims.

Furthermore, from time to time we make certain claims relating to the potential health benefits of some of our

products in our promotional materials, and these claims could be subject to challenge by consumers. Although we

maintain product liability insurance, we cannot guarantee that our product liability insurance coverage will be

adequate under certain circumstances or continue to be available at acceptable terms, including, among other

things, the premium payable. As a result of product liability legislation, civil claims may be brought against us.

Even when correlation or causation between our product and a claim or injury is not conclusive, we may decide

to, or regulatory authorities may require that we, withdraw the product from the market and/or we may incur

significant costs, including the possibility of paying substantial damages. Should any new developments arise,

such as a change in Indian law or rulings against us by appellate courts or tribunals, we may need to make

provisions in our financial statements, which could increase our expenses and our current liabilities. We cannot

assure you that we will not experience any material product liability losses in the future or that we will not incur

significant costs to defend any such claims, which could have a material adverse effect on our business, financial

condition or results of operations.

There are outstanding legal proceedings involving our Company, Subsidiaries, Directors and Promoters. We

face the risk of potential liabilities from these lawsuits or claims by consumers and other legal proceedings

including regulatory proceedings.

We are involved in various legal proceedings from time to time, which involve matters pertaining to, amongst

others, trademark infringement proceedings, criminal proceedings, civil proceedings, regulatory proceedings

under Legal Metrology Act, 2009 (“LM Act”) and FSS Act and tax disputes, which are pending before various

adjudicating fora. Further, there are various proceedings involving our Directors, and our Promoter.

We may be required to devote management and financial resources in the defence or prosecution of such legal

proceedings. If a number of these disputes are determined against us and if we are required to pay all or a portion

of the disputed amounts, there could be a material and adverse impact on our reputation, business, cash flows,

financial condition and results of operations.

On an on-going basis, we attempt to assess the likelihood of any adverse judgments or outcomes to these

proceedings or claims, although it is difficult to predict final outcomes with any degree of certainty. We can give

no assurance that these legal proceedings will be decided in our favour. Furthermore, we may not be able to

quantify all the claims in which we are involved. For instance, in the past, we were involved in a dispute relating

to a television advertisement issued for one of our products, Complan, for which the complainant obtained an

injunction against the advertisement on the grounds that it disparaged one of its products. There can be no

assurance that we will not suffer reputational or financial damage as a result of similar disputes in the future.

Additionally, our subsidiary ZWPL is involved in various direct tax cases under the transfer pricing norms in

relation to advertising, marketing and sales promotion for, inter alia, the brands owned by the overseas

subsidiaries of Heinz and ZWPL. Further, given the nature of our business, our Company, ZWPL and our

Directors are involved in various proceedings under the FSS Act and the erstwhile Prevention of Food

Adulteration Act, 1955 which are criminal proceedings in nature. Additionally, we are involved in various IPR

related litigations.

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There can be no assurance that the provisions we have made for litigation will be sufficient or that further litigation

will not be brought against us in the future. Failure to successfully defend these or other claims or if our current

provisions prove to be inadequate, our business and results of operations could be adversely affected. For more

information regarding litigation, please refer to the section titled “Legal Proceedings” beginning on page 184 of

this Preliminary Placement Document.

We are required to obtain licenses and approvals under several legislations including the Food Safety and

Standards Act, 2006 and the relevant rules and regulations, the Factories Act, 1948, the shops and

establishments acts of various states etc. Our inability to obtain or renew such permits, approvals and licenses

in the ordinary course of our business may adversely affect our business, financial condition and results of

operations.

We are required to obtain and renew various licenses and approvals under several legislations from time to time

including the Food Safety and Standards Act, 2006 (the “FSS Act”), the Factories Act, 1948, Contract Labour

(Regulation and Abolition) Act, 1970 and the Shops and Establishment Acts of various states and other central

and state laws applicable to our business. These approvals, licences, registrations and permits are subject to several

conditions and are primarily valid for only a specific period and are required to be renewed from time to time.

However, in some cases, these licenses could have been granted for shorter period as well. These licenses also

contain certain terms and conditions which are required to be complied with throughout the period of the license.

A majority of these approvals are granted for a limited duration and require renewal. Further, while we have

applied for relevant approvals, we cannot assure you that such approvals will be issued or granted or renewed in

a timely manner, or at all. If we do not receive any or all such approvals or are not able to renew any or all of the

approvals in a timely manner, our business and operations may be adversely affected.

Further, there can be no assurance that the relevant authorities will issue such approvals in the timeframe

anticipated by us or at all. For instance, with respect to our facility in Sikkim, we have made certain renewal

applications to the State Pollution Control Board, Sikkim to obtain consent to operate our facilities as well as to

handle hazardous wastes, which is pending grant of renewal on account of COVID-19.

We are required, and will continue to be required, to obtain and hold relevant licenses, approvals, consents and

permits at the local, state and central government levels for undertaking our business. There can be no assurance

that the Government may not implement new regulations which will require us to obtain approvals and licenses

from the Government and other regulatory bodies or impose onerous requirements and conditions on our

operations.

Further, the relevant authorities may also initiate penal actions against us, restrain our operations, impose

fines/penalties or initiate legal proceedings for inability to obtain or renew approvals in a timely manner or at all.

Any such failure or delay in obtaining or renewing such consents, approvals, permits and licences may affect our

ability to continue our operations, which may in turn have an adverse effect on our business, financial condition

and results of operations and our growth strategy may be adversely impacted.

Compliance with, and changes in, safety, health and environmental laws and regulations may adversely affect

our results of operations and financial condition.

As a company engaged in the manufacture of consumable and healthcare products, we are subject to a broad range

of safety, health and environmental laws and regulations in the jurisdictions in which we operate. For instance,

our products along with our production facilities located in India and the disposal and storage of raw materials,

chemicals and waste water from such production facilities are subject to Indian laws and regulations on safety,

health and environmental protection. These laws and regulations also impose controls on our noise emissions, air

and water discharges, on the storage, handling, discharge and disposal of chemicals, employee exposure to

hazardous substances and other aspects of our operations and products. In addition, we may be required to incur

costs to remedy the damage caused by such discharges, pay fines or other penalties or close down the production

facilities for non-compliance, which could have a material adverse effect on our financial condition and results of

operations.

We cannot assure you that we will not be involved in future litigation or other proceedings or be held liable in any

litigation or proceedings including in relation to safety, health and environmental matters, the costs of which may

be significant. Any accidents at our facilities may result in personal injury or loss of life, substantial damage to or

52

destruction of property and equipment resulting in the suspension of operations. The loss or shutdown of our

operations over an extended period of time could have an adverse effect on our business and operations.

A downgrade in our credit rating could adversely impact interest costs or access to future borrowings.

Our borrowing costs can be affected by short and long-term credit ratings assigned by rating organizations. Credit

ratings reflect the opinions of ratings agencies on our financial strength, operating performance, strategic position

and ability to meet our obligations. Certain factors that influence our credit ratings may be outside of our control.

A decrease in these credit ratings could limit our access to capital markets and increase our borrowing costs, which

could materially and adversely affect our financial condition and operating results. However, these ratings are not

recommendations to buy, sell or hold securities and prospective investors should take their own decisions.

A certain portion of our business operations are being conducted on leased or licensed premises. Our inability

to seek renewal or extension of such leases and/or leave & licenses may adversely affect our business operations

A certain portion of our business operations (including manufacturing operations) are being conducted on

premises leased from third parties or availed on a lease and license basis from third parties and our promoter i.e.

Cadila Healthcare Limited. There can be no assurance that there will be no non-compliance leading to termination

of such leases in the future. Any change in the terms and conditions of the lease agreements and any premature

termination of such lease agreements may have an adverse impact on our business operations. Any adverse impact

on the title and ownership rights of the owners from whose premises we operate, breach of the contractual terms

of any lease deeds, or any inability to renew such agreements on acceptable terms may also affect our business

operations. There can be no assurance that we will be able to renew these leasing arrangements at commercially

favourable terms, or at all. If we are unable to renew all or any of our leasing arrangements, it may cause

disruptions in our business and we may incur substantial costs associated with shifting to new premises, all of

which may adversely affect our business operations.

Industry information included in this Preliminary Placement Document has been derived from industry

reports. We cannot guarantee the accuracy or completeness of facts and other statistics with respect to India,

the Indian economy and cosmeceutical industry contained in this Preliminary Placement Document.

While facts and other statistics in this Preliminary Placement Document relating to India, the Indian economy and

the cosmeceutical industry has been based on publications and reports from CRISIL and Nielsen, agencies that

we believe are reliable, we cannot guarantee the quality or accuracy of such materials. While we have taken

reasonable care in the reproduction of such information, industry facts and other statistics have not been prepared

or independently verified by us or any of our respective affiliates or advisors and, therefore we make no

representation as to their accuracy or completeness. These facts and other statistics include the facts and statistics

included in the chapter titled ‘Industry Overview’ beginning on page 90 of this Preliminary Placement Document.

Due to possibly flawed or ineffective data collection methods or discrepancies between published information and

market practice and other problems, the statistics herein may be inaccurate or may not be comparable to statistics

produced elsewhere and should not be unduly relied upon. Further, there is no assurance that they are stated or

compiled on the same basis or with the same degree or accuracy, as the case may be, elsewhere. Statements from

third parties that involve estimates are subject to change, and actual amounts may differ materially from those

included in this Preliminary Placement Document.

Changes in financial reporting standards, management’s use of accounting estimates may affect our operating

results and financial position.

To comply with Ind AS, our management is required to make various estimates, judgments and assumptions. The

facts and circumstances on which management bases these estimates, judgments, assumptions, and management’s

judgment of the facts and circumstances, may change from time to time and this may result in significant changes

in the estimates, with an impact on our assets or income. Current and future accounting pronouncements and other

financial reporting standards may adversely affect the financial information presented. We regularly monitor our

compliance with all of the financial reporting standards that are applicable to us and any new pronouncements

that are relevant to us. Findings of our monitoring activity or new financial reporting standards may require us to

change our internal accounting policies and to alter our operational policy so that it reflects new or amended

financial reporting standards. We cannot exclude the possibility that this may have a material impact on our assets,

income, or cash flows.

53

We have entered into, and may continue to enter into, related party transactions, and there can be no assurance

that we could not have achieved more favourable terms if such transactions had been entered into with third

parties.

We have in the course of our business entered into transactions with related parties that include our Promoters and

companies forming part of our promoter group. While we believe that all such transactions have been conducted

on an arms-length basis, there can be no assurance that we could not have achieved more favorable terms had

such transactions not been entered into with related parties. Furthermore, it is likely that we will enter into related

party transactions in the future. The transactions we have entered into and any future transactions with our related

parties have involved or could potentially involve conflicts of interest. For more information regarding our related

party transactions, see “Related Party Transactions” statements included in this Preliminary Placement Document.

Furthermore, our business is expected to involve transactions with such related parties, in the future.

Our failure to protect confidential information like our product formulations, pricing or launch information

could adversely affect our competitive position.

We intend to keep the recipes and formulations of our products confidential. We also keep information in relation

to our proposed pricing of any new product, any proposed variation in price or launch of any new product

confidential. Any failure to protect such confidential information due to leakage of information may harm our

competitive position in the healthier alternative food products market. The terms of appointment of our employees

who are aware about our recipes and formulations to manufacture our products, require that all information made

known to them be kept strictly confidential and not used for any other purpose. Although we attempt to protect

our recipes, formulations and trade secrets, the terms of appointment of our employees may not effectively prevent

disclosure of our proprietary information and may not provide an adequate remedy in the event of unauthorised

disclosure of such information to our competitors. Consequently, such events may adversely affect our business,

results of operations and financial condition.

Restrictive covenants in loan documents may affect our business operations.

There are restrictive covenants in agreements we have entered into in respect to issuance of NCDs and with various

banks and financial institutions for borrowings and for other business requirements. These restrictive covenants

require us to obtain either prior permission of such banks or financial institutions or NCD holders or trustees or

require us to inform them of various activities, including, among others, alteration of our capital structure, raising

of fresh capital, undertaking new projects or undertaking any merger, amalgamation, restructuring or change in

management, these restrictive covenants may also affect some of the rights of our shareholders, including payment

of dividends in the event of default. Additionally, these covenants could affect our flexibility and delay certain

corporate finance activities.

Our insurance coverage may not adequately protect us against possible risk of loss which may adversely impact

our business, financial condition and results of operations.

We could be held liable for accidents that occur at our manufacturing facilities or otherwise arise out of our

operations. In the event of personal injuries, fires or other accidents suffered by our employees or other people,

we could face claims alleging that we were negligent, provided inadequate supervision or be otherwise liable for

the injuries. Our principal types of insurance coverage includes insurance policies covering property damage to

our manufacturing facilities, our R&D center and other property material to our business, subject to customary

limits, from damage due to natural disasters or similar events, money insurance, fire insurance, fidelity insurance,

burglary insurance, portable insurance policy, marine sales turnover policy insurance, motor policy, etc.

Furthermore, we also hold group personal accidental insurance and group mediclaim insurance policies which

cover employees working for our Company. While we believe that the insurance coverage which we maintain

would be reasonably adequate to cover the normal risks associated with the operation of our business, we cannot

assure you that any claim under the insurance policies maintained by us will be honoured fully, in part or on time,

or that we have taken out sufficient insurance to cover all our losses.

Our insurance policies do not cover all risks that are applicable to our business and are also subject to exclusions

and deductibles. If any or all of our production facilities are damaged in whole or in part and our operations are

interrupted for a sustained period, there can be no assurance that our insurance policies will be adequate to cover

the losses that may be incurred as a result of such interruption or the costs of repairing or replacing the damaged

facilities. If we suffer a large uninsured loss or any insured loss suffered by us significantly exceeds our insurance

54

coverage, our business, financial condition and results of operations may be materially and adversely affected.

For more information regarding our insurance, see “Our Business - Insurance” statements included in this

Preliminary Placement Document.

EXTERNAL RISKS

We are affected by economic trends and adverse developments in the global economy and in countries where

we operate.

Our business is affected by general economic conditions, and we are susceptible to downturns in economies

around the world, particularly if this economic impact spreads to India. General economic conditions and

macroeconomic trends can affect overall demand for our products and the markets in which we operate. During

periods of slow economic activity, consumers may forego or delay purchases of our products, and if the economic

environment in any of the markets from which we derive substantial revenue declines, unfavorable economic

conditions may impact a significant number of our customers and, consequently, the demand for our product lines.

Future economic downturns (including but not limited to global or regional recessions as a result of factors

mentioned above or other conflicts, credit crises, natural disasters or general or industry-specific declines in output

or growth) could have the effect of significantly reducing demand for our products and could negatively affect

our customers, our suppliers and the financial institutions with which we have accounts or other business

relationships. Any of these developments, alone or in combination, could have a material adverse effect on our

business, financial condition or results of operations.

Regulatory changes may adversely affect our performance or financial condition.

Regulatory changes relating to business segments in which we operate in India and overseas, including tax

incentives that are available to us can have a bearing on our business. In particular, the taxation system within the

country still remains complex. Each state in India has different local taxes and levies. Furthermore, changes in

these local taxes and levies may impact our profits and profitability.

In particular, because some of our products are ingested or health-related, we are subject to the risk that they may

become regulated by foods, drug or similar laws, either in India or elsewhere. Food and drug regulations can be

stringent and the related clearance procedures can be costly and time-consuming, and there can be no guarantee

that if subjected to these regulations, we could obtain the necessary approval to sell our products. Furthermore,

our products could be subjected to price controls, which could set ceilings on the amount we can charge for our

products, thereby limiting our profitability on these products.

Changes in laws and regulations, more stringent enforcement or alternative interpretation of existing laws and

regulations in jurisdictions in which we currently operate can change the legal and regulatory environment,

making compliance with all applicable laws and regulations more challenging. In addition, regulatory authorities

exercise considerable discretion in matters of enforcement and interpretation of applicable laws, regulations and

standards. The growth in size or scope of our business, expansion of our footprint in existing regions in which we

operate and entry into new geographies also will expose us to regulatory regimes with which we have no prior

direct experience and expansion into new product areas could lead to our becoming subject to additional or

different laws and regulations.

Any negative changes in the regulatory conditions in India or our other geographic markets could adversely affect

our business operations or financial conditions.

Political instability or a change in economic liberalization and deregulation policies could seriously harm

business and economic conditions in India generally and our business in particular.

The Government of India has traditionally exercised and continues to exercise influence over many aspects of the

economy. Our business and the market price and liquidity of our Equity Shares may be affected by interest rates,

changes in Government policy, taxation, social and civil unrest and other political, economic or other

developments in or affecting India. The rate of economic liberalization could change, and specific laws and

policies affecting the information technology sector, foreign investment and other matters affecting investment in

our securities could change as well. Any significant change in such liberalization and deregulation policies could

adversely affect business and economic conditions in India, generally, and our business, prospects, financial

condition and results of operations. Any political instability or military conflict in India, including increased

55

tensions on the Indian borders, or in countries in the region or globally, including in India’s neighbouring

countries, may adversely affect the Indian securities markets in general, which could also adversely affect the

trading price of the Equity Shares. Any political instability could delay the reform of the Indian economy and

could have an adverse effect on the market for the Equity Shares.

Changing regulations in India, including in relation to finance and taxation laws, could lead to new

compliance requirements that are uncertain.

The regulatory environment in which we operate is evolving and is subject to change. The Government of India

may implement new laws or other regulations that could affect our businesses, which could lead to new

compliance requirements. New compliance requirements could increase our costs or otherwise adversely affect

our business, financial condition and results of operations. Further, the manner in which new requirements will be

enforced or interpreted can lead to uncertainty in our operations and could adversely affect our operations.

For example, as of July 1, 2017, a national goods and service tax (“GST”) in India replaced taxes levied by central

and state governments with a unified tax regime in respect of the supply of goods and services for all of India.

However, given the recent introduction of GST in India, the practice regarding the implementation of, and

compliance with, GST is still evolving. Our business and financial performance could be adversely affected by

any unexpected or onerous requirements or regulations resulting from the introduction of GST or any changes in

laws or interpretation of existing laws, or the promulgation of new laws, rules and regulations relating to GST, as

it is implemented. Any changes to the GST rate or rules and regulations surrounding GST and the related

uncertainties with respect to the implementation of GST may have a material adverse effect on our business,

financial condition and results of operations.

Further, as GST is implemented, there can be no assurance that we will not be required to comply with additional

procedures or obtain additional approvals and licenses from the government and other regulatory bodies or that

they will not impose onerous requirements and conditions on our operations. Any such failure to achieve

compliance may result in increased cost and may adversely affect our business and results of operations.

The Finance Act, 2020 has, amongst others things, provided a number of amendments to the direct and indirect

tax regime, including, without limitation, a simplified alternate direct tax regime and that dividend distribution

tax will not be payable in respect of dividends declared, distributed or paid by a domestic company after March

31, 2020, and accordingly, such dividends would not be exempt in the hands of the shareholders, both resident

as well as non-resident. Significant differences exist between Ind AS and other accounting principles with

which investors may be more familiar.

Our financial statements are prepared in conformity with Indian Accounting Standards (“Ind AS”). Ind AS differs

in certain significant respects from IFRS, U.S. GAAP and other accounting principles and accounting standards

with which prospective investors may be familiar with in other countries. We do not provide a reconciliation of

our financial statements to IFRS or U.S. GAAP or a summary of principal differences between Ind AS, IFRS and

U.S. GAAP relevant to our business. Furthermore, we have not quantified or identified the impact of the

differences between Ind AS and IFRS or between Ind AS and U.S. GAAP as applied to our financial statements.

As there are significant differences between Ind AS and IFRS and between Ind AS and U.S. GAAP, there may be

substantial differences in our results of operations, cash flows and financial position if we were to prepare our

financial statements in accordance with IFRS or U.S. GAAP instead of Ind AS. The significant accounting policies

applied in the preparation of our Ind AS financial statements are as set forth in notes to our financial statements

included in this Preliminary Placement Document. Prospective investors should review the accounting policies

applied in the preparation of our financial statements, and consult their own professional advisors for an

understanding of the differences between Ind AS and IFRS and between Ind AS and U.S. GAAP and how they

might affect the financial information contained in this Preliminary Placement Document.

Force majeure events, particularly those affecting the states where our facilities are located, could adversely

affect our business.

Our facilities are located across India. It is possible that earthquakes, cyclones, floods, fires, explosions, pandemic

diseases or other natural or man-made disasters in India or these countries, particularly those that directly affect

the areas in which our facilities and other operations are located, could result in substantial damage to the

manufacturing facilities and other assets and adversely affect our operations and financial results.

In addition, increased international political instability, evidenced by the threat or occurrence of terrorist attacks,

enhanced national security measures, conflicts in several regions in which we operate, strained international

56

relations arising from these conflicts and the related decline in consumer confidence may hinder our ability to do

business. Any escalation in these events or similar future events may disrupt our operations or those of our

customers and suppliers and could affect the availability of materials needed to manufacture our products or the

means to transport those materials to manufacturing facilities and finished products to customers. These events

have had and may continue to have an adverse impact on the world economy and customer confidence and

spending in particular, which could, in turn, adversely affect our business, financial condition or results of

operations.

Any downgrading of India’s debt rating by an independent agency may harm our ability to raise debt financing.

Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies

due to various factors, including changes in tax or fiscal policy or a decline in India’s foreign exchange reserves,

which are outside our control, may adversely affect our ability to raise additional financing and the interest rates

and other commercial terms at which such additional financing is available. This could have a material adverse

effect on our capital expenditure plans, business and financial performance.

RISKS RELATING TO THE ISSUE

Any future issuance of Equity Shares by us may dilute an investor’s shareholding or adversely affect trading

price of the Equity Shares.

Any future issuance of Equity Shares by us could dilute the investor’s shareholding. Additionally, sales of our

Equity Shares by the Promoters could also have an adverse effect on the trading price of the Equity Shares. Such

events could also impact our ability to raise capital through an offering of our securities. In addition, any

perception by investors that such issuances or sales might occur could also affect the trading price of the Equity

Shares.

After this Issue, our Equity Shares may experience price and volume fluctuations.

The offer price of the Equity Shares in this Issue will be determined by us in consultation with the Book Running

Lead Manager, based on the Bids received in compliance with Chapter VI of the SEBI ICDR Regulations, and it

may not necessarily be indicative of the market price of the Equity Shares after this Offering is complete. You

may be unable to resell your Equity Shares at or above the offer price and, as a result, you may lose all or part of

your investment.

The price of the Equity Shares may fluctuate after this Issue as a result of several factors, including volatility in

the Indian and global securities markets, the results of our operations, the performance of our competitors,

developments in the Indian FMCG sector, adverse media reports on us or the Indian FMCG industry, changes in

the estimates of our performance or recommendations by financial analysts, significant developments in India’s

economic liberalization and deregulation policies, and significant development in India’s fiscal regulations.

Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

The Indian securities markets are smaller and may be more volatile than securities markets in more developed

economies. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and

other participants differ, in some cases significantly, from those in Europe and the U.S. In addition, Indian stock

exchanges have in the past experienced substantial fluctuations in the prices of listed securities.

Indian stock exchanges have, in the past, experienced problems that have affected the market price and liquidity

of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and

strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time

restricted securities from trading, limited price movements and increased margin requirements. A closure of, or

trading stoppage on, either the BSE or the NSE could adversely affect the trading price of the Equity Shares.

Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the

future.

There is no guarantee that we will pay dividends.

Any dividend that we pay to shareholders will be based on our performance. In turn, our ability to pay dividends

in the future will be affected by a number of factors, principally our generation of distributable profits. In addition,

we may be precluded from paying dividends by various factors, such as our financial condition, restrictions in

57

existing or future financing documents to which we are party, or applicable law. We may decide to retain all of

our earnings to finance the development and expansion of our business and, therefore, may not declare dividends

on the Equity Shares. Any of the foregoing could limit the payment of dividends to shareholders or, if we pay

dividends, the amount of such dividends. The amounts paid as dividends in the past are not necessarily indicative

of our Company’s dividend policy or the dividend amounts, if any, in the future. There is no guarantee that any

dividends will be declared or paid or that the amount thereof will not be decreased in the future.

Foreign investors are subject to foreign investment restrictions under Indian law that limits our ability to attract

foreign investors, which may adversely impact the market price of the Equity Shares.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies,

including those specified under FEMA and the rules thereunder. Under the foreign exchange regulations currently

in force in India, transfers of shares between non-residents and residents are freely permitted (subject to certain

exceptions) if they comply with the pricing guidelines and reporting requirements specified by RBI. If the transfer

of shares, which are sought to be transferred, is not in compliance with such pricing guidelines or reporting

requirements or fall under any of the exceptions referred to above, then the prior approval of the RBI will be

required. Additionally, shareholders who seek to convert the Rupee proceeds from a sale of shares in India into

foreign currency and repatriate that foreign currency from India will require a no objection/tax clearance certificate

from the income tax authority. The GoI may also impose foreign exchange restrictions in certain emergency

situations, including situations where there are sudden fluctuations in interest rates or exchange rates, where the

GoI experiences extreme difficulty in stabilizing the balance of payments or where there are substantial

disturbances in the financial and capital markets in India. These restrictions may require foreign investors to obtain

the GoI’s approval before acquiring Indian securities or repatriating the interest or dividends from those securities

or the proceeds from the sale of those securities. There can be no assurance that any approval required from the

RBI or any other government agency can be obtained on any particular terms or at all.

Furthermore, in accordance with press note 3 of 2020, dated April 17, 2020, issued by the Department for

Promotion of Industry and Internal Trade, Government of India, all foreign direct investments by entities

incorporated in a country which shares land border with India or where the beneficial owner of an investment into

India is situated in or is a citizen of any such country will require prior approval of the Government of India and

shall have to be in conformity with the applicable provisions of the FEMA.

Investors will be subject to market risks until the Equity Shares credited to the investor’s demat account are

listed and permitted to trade

Investors can start trading the Equity Shares allotted to them only after they have been credited to an investor’s

demat account, are listed and permitted to trade. Since our Company’s Equity Shares are currently traded on BSE

and NSE, investors will be subject to market risk from the date they pay for the Equity Shares to the date when

trading approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to an

investor will be credited to the investor’s demat account or that trading in the Equity Shares will commence in a

timely manner.

An investor will not be able to sell any of our Equity Shares subscribed in this Issue other than on a recognized

Indian stock exchange for a period of 12 months from the date of allotment of the Equity Shares pursuant to

the Issue

The Equity Shares in this Issue are subject to restrictions on transfers. Pursuant to the SEBI ICDR Regulations,

for a period of 12 months from the date of the allotment issue of Equity Shares in this Issue, QIBs subscribing to

the Equity Shares in the Issue may only sell their Equity Shares on the Stock Exchanges and may not enter into

any off market trading in respect of these Equity Shares. Further, allotments made to VCFs and AIFs in the Issue

are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

We cannot be certain that these restrictions will not have an effect on the price and liquidity of the Equity Shares.

Your ability to acquire and sell Equity Shares is restricted by the distribution and transfer restrictions set forth

in this Preliminary Placement Document.

No actions have been taken to permit a public offering of the Equity Shares in any jurisdiction, including India.

As such, the Equity Shares have not and will not be registered under the U.S. Securities Act, any state securities

laws or the law of any jurisdiction other than India. Furthermore, the Equity Shares are subject to restrictions on

transferability and resale. You are required to inform yourself about and observe these restrictions, which are set

58

forth in this Preliminary Placement Document under the heading “Selling Restrictions”. We, our representatives

and our agents will not be obligated to recognize any acquisition, transfer or resale of the Equity Shares made

other than in compliance with the restrictions set forth herein.

You may be subject to Indian taxes arising out of capital gains.

Under the current tax laws in India, unless specifically exempted, capital gains arising from the sale of equity

shares in an Indian company are generally taxable in India. The IT Act levies taxes on such long-term capital gains

exceeding ₹1lakh per financial year arising from sale of equity shares on or after April 1, 2018 while continuing

to exempt the unrealized capital gains earned up to January 31, 2018 on such equity shares subject to specific

conditions. You may be subject to payment of long-term capital gains tax in India, in addition to payment of

securities transaction tax (“STT”), on the sale of any Equity Shares held for more than 12 months. STT will be

levied on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on

the sale of Equity Shares held for more than 12 months, which are sold other than on a recognized stock exchange

and on which no STT has been paid, will be subject to long term capital gains tax in India.

Furthermore, any gain realized on the sale of equity shares held for a period of 12 months or less is subject to

capital gains tax in India Investors are advised to consult their own tax advisers and to carefully consider the

potential tax consequences of an investment in shares.

Capital gains arising from the sale of our Equity Shares will be exempt from tax in India in cases where such

exemption is provided under the tax treaty between India and the country of which the seller is a resident.

Generally, Indian tax treaties, including those with the United States, do not limit India’s ability to impose tax on

capital gains. As a result, residents of other countries may be liable for tax in India as well as in their own

jurisdiction on a gain upon the sale of the Equity Shares.

Investors to the Issue are not allowed to withdraw or revise their Bids downwards after the Bid/ Issue Closing

Date.

In terms of the SEBI ICDR Regulations, investors in the Issue are not allowed to withdraw their Bids or revise

their Bids downwards after the Issue Closing Date. The Allotment of Equity Shares in this Issue and the credit of

such Equity Shares to the investor’s demat account with the depository participant could take approximately seven

days and up to 10 days from the Issue Closing Date. However, there is no assurance that material adverse changes

in the international or national monetary, financial, political or economic conditions or other events in the nature

of force majeure, material adverse changes in the business, results of operation or financial condition of our

Company, or other events affecting the investor’s decision to invest in the Equity Shares, would not arise between

the Issue Closing Date and the date of Allotment of Equity Shares in the Issue. Occurrence of any such events

after the Issue Closing Date could also adversely impact the market price of the Equity Shares. The investors shall

not have the right to withdraw their Bids or revise their Bids downwards in the event of any such occurrence. Our

Company may complete the Allotment of the Equity Shares even if such events may limit the investors’ ability to

sell the Equity Shares after the Issue or cause the trading price of the Equity Shares to decline.

59

MARKET PRICE INFORMATION

As on the date of this Preliminary Placement Document, 5,97,86,144 Equity Shares have been issued, subscribed

and paid up. The Equity Shares have been listed on BSE and NSE since January 3, 1996 and November 13, 2009,

respectively. The Equity Shares are listed and actively traded on NSE under the symbol ZYDUSWELL and BSE

under the scrip code 531335.

On September 22, 2020, the closing price of the Equity Shares on BSE and NSE was `1,767.50 and `1,782.70

per Equity Share, respectively. Since the Equity Shares are available for trading on BSE and NSE, the market

price and other information for each of BSE and NSE has been given separately.

1. The following tables set forth the reported high, low, average market prices and the trading volumes of the

Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded and

the total trading turnover for Fiscals 2020, 2019 and 2018:

BSE

Fiscal High (₹) Date of

high

Number of

Equity

Shares

traded on

the date of

high

Total

turnover of

Equity

Shares

traded on

date of high

(₹ lakhs)

Low (₹) Date of

low

Number of

Equity

Shares

traded on

the date of

low

Total turnover

of Equity

Shares traded

on date of low

(₹ lakhs)

Average price

for the year

(₹)

2020 1,819.85

September

9, 2019 3,949 70.84 1,207.15

March 24,

2020 425 5.15 1,455,89

2019 1,757.55

September

4, 2018 9,795 171.25 1,105.80

November

15, 2018 1,487 16.68 1,332.74

2018 1,296.15

March 1,

2018 3,035 39.58 810.40

May 19,

2017 911 7.49 945.67

(Source: www.bseindia.com)

NSE

Fiscal High (₹) Date of

high

Number

of Equity

Shares

traded on

the date

of high

Total

turnover of

Equity Shares

traded on date

of high (₹

lakhs)

Low (₹) Date of

low

Number of

Equity

Shares

traded on

the date of

low

Total turnover

of Equity

Shares traded

on date of low

(₹ lakhs)

Average price

for the year

(₹)

2020 1,821.35

September

9, 2019 63,483 1,138.13 1,200.20

March 24,

2020 70,674 848.98 1,456.69

2019 1,761.50

September

4, 2018 56,469 989.04 1,109.80

November

15, 2018 10,629 119.09 1,332.28

2018 1,295.70

March 1,

2018 55,153 715.31 813.65

May 19,

2017 3,983 32.86 946.33

(Source: www.nseindia.com)

Note:

1. High, low and average prices are based on the daily closing prices.

2. In case of two days with the same closing price, the date with the higher volume has been chosen.

3. In the case of a year, average price for the year represents the average of the closing prices on each day

of each year.

60

2. The following tables set forth the reported high, low and average market prices and the trading volumes of

the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded

during each of the last six months, as applicable:

BSE

Month, year High (₹) Date of

high

Number

of

Equity

Shares

traded

on date

of high

Total

turnover

of Equity

Shares

traded on

date of

high (₹

lakhs)

Low (₹) Date of

low

Numbe

r of

Equity

Shares

traded

on date

of low

Total

turnover of

Equity

Shares

traded on

date of low

(₹ lakhs)

Average

price for

the

month

(₹)

Equity Shares traded in

the month

Volume Turnover(₹in

lakhs)

August 2020 1,726.45 August

25, 2020 10,044 174.35 1,598.30

August

12, 2020 6,039 97.18 1,664.66 103,605 1,750.45

July 2020 1,638.20 July 24,

2020 8,118 131.59 1,276.45

July 1,

2020 797 10.17 1,443.93 117,880 1,755.29

June 2020 1,316.40 June 3,

2020 1,171 15.56 1,209.00

June 16,

2020 1,740 21.39 1,266.09 41,838 530.16

May 2020 1,308.00 May 5,

2020 705 9.16 1,188.80

May 18,

2020 653 7.80 1,254.87 143,490 1,761.79

April 2020 1,460.20 April 9,

2020 6,723 100.87 1,216.35

April 3,

2020 206 2.53 1,340.00 45,398 634.43

March 2020 1,452.70 March 5,

20 720 10.35 1,207.15

March

24, 2020 425 5.15 1,317.78 14,380 186.37

(Source: www.bseindia.com)

NSE

Month,

year High (₹)

Date of

high

Number

of Equity

Shares

traded

on date

of high

Total

turnover of

Equity

Shares

traded on

date of high

(₹ lakhs)

Low (₹) Date of

low

Number

of

Equity

Shares

traded

on date

of low

Total

turnover of

Equity

Shares

traded on

date of low

(₹ lakhs)

Average

price for

the

month

(₹)

Equity Shares traded in

the month

Volume Turnover (₹

in lakhs)

August

2020 1,726.40

August

25, 2020 93,965 1,632.15 1,599.30

August

12, 2020 35,664 573.61 1,664.51 1,209,022 20,438.63

July

2020 1,638.25

July 24,

2020 102,181 1,656.35 1,275.85

July 1,

2020 26,002 331.91 1,444.66 1,753,897 25,846.19

June

2020 1,316.40

June 3,

2020 77,337 1,027.23 1,207.95

June 16,

2020 58,765 721.29 1,266.60 1,090,296 13,867.13

May

2020 1,310.05

May 5,

2020 33,211 432.89 1,188.25

May 18,

2020 20,277 242.67 1,255.19 585,499 7,418.86

April

2020 1,462.10

April 9,

2020 126,246 1,883.84 1,216.40

April 3,

2020 6,988 85.43 1,339.76 940,493 13,055.32

March

2020 1,452.45

March 4,

2020 11,186 161.23 1,200.20

March

24, 2020 70,674 848.98 1,317.92 608,129 7,883.28

(Source: www.nseindia.com)

Note:

1. High, low and average prices are based on the daily closing prices.

2. In case of two days with the same closing price, the date with the higher volume has been chosen.

3. In the case of a month, average price for the month represents the average of the closing prices on each

day of each month.

61

3. The following table set forth the details of the number of Equity Shares traded on the Stock Exchanges and

the turnover during Fiscals 2020, 2019 and 2018:

Fiscal Number of Equity Shares Traded Turnover (In ₹ lakhs)

BSE NSE BSE NSE

2020 273,423 4,471,103 4,080.45 65,109.30

2019 548,653 4,499,233 7,640.92 62,132.51

2018 846,971 2,672,062 7,973.20 27,106.22

(Source: www.bseindia.com and www.nseindia.com)

4. The following tables set forth the market price on the Stock Exchanges on July 28, 2020, being the first

working day following the approval of the Board for the Issue:

BSE

Open High Low Close Number of Equity Shares traded Volume

(₹ lakhs)

1,570.00 1,650.00 1,555.55 1,630.45 1,388 118.29

(Source: www.bseindia.com)

NSE

Open High Low Close Number of Equity Shares traded Volume

(₹ lakhs)

1,576.20 1,650.75 1,555.00 1,623.70 8,164 1,336.62 (Source: www.nseindia.com)

62

USE OF PROCEEDS

The gross proceeds from this Issue shall be approximately `[●] lakhs. The net proceeds from this Issue, after

deducting fees, commissions and expenses relating to this Issue, amounting to approximately `[●] lakhs, will be

approximately `[●] lakhs (“Net Proceeds”).

Objects of this Issue

Our Company along with its subsidiary, Zydus Wellness Products Limited, acquired 100% equity shares of

erstwhile Heinz India Private Limited. As part of the consideration for the acquisition our Company had issued

non-convertible debentures (“NCDs”) aggregating to `1,50,000 lakhs. As on the date of this Preliminary

Placement Document 15,000 NCDs aggregating to `1,50,000 lakhs are outstanding. The NCDs carry an interest

rate of 9.14% per annum, which is payable on a bi-annual basis (in intervals of six months). The NCDs aggregating

to ` 1,10,500 lakhs have been purchased by Zydus Wellness Products Limited from the market for which it had

availed short-term inter corporate loans aggregating to `1,10,000 lakhs from Zydus Healthcare Limited, a

subsidiary of one of our Promoter i.e. Cadila Healthcare Limited. Subject to compliance with the terms of the

NCDs, applicable laws and regulations, our Company, with a view to reduce the high cost of interest associated

with the outstanding NCDs and to strengthen its balance sheet position, proposes to utilize the Net Proceeds to

redeem a part of the outstanding NCDs, in accordance with the terms of the NCDs, which are presently held by

Zydus Wellness Products Limited and which, in turn, will repay inter-corporate loans obtained from Zydus

Healthcare Limited.

Subject to the review of our Audit Committee as required under the SEBI Listing Regulations and in accordance

with the decision of our Board, our management will have flexibility in deploying the Net Proceeds in accordance

with applicable law.

Interim use of Proceeds

Pending utilisation for the purposes described above, we intend to temporarily invest Net Proceeds in creditworthy

instruments, including money market mutual funds and deposits with banks and corporates. Such investments

would be in accordance with the investment policies as approved by the Board from time to time and all applicable

laws and regulations.

Other confirmations

As on the date of this Preliminary Placement Document, neither the Promoter nor our Directors are making any

contribution either as part of the Issue or separately in furtherance of the objects of the Issue.

Our Company shall disclose the utilisation of funds raised through the Issue in its annual reports until such funds

are fully utilised.

In accordance with applicable laws, our Company undertakes to not utilise proceeds from the Issue unless

Allotment is made and the corresponding return of Allotment is filed with the RoC, and the final listing and trading

approvals are received from each of the Stock Exchanges.

Since the Net Proceeds are proposed to be utilised towards the purposes set forth above, and not being used

towards implementation of any project, the following disclosure requirements under the SEBI ICDR Regulations,

are not applicable: (i) break-up of cost of the project, (ii) means of financing such project, and (iii) proposed

deployment status of the proceeds at each stage of the project.

63

CAPITALISATION STATEMENT

The following table sets forth the capitalisation of our Company, on a consolidated basis, as at March 31, 2020

and as adjusted to give effect to the receipt of the gross proceeds of the Issue.

This table should be read in conjunction with “Risk Factors”, “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” and “Financial Statements” beginning on pages 39, 69 and 195,

respectively.

(₹ in lakhs)

Particulars Pre-Issue (as at

March 31, 2020)

Post-Issue as

adjusted of QIP*

Current borrowing:

Secured 1,630 [●]

Unsecured 275 [●]

Non-current borrowing:

Secured 1,50,000 [●]

Unsecured - [●]

Total borrowing (a) 151,905 [●]

Shareholders’ funds:

Share capital 5,766 [●]

Securities premium 2,55,641 [●]

Reserves and surplus (excluding securities premium) 84,659 [●]

Shareholders’ funds (excluding borrowings) (b) 3,46,066 [●]

Total capitalization (a + b) 4,97,971 [●]

Current Borrowing / Shareholders Funds 0.0055 [●]

Total Borrowing / Shareholders Funds 0.4389 [●]

*As adjusted to reflect the number of Equity Shares issued pursuant to the Issue and proceeds from the Issue.

Adjustments do not include Issue related expenses.

Note:

1. On September 19, 2020, the Company allotted 21,22,000 Equity Shares on a preferential allotment basis to

Zydus Family Trust, one of its Promoters, at a price of Rs. 1,649.00 per Equity Share for an aggregate

consideration of Rs. 349,91,78,000.

64

CAPITAL STRUCTURE

The Equity Share capital of our Company as at the date of this Preliminary Placement Document is set forth

below:

Particulars Aggregate value at face value#

(in ₹)

A AUTHORISED SHARE CAPITAL

10,00,00,000 Equity Shares 1,00,00,00,000

B ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL BEFORE THE ISSUE

5,97,86,144 Equity Shares 59,78,61,440

C PRESENT ISSUE IN TERMS OF THIS PRELIMINARY PLACEMENT DOCUMENT(1)

Up to [●] Equity Shares [●]

D ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL AFTER THE ISSUE

[●] Equity Shares [●]

E SECURITIES PREMIUM ACCOUNT

Before the Issue (in ` lakhs) 2,90,421

After the Issue(2) (in ` lakhs) [●] # Except for share premium reserve

(1) The Issue has been authorised by the Board of Directors pursuant to its resolution passed on August 27, 2020. The Shareholders have

authorised and approved the Issue by way of a special resolution passed on September 19, 2020. (2) To be determined upon finalization of the Issue Price.

Equity Share capital history of our Company

The following table sets forth details of allotments of Equity Shares by our Company since its incorporation:

Date of

allotment

Number of

Equity

Shares

Face

value

per

Equity

Share

(₹)

Issue

price

per

Equity

Share

(₹)

Nature of

consideration

Reason/

Nature of

allotment

Cumulative

number of

Equity

Shares

Cumulative

paid-up

equity share

capital

( ₹)

November

10, 1994

70 10 10 Cash Subscription to

Memorandum

of Association

70 700

February 25,

1995

350,000 10 10 Cash Preferential

Allotment

3,50,070 35,00,700

December

20, 1995

52,25,030 10 10 Cash Initial public

offering

55,75,100 5,57,51,000

Forfeiture of 914,200 Equity Shares which were forfeited and were re-issued on June 2, 2005 for ₹70 per Equity Share.

January 17,

2009

3,34,96,989 10 - Other than

cash

Pursuant to a

composite

scheme of

arrangement (1)

3,90,72,089 39,07,20,890

January 29,

2019

1,85,92,055 10 1,385 Cash Preferential

Allotment

5,76,64,144 57,66,41,440

September

19, 2020

21,22,000 10 1,649 Cash Preferential

Allotment

5,97,86,144 59,78,61,440

(1) Pursuant to the scheme of arrangement between Cadila Healthcare Limited, Zydus Wellness Limited and Zydus Hospitals and Medical

Research Private Limited which was approved by the High Court of Gujarat vide its order dated October 23, 2008, Equity Shares were allotted

to the shareholders of Cadila Healthcare Limited in the ratio of 15:4.

65

Proposed Allottees in the Issue

In compliance with the requirements of Chapter VI of the SEBI ICDR Regulations, Allotment shall be made by

the Company, in consultation with the BRLM(s), to Eligible QIBs only, on a discretionary basis.

The names of the proposed Allottees and the percentage of post-Issue capital that may be held by them in our

Company is set forth below.

*Subject to receipt of funds and allotment in the Issue. The above table has been intentionally left blank and shall be updated

in the Placement Document.

These details of the proposed Allottees, assuming that the Equity Shares are Allotted to them pursuant to this

Issue, will be included in the Placement Document to be sent to such proposed Allottees.

Pre-Issue and post-Issue shareholding pattern of our Company

The pre-Issue shareholding pattern of our Company as on June 30, 2020 and the post-Issue shareholding pattern

of our Company is set forth below:

No. Category

Pre-Issue as of June 30, 2020 Post-Issue*

No. of Equity

Shares held

% of Equity

Share holding

No. of Equity

Shares held

% of Equity

Share holding

A Promoters’ holding

1 Indian

Individual 4,797 0.01 [●] [●]

Bodies corporate 3,66,48,149 63.55 [●] [●]

Others 24,71,193 4.29 [●] [●]

Sub-total 3,91,24,139 -- [●] [●]

2 Foreign promoters - -- [●] [●]

Sub-total (A) 3,91,24,139 67.85 [●] [●]

B Non-promoters’ holding

1 Institutional investors

Indian 1,29,36,424 22.43 [●] [●]

Foreign 11,60,222 2.01 [●] [●]

2 Non-institutional

Investors

Private corporate bodies 11,19,234 1.95 [●] [●]

Directors and relatives 9,776 0.02 [●] [●]

Indian public 29,03,256 5.03 [●] [●]

Others

(including Non-resident

Indians (NRIs))

4,11,093 0.71 [●] [●]

Sub-total (B) 1,85,40,005 32.15 [●] [●]

Total (A+B) 5,76,64,144 100.00 [●] [●]

*The details of the post-Issue shareholding pattern have been intentionally left blank and will be filled-in before filing of the

Placement Document with the Stock Exchanges.

Other Confirmations

Our Company has not made any allotments of Equity Shares, including for consideration other than cash, in the

last one year preceding the date of this Preliminary Placement Document.

No. Name of the proposed Allottee Percentage of post-Issue paid-

up Equity Share capital*

1. [●] [●]

2. [●] [●]

3. [●] [●]

4. [●] [●]

5. [●] [●]

Total [●]

66

Our Equity Shares have been listed for a period of at least one year prior to the date of the issuance of the notice

of the extra ordinary general meeting of our shareholders held on September 19, 2020, to the shareholders for the

approval of this Issue.

Our Company shall not make any subsequent qualified institutions placement until the expiry of two weeks from

the date of this Issue. Further, Equity Shares allotted pursuant to this Issue cannot be sold by the Allottee for a

period of one year from the date of allotment, except on the Stock Exchanges.

There will be no change of control of our Company pursuant to the Issue.

Other than as disclosed below, our Company has not allotted securities on preferential basis or private placement

or by way of rights issue in the last one year preceding the date of this Preliminary Placement Document:

Nature of issuance Date of allotment Number of Equity

Shares issued

Face value

(in `) Issue price of Equity

Shares (in `)

Preferential

Allotment

September 19, 2020 21,22,000 10 1,649

67

RELATED PARTY TRANSACTIONS

For details of the related party transactions as per the requirements under Ind AS 24, as notified under Section

133 of the Companies Act, 2013 read with Ind AS rules as amended for Fiscals 2020, 2019 and 2018, see

“Financial Statements” beginning on page 195.

68

DIVIDENDS

The declaration and payment of final dividend, if any, will be recommended by our Board and approved by our

Shareholders at their discretion, subject to the provisions of the Articles of Association and the applicable laws,

including the Companies Act.

Our Board may also, from time to time, declare interim dividends. Our Board has approved and adopted a formal

dividend distribution policy in terms of Regulation 43A of the SEBI Listing Regulations, effective from January

30, 2017. For further information, see “Description of the Equity Shares” beginning on page 173.

The following table details the dividend paid or payable by our Company on the Equity Shares in respect of the

quarter ended June 30, 2020 and Fiscals 2020, 2019 and 2018:

Particulars Quarter ended

June 30, 2020 Fiscal 2020 Fiscal 2019 Fiscal 2018

Face value of Equity Shares (in ₹ per

share) 10

10.00 10.00 10.00

Dividend (Interim) per share (in ₹) - 5.00 - -

Dividend (Final) per share (in ₹) - - 5.00 8.00

Total Dividend per share (in ₹) - 5.00 5.00 8.00

Total Dividend including Dividend

distribution tax (₹ in lakhs)

- 3,475.86 3,475.86 3,768.27

Dividend Rate (in %) - 50.00 50.00 80.00

Dividend distribution tax (₹ in lakhs) - 592.65 592.65 642.51

The amounts declared as dividend in the past are not indicative of dividend which may be declared by our

Company, if any, in the future. There is no guarantee that any dividends will be declared or paid in the future. The

frequency and amount of future dividends declared by our Company will depend on a number of internal and

external factors, including, but not limited to, current year’s profits, future outlook, operating cash flows,

extraordinary income/expenses, position of total debt to equity ratio, capital expenditure plans, inorganic growth

requirements and contingency requirements. For a summary of some of the restrictions that may materially affect

our ability to declare or pay dividends, see “Risk Factors – “There is no guarantee that we will pay dividends”

beginning on page 56.

The Equity Shares to be issued in connection with this Issue shall qualify for dividend including interim dividend,

if any, that is declared and record date thereof occurs after the Allotment. For further information, please see the

section entitled “Description of the Equity Shares” beginning on page 173.

For a summary of certain consequences under Indian taxation law of dividend distributions to shareholders, see

“Statement of Special Tax Benefits” on page 178.

69

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

We encourage you to read the following discussion in conjunction with the section entitled “Selected Financial

Data” as well as with our Financial Statements and the related notes thereto included elsewhere in this

Preliminary Placement Document. The following discussion includes forward-looking statements which, although

based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual

events or conditions to differ materially from those expressed or implied by the forward-looking statements. For

a discussion of some of those risks and uncertainties please refer to the sections entitled “Forward-Looking

Statements” and “Risk Factors” beginning on pages 14 and 39.

Our fiscal year ends on March 31 of each year, and references to a particular fiscal are to the twelve months

ended March 31 of that year. For further information, see “Financial Statements” beginning on page 195.

In this section, unless the context otherwise requires, a reference to “our Company” is a reference to Zydus

Wellness Limited on a standalone basis, while any reference to “we”, “us”, “our” or “Group” is a reference to

Zydus Wellness Limited on a consolidated basis.

Pursuant to the acquisition of Heinz India Private Limited (“Heinz”), on January 30, 2019, the consolidated

financial results for the fiscal year ended March 31, 2020, includes the operations of Heinz, which was merged

into Zydus Wellness Products Limited (formerly known as “Zydus Nutritions Limited”).

Overview

Our Company is one of the leading consumer health and wellness product manufacturing company with over 25

years of operational experience. We develop, manufacture and market a broad range of products, including under

the market leading brands Glucon-D, SugarFree, NYCIL, and other well-known brands like Complan, EverYuth,

Nutralite and Sugarlite. We believe that, our business combines healthcare, nutrition and cosmeceutical products

to provide quality wellness products. Our products in sugar substitute segment, fat spread segments, various

skincare segments such as peel offs and face scrub and other healthcare segments enjoy leading positions.

Headquartered in Ahmedabad, India, we enjoy a pan-India marketing and distribution network comprising more

than 1,700 distributors and approximately 2,000 “feet-on-street” representatives who facilitate the distribution of

our products to retailers across India.

We have a diversified portfolio with our product basket consisting of eight products used for various purposes

such as sugar substitutes, butter substitutes, health drinks, nutrition supplements, skin and personal care, products.

We believe that we are well positioned to sustain our existing leadership positions in key markets as well as exploit

significant growth opportunities that exist in the expanding FMCG sector, both in India and abroad.

We manufacture our products through five manufacturing facilities across four states in India (one in Gujarat,

Uttar Pradesh, Uttarakhand and two at Sikkim). The quality of our manufacturing facilities is evidenced by the

quality of certifications and accreditations, including the FSSC 22000 and ISO 22000, that our facilities have

70

obtained from various local and international accreditation agencies validating our process and quality

consistency. Our manufacturing facilities are supported by, our R&D facilities located in Gujarat and Maharashtra

with capabilities that enable us to support our growth strategy by developing new products and processes, which

enhance our range of products and their variants in the market, to cater to evolving consumer trends and

preferences.

We are further supported by our distribution capabilities, which include 20 cold chain warehouses, 25 ambient

warehouses, more than 1,700 distributors and 23 carry forward agents (“CFAs”). We believe that our structured

distribution network enables us to facilitate sales to address different consumer demands. Our products are

primarily sold by distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies,

institutional channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department),

CPC (Central Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores). Supplies are made available either

through distributors or directly by the Company. We have received a number of industry awards in recent years,

including Frost and Sullivan India Manufacturing Excellence Awards 2019 for Zydus Wellness Sikkim. We are a

part of the Zydus Cadila Group and our association provides us with a competitive edge on account of the goodwill

enjoyed by the Zydus Cadila Group. Cadila Healthcare Limited (“Cadila”), our corporate promoter is ranked 5th

in Indian pharmaceutical industry with a 4.18% market share in July 2020 (Source: AWACS July MAT 2020), and

revenue of ₹142,531 million with an EBITDA margin of 19.5% in Fiscal 2020. Cadila, is also promoted by Pankaj

Patel and Dr. Sharvil Patel, who have both been instrumental in the growth of our business. Our Promoters together

with the Promoter Group hold 67.85% of the shareholding of our Company as on June 30, 2020.

Our total income from operations in Fiscal 2020 was ₹1,76,682 lakhs, derived principally from the sale of branded

products. Over a period of three years from Fiscal 2018 to Fiscal 2020, our total income from operations has

grown at a CAGR of 84.1%. The last three months ended June 30, 2020 have witnessed a consolidated revenue

decline of 13.4%, as compared to the same period in the prior year. During the period of three years from Fiscal

2018 to Fiscal 2020, our PAT grew from ₹13,651 lakhs to ₹14,172 lakhs, registering a CAGR of 1.9%. The PAT

for Fiscal 2020 includes exceptional items pertaining to various expenses amounting to ₹4,420 lakhs incurred due

to integration of the business acquired from Heinz India Private Limited (“Heinz”). The CAGR growth excluding

this exceptional item would be 16.7%. For the three months ended June 30, 2020, the PAT was ₹8,920 lakhs,

registering a growth of 10.9% over the same period from the previous year. The acquisition was completed on

January 30, 2019.

Our History and Parentage

Our Company traces its beginning to November 1, 1994 as Carnation Health Foods Limited, the manufacturer

and marketer of Nutralite, a butter substitute and low-fat table spread. Our name was changed to Carnation Nutra

– Analogue Foods Limited in 1995. In 2006, Cadila acquired 61.56% controlling stake capital of our Company,

and we became a subsidiary of Cadila. In 2008, pursuant to the approval by the High Court of Gujarat to the

composite scheme of arrangement, the consumer products division of Cadila, consisting of ‘SugarFree’ and

‘EverYuth’ products, was demerged to our Company. Following the de-merger, the product portfolio of our

Company comprised of Nutralite, SugarFree and EverYuth. Subsequently, our name was changed to Zydus

Wellness Limited on January 5, 2009. On October 24, 2018, we entered into an agreement (jointly with Cadila)

to acquire 100% equity shares of Heinz. Pursuant to the Heinz acquisition, our portfolio brands expanded to

comprise of Glucon-D, NYCIL, Complan and Sampriti.

Significant factors affecting results of operations

We believe that the following factors, among others, have had and may continue to have a material effect on our

results of operations and financial condition. As many of these factors are beyond our control and a number of

these factors have historically been volatile, and accordingly, our past performance will not necessarily be

indicative of our future performance and it is difficult to predict future performance with any degree of certainty.

In addition, important factors that could cause our actual results of operations or financial condition to differ

materially from those expressed or implied below include, but are not limited to, factors indicated in this

Preliminary Placement Document under the section titled “Risk factors” beginning on page 39.

COVID-19

The World Health Organization declared the 2019 novel coronavirus (“COVID-19”) outbreak a Public Health

Emergency of International Concern on January 30, 2020, and a pandemic on March 11, 2020. Governments and

municipalities around the world instituted measures in an effort to control the spread of COVID-19, including

71

quarantines, shelter-in-place orders, school closings, travel restrictions, and closure of non-essential businesses.

The pandemic outbreak has caused an economic downturn on a global scale, including closures of many

businesses and reduced consumer spending, as well as significant market disruption and volatility. The steps taken

to counter the effects of the pandemic have resulted in a period of economic downturn and business disruption in

India and globally.

The ongoing COVID-19 pandemic has affected our business, financial condition and results of operations. In

addition to the macroeconomic impacts on the FMCG market in India and the customer demand, production

activities at our plants were disrupted, as we sought to comply with regulations and ensure the health of our

employees. Companies have faced disruptions in manufacturing and their supply chains. The disruptions in supply

chain and logistics led to decreased inventory levels at retailers, which in turn affected the supply of products to

consumers. According to the CRISIL Report, demand for food and home care was higher than personal care and

beauty products owing to increased concern on hygiene among consumers. Demand for premium category

essential items, discretionary items and personal care and beauty products was significantly impacted. The

decrease in demand may affect the sales of some of our products that may fall within the premium category or are

considered as discretionary items.

The COVID-19 pandemic has resulted in a decline in our Group’s revenue and profitability for the three months

ended June 30, 2020. At the outset of the pandemic, our immediate priority was to preserve cash flow and liquidity.

Due to seasonality of our business, we expect reduction in our cash and cash equivalent as at September 30, 2020

as compared to March 31, 2020, we continue to monitor and maintain our cash position and expect to continue to

meet our contractual obligations as they fall due with our operating cash flow. We can also access to credit facilities

from the bank in case of need. We will continue to re-evaluate our assessment of the long-term effects of COVID-

19 on consumer behaviour, supply chain and distribution.

As the situation has progressively stabilised, we have sought to obtain the necessary regulatory approvals for the

resumption of our manufacturing plants and the operation of our warehouses. A majority of our distributors have

also obtained permissions from local authorities to resume their business operations. While we have gradually

resumed our business activities, we have also adopted the necessary safe management practices as an integral part

of our operations to ensure the well-being of our employees and workforce. With the support from the Government

to ensure that essential services and businesses continue to operate, we have been able to resume a significant part

of our business operations to ensure that our products are available to consumers without significant interruptions.

In view of the fluidity of the situation and lack of visibility on the timeline for containment of the global pandemic,

the recovery trajectory remains uncertain. We continue to closely monitor the impact that COVID-19 may have

on our business and results of operations. Adverse effects of the COVID-19 pandemic may also significantly

increase the effect of the aforementioned factors affecting our results of operations

Acquisitions

We have established acquired and successfully integrated additional businesses, and our results of operations have

been influenced and will continue to be influenced by our acquisitions and partnerships. On January 30, 2019, we

completed the acquisition of 100% shareholding in Heinz India Private Limited (“Heinz”), which was a key

strategic acquisition to supplement our business verticals, grow and further strengthen our product portfolio,

increase our sales volume and increase our market share.

Heinz’s results of operations have been reflected in our consolidated financial statements since the date of

acquisition have had a significant impact on our Fiscal 2019 and Fiscal 2020 results. The key impacts of the Heinz

acquisition on our financial condition are as follows:

• increase in revenue from operation and EBITDA;

• change in capital structure through the infusion of equity of ₹2,575 crores and the issuance of non-

convertible debentures of ₹1,500 crores; and

• corresponding increase in the assets of the Company which include plant and machinery, land and building,

goodwill, brands and other intangible assets.

Regulations

Our business is subject to, and significantly affected by, laws and regulations India, and to a lesser extent in other

countries around the world. In India, the regulations governing our products have been evolving and the regulatory

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framework can be uncertain due to limited guidance. These regulatory frameworks can have a significant impact

on our results of operations.

Being in the consumer healthcare and wellness segment, our products and manufacturing facilities and supply

chain processes are required to maintain high quality standards. Any deviation from prescribed regulations or any

variation in quality from standards laid down by regulatory authorities can lead to actions from these authorities

or litigation from our customers. Under Indian laws, we are required to obtain and renew various licenses and

approvals under several legislations from time to time including the Food Safety and Standards Act, 2006 (the

“FSS Act”), the Factories Act, 1948 and the Shops and Establishment Acts of various states and other central and

state laws applicable to our business. These approvals, licences, registrations and permits are subject to several

conditions and are primarily valid for only a specific period and are required to be renewed from time to time.

However, in some cases, these licenses could have been granted for shorter period as well. These licenses also

contain certain terms and conditions which are required to be complied with throughout the period of the license.

We have implemented various policies relating to quality risk management, food safety management systems and

regulatory controls. Different standard operating procedures such as global food safety management compliance

standards for manufacturing facilities and self-inspection are also implemented. A dedicated team has been

deployed to continuously identify the changes in regulatory requirements and evaluate their likely impact on our

Company, so as to enable proactive measures to mitigate any possible risks of regulatory actions.

Further, we derived a portion of our revenue from customers located outside India, and we anticipate that these

sales will represent an increasing proportion of our revenue over time. In addition, we have assets located outside

India and use non-Indian third-party suppliers. As a result, we are subject to numerous risks and uncertainties

relating to international sales and operations, including but not limited to different regulatory structures.

Further, regulatory changes relating to business segments in which we operate in India and overseas, including

tax incentives that are available to us can have a bearing on our business.

For further information on our regulatory environment and the related risks that we face, see “Regulation”, “Risk

Factors — Regulatory changes may adversely affect our performance or financial condition” and “Risk Factors

— Changing regulations in India, including in finance and taxation laws, could lead to new compliance

requirements that are uncertain”.

Competition and market position

Competition within the markets in which we operate is strong. Several of our products enjoy significant market

share in the markets that we operate. See “Our Business – Competition”. The risk of competition from existing

players, as well as from new entrants, remains high. However, we believe that our strength in the marketplace,

coupled with our continuous emphasis on improving the quality of our products and offering newer products in

the wellness segment may provide us with a competitive edge in the market. Our Company supplies products to

our distributors in the retail segment as well as to institutional customers. However, we are focused on increasing

our market share in all segments through a sound marketing strategy and a balanced approach.

We face significant competition from domestic and multinational competitors. In order to successfully compete

in our markets, we focus on developing and marketing premium, proven, aspirational and engaging products for

the Indian FMCG sector. In order to protect our existing market share or capture market share in this highly

competitive retail environment, we may be required to increase expenditure for advertising and promotions. We

use various media, such as television, digital, radio, press, outdoor hoarding as part of our advertisement plans. In

the recent past, we have effectively used celebrity endorsements for our brands such as Kareena Kapoor Khan and

Saif Ali Khan for Sugarlite, Parineeti Chopra and Abhay Deol for SugarFree, Sanjeev Kapoor for Nutralite, and

Sourav Ganguly for Complan. We may also be required to introduce and establish new products which have

certain inherent risks including uncertainties about trade and consumer acceptance. Our portfolio of brands has

diverse offerings in nutritional, food and personal care categories. We believe that we are uniquely positioned to

leverage our core strengths in innovation and scientific promotion that is healthy and responsive to the changing

times. Our niche brands offer solutions for customers of different age groups.

We also believe that launching new innovative products helps distinguish us from our competitors. For example,

during the COVID-19 pandemic, we launched a number of new products, including the NYCIL sanitizer, which

were positioned as herbal hand sanitizers and expanded our product offerings of hand sanitizers.

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We have also entered new markets like New Zealand and Kenya. to build our international business. We enhanced

our portfolio with the launch of Complan products in countries like UAE, Bahrain, Qatar, Mauritius, Oman, Saudi

Arabi and Kuwait and launch of Nutralite products in Malaysia. We will continue to expand our footprints in new

international markets.

We may face the risk that our competitors develop better brands, technological advances, gain early access to

information and be better placed to act upon such information. Increasing competition could result in price and

supply volatility, which could cause our business to suffer. Our competitors may further, enter into business

combinations or alliances or technical collaborations that strengthen their competitive positions or prevent us from

taking advantage by entering such business combinations or alliances or technical collaborations. Increasing

competition may result in pricing pressures or decreasing profit margins or lost market share or failure to improve

our market position, any of which could substantially harm our business and results of operations. We will be

required to compete effectively with our existing and potential competitors, to maintain and grow our market share

and in turn, our results of operations. To remain competitive, we will have to continuously strive to improve

operating efficiencies, increase expenditure for advertising, promotions and introduce and establish new products.

For further information on our competition, see “Our Business – Competition.”

Seasonality

The sales of some of our products are subject to seasonality due to consumer behaviour. For example, the delay

or shift in seasons may impact business of some of our brands like Glucon-D and NYCIL which are largely

dependent on onset of a good summer season in India (and similarly can be disrupted by mild summer or early

monsoon). As a result, we can experience fluctuations in our product inventory levels and revenue throughout the

year. We expect this seasonality to continue, or possibly increase in the future, which may cause fluctuations in

our operating results and financial metrics.

Product mix and pricing

Our revenue is affected by the mix of products that we offer and their respective prices. We have a wide range of

health and wellness products at a number of price points. Our product portfolio includes popular brands, such as

Glucon-D, Complan, SugarFree, NYCIL, EverYuth, Nutralite and Sugarlite. Continuous research and feedback

from the consumers have helped us improve upon our brands and develop products that we believe suit changing

customer demand. For example, SugarFree Green is now available with an improved formulation and packaging

Sugarlite has been relaunched with better product formulation and enhanced taste; Nutralite continued to be well-

received by our customers with its core strengths of taste, health benefits and new offerings; and NYCIL hand

sanitizers was launched successfully during the COVID-19 pandemic. We are focused on research and innovation

and greater understanding of the consumer needs in order to develop a pipeline of products.

The mix of products that we offer our consumers and their relative appeal to our consumers has a significant

impact on our revenue, gross profit and gross profit margin and EBITDA and EBITDA margin. We regularly

evaluate our product offerings in terms of their quality offering, branding, retail and wholesale price and consumer

appeal. We plan to continue to invest in these product segments in order to implement our strategy to maintain

and strengthen our market position.

Product mix affects margins, as different products may provide different margins depending on the market at a

particular point in time. To meet market demand at different points of time, we may adjust the product mix within

our product range, which could have an impact on our margins. For further information, see “Our Business —

Product portfolio.”

Availability of Raw Materials

Our results of operations and financial position are impacted by the effectiveness of our product and raw material

supply chain. Agricultural commodity products, such as aspartame, lactose, dextrose monohydrate, maltodextrin,

sucralose, refined palm oil, palm kernel oil, skimmed milk powder, refined sesame oil, form a key part of our

supply chain. As we source these products from designated third party suppliers in India, the speed, efficiency and

effectiveness of our supply chain can impact our costs of sales, distribution costs and administrative expenses.

Prices of the key ingredients used in the products manufactured and marketed by the Company remain volatile

due to several market-related factors, including changes in government policies, commodity price fluctuation and

fluctuations in the foreign exchange rates. We have taken steps to diversify our network of suppliers and improve

lead times in our supply network in order to support future volume growth. We enter into long-term contracts,

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wherever feasible, to minimise the risk of fluctuations in the input prices. Our market position and the significant

retail sales that we generate can also provide us with buying power with many of our suppliers and enable us to

achieve operational and cost efficiencies across our supply chain.

While we have consolidated our carry and forward agents (“CFAs”), these CFAs are located across India to

support our distribution network in the country. Our various optimisation and straight-line consolidation initiatives

have reduced logistics costs through warehouse and clearing and forwarding enhancement.

The per unit costs of producing a significant number of our products is impacted by the global markets. Our

products are subject to the supply and price volatility of the raw materials. Increases in the price of our raw

materials may negatively impact our gross profit margins if we are not able to offset such price increases through

increases in our selling price or changes to our product mix.

Inventory management

Our results of operations can be affected by our inventory management processes. We take ownership of

significant amounts of products each year. We track order levels and product commitments together with the sales

of products and amend order quantities as appropriate and where relevant, if possible. Where certain product lines

experience a slower rate of sale than that desired, we may apply discounts and/or increase marketing and

promotions.

We enter into contracts with third party manufacturers to produce some of our products, such as NYCIL.

Accordingly, our results of operations will be affected if these third party manufacturers do not perform their

obligations, or if these third party manufacturers deliver products (or component of products) that have a

manufacturing defect or do not comply with our specified quality standards and technical specifications.

We utilise a variety of agricultural raw materials in our products, including dairy products, and the availability of

these products is subject to many risks, including agricultural disease, insect or animal infestation, adverse weather

conditions, adverse ground conditions and natural and other disasters. Certain agricultural raw materials are

available only at specific times during a year due to the seasonality of growing periods and harvest times in India.

In addition, the available amounts of raw materials may not adjust in response to increasing demand. Our results

of operations will be affected in the event of any shortfall of our raw materials.

We have also integrated enterprise resource planning (“ERP”) system, SAP S/4HANA in fiscal year 2020. We

believe our ERP system enables us to effectively monitor business, optimise operational efficiency, maintain a

high level of responsiveness to our customers’ needs and lower operating cost.

Channel mix

Our result of operations is impacted by the mix of product sales across our channels. We believe that we are able

to maximize sales by engaging with our consumers across multiple channels. Our products are primarily sold by

distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies, institutional

channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department), CPC (Central

Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores).

We believe that there will be greater play of mobile analytics, artificial intelligence and cloud technology, which

will help the FMCG sector to transform and drive the next phase of growth. The ability to digitise fast, customise

and improve customer experience via e-retail will be the biggest differentiator. We believe that the initiatives that

we have taken will drive change and enable businesses to become more efficient and cost effective. By managing

e-inventories, bridging gaps in supply chain management and making distribution channels more efficient, we

will be able to improve customer experience and the sales of our products.

We also intend to expand our e-commerce platform, which has become an important distribution medium in the

health and wellness sector. As we recognised the shift in consumer preference to digital purchase options due to

the COVID-19 pandemic, we leveraged e-commerce platforms by setting up telesales channels for retailers across

many cities in India. We aim to widen our geographical outreach and bridge the gap between our Company and

the consumers by strengthening and investing in our e-commerce distribution model. All our Company’s products

are available at various e-commerce platforms like Amazon, Flipkart, Grofers, Big Basket, Nykaa, Udaan, Jio

Mart etc. As the e-commerce sector matures, we believe e-commerce platforms and communications will likely

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become a major component of product distribution and may have a profound impact on the health and wellness

industry and the supply chain. For further information, see “Our Business — Distribution.”

Explanation of key income statement items

Revenue from operations

Revenue from operations consists of sale of products and other operating revenues contributed by net gain/(loss)

on foreign currency transactions and translation and miscellaneous income.

Other Income

Other income consists of interest income on financial assets measured at amortised cost, net gain on investments

measured at fair value through profit and loss and net gain on sale of investments.

Cost of Materials consumed

Cost of materials consumed consists primarily of costs of milk, dextrose monohydrate, sugar and refined palm

oil.

Purchases of stock-in-trade

Purchases of stock-in-trade consists primarily of traded goods which the Company does not manufacture in-house

such as NYCIL.

Changes in Inventories

Changes in inventories between a reported period and opening balance consist primarily of finished goods, work-

in-progress and stock-in-trade.

Employee benefits expense

Employee benefits expense consists primarily of salaries and wages, contribution to provident and other funds

and staff welfare expenses.

Finance Cost

Finance cost consists primarily of interest expenses on working capital loans, non-convertible debentures and

lease and bank commission and charges.

Depreciation and amortisation expense

Depreciation and amortisation expense consist primarily of depreciation on tangible assets and right-to-use assets,

amortisation of intangible assets over the useful life of the assets.

Other expenses

Other expenses consists primarily of consumption of stores and spare parts, power and fuel, labour charges, rent,

repairs to buildings, repairs to plant and machinery, repairs to others, insurance, rates and taxes, commission to

directors, traveling expenses, legal and professional fees, commission on sales, freight and forwarding on sales,

advertisement and sales promotions, representative allowances, other marketing expenses, directors’ fees, net loss

on disposal of fixed assets and miscellaneous expenses including expenditure on corporate social responsibility

activities as required under section 135 of the Companies Act, 2013.

Tax expenses

Tax expenses consist primarily of current tax and deferred tax. Current tax consists of amount expected to be paid

in accordance with the provisions of the Income Tax Act, 1961 applicable in India. Deferred tax consists of

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deferred tax liabilities arising from depreciation and deferred tax assets arising from employee benefits,

unabsorbed business loss and depreciation and provision for expiry and breakages.

Critical accounting policies and practices

The discussion and analysis of our results of operations and financial condition is based on our audited

consolidated financial information, which has been prepared in accordance with Ind AS. Our results of operations

and financial condition are sensitive to accounting methods, assumptions and estimates that underlie the

preparation of our consolidated financial information. Historical experience and various other assumptions and

estimate we currently believe to be reasonable form the basis for making our judgments on matters that are not

readily apparent from other sources. Our management evaluates these estimates on an ongoing basis. Actual

results may differ from these estimates as the facts, circumstances and conditions may experience change or as a

result of different assumptions.

The selection of critical accounting policies, the judgments and other uncertainties affecting the application of

those policies, as well as the sensitivity of reported results to changes in conditions and assumptions, are all factors

you should consider when reviewing our audited financial statements. Our significant accounting policies are

summarized in Note 2 to the Audited Consolidated Financial Statements as of and for the year ended March 31,

2020 included elsewhere in this Preliminary Placement Document.

We believe the following critical accounting policies are affected by management’s estimates and assumptions,

changes to which could have a significant impact on our consolidated financial statements.

Income Taxes

Significant judgments are involved in determining the provision for income taxes, including amount expected to

be paid/recovered for uncertain tax positions and possibility of utilisation of Minimum Alternate Tax credit in

future.

Property, Plant and Equipment

Property, Plant and Equipment represent a significant proportion of the asset base of the Group. The charge in

respect of periodic 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. Management reviews the residual values, useful lives and methods

of depreciation of property, plant and equipment at each reporting period end and any revision to these is

recognised prospectively in current and future periods. 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.

Employee Benefits

Significant judgments are involved in making estimates about the life expectancy, discounting rate, salary

increase, etc. which significantly affect the working of the present value of future liabilities on account of

employee benefits by way of defined benefit plans.

Leases

When the entity has the option to extend a lease, management uses its judgement to determine whether or not an

option would be reasonably certain to be exercised. Management considers all facts and circumstances including

their past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help

them determine the lease term.

Product warranty and expiry claims

Significant judgments are involved in determining the estimated stock lying in the market with product shelf life

and estimates of likely claims on account of expiry of such unsold goods lying with stockist.

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Impairment of assets and investments

Significant judgment is involved in determining the estimated future cash flows from the investments, Property,

Plant and Equipment, other intangible assets and Goodwill to determine its value in use to assess whether there is

any impairment in its carrying amount as reflected in the financials.

Changes in accounting policies

Ind AS 115 – Revenue from Contracts with Customers

A. The Group has applied Ind AS 115 – Revenue from Contracts with Customers which is effective for an annual

period beginning on or after April 1, 2018. The following is the significant accounting policy related to

revenue recognition under Ind AS 115.

a. Sale of Goods:

Revenue from the sale of goods is recognized as revenue on the basis of customer contracts and the

performance obligations contained therein. Revenue is recognised at a point in time when the control of

goods or services is transferred to a customer. Control lies with the customer if the customer can

independently determine the use of and consume the benefit derived from a product or service. Revenues

from product deliveries are recognised at a point in time based on an overall assessment of the existence

of a right to payment, the allocation of ownership rights, the transfer of significant risks and rewards and

acceptance by the customer. The goods are often sold with volume discounts/pricing incentives and

customers have a right to return damaged or expired products. Revenue from sales is based on the price

in the sales contracts, net of discounts. When a performance obligation is satisfied, revenue is recognised

with the amount of the transaction price excluding estimates of variable consideration that is allocated to

that performance obligation. Historical experience, specific contractual terms and future expectations of

sales returns are used to estimate and provide for damage or expiry claims. No element of financing is

deemed present as the sales are made with the normal credit terms as per prevalent trade practice and

credit policy followed by the Group.

b. Service Income:

Service income is recognised as per the terms of contracts with the customers when the related services

are performed as per the stage of completion or on the achievement of agreed milestones and are net of

indirect taxes, wherever applicable.

B. Goods and Service Tax (GST) is not received by the Group on its own account. Rather, it is tax collected on

value added to the goods by the Group on behalf of the government. Accordingly, it is excluded from revenue.

C. The specific recognition criteria described below must also be met before revenue is recognized:

a. Interest Income:

For all debt instruments measured at amortised cost, interest income is recorded using the effective

interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or

receipts over the expected life of the financial instrument or a shorter period, where appropriate, to

the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When

calculating the effective interest rate, the Group estimates the expected cash flows by considering

all the contractual terms of the financial instrument but does not consider the expected credit losses.

b. Dividend:

Dividend income is recognised when the Group’s right to receive the payment is established, which

is generally when shareholders approve the dividend.

c. Other income:

Other income is recognised when no significant uncertainty as to its determination or realization

exists.

Ind AS 116 “Leases”

The Group has adopted Ind AS 116 “Leases” which is effective for an annual period beginning on or after from

April 1, 2019. The following is the significant accounting policy related to Ind AS 116. The adoption of this new

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Standard has resulted in the Group recognising a right-of-use asset and related lease liability in connection with

all former operating leases except for those identified as low-value or having a remaining lease term of less than

12 months from the date of initial application.

The new Standard has been applied using the modified retrospective approach, with the cumulative effect of

adopting Ind AS 116 did not have any impact to be recognised in equity as an adjustment to the opening balance

of retained earnings for the current period. Prior periods have not been restated. For contracts in place at the date

of initial application, the Group has elected to apply the definition of lease from Ind AS 17 and has not applied

Ind AS 116 to arrangements that were previously not identified as lease under Ind AS 17. The Group has elected

not to include initial direct costs in the measurement of the right-of-use asset for operating leases in existence at

the date of initial application of Ind AS 116, being April 1, 2019. At this date, the Group has also elected to

measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease

payments that existed at the date of transition. On transition, for leases previously accounted for as operating

leases with a remaining lease term of less than 12 months and for leases of low-value assets the Group has applied

the optional exemptions to not recognise right-of-use assets but to account for the lease expense on a straight-line

basis over the remaining lease term. For those leases previously classified as finance leases, the right-of-use asset

and lease liability are measured at the date of initial application at the same amounts as under Ind AS 17

immediately before the date of initial application.

As a lessee:

For any new contracts entered into on or after April 1, 2019, the Group considers whether a contract is, or contains

a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset the underlying

asset for a period of time in exchange for consideration’.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the Balance Sheet.

The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any

initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end

of the lease, and any lease payments made in advance of the lease commencement date net of any incentives

received.

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the

earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses

the right-of-use asset for impairment when such indicators exist. At the commencement date, the Company

measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the

interest rate implicit in the lease if that rate is readily available or the Company’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments including in

substance fixed, variable payments based on an index or rate, amounts expected to be payable under a residual

value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It

is remeasured to reflect any reassessment or modification, or if there are changes to the in-substance fixed

payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use

asset, or profit and loss if the right-of-use asset is already reduced to zero. The Group has elected to account for

short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-

use asset and lease liability, the payments in relation to these are recognised as an expense in Statement of Profit

and Loss on a straight-line basis over the lease term.

As a lessor:

The Group’s accounting policy under Ind AS 116 has not changed from the comparative period. As a lessor the

Company classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it

transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as

an operating lease if it does not.

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Results of operations

The following table sets forth certain of our historical revenue and expense items for the periods indicated below.

(₹ in lakhs) Fiscal year ended

March 31,

Three months ended

June 30,

2018 2019 2020 2019 2020

(audited) (unaudited)

REVENUE:

Revenue from Operations 52,114 84,282 176,682 62,025 53,737

Other Income 3,506 3,888 1,071 303 182

Total Income 55,620 88,170 177,753 62,328 53,919

EXPENSES:

Cost of materials consumed 16,018 29,263 75,382 12,926 10,945

Purchases of stock-in-trade 10 3,002 8,249 3,349 4,027

Changes in inventories of finished goods, work-

in-Progress and stock-in-trade

61 (2,428) (5,754) 9,020 8,858

Excise duty on sales 852 — — — —

Employee benefits expense 5,664 8,560 17,469 4,842 5,266

Finance costs 170 3,009 13,991 3,485 3,460

Depreciation, amortisation and impairment

expenses

888 1,251 2,639 1,035 642

Advertisement and promotion expenses —(1) —(1) —(1) 9,719 4,914

Other expenses 16,983 27,405 49,230 7,298 7,492

Total Expenses 40,646 70,062 161,206 51,674 45,604

Profit before exceptional items and tax 14,974 18,108 16,547 10,654 8,315

Exceptional items — (1,045) (4,420) 2,670 —

Profit before Tax 14,974 17,063 12,127 7,984 8,315

Less: Tax Expense:

Current Tax 3,071 3,109 (265) — —

Deferred Tax (1,748) (3,170) (1,780) (56) (605)

Total Tax Expenses 1,323 (61) (2,045) (56) (605)

Profit for the year 13,651 17,124 14,172 8,040 8,920

Other Comprehensive Income

Items that will not be reclassified to profit or

loss:

Re-measurement gains on post-employment

defined benefit plans (net of tax)

11 2 201 (5) 25

Items that will be reclassified to profit or loss:

Exchange differences on transaction of financial

statement of a foreign subsidiary

— — 17 — (1)

Other Comprehensive Income for the year

(net of tax)

11 2 218 (5) 24

Total Comprehensive Income for the year (net

of Tax)

13,662 17,126 14,390 8,035 8,944

Net profit attributable to:

Owners of the parent 13,390 16,914 14,172 8,035 8,944

Non-controlling interests 261 210 — — —

Other Comprehensive Income attributable to:

Owners of the parent 11 2 218 (5) 24

Non-controlling interests — — — — —

Total Comprehensive Income attributable to:

Owners of the parent 13,401 16,916 14,390 8,035 8,944

Non-controlling interests 261 210 — — —

Basic and diluted earnings per equity share

(EPS)(2) (in Rupees)

34.27 40.10 24.58 13.95 15.47

Notes:

1. Advertisement and promotion expenses are included in other expenses for the fiscal year March 31, 2018, 2019 and 2020.

2. EPS for three months ended June 30, 2019 and 2020 is not annualized.

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Comparison of results of operations for the three months ended June 30, 2019 and 2020

Revenue from Operations

Revenue from operations decreased by ₹8,288 lakhs, or 13.4%, to ₹53,737 lakhs for the three months ended June

30, 2020 from ₹62,025 lakhs for the three months ended June 30, 2019, primarily due to a disruption in supply-

chain and intermittent lockdown of businesses across India due to the COVID-19 pandemic during the three

months ended June 30, 2020, and the absence of GST budgetary support income for our operations in Sitarganj

which has ended on December 11, 2019.

Other Income

Other income decreased by ₹121 lakhs, or 39.9%, to ₹182 lakhs for the three months ended June 30, 2020 from

₹303 lakhs for the three months ended June 30, 2019, primarily due to the reduction of return on investment and

also from the sale of the Company’s investments to satisfy the cash requirements for payment of interest on non-

convertible debentures.

Cost of material consumed

Cost of material consumer decreased by ₹1,981 lakhs, or 15.3%, to ₹10,945 lakhs for the three months ended

June 30, 2020 from ₹12,926 lakhs for the three months ended June 30, 2019, primarily due to a proportionate

reduction in our sales.

Purchases of stock-in-trade

Purchase of stock-in-trade increased by ₹678 lakhs, or 20.2%, to ₹4,027 lakhs for the three months ended June

30, 2020 from ₹3,349 lakhs for the three months ended June 30, 2019, primarily due to additional purchases

required to meet the seasonal demand of NYCIL.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade decreased by ₹162 lakhs, or 1.8%,

to ₹8,858 lakhs for the three months ended June 30, 2020 from ₹9,020 lakhs for the three months ended June 30,

2019.

Employee benefits expense

Employee benefits expense increased by ₹424 lakhs, or 8.8%, to ₹5,266 lakhs for the three months ended June

30, 2020 from ₹4,842 lakhs for the three months ended June 30, 2019, primarily due to regular annual salary

increases to account for inflation and an increase in costs associated with our newly formed foreign subsidiary,

Zydus Wellness International DMCC.

Finance costs

Finance costs decreased by ₹25 lakhs, or 0.7%, to ₹3,460 lakhs for the three months ended June 30, 2020 from

₹3,485 lakhs for the three months ended June 30, 2019.

Depreciation, amortisation and impairment expenses

Depreciation, amortisation and impairment expenses decreased by ₹393 lakhs, or 38.0%, to ₹642 lakhs for the

three months ended June 30, 2020 from ₹1,035 lakhs for the three months ended June 30, 2019, primarily due to

alignment of the accounting policy of Heinz in relation to fixed asset with that of the Company in previous year.

Advertisement and promotion expenses

Advertisement and promotion expenses decreased by ₹4,805 lakhs, or 49.4%, to ₹4,914 lakhs for the three months

ended June 30, 2020 from ₹9,719 lakhs for the three months ended June 30, 2019, primarily due to a reduction in

advertisement expenditure during the lockdown imposed due to the COVID-19 pandemic.

81

Other expenses

Other expenses increased by ₹194 lakhs, or 2.7%, to ₹7,492 lakhs for the three months ended June 30, 2020 from

₹7,298 lakhs for the three months ended June 30, 2019.

Exception items

Exception items decreased by ₹2,670 lakhs, or 100%, to Nil for the three months ended June 30, 2020 from ₹2,670

lakhs for the three months ended June 30, 2019, primarily due to expenses such as fees under transition service

agreement, consultancy fees, stamp duties, legal and professional charges and other incidental charges incurred in

connection with the integration and completion of the merger of Heinz during fiscal year 2020.

Total tax expenses

Total tax expenses decreased by ₹549 lakhs, or 980.4%, to ₹(605) lakhs for the three months ended June 30, 2020

from ₹(56) lakhs for the three months ended June 30, 2019, primarily due to the tax benefits created on unabsorbed

business loss and depreciation in standalone entities.

Comparison of results of operations for the fiscal years ended March 31, 2019 and 2020

Revenue from Operations

Revenue from operations increased by ₹92,400 lakhs, or 109.6%, to ₹176,682 lakhs for the fiscal year ended

March 31, 2020 from ₹84,282 lakhs for the fiscal year ended March 31, 2019, primarily due to the acquisition of

Heinz since 30 January 2019, which contributed to our revenue for an entire fiscal year in fiscal year 2020 as

compared to the two-month period in fiscal year 2019.

Other Income

Other income decreased by ₹2,817 lakhs, or 72.5%, to ₹1,071 lakhs for the fiscal year ended March 31, 2020

from `3,888 lakhs for the fiscal year ended March 31, 2019, primarily due to the reduction in interest rates and

utilization of investment in payment of interest due on issuance of non-convertible debenture, which led to

reduction in investments and corresponding reduction in other income in FY2020.

Cost of material consumed

Cost of material consumed increased by ₹46,119 lakhs, or 157.6%, to ₹75,382 lakhs for the fiscal year ended

March 31, 2020 from ₹29,263 lakhs for the fiscal year ended March 31, 2019, primarily due to corresponding

increase in sales due to the acquisition of Heinz since 30 January 2019, which contributed to an increase in cost

of material consumed for the fiscal year 2020.

Purchases of stock-in-trade

Purchases of stock-in-trade increased by ₹5,247 lakhs, or 174.8%, to ₹8,249 lakhs for the fiscal year ended March

31, 2020 from ₹3,002 lakhs for the fiscal year ended March 31, 2019, primarily due to the acquisition of Heinz

since January 30, 2019, which contributed to an increase in purchases of stock-in-trade through the trading of

NYCIL for the full year ended March 31, 2020, as compared to the two-month period ended March 31, 2019.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade gain by ₹3,326 lakhs, or 137.0%,

to ₹(5,754) lakhs for the fiscal year ended March 31, 2020 from ₹(2,428) lakhs for the fiscal year ended March

31, 2019, primarily due to increase in closing stock as the dispatch were impacted on account of the COVID-19

pandemic during the last week of March 2020.

Employee benefits expense

Employee benefits expense increased by ₹8,909 lakhs, or 104.1%, to ₹17,469 lakhs for the fiscal year ended

March 31, 2020 from ₹8,560 lakhs for the fiscal year ended March 31, 2019, primarily due to the acquisition of

Heinz since 30 January 2019, which contributed to an increase employee benefits expense for the fiscal year 2020.

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Finance costs

Finance cost increased by ₹10,982 lakhs, or 365.0%, to ₹13,991 lakhs for the fiscal year ended March 31, 2020

from ₹3,009 lakhs for the fiscal year ended March 31, 2019, primarily due to interest accruals of non-convertible

debentures issued during the last quarter of fiscal year 2019 and was outstanding during entire fiscal year 2020.

Depreciation, amortisation and impairment expenses

Depreciation, amortisation and impairment expenses increased by ₹1,388 lakhs, or 111.0%, to ₹2,639 lakhs for

the fiscal year ended March 31, 2020 from ₹1,251 lakhs for the fiscal year ended March 31, 2019, primarily due

to the acquisition of Heinz since 30 January 2019, which contributed to an increase in depreciation, amortisation

and impairment expenses for the fiscal year 2020.

Other expenses

Other expenses increased by ₹21,825 lakhs, or 79.6%, to ₹49,230 lakhs for the fiscal year ended March 31, 2020

from ₹27,405 lakhs for the fiscal year ended March 31, 2019, primarily due to the acquisition of Heinz since 30

January 2019, which contributed to an increase in other expenses for the fiscal year 2020.

Exception items

Exception items increased by ₹3,375 lakhs, or 323%, to ₹4,420 lakhs for the fiscal year ended March 31, 2020

from ₹1,045 lakhs for the fiscal year ended March 31, 2019, primarily due to expenses such as transition service

agreement, consultancy fees, stamp duties, legal and professional charges and other incidental charges incurred in

connection with the integration and completion of the merger of Heinz during fiscal year 2020.

Total tax expenses

Total tax expenses decreased by ₹1,984 lakhs, or 3,252.5%, to ₹(2,045) lakhs for the fiscal year ended March 31,

2020 from ₹(61) lakhs for the fiscal year ended March 31, 2019, primarily due effect of change in enacted rate in

India and deferred tax asset created on unabsorbed business loss and depreciation in standalone entities during

fiscal year 2020.

Comparison of results of operations for the fiscal years ended March 31, 2018 and 2019

Revenue from Operations

Revenue from operations increased by ₹32,168 lakhs, or 61.7%, to ₹84,282 lakhs for the fiscal year ended March

31, 2019 from ₹52,114 lakhs for the fiscal year ended March 31, 2018, primarily due to the acquisition of Heinz

since 30 January 2019, which contributed to our revenue for the two-month period in fiscal year 2019.

Other Income

Other income increased by ₹382 lakhs, or 10.9%, to ₹3,888 lakhs for the fiscal year ended March 31, 2019 from

₹3,506 lakhs for the fiscal year ended March 31, 2018, primarily due to gain on sale of investment from our

investment of the proceeds from the issuance of ₹1,500 crores non-convertible debentures in a liquid fund, prior

to the deployment of funds in the acquisition of Heinz.

Cost of material consumed

Cost of material consumed increased by ₹13,245 lakhs, or 82.7%, to ₹29,263 lakhs for the fiscal year ended March

31, 2019 from ₹16,018 lakhs for the fiscal year ended March 31, 2018, primarily due to the acquisition of Heinz

since 30 January 2019, which contributed to an increase in cost of material consumed for the fiscal year 2019 due

to corresponding increase in sales.

Purchases of stock-in-trade

Purchases of stock-in-trade increased by ₹2,992 lakhs, or 29,920.0%, to ₹3,002 lakhs for the fiscal year ended

March 31, 2019 from ₹10 lakhs for the fiscal year ended March 31, 2018, primarily due to the increase in purchase

of NYCIL upon completion of the acquisition of Heinz during the last quarter of fiscal year 2019.

83

Changes in inventories of finished goods, work-in-Progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade decreased by ₹2,489 lakhs, or

4,080.3%, to ₹(2,428) lakhs for the fiscal year ended March 31, 2019 from ₹61 lakhs for the fiscal year ended

March 31, 2018, primarily due to primarily due to the acquisition of Heinz since 30 January 2019, which

contributed to a decrease in inventories of finished goods, work-in-progress and stock-in-trade for the fiscal year

2019.

Employee benefits expense

Employee benefits expense increased by ₹2,896 lakhs, or 51.1%, to ₹8,560 lakhs for the fiscal year ended March

31, 2019 from ₹5,664 lakhs for the fiscal year ended March 31, 2018, primarily due to the acquisition of Heinz

since 30 January 2019, which contributed to an increase in employee benefits expense for the fiscal year 2019.

Finance costs

Finance costs increased by ₹2,839 lakhs, or 1,670.0%, to ₹3,009 lakhs for the fiscal year ended March 31, 2019

from ₹170 lakhs for the fiscal year ended March 31, 2018, primarily due to interest accrued on non-convertible

debentures issued during last quarter of fiscal year 2019.

Depreciation, amortisation and impairment expenses

Depreciation, amortisation and impairment expenses increased by ₹363 lakhs, or 40.9%, to ₹1,251 lakhs for the

fiscal year ended March 31, 2019 from ₹888 lakhs for the fiscal year ended March 31, 2018, primarily due to the

acquisition of Heinz since 30 January 2019, which contributed to an increase in depreciation, amortisation and

impairment expenses for the fiscal year 2019.

Other expenses

Other expenses increased by ₹10,422 lakhs, or 61.4%, to ₹27,405 lakhs for the fiscal year ended March 31, 2019

from ₹16,983 lakhs for the fiscal year ended March 31, 2018, primarily due to the acquisition of Heinz since 30

January 2019, which contributed to an increase in other expenses for the fiscal year 2019.

Exception items

Exception items increased by ₹1,045 lakhs, or 100%, to ₹1,045 lakhs for the fiscal year ended March 31, 2019

from Nil for the fiscal year ended March 31, 2018, primarily due to expenses such as fees under transition service

agreement, consultancy fees, stamp duties, legal and professional charges and other incidental charges incurred in

connection with the integration and completion of the merger of Heinz during fiscal year 2019.

Total tax expenses

Total tax expenses decreased by ₹1,384 lakhs, or 104.6%, to ₹(61) lakhs for the fiscal year ended March 31, 2019

from ₹1,323 lakhs for the fiscal year ended March 31, 2018, primarily due to reduction in our effective income

tax rate from 8.84% for the year ended March 31, 2018 to 0.35% for the year ended March 31, 2019. Please refer

to Note 8 of the notes to the Company’s consolidated financial statements as at and for the year ended March 31,

2019 for further information.

Liquidity and Capital Resources

Our liquidity requirements arise principally from our operating activities, capital expenditures for maintenance

and expansion activities, new facilities, the repayment of borrowings and debt service obligations. Our expansion

plans include setting up of new manufacturing line for new products.

Historically, our principal sources of funding have included cash from operations, short-and long-term committed

and uncommitted loan facilities, overdraft facilities that are repayable on demand, cash and cash equivalents and

equity and financing provided by our shareholders.

We held cash and cash equivalents of ₹2,959 lakhs, ₹13,815 lakhs and ₹5,448 lakhs as of March 31, 2018, 2019

and 2020, respectively.

84

Our gross debt as at March 31, 2020 was ₹1,51,905 lakhs.

As at March 31, 2020, we held cash and cash equivalent of ₹31,257 lakhs (includes liquid investment and bank

balances).

We believe that, as adjusted for the Issue, our operating cash flows and facilities will be sufficient to meet our

requirements and commitments for at least the next twelve months. We are currently leveraged and have

significant debt service obligations. Our actual financing requirements will depend on a number of factors, many

of which are beyond our control.

Cash flow

The following table sets forth cash flow information for the fiscal years ended March 31, 2018, 2019 and 2020.

For a full description of line items in our cash flow statement, see pages 196 to 306 of this Preliminary Placement

Document.

(₹ in lakhs) Fiscal year ended March 31

2018 2019 2020

(audited)

Net cash from operating activities 6,906 14,938 25,925

Net cash from / (used in) investing activities (5,912) (416,165) (8,323)

Net cash (used in)/generated financing activities (182) 405,153 (25,969)

Net increase/(decrease) in cash and cash equivalents 812 3,926 (8,367)

Cash and cash equivalents at the beginning of the period 2,147 2,959 13,815

Cash and cash equivalents of acquired Business — 6,930 —

Cash and cash equivalents at the end of the period 2,959 13,815 5,448

Net cash from operating activities

Net cash from operating activities was ₹25,925 lakhs for the fiscal year ended March 31, 2020 compared to

₹14,938 lakhs for the fiscal year ended March 31, 2019. The increase was primarily due to our acquisition of

Heinz since 30 January 2019, which led to the increase in EBITDA during fiscal year 2020.

Net cash from operating activities was ₹14,938 lakhs for the fiscal year ended March 31, 2019 compared to ₹6,906

lakhs for the fiscal year ended March 31, 2018. The increase was primarily due to our acquisition of Heinz since

30 January 2019, which led to the increase in EBITDA during the two-month period ended 31 March 2019.

Net cash used in investing activities

Net cash used in investing activities was ₹8,323 lakhs for the fiscal year ended March 31, 2020 compared to

₹416,165 lakhs for the fiscal year ended March 31, 2019. This was primarily due to cash outflow in connection

with the acquisition of Heinz during the fiscal year ended March 31, 2019.

Net cash used in investing activities was ₹416,165 lakhs for the fiscal year ended March 31, 2019 compared to

₹5,912 lakhs for the fiscal year ended March 31, 2018. This was primarily due to cash outflow in connection with

the acquisition of Heinz during the fiscal year ended March 31, 2019.

Net cash (used in) / generated from financing activities

Net cash used in financing activities was ₹25,969 lakhs for the fiscal year ended March 31, 2020 compared to net

cash generated from financing activities of ₹405,153 lakhs for the fiscal year ended March 31, 2019. This was

primarily due to inflow of cash through the issuance of non-convertible debentures and equity shares on a

preferential basis for the acquisition of Heinz during the fiscal year ended March 31, 2019.

Net cash generated from financing activities was ₹405,153 lakhs for the fiscal year ended March 31, 2019

compared to net cash used in financing activities of ₹182 lakhs for the fiscal year ended March 31, 2018. This

was primarily due to inflow of cash through the issuance of non-convertible debentures and equity shares on a

preferential basis for the acquisition of Heinz during the fiscal year ended March 31, 2019.

85

Capital Expenditure

Our capital expenditures include expenditure on plant and equipment and other intangible assets (excluding

goodwill).

For the fiscal years ended March 31, 2018, 2019 and 2020 and for the three months ended June 30, 2019 and

2020, we made capital expenditures of ₹1,050 lakhs, ₹1,477 lakhs, and ₹2,459 lakhs, ₹436 lakhs and ₹236 lakhs,

respectively.

Capital expenditure for the three months ended June 30, 2020 was ₹236 lakhs, compared with ₹436 lakhs in the

three months ended June 30, 2019, a decrease of ₹200 lakhs. This was primarily due to reduction on capital

expenditure as part of its normal course of business capital expenditure plans.

Capital expenditure for the fiscal year ended March 31, 2020 was ₹2,459 lakhs, compared with ₹1,477 lakhs in

the fiscal year ended March 31, 2019, an increase of ₹982 lakhs. This was primarily due to increase in expenditure

towards integration of our accounting software SAP ECC to S/4 Hana and procuring of equipment to maintain

production and supply of goods.

Capital expenditure for the fiscal year ended March 31, 2019 was ₹1,477 lakhs, compared with ₹1,035 lakhs in

the fiscal year ended March 31, 2018, an increase of ₹442 lakhs. The increase was primarily due to expenditure

on procuring of equipment to maintain production and supply of goods.

Over the next three years, we expect to incur capital expenditure for the improvement and renovation of our plants,

expansion of our business operations further in line with our expectations of the planned growth of our customers.

Contractual Obligations

The following table sets forth our remaining contractual maturity for our non-derivative financial liabilities with

contractual repayment periods as of March 31, 2020. The table reflects the undiscounted cash flows of financial

liabilities based on the earliest date on which we could be required to pay.

(₹ in lakhs)

As at March 31, 2020

Carrying

value <1 year 1-2 years 2-3 years >3 years Total

Particulars

Non-derivatives financial liabilities

Borrowings (including interest) 154,727 15,690 63,635 59,115 54,570 193,010

Trade payables 49,112 49,112 — — — 49,112

Lease Liabilities 78 22 22 22 33 99

Other financial liabilities (excluding

interest accrued but not due)

1,506 1,455 — — 51 1,506

Total 205,423 66,279 63,657 59,137 54,654 243,727

Our ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, our indebtedness,

or to fund planned capital expenditure and working capital, will depend on our future performance and our ability

to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive,

legislative, legal, regulatory and other factors that are beyond our control, as well as to other factors discussed

under “Risk Factors.”

86

Interest Coverage Ratio

The following table sets forth our interest coverage ratio for the periods indicated:

(in ₹ lakhs)

Particulars

For the financial years ended

March 31, 2020

(in Ind AS)

March 31, 2019

(in Ind AS)

March 31, 2018

(in Ind AS)

Profit After Tax(1) 14,172 17,124 13,651

Add: Depreciation, amortisation and

Impairment Expenses

2639 1,251 888

Cash Profit After Tax 16,811 18,375 14,539

Add: Finance cost(2) (A) 13,991 3,009 170

Cash Profit after Tax + Finance cost (B) 30,802 21,384 14,709

Interest Coverage Ratio (B/A) (in times) 2.20 7.11 86.52

Notes:

(1) Profit After Tax is considered as Profit for the year before taking in to account Other Comprehensive Income.

(2) Finance cost is inclusive of Interest expenses and bank commission & other finance charges as per statement

of Profit and Loss.

Off-Balance Sheet Arrangements and Contingent Liabilities

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future

effect on our financial condition, changes in financial condition, revenue or expenses, operating results, liquidity,

capital expenditure or capital resources.

Contingent Liabilities

Please refer to Note 28 of the Audited Consolidated Financial Statements as of and for the year ended March 31,

2020 included elsewhere in this Preliminary Placement Document for details of our contingent liabilities.

Qualitative and Quantitative Disclosures about Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of

changes in market prices. Market prices are subject to currency rate risk and interest rate risk. The financial

instruments that are affected by these risks include loans, bonds and borrowing, deposits, available-for-sale

investments and derivative financial instruments.

Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. We

are exposed to credit risk from trade receivables, bank deposits and other financial assets. We periodically assess

the financial reliability of the counterparty taking into account the financial condition, current economic trends,

analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

Bank deposits

87

We maintain our cash and cash equivalents and bank deposits with reputed and highly rated banks Hence, there is

no significant credit risk on such deposits.

Loans to related parties

They are given for business purposes. We reassess the recoverability of loans periodically. Interest recoveries from

these loans are regular and there is no event of defaults.

Trade Receivable

We trade with recognized and credit worthy third parties. It is our policy that all customers who wish to trade on

credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-

going basis with the result that our exposure to bad debts is not significant. There are no significant credit risks

with related parties of our Company. We are exposed to credit risk in the event of non-payment by customers.

Credit risk concentration with respect to trade receivables is mitigated by our large customer base. Adequate

expected credit losses are recognized as per the assessments.

The history of trade receivables shows an allowance for bad and doubtful debts of Nil as at March 31, 2020. We

have made allowance of Nil, against trade receivables of ₹11,820 lakhs as at March 31, 2020.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the

availability of funding through an adequate amount of committed credit facilities to meet obligations when due.

Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under

committed facilities.

Management monitors rolling forecasts of our liquidity position and cash and cash equivalents on the basis of

expected cash flows. We take into account the liquidity of the market in which the entity operates. In addition, our

liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid

assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory

requirements and maintaining debt financing plans.

Maturities of financial liabilities

The table below analyses our financial liabilities into relevant maturity groupings based on their contractual

maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual

undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of

discounting is not significant.

(₹ in lakhs)

As at March 31, 2020

Carrying

value <1 year 1-2 years 2-3 years >3 years Total

Particulars

Non-derivatives financial liabilities

Borrowings (including interest) 154,727 15,690 63,635 59,115 54,570 193,010

Trade payables 49,112 49,112 — — — 49,112

Lease Liabilities 78 22 22 22 33 99

Other financial liabilities (excluding

interest accrued but not due)

1,506 1,455 — — 51 1,506

Total 205,423 66,279 63,657 59,137 54,654 243,727

Foreign currency risk

We are exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the

US Dollar, Euro and GBP. Foreign exchange risk arises from recognised assets and liabilities denominated in a

88

currency that is not our functional currency. Our operations in foreign currency is insignificant and hence there is

no material risk.

Foreign currency risk exposure

The Group’s exposure to foreign currency risk at the end of the reporting period expressed as follows:

Sensitivity

The sensitivity of profit or loss and equity to changes in the exchange rates arises mainly from foreign currency

denominated financial instruments.

(₹ in lakhs)

As at March 31, 2020 As at March 31, 2019

Movement in Rate Impact on PAT Movement in Rate Impact on PAT

Particulars

USD 9% 12 7 7

USD (9%) (12) (7%) (7)

EUR 7% 9 7 16

EUR (7%) (9) (7%) (16)

Others 5 2 5 (0)

Others (5%) (2) (5%) 0

Interest Rate Risk

Liabilities*

Our policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2020, we

are exposed to changes in market interest rates through bank borrowings at variable interest rates. Our investments

in fixed deposits are at fixed interest rates.

Below is the sensitivity of profit or loss and equity changes in interest rates:

(₹ in lakhs)

Movement in Rate As at March 31, 2020 As at March 31, 2019

Particulars

Interest rates +0.50% (7) (23)

Interest rates (0.50%) 7 23

[*] Holding all other variables constant

Price Risk

Exposure

Our exposure to price risk arises from investments in equity and mutual fund held by us and classified in the

balance sheet as fair value through OCI and at fair value through profit or loss respectively, to manage our price

risk arising from investments in equity securities and mutual fund, we diversify our portfolio. Diversification of

the portfolio is done in accordance with the limits set by us.

89

Sensitivity – Mutual Fund [*]

The table below summarises the impact of increases/decreases of the index on our equity and profit and loss for

the period. The analysis is based on the assumption that the price of the instrument has increased by 2% or

decreased by 2% with all other variables held constant.

(₹ in lakhs)

Movement in

Rate

As at March 31,

2020

As at March 31,

2019

Particulars

Mutual Funds [Quoted]

Increase 2% +2% 221 92

Decrease 2% -2% (221) (92)

[*] Holding all other variables constant.

90

INDUSTRY OVERVIEW

Unless noted otherwise, the information in this section is obtained or extracted from (i) the CRISIL Report

prepared and issued by CRISIL on our request, and (ii) the Nielsen Report prepared and issued by Nielsen on our

request. Neither we nor any other person connected with the Issue have independently verified this information.

The data may have been re-classified by us for the purposes of presentation. Industry sources and publications

generally state that the information contained therein has been obtained from sources generally believed to be

reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability

cannot be assured. Industry sources and publications are also prepared based on information as of specific dates

and may no longer be current or reflect current trends. Industry sources and publications may also base their

information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly,

investors must rely on their independent examination of, and should not place undue reliance on, or base their

investment decision solely on this information. The recipient should not construe any of the contents in this report

as advice relating to business, financial, legal, taxation or investment matters and are advised to consult their

own business, financial, legal, taxation, and other advisors concerning the transaction.

CRISIL Report is subject to the following disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing the report

(Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data). However,

CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible

for any errors or omissions or for the results obtained from the use of Data / Report. The Report is not a

recommendation to invest / divest in any entity covered in the Report and no part of the Report should be construed

as an expert advice or investment advice or any form of investment banking within the meaning of any law or

regulation. CRISIL especially states that it has no liability whatsoever to the subscribers / users / transmitters/

distributors of the Report. Without limiting the generality of the foregoing, nothing in the Report is to be construed

as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the

necessary permission and/or registration to carry out its business activities in this regard. Zydus Wellness Limited

will be responsible for ensuring compliances and consequences of non-compliances for use of the Report or part

thereof outside India. CRISIL Research operates independently of, and does not have access to information

obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their

regular operations, obtain information of a confidential nature. The views expressed in the Report are that of

CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of the Report may be published/reproduced

in any form without CRISIL’s prior written approval.”

1. Macroeconomic overview of India

1.1. A review of India’s gross domestic product growth

Gross domestic product clocked 7% CAGR between fiscals 2012 and 2020

In 2015, the Ministry of Statistics and Programme Implementation (MoSPI) changed the base year for calculating

the gross domestic product (GDP) to fiscal 2012 from fiscal 2005. Based on this, India’s GDP increased at a

compound annual growth rate (CAGR) of 7% to Rs 146 trillion from Rs 87 trillion between fiscals 2012 and 2020.

Fiscal 2020 estimates show that investment decline has added to the economy’s woes

India’s GDP growth in fiscal 2020 was at 4.2% as per the provisional estimates. Private consumption was brought

down to a decadal low of 5.3% from 7.2% in fiscal 2019. The dip is clearly a fallout of the slowdown in spending

by the central and state governments and a muted private sector appetite for fresh investments. Over the past four

years, a sharp increase in government spending, especially on infrastructure, such as roads, railways and highways,

had kept the overall investment spending growth at an 8% average. In fiscal 2020, though, government investment

spending took a backseat. Meanwhile, weak consumption demand and low capacity utilisation kept investments

in the manufacturing sector in the lull.

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Real GDP growth in India (new GDP series)

PE: Provisional estimates

PE: Provisional estimates

Source: Provisional Estimates of Annual National Income, 2019-20, Central Statistics Office (CSO), MoSPI,

CRISIL Research

1.2. GDP outlook for fiscal 2021

International Monetary Fund forecasts India’s GDP growth rate to contract by 4.5% in fiscal 2021

The International Monetary Fund (IMF), in the World Economic Outlook Update released in June 2020, has

projected a sharp contraction of 4.5% for the Indian economy in fiscal 2021, citing the Covid-19 pandemic,

following a longer period of lockdown and slower than anticipated recovery in April. However, according to the

report, India’s GDP is expected to bounce back in fiscal 2022 with a robust 6% growth rate.

Real GDP growth (% on-year)

E: Estimated,’ P: Projected

Projections are based on World Economic Outlook Update released in June 2020 by the IMF

Source: Provisional Estimates of Annual National Income, 2019-20, CSO, MoSPI, CRISIL Research, IMF

1.3. Fundamental growth drivers of GDP

By 2030, India’s population is projected to touch 1.5 billion by 2030

India’s population clocked 1.8% CAGR from 2001 to 2011 to reach approximately 1.2 billion and comprised

nearly 246 million households, as per Census 2011.

According to the World Urbanization Prospects: The 2018 Revision by the United Nations, India, which is second

only to China in terms of population, accounted for nearly 37% of the world’s population as of 2015. The report

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projects India’s population to increase at 1% CAGR to 1.5 billion by 2030, making it the world’s most populous

country, surpassing China (with 1.4 billion people by 2030).

India’s population growth

P: Projected

Source: World Urbanization Prospects: The 2018 Revision, United Nations, CRISIL Research

Urbanisation likely to reach 40% by 2030

The share of India’s urban population, in relation to its total population, has been rising over years and printed

approximately 31% in 2010. This trend will continue, with the United Nations’ report projecting that nearly 40%

of the country’s population will live in urban areas by 2030.

India’s urban versus rural population

P: Projected

Source: World Urbanization Prospects: The 2018 Revision, United Nations, CRISIL Research

People from rural areas move to cities for better job opportunities, education and quality of life. Entire family or

only a few individuals (generally an earning member or students) may migrate, while the rest of the family

continues to live in the native, rural house.

Per capita income recorded 5% CAGR between fiscals 2012 and 2020

India’s per capita income, a broad indicator of living standards, clocked a healthy approximately 5% CAGR

between fiscals 2012 and 2020, increasing from Rs 63,642 in fiscal 2012 to Rs 94,954 in fiscal 2020. Growth in

per capita income has been led by better job opportunities, propping up overall GDP growth. Moreover, population

growth has remained fairly stable at approximately 1% CAGR.

Based on the IMF forecast of GDP and population growth for fiscals 2021 and 2022, CRISIL Research believes

that per capita net national income will contract by 5.5% during fiscal 2021. However, the per capita net national

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income is set to rise 5% on-year during fiscal 2022 led by strong GDP growth as population is expected to continue

to grow at a rate of 1% on-year.

Per capita net national income at constant prices

PE: Provisional estimates

P: Projections based on IMF forecast of GDP growth at approximately 4.5% for FY21 and 6% for FY22

Source: Provisional Estimates of Annual National Income, 2019-20, CSO, MoSPI, CRISIL Research

1.4. A review of private final consumption growth in India

Private final consumption expenditure to maintain dominant share in GDP

Private final consumption expenditure at constant prices clocked 6.8% CAGR between fiscals 2012 and 2020,

maintaining its dominant share of approximately 57% in the GDP pie. In its annual provisional estimates, the CSO

estimated the private final consumption expenditure at Rs 83.3 trillion (approximately 57% of GDP) for fiscal

2020. Factors contributing to this growth included a good monsoon, wage revisions due to the implementation of

the Pay Commission’s recommendations, benign interest rates and low inflation.

Private final consumption expenditure (at constant prices)

PE: Provisional estimates

Source: Provisional Estimates of Annual National Income, 2019-20, CSO, MoSPI, CRISIL Research

1.5. Global GDP outlook for 2021

World GDP to contract 4.9% in 2020, but grow 5.4% in 2021

The pandemic had a significant impact on the economic activity in the first half of 2020, and recovery is projected

to be gradual. As per the World Economic Outlook Update, published by the IMF in June 2020, global GDP is

projected to decline 4.9% in 2020, and clock 5.4% growth in 2021 led by strong consumption and investment.

Advanced economies are projected to contract 8.0% in 2020, but grow 4.8% in 2021. Overall, emerging markets

and developing economies are forecast to contract 3.0% in 2020 and grow 5.9% in 2021.

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Real GDP growth (on-year)

P: Projected

Source: IMF, World Economic Outlook, June 2020

However, there are downsides to the projection, such as:

• Reoccurrence and the timeframe of the pandemic and required lockdowns

• Voluntary social distancing, which will affect spending

• Displaced workers’ ability to secure employment, possibly in different sectors

• Scarring from firm closures and unemployed workers exiting the workforce, which may make it more

difficult for activity to bounce back once the pandemic fades

• The impact of changes may strengthen workplace safety — such as staggered work shifts, enhanced

hygiene and cleaning between shifts, new workplace practices relating to proximity of personnel on

production lines — which incur business costs

• Global supply chain reconfigurations that affect productivity, as companies try to enhance their resilience

to supply disruptions

• Extent of cross-border spillovers from weaker external demand and funding shortfall

• Eventual resolution of the current disconnect between asset valuations and prospects for economic activity

• Escalating tensions between the United States and China on multiple fronts

• Frayed relationships among the Organization of the Petroleum Exporting Countries and coalition of oil

producers

• Additional challenges to the global economy due to the widespread social unrest

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2. Assessment of the FMCG industry in India

2.1. Overview of the FMCG industry in India

Food and beverages (F&B) accounted for more than 50% of the overall FMCG industry as of fiscal 2020

Figures in the parentheses represent the share of segments as a percentage of the total FMCG market (in value

terms) from the manufacturing perspective, as of fiscal 2020.

Source: CRISIL Research

F&B

Sub-segment-wise share within F&B as on fiscal 2020

Note: Sub-segment-wise share from the manufacturing revenue perspective

Source: CRISIL Research

The branded foods industry is fairly concentrated among organised players with at least one player being dominant

in a particular segment. However, competitive intensity in the industry is increasing led by the foray of foreign

players, expansion by regional players as well as introduction of innovative products launched by various players.

The non-alcoholic beverages segment is characterised by strong demand due to changing lifestyle of consumers,

rising disposable income, launch of new varieties, and increased penetration in semi-urban and rural markets. The

sector is characterised by seasonality in demand, which spikes in summer and weakens in winter. Seasonality is

higher for segments like carbonated soft drinks and packaged fruit-based beverages, wherein seasonality in

demand leads to approximately 50% sales in summer. Over the last few years, players have launched beverages

in a variety of flavours and packaging to suit consumer demand.

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Home care

Sub-segment-wise share within home care as of fiscal 2020

Note: Sub-segment-wise share from the manufacturing revenue perspective

Source: CRISIL Research

The home care industry is oligopolistic in nature with a few players dominating the market in different segments.

The level of competition, among all players, remains high. The organised sector accounts for over 80% of the

industry as of fiscal 2020. Players in the organised segment compete on brand image and ability to launch relevant

innovative products. Rising competition from regional and international players coupled with new entrants has

made pricing competitive. Being a price sensitive market, they also offer products at the lower price rung to

combat unorganised players.

Personal care

Sub-segment-wise share within personal care as of fiscal 2020

Note: Sub-segment-wise share from the retail revenue perspective

Source: CRISIL Research

The personal care segment is dominated by organised players. Players in the organised segment compete on brand

image and ability to launch relevant innovative products. Rising competition from regional and national players

coupled with the entry of new players has made pricing competitive. While competition is oligopolistic in nature,

especially in oral care and hair care, it is fragmented in case of skin care. Under cosmetics, it is again oligopolistic

in the premium category, while it is fragmented in case of other products.

India being a price-sensitive market, cosmetics and personal care product companies, especially new entrants,

have had to constantly chalk out new strategies to suit local preferences and budgets and to carve a niche in the

market. However, organised players have been successful in combating this competition by offering products in

the low-end segment and introducing products at affordable price points. Economic and demographic trends

continue to influence the sales of cosmetics and toiletries in India.

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2.2. Covid-19 and the Indian FMCG industry

Challenges faced by the industry

Source: CRISIL Research

The pandemic and the nationwide lockdown in March 2020 led to disruptions in production, demand and supply

chain of the FMCG industry. The impact was lower for essentials as demand was only marginally and temporarily

impacted. Consumer food companies were moderately impacted on working capital intensity as automated

production capacities and steady demand ensured inventory days remained low. However, stressed penetration in

rural areas and supply chain disruptions delayed payments from distributors. Within essential items, demand for

food and home care was higher than personal care/beauty products owing to increased concern about hygiene

among consumers.

A shift in brand loyalty was observed due to unavailability, which boosted sales of local manufacturers / small

and medium-sized enterprises with a flexible logistics network. Start-ups and small and medium-sized enterprises

with in-house logistics and local snacks manufacturers in rural areas were able to keep pace with the growing

demand for essential items.

E-retail segment took advantage of the changing consumer needs. E-grocers such as BigBasket and Grofers and

online marketplaces such as Amazon and Flipkart saw a surge in demand and were delivering essential items at

the doorstep.

Measures undertaken by FMCG companies to cope with Covid-19

To reduce the impact, FMCG companies turned to product mix optimisation strategies. Companies produced only

what consumers demanded. FMCG companies produced hand sanitisers in order to cope with the losses as there

was a huge demand for the same. Companies also offered discounts on personal care and premium essential

products to catch up with the curbed demand. Retailers and FMCG companies tied up with food delivery service

providers for doorstep deliveries, to meet consumer inclination towards convenience.

Changing consumer behaviour and the potential impact on FMCG industry

Consumer behaviour is expected to witness a change in the near term as availability, convenience, affordability,

hygiene and safety become new consumer priorities.

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Source: CRISIL Research

FMCG companies are on an innovation spree in order to meet consumers’ changing preferences. FMCG

companies are launching new variants in their essential products basket in order to attract consumer interest. With

consumers becoming more health conscious, FMCG companies have a huge potential to tap, especially in products

that help build immunity and provide better protection.

Some recent developments in the FMCG sector are as follows:

• In May 2020, Tata Consumer Products Ltd acquired PepsiCo’s stake in NourishCo Beverages Ltd

• Hindustan Unilever Ltd (HUL) completed merger with GSK Consumer Healthcare India Ltd effective fiscal

2021. The two brands Horlicks and Boost now are a part of HUL

• Zydus Wellness Ltd completed the acquisition of Heinz India Private Ltd (subsidiary of Kraft Heinz). The

acquisition got into Zydus Wellness Ltd brands, namely Complan, Glucon-D, NYCIL and Sampriti Ghee, and

two manufacturing facilities in Aligarh and Sitarganj

• In March 2020, HUL signed an agreement with Glenmark Pharmaceuticals Ltd to acquire its intimate hygiene

brand VWash

• In November 2019, ITC Ltd acquired 33.42% stake in Delectable Technologies, a vending machine start-up

2.3. Market size of the FMCG industry in India

Industry to continue growing at 7-9% CAGR between fiscals 2020 and 2025

The FMCG industry grew at a healthy 8% CAGR between fiscals 2017 and 2020, backed by strong growth

especially in the food and beverages (F&B) segment (which grew at 12% CAGR). A short term supply and demand

setback following the pandemic is expected to lead to revenue growth slowing to 2-3% on-year in fiscal 2021.

However, with demand rising in the long-term, growth is expected to remain robust. Penetration of private labels

is further expected to strengthen growth in the sector. Hence, CRISIL Research expects the Indian FMCG industry

to continue to clock a healthy CAGR of 7-9% between fiscals 2020 and 2025, growing in size to Rs 6.0-6.5 trillion

from approximately Rs 4.2 trillion.

Indian FMCG industry poised to grow at 7-9% CAGR between FY20 and FY25

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The industry size is estimated from the perspective of manufacturing revenue

E: Estimated. P: Projected

Source: CRISIL Research

2.4. Segment-wise bifurcation of the FMCG industry

F&B segment to lead FMCG growth in next five fiscals

Branded foods to clock highest revenue growth in FY20-FY25

Note: E: Estimated; P: Projected

Source: CRISIL Research

F&B to grow at robust 10-12% CAGR

Branded foods is expected to drive demand in the industry with the segment poised to grow at 10-12% CAGR

between fiscals 2020 and 2025. The introduction of innovative products to suit local tastes is expected to change

consumer preferences and drive volume growth in the segment. Increasing rural penetration by players will also

act as a driver. Government policies have been largely favourable for FMCG players, with the exception of non-

alcoholic beverage players, with the government imposing 40% GST (including cess) on carbonated drinks.

However, FMCG players are able to pass on the fluctuations in input costs, as a few players command majority

of the market share.

In fiscal 2021, however, the industry is expected to grow at a slower pace of 5-7% on-year, as the nationwide lock

down from March 2020 had an impact on production and distribution of food products during in April. Continued

economic slowdown is expected to keep sales growth low.

Home care to clock 4-6% growth

The home care industry is estimated to have grown at 7% CAGR between fiscals 2017 and 2020. The growth was

led by an increase in premium products and introduction of new brands in the already penetrated market. Increased

penetration in the rural markets alongside good monsoon also contributed to volume growth in this period. Most

of the raw materials used are chemical in nature and some of their prices are linked to crude oil prices. Demand

in this sector is driven by rising population, increased per capita consumption, and rising income levels and rural

penetration.

Going forward, the segment is expected to clock 4-6% CAGR between fiscals 2020 and 2025. Introduction of

new brands and extensive promotional strategies alongside rising per capita income will spur growth. Faster

growth is expected in the dish-wash products sub-segment due to increased penetration in the rural market. Growth

in this segment is mostly volume driven due to competitive pricing strategy followed by most players. Government

policies for this industry also create a conducive environment.

Personal care to grow at subdued 6-7%

Overall, the personal care segment grew at 6% CAGR between fiscals 2017 and 2020, with volume growth coming

largely from rural areas. Going forward, CRISIL Research expects the segment to grow at 6-7% CAGR over

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fiscals 2020 and 2025 with volume growth continuing to come largely from rural areas through increasing

penetration and marketing initiatives.

Growth in demand for the relatively under penetrated products like shampoos, hair dyes, hair colours, skin care

etc. is being driven by an increase in consumption and up trading. Strong growth has been witnessed in emerging

categories across various product lines. The Indian oral care industry, a mass market segment, witnessed

slowdown in fiscal 2020 due to consumption slowdown. However, it is on a secular growth path with consumer

upgrading expanding growth potential. The hair care segment is expected to grow at 6-8%, with hair dyes growing

faster, between fiscals 2020 and 2025.

2.5. Growth drivers and challenges

Source: CRISIL Research

Key growth drivers

Rise in urbanisation and

increase in disposable incomes

The share of India’s urban population, in relation to its total population,

has been rising over the years is expected to continue growing with nearly

40% of the country’s population projected to live in urban areas by 2030.

Also, the per capita net national income is set to rise 5% on-year in fiscal

2022 led by strong GDP growth, even as as population is expected to

continue growing at 1% annually

Opportunity in rural India Low penetration in rural markets offers room for growth

Increase in number of working

women

Increasing literacy rate and changing mindsets have led to an increase in

number of working women in India. The government has also taken

several steps to create a congenial work places (for instance, the recent

decision to increase maternity leave to 26 weeks). This is expected to

further aid the increase in number of working women in the coming years.

Innovation in product mix Companies are increasingly manufacturing products across price points

and innovating to cater to different consumers with varying tastes and

preferences. This should lead to a significant rise in penetration levels of

various segments, leading to overall healthy growth in the industry over

the medium term

Improvement in supply chain

infrastructure through food

parks

The expansion of cold storage, transportation and other critical supply

chain infrastructure across the country will result in a rise in the growth of

the consumer foods industry over the long term, as it will reduce wastage

and increase the shelf-life of the food products. A total of 37 foods parks

have been sanctioned by the government as of August 5, 2020 of which 4

are operational and complete, 15 are operational and 18 under

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implementation.

Government’s thrust on

industry through priority

lending status

CRISIL Research believes that the priority lending status given to the

consumer foods industry would help it grow at a strong pace, as more

companies will plan to invest in it

Source: CRISIL Research

Key challenges

Intense competition Competition in the FMCG industry is intensifying led by foray of foreign

players, expansion by regional players as well as introduction of various

innovative products

Extended pandemic situation

and economic downturn

The pandemic could have an extended impact on demand and production.

With a prolonged economic downturn, the industry may be exposed to

debt. The collective impact of the pandemic and associated economic

downturn could negatively impact cash position and ability to fund desired

investment projects and ongoing operations

Source: CRISIL Research

3. Assessment of the sugar substitute industry in India

3.1. Industry overview

Sugar substitutes currently hold less than 1% share in the Indian sweetener market

Sugar substitutes are food additives that impart the effect of sugar in terms of taste and add zero-to-low calories

to the food/beverages. Based on the origin, some sugar substitutes are synthetic and some natural. With rising

lifestyle diseases, sugar substitutes are gaining popularity globally.

Sugar substitutes are helpful to control the intake of calories. These additives generally do not raise blood sugar

levels because unlike sugar they do not have carbohydrates. This makes them blood sugar controlling-aids for

people suffering from diabetes. Unlike sugar, they also do not contribute to tooth decay and cavities. Also, its low

calorie content makes it popular among people attempting to lose weight.

By value, sugar holds over 99% share in the Indian sweetener market industry, with sugar substitutes holding less

than 1%.

Sweetener market in India by value (FY19E)

Source: Industry, CRISIL Research

Although the proportion of sugar substitutes in India’s sweetener market is minuscule currently, it is expected to

gain share in future as Indian consumers seek alternatives because of obesity, diabetes and serious health problems

caused due to consumption of sugar catching up.

Broad classification of sugar substitutes

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Sugar substitutes can be classified on the basis of two broad parameters: user category and types of

chemical/natural products used in manufacturing.

The user category classification can be further segmented under household and industrial:

• Household consumption: Sugar substitutes are generally used by households. This can be further

classified into diabetic and non- diabetic households. As per industry interactions, diabetic household users

occupy major share (60%) in home usage of sugar substitutes in the country. Diabetic household usage

refers to use of substitutes in households of people with diabetes. Non-diabetic household usage - which

refers to usage by health conscious people to cut down on calories intake and consumers who want to

manage weight - accounts for the balance 40% of household consumption of sugar substitutes.

• Industrial consumption: This category includes usage in processed foods such as canned foods, jams and

jellies, dairy products, soft drinks, bakery products and other foods and beverages. Industrial/institutional

consumption of sugar substitutes is a very small market in India but with increasing demand from the F&B

industry, it is expected to gain momentum in the future.

Classification of sugar substitutes (on the basis of user segments)

Source: Industry, CRISIL Research

On the basis of chemical/natural products used to manufacture these sweeteners, they can be classified as:

aspartame, sucralose, acesulfame potassium, saccharin sodium, neotame, isomaltulose and stevia. These

substitutes are approved by the Food Safety and Standards Authority of India (FSSAI).

Aspartame and sucralose are the most commonly used sugar substitutes in India and account for 70-75% and

2025%, respectively, in the total sugar substitute market.

Stevia is in a nascent stage in India and is made from leaf extracts of the stevia plant. It is the only naturally

occurring sugar substitute and its share in overall pie is likely to increase in the future.

Classification of sugar substitutes (on basis of type)

Source: Industry, CRISIL Research

Market segmentation of sugar substitutes

Penetration of sugar substitutes is higher among urban (approximately 85%) than rural consumers (about 15%).

West Bengal, with about 15-16% of the total demand of sugar substitutes, holds the leading position. Maharashtra

and Uttar Pradesh have a share of 9-11%, each. Delhi, Gujarat, Orissa, Tamil Nadu and Andhra Pradesh contribute

5-6% each to the total demand. Thus, eight states comprise 60-70% of the total sugar substitute demand of the

country.

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3.2. Prevalence of diabetes in India

India is home to the second largest number of adults with diabetes worldwide

Diabetes is considered a serious threat to global health and is among the top 10 causes of death, globally.

According to International Diabetes Federation (IDF) estimates in 2019, about 463 million adults (20-79 years)

had diabetes in the world. Of this, 88 million people belong to the south-east Asian region. India, with 77 million

diabetic adults, led the region. India was the second largest country, preceded only by China, in terms of numbers

of adults with diabetes in 2019.

Prevalence of diabetes in India

Note: *Adults age group: 20-79 years

Source: International Diabetes Federation, industry, CRISIL Research

3.3. Diabetes in India versus world

India’s dismal track record globally set to worsen on some parameters

In 2019, India was ranked second, third and fourth in the world in the number of diabetic adults, diabetic people

older than 65 years, and number of adults with imparted glucose tolerance, respectively.

As of 2019, about 563 million people were suffering from diabetes worldwide. The IDF has predicted this number

to rise to 578.4 million by 2030 and to 700.2 million by 2045. While India has -77 million diabetic adults, China

and the US are estimated to have 116.4 million and 31 million, respectively. These numbers place India at second

position globally. It is anticipated that India will hold this position in 2030 and 2045 as well.

Diabetes prevalence increases with age. Thus, the highest estimated prevalence is in people older than 65 years.

In 2019, the estimated number of people older than 65 years (65-99 years) with diabetes in world was 135.6

million. For India, this figure was at 12.1 million, putting it in the third spot globally. China and US hold first and

second positions, with 35.5 million and 14.6 million diabetic people, respectively, in this age group. It is estimated

that, worldwide, there will be a significant increase in diabetic people aged above 65 years, with the count for this

age group reaching 195.2 million in 2030 and 276.2 million in 2045. It is forecast that China will maintain its first

position in 2030 and 2045 as well, while in 2045, India will move up to second position, leaving USA at third.

It is also estimated that approximately 7.5% of the global adult (aged 20-79 years) population, i.e., 373.9 million

adults had impaired glucose tolerance (IGT) in 2019. This is predicted to rise to 454 million by 2030 (8.0%) and

548 million (8.6%) by 2045, respectively. China (54.5 million) and the US (37.4 million) held the first two spots

in 2019. These two countries are predicted to hold their respective positions in 2030 and 2045 as well. In 2019,

Indonesia (29.1 million) was ranked third under this category. India (25.2 million), currently ranked at fourth

position, is expected to continue on the same rank in 2030 (32.2 million adults) but move to third position in 2045,

with 40.7 million adults with IGT tolerance.

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India’s ranking at global level

Source: International Diabetes Federation, CRISIL Research

Prolonged undiagnosed diabetes can have negative consequences. Thus, early detection of diabetes is crucial for

improved screening of this condition. Of the 463 million adults (20-79 years) living with diabetes worldwide (in

2019), approximately 50% were unaware that they had this condition. Thus, about 231.9 million adults have

undiagnosed diabetes, globally. India (43.9 million) is ranked second in number of adults living with undiagnosed

diabetes. It is preceded by China, which is estimated to have 65.2 million undiagnosed diabetic adults.

The incidences of type 1 diabetes is increasing in children and adolescents. According to IDF estimates, globally,

there were approximately 600,900 children and adolescents (0-14 years) with type 1 diabetes. India, with 95,600

existing cases is ranked one. IDF has also estimated that annually -98,200 cases (worldwide) of type 1 diabetes

are diagnosed in this age group. India adds 15,900 cases every year. The US closely follows, with 94,200 active

cases in 2019 and an addition of approximately 14,700 cases annually.

Type 1 diabetes in children and adolescents (0-14 years): India’s ranking at global level

Source: International Diabetes Federation, CRISIL Research

3.4. Government measures for diabetes prevention and control in India

National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Disease and Stroke

(NPCDCS)

Non-communicable diseases (NCDs) like cardiovascular diseases, chronic respiratory diseases, cancer, and

diabetes are estimated to account for about 60% of all deaths in India. NCDs are increasing significantly leading

to many premature deaths causing considerable loss in potentially productive years (aged 35-64 years) of life.

Thus, to prevent and control major NCDs, government of India initiated NPCDCS under the National Health

Mission in 2010. The programme focuses on strengthening of infrastructure and other resources for health

promotion, screening, early detection, treatment and referral.

Key objectives of the programme are:

• Health promotion through behaviour change: Involvement of community, civil society, community based

organizations, media etc.

• Screening and early detection: Screening at all levels from sub-centre and above for early detection of

diseases covered under the programme, including management and follow ups

• Capacity build up at various levels: For prevention, early diagnosis, treatment, rehabilitation, IEC/BCC

(Information Education Communication/ Behaviour Change Communication) and operational research

• Logistic support: For diagnosis and cost effective treatment at primary, secondary and tertiary levels of

healthcare

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• Development of database of NCDs through surveillance systems: For monitoring NCD morbidity and

mortality, and risk factors

NPCDCS performance

Source: Ministry of Health and Family Welfare, CRISIL Research

The programme provides funds to states under NCD flexi-pool through state Program Implementation Plans

(PIPs) of respective States/UTs. Centre: State share is in the ratio of 60:40. For north-eastern and hilly states, this

proportion is 90:10.

3.5. Market assessment of sugar substitute industry in India

Sugar substitute industry to grow at 8-9% CAGR between fiscals 2020 to 2025

India is the second largest producer and also the largest consumer of sugar in the world. India consumed about

24.5 million tonne of sugar in sugar season 2020. According to the Indian Sugar Mill Association (ISMA) India’s

per capita sugar consumption in 2018 stands at 19.5, which is less than the global average of 22.5. However, it

should be noted that India’s per capita consumption has been increasing, as discussed in the table below:

India’s per capita consumption of sugar

Source: Indian Sugar Mill Association (ISMA)

High sugar consumption implies increased risk of diabetes, heart diseases, weight gain, tooth decay/cavities and

other chronic illnesses. A sedentary lifestyle of urban population further elevates these health related problems.

Increased health awareness among Indian consumers over the past few years has resulted in growth of sugar

substitutes market in the country.

The Indian sugar substitute industry has grown at 5-6% CAGR to reach at an estimated value of Rs 2.8-2.9 billion

in fiscal 2020 from approximately Rs 2.4 billion in fiscal 2017. Better awareness about health and various

marketing initiatives by manufacturers has helped it register a strong growth post April 2020 and it is expected to

grow at 9-11% on year, and reach Rs. 3.1-3.2 billion in fiscal 2021 Further, CRISIL Research estimates that the

Indian sugar substitute industry will continue on its growth trajectory of 8-9% CAGR to reach Rs 4.2-4.4 billion

by fiscal 2025.

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Indian sugar substitute industry trend and outlook

Note: E: Estimated. P: Projected

The industry size is estimated from the perspective of manufacturing revenue

Source: Industry, CRISIL Research

The sugar substitute industry in India is an organised industry. Zydus holds a dominant share in this segment in

FY20. Other prominent players in the industry include Wipro and Tata NX.

The size of the sugar substitute industry in India is minuscule (less than 1%) in comparison with sugar industry,

which was estimated at Rs 750-800 billion in fiscal 2020. However, this very fact offers it a significant potential

for growth.

3.6. Key growth drivers and challenges to sugar substitute industry in India

Key growth drivers

Growing diabetic population: According to International Diabetes Federation (IDF) estimates, in 2019, about

77 million adults (20-79 years) in India were diabetic, with urban areas having a higher share of diabetics. The

number of diabetics in India is estimated to increase to 101 million and 134.2 million by 2030 and 2045,

respectively. Furthermore, nearly one million adults in the country die due to diabetes every year. Thus, the hike

in the number of diabetic patients and rising awareness of the risks associated with diabetes are expected to propel

demand for low-caloric sugar substitutes in India.

1. Increasing prevalence of lifestyle diseases: Overweight and obesity, which kills more people than

underweight, are emerging health problems in India. These are predisposing factors for non-communicable

diseases such as cardiovascular diseases (CVD), diabetes, musculoskeletal disorders (osteoarthritis),

hypertension, and some cancers (including breast, ovarian, prostate, liver, gallbladder, kidney, and colon).

These are lifestyle diseases that are increasing at an alarming rate in the country. High intake of sugar,

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coupled with the onslaught of modern technology, have led to sedentary lifestyles and, therefore, these

diseases.

According to the National Family Health Survey (NFHS), the percentage of overweight or obese men (15-

49 years) in India has risen to 18.9% in fiscal 2016 from 9.3% in fiscal 2006. For women in the same age

group, this percentage increased to 20.6% from 12.6%, during the same period. Also, the urban Indian, due

to his/her sedentary lifestyle, is more obese/overweight than his/her rural counterpart. Thus, with the rising

number of lifestyle diseases, it is expected that people will opt for healthy ways of sugar consumption,

thereby increasing the demand for sugar substitutes in the future.

2. Rising share of health-conscious people: Consumers in India have become more health-conscious. They

are trying to cut down on calorie intake and better manage their weight. This calls for controlling sugar

consumption and sugar substitutes offer such customers an alternative to sugar. Sugar substitutes duplicate

the effect of sugar in taste while providing zero to low calories. Increasing health awareness about low

calorie diets and weight control among people is expected to augment growth for these substitutes.

3. Low penetration of sugar substitutes: Although India is a diabetic nation, penetration of low-calorie

sugar substitutes is very low. Industry interaction indicate that the product has only 2% penetration. The

industry is estimated at Rs.3.8 billion in fiscal 2020. Low penetration is mainly on account of lack of

consumer awareness, low per capita income and perceived price premium of substitutes. However, with

rising awareness through promotions and marketing and strengthening of the distribution network, this

industry is expected to grow rapidly.

4. Initiatives by sugar substitute manufacturers and product innovation by F&B companies: Sugar

substitute manufacturers are conducting R&D and numerous studies to boost product innovation.

Companies are making significant investments to attract customers through innovative promotions and

marketing campaigns. This helps these players to create better awareness amongst potential consumers.

Also, F&B companies are increasingly using sugar substitutes to launch low/zero calorie products such as

dairy products, biscuits, beverages, and confectionery. All these initiatives will drive demand for sugar

substitutes in India.

Key challenges

1. Hesitance to shift to ‘artificial’ sweeteners: Despite the fact that sugar substitutes provide a sweet taste

like sugar and add zero to few calories to food and drinks, many consumers are still skeptical of shifting

to ‘artificial’ sweeteners. Though these sweeteners are approved by the Food Safety and Standards

Authority of India (FSSAI) and Food and Drug Administration (FDA), people still fear potential side-

effects and are doubtful about its taste too. A majority of the ingredients used in manufacturing these

additives are derived from chemicals, except stevia which is derived from stevia leaves.

2. Perception that it is for diabetic people only: Many people perceive sugar substitutes as products for

diabetic patients. There are many potential consumers trying to manage their weight and cut calorie

consumption. This product is an excellent option for such health-conscious people. However, these

sweeteners are looked-at as medicines to control diabetes. This perception surrounding sugar substitutes is

hindering the growth of the industry.

3. Low awareness about the product: Although the number of diabetic and obese patients is increasing

rapidly in India, there is still lack of awareness about sugar substitutes among the people. This challenge

can be addressed through well-thought out marketing and promotional events in rural and urban markets.

4. Limited distribution network: Distribution networks play a very important role in the success of any

product. Efforts are being made by prominent players in the sugar substitutes industry to increase their

reach. However, substantial investments will have to be made on the logistics front to tap untapped markets.

3.7. Key government regulations impacting the sugar substitutes industry in India

The FSSAI regulates usage of sugar substitutes (artificial sweeteners) in different food applications in India

The FSSAI has approved six artificial sweeteners to be used in food and beverages: aspartame, sucralose,

acesulfame potassium, saccharin sodium, neotame, and isomaltulose. Stevia is the latest addition to the list and is

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at a nascent stage in India. It is the only naturally occurring sugar substitute and is made from leaf extracts of the

Stevia plant.

The first instance of artificial sweeteners being allowed in India was in 1958 when the FSSAI allowed the usage

of saccharin sodium. After more than 20 years of first approval, in 1981, usage of aspartame was allowed.

Thereafter, various approvals were given at each stage for various products.

In 2015, the FSSAI approved usage of stevia as a sugar substitute. Stevie is derived from a natural herb and is

200-300 times sweeter than regular sugar. Its bitter aftertaste was the key hindrance to its acceptance.

Year-wise approval of sugar substitutes in India

Source: Industry, CRISIL Research

The FSSAI has also laid down certain regulations for usage of each of these substitutes in various food products

such as beverages, baked products, chocolates, etc. These regulations are under Food Safety and Standards (Food

Products Standards and Food Additives) Regulations, 2011, and provided in the regulation 3.1.3. The regulation

mentions substitute-wise name/category of food articles and maximum limit of the substitute to be used in each

of the respective food articles. The regulation also mentions the labeling requirement if these substitutes are added

in food articles.

4. Assessment of the health food drinks industry in India

4.1. An overview of the health food drinks industry in India

The health food drink industry in India is dominated by quite a few players. These include brands such as Horlicks,

Complan, Boost, Bournvita, Ensure, Pediasure, Protinex, Milo, Maltova and Viva.

The health food drinks industry can be classified based on the user type, as indicated below:

Source: CRISIL Research

Kids account for the majority of consumers of Indian health food drinks with a share of approximately 80% of the

business. Toddlers and adults account for about 8-12%. Over the years, brands such as Horlicks, Complan and

others have innovated their product offerings in the toddlers and adults space to better penetrate and gain market

share.

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Innovative strategies adopted by brands:

Source: CRISIL Research

Some of the key brands and their innovative product offerings are listed below:

Source: CRISIL Research

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Recent trends in the industry:

• Hindustan Unilever Limited (HUL) completed merger with GSK Consumer Healthcare India Limited

effective fiscal 2021. The two brands namely Horlicks and Boost now are a part of HUL.

• Zydus Wellness Limited completed its acquisition of Heinz India Private Limited (a subsidiary of Kraft

Heinz). The acquisition helped Zydus acquire brands like Complan, Glucon-D, NYCIL and Sampriti ghee

and two manufacturing facilities in Aligarh and Sitarganj.

4.2. Market size of the health food drinks segment in India

Indian health food drinks industry to clock stronger growth

The Indian health food drinks market in India is estimated to have clocked a CAGR of 6% during fiscal 2017 to

2019 from Rs 68 billion to Rs 76 billion. The industry witnessed a temporary glitch in production and supply

chain owing to mergers and acquisitions of key brands during fiscals 2019 and 2020. Also, the impact caused by

the Covid-19 pandemic was felt during the last quarter of fiscal 2020. Thus, the Indian health food drinks industry

is estimated to have contracted by 5-6% on-year during fiscal 2020.

However, going forward, CRISIL Research believes that the industry is expected to clock a CAGR of 7-8%

between fiscals 2020 and 2025, backed by:

• Rising demand for low-value packages/sachets

• Product innovations to suit customer preferences

• Increasing awareness on health and

• Higher distribution reach of stronger players in the industry resulting in higher penetration

Thus, the health food drinks industry in India is expected to reach Rs 100-105 billion by fiscal 2025, as compared

with the current estimate of Rs 73 billion as of fiscal 2020.

Indian health food drinks industry to clock a CAGR of 7-8% between fiscals 2020 and 2025

The industry size is estimated from the perspective of manufacturing revenue

E: Estimated. P: Projected

Source: CRISIL Research

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4.3. Growth drivers and challenges

Key growth drivers

Source: CRISIL Research

*Favourable demographics

As per Census 2011, India, with a population of 1.21 Bn, has 0.16 Bn children in the age group 0-6 years and 0.37

Bn in the age group 0-14 years which constitute 13.59% and 30.76% of the total population respectively. Also

NFHS-4 (2015-16) indicates that at all India level, 38% of children under age five years are stunted (too short

height for their age). It is higher among children in rural areas (41%) than that of urban areas (31%). At an all

India level, 21% of children under age five years are wasted (too thin for their height) and 36% of children under

age five years are underweight.

Youth in India to further drive demand for HFD

As per Census 2011, India’s youth (15-24 years) constitute one-fifth (19.1%) of the country’s total population at

231.95 million. According to a report titled ‘Youth in India’ published by MoSPI in 2017, the number of India’s

youth (the report considered the 15-34-year age group) increased from 168 million in 1971 to 422 million in 2011.

This increase was in the form of annual addition of roughly 5.3 million, 6 million, and 6.6 million during the

1970s, 1980s and 1990s, respectively. Between 2001 and 2011, the addition was substantially higher at 7.4 million.

The share of the youth in the total population has been increasing continuously, from 30.6% in 1971 to 34.8% in

2011. India’s youth is expected to have 34.1% share in the total population by 2021 from 422.0 million in 2011 to

479.4 million in 2021.

Thus, there is immense growth opportunity in categories of kids, toddlers as well as adults for the HFD industry.

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Trend in nutritional status of children in India Share of youth in India’s total population

Source: National Family Health Survey, CRISIL Research P: Projected Source: CRISIL Research

Key challenges

Source: CRISIL Research

4.4. FSSAI regulations

As per the FSSAI, malted milk food is described as follows:

Malted milk food means the product obtained by mixing whole milk, partly skimmed milk or milk powder with

the wort separately from a mash of ground barley malt, any other malted cereal grain and wheat flour or any other

cereal flour or malt extract with or without addition of flavouring agents and spices, emulsifying agents, eggs,

protein isolates, edible common salt, sodium or potassium bicarbonate, minerals and vitamins and without added

sugar in such a manner as to secure complete hydrolysis of starchy material and prepared in a powder or granule

or flake form by roller drying, spray drying, vacuum drying or by any other process. It may contain cocoa powder.

It shall be free from dirt and other extraneous matter. It shall not contain any added starch (except starch natural

to cocoa powder) and added non-milk fat. It shall not contain any preservative or added colour. Malted milk food

containing cocoa powder may contain added sugar.

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The FSSAI has notified the following standards for malted milk food:

Source: FSSAI, CRISIL Research

5. Assessment of the glucose-based powder industry in India

5.1. An overview of the glucose-based powder industry in India

Glucose-based powders are usually consumed to fight fatigue and tiredness, especially during summers. As per

industry sources, the industry’s seasonal nature poses a challenge to players since most sales, nearly 70-75%,

occur during peak summers and between the months of April to August. Hence, players are continuously trying

to evolve their marketing strategies to help better market their products as a non-summer product.

Some of the key brands in the industry are Glucon-D (Zydus Wellness Ltd.), Glucose-D (Dabur India Ltd.), and

Glucovita glucose D (Wipro consumer care and Lighting Ltd.). Apart from the key brands by FMCG players,

pharmaceutical companies also offer glucose-based powders as over the counter (OTC) products.

Some of the key brands and their variants are listed below:

Source: CRISIL Research

Glucon-D’s market share and ranking as per Nielsen Report: According to “Zydus Wellness Products Ltd.

calculation based on data reported by Nielsen through its Retail Index Service for the Prickly Heat Powders,

value for the 12-month ending July 31, 2020, for the India (U+R) market. (Copyright © 2020, The Nielsen

Company.)”, Glucon-D has 56.1% market share and is ranked first in value sales in the glucose-based powders

industry.

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5.2. Market size of the glucose-based powder segment in India

Indian glucose-based powder industry to clock a CAGR 9-10% between fiscals 2020 and 2025

The Indian glucose-based powder industry in India is estimated to have clocked a CAGR of 11% between fiscals

2017 and 2020 from Rs 7.2 billion to Rs 9.8 billion respectively.

The industry is expected to witness a severe dip in revenue caused by the nationwide lockdown to combat the

pandemic which coincided with the segment’s peak summer sales period. Further, work from home and migration

of labourers to their hometowns/villages have impacted sales of the segment even post-lockdown. Thus, the Indian

glucose-based powder industry is projected to contract 25-30% on-year during fiscal 2021.

However, CRISIL Research expects the industry to bounce back from fiscal 2022 as businesses have started to

recommence and daily wage workers/labourers have started to return to their workplaces. Also, with high

penetration opportunities, on-going innovation and efforts to enhance marketing strategies in order to increase the

product relevance at other times of the year apart from summers will aid growth. CRISIL Research expects the

glucose-based powder industry to clock a healthy CAGR of 9-10% between fiscals 2020 and 2025. The segment

is expected to touch Rs 16-17 billion by fiscal 2025 from the estimated Rs 9.8 billion in fiscal 2020.

Glucose powder industry in India to clock CAGR of 9-10% between fiscals 2020 and 2025

5.3. Growth drivers and challenges

Source: CRISIL Research

The industry size is estimated from the perspective of manufacturing revenue

E: Estimated; P: Projected

Source: CRISIL Research

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Growth drivers

1. India is a ‘Tropic of Cancer’ country: Summers in India lie between April and June. However, as the

Tropic of Cancer runs through the middle of India, the areas that lie on the south of Tropic of Cancer are

closer to the Equator and experience very high temperatures throughout the year. The eight states, which

come along the Tropic of Cancer are Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand, West

Bengal, Tripura and Mizoram.

2. Low penetration, high opportunity: The glucose powder-based industry is currently a low-penetrated

industry, and hence there is a lot of potential to expand for players in this industry.

3. Innovation of new flavours: As the industry is competitive in nature, players in the industry regularly

come up with innovative flavours to suit and attract consumer interest. This proves as an important growth

enabler.

Challenges

1. High dependence on summers: The industry is seasonal, with majority sales (70-75%) taking place during

the peak summers and between April and August. This poses as a great challenge to the players, as their

sales are dependent on summers and their volumes drop sharply during the rest of the year. Hence, there is

a lot of pressure on players to market their products even as a non-summer product to gain sales.

2. Intense competition: Since a lot of people are moving away from carbonated drinks, other non-alcoholic

beverages have been witnessing demand. The glucose-based powder industry is not only challenged by

brands from FMCG companies and pharmaceutical companies, but also other powder-based drink

categories, such as tangs.

3. Cheaper alternatives available: Cheaper alternatives to well-known brands are available off-the-shelf and

are also promoted by pharmacists as OTC products.

6. An assessment of the skincare products sector in India

6.1. An overview of skincare products industry in India

Indian skincare industry is rapidly growing dynamic market

Indian consumers’ interest in skincare is steadily growing. It has been observed that consumers are moving from

basic routine of cleanse-tone-moisturise to more sophisticated regimes, such as serums, gels, sheet masks and

night creams. Changing consumer lifestyles, increasing per-capita income, more consciousness in self-care,

growing interest in grooming among the youth, availability of various products to choose from, and increasing

awareness are some of the factors driving the skincare industry in the country.

The skincare products industry comprises a plethora of products, and the industry can be broadly classified into

two main segments: body care and facial care. By value, the body care products segment holds 70-75% of the

total skincare products market and the rest 25-30% is accounted by the facial care products.

Market segmentation of skincare products in India

Source: Industry, CRISIL Research

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6.2. An assessment of skincare products industry in India

Current market size of Rs 280-290 billion expected to grow at a CAGR of 7-8% between fiscals 2020 and

2025

CRISIL Research estimates the size of the skincare products industry in India to have been Rs 280-290 billion in

fiscal 2020. The industry grew at a CAGR of about 6-8% from about Rs 233 billion in fiscal 2017.

While some of the skincare products are expected to face the heat of the Covid-19 pandemic, it is anticipated that

some products will have a positive impact due to the pandemic. Beauty parlours, spas and salons remained closed,

as the government imposed a nationwide lockdown to contain the pandemic. This, coupled with the emergence of

many DIY videos on social media, influenced many consumers to use products such as face masks and face packs

at their homes. The pandemic fueled demand of soaps, hand washes and sanitisers across the country. On the other

hand, seasonal (summer) products such as sun-screens and prickly-heat powders registered a decline.

Social gatherings reduced due to the lockdown across the county, extended and ad-hoc complete/partial lockdown

after the first lockdown, and the restriction of social distancing post-lockdown. Thus, the need and desire to look

good declined too, impacting demand of personal care and skincare products. Also, the pandemic impacted the

trade channel and transport of goods. While chemists and grocery stores were allowed to operate, malls and other

cosmetic outlets were forced to shut down. These factors impacted the supply of skincare products to the market.

CRISIL Research expects the skincare products industry to grow at a CAGR of about 7-8% to Rs 405-415 in fiscal

2025.

Trend and outlook of Indian skincare products industry

E: Estimated; P: Projected

The industry size is estimated from the perspective of manufacturing revenue

Source: Industry, CRISIL Research

Body care products industry

Body care products include a range of products, such as lotions and creams for body, hands and feet, excluding

face. Among these products, the soap market is one of the oldest and considered most mature sub-segment under

the overall FMCG industry. It commands the majority share in the body care products industry. Soaps is one of

the product categories with a good penetration into the rural market as well. Increasing awareness of hygienic

standards and government initiatives, which promote health and hygiene (such as Swachh Bharat Mission) are

propelling demand for this sub-segment.

The Indian talcum powder market is among the largest in the world and includes prickly heat powder. According

to CRISIL Research’s estimates, the Indian prickly heat powder industry, valued at Rs 5.6 -5.8 billion in fiscal

2020, grew with a CAGR of 9-10% from Rs. 4.4 billion in fiscal 2017. Prickly heat powder is a seasonal product

and has high demand during summers. India experiences heat waves between March and July and about 60-65%

sales of prickly heat powder is contributed by April, May and July. This year demand was hit by the lockdown

measures to contain the Covid-19 pandemic. People were forced to stay at home and there was no need of the

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product. However, demand picked up a bit with the arrival of humid monsoon and soaring temperatures. Demand

for the product is forecasted to reach Rs 9.1-9.3 billion by fiscal 2025, implying a CAGR of 9-11%.

Trend and outlook of Indian prickly heat powder industry

E: Estimated. P: Projected

The industry size is estimated from the perspective of manufacturing revenue

Source: Industry, CRISIL Research

The industry comprises brands, such as NYCIL, Dermicool, Navratna, Boroplus, Shower to Shower, and others.

NYCIL’s market share and ranking as per Nielsen Report: According to “Zydus Wellness Products Ltd.

calculation based on data reported by Nielsen through its Retail Index Service for the Prickly Heat Powders,

value for the 12-month ending July 31, 2020, for the India (U+R) market. (Copyright © 2020, The Nielsen

Company.)”, NYCIL has 32.8% market share and is ranked first in value sales in the prickly heat powders

category.

Face-cleansing products industry

Indian face-cleansing industry is experiencing tremendous growth since past few years. The market improved

from about Rs 17.3 billion in fiscal 2017 to Rs 23-25 billion in fiscal 2020, registering a CAGR of 11-13%.

Increasing consciousness about personal hygiene, rising number of young population, hike in disposable income

and brand endorsements by celebrities are some of the key factors contributing to the growth of this industry.

Many companies have introduced different variants of face cleansing products for different skin types/problems

such as acne, pimples, dry skin, black-heads, oily skin etc. Moreover, penetration of face-cleansing products is

very low in rural India. Companies have launched smaller SKUs (stock keeping units) to attract consumers from

this section. Other factors which are anticipated to elevate the demand of face-cleansing products in the country

include rising e-commerce sales, entry of international players (ensuring availability of wide range) and increasing

demand from men.

Going forward, the market of face-cleansing products in India is projected to reach Rs. 46-48 billion in fiscal

2020, growing with a healthy CAGR of 13-15% over the next five years.

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Trend and outlook of Indian face-cleansing industry

E: Estimated; P: Projected

The industry size is estimated from the perspective of manufacturing revenue

Source: Industry, CRISIL Research

The face-cleansing industry can be further divided into four main categories: face washes, scrubs, packs/masks

and others. Others include face wipes and bleaches. Face wash accounts for 75-80% of the cleanser market and is

followed by face scrubs (7-9%), packs/masks (6-8%).

Face washes: Face washes are sold in the form of liquid, cream or gel, based on the consumer preferences.

Demand for face wash products is on the rise, as they are perceived to be a gentler alternative to traditional

products, such as soaps, by consumers. Increasing demand from male consumers has led companies to launch face

washes, specifically for men’s skin requirements.

The market can be further divided into urban and rural markets. While the urban market accounts for the majority

(80-85%) of demand, rural market, with a 15-20% share, represents a huge opportunity for face wash brands. This

segment is also characterised by the presence of a large number of players and is one the most competitive category

in the facial care segment.

The market for face wash products has been growing at an average rate of 12-14% over the past few years.

Himalaya, Clean & Clear, Ponds, Glow & Lovely, and Gamier are the prominent players in this industry in India.

Face scrubs: Face scrubs are used to scrub-off dead-skin cells and are one of the least penetrated products in the

face cleanser segment. Urban population accounts for about 90% of the market for this product and rural

population contributes the rest 10%. Scrubs are available in the form of gel or cream and there are multiple players

in this category. Apart from EverYuth by Zydus Wellness Ltd., other key players include Himalaya, Lotus and

VLCC amongst others.

Face packs and masks: Face masks are multi-utility products used to moisturise and replenish nutrients in the

skin. The penetration level of these products is relatively low in the Indian market and is largely used in the urban

areas. EverYuth and Himalaya are leading players in the Indian face packs and masks market. The industry can

be further classified into cream-based, natural, clay masks and peel-offs. Peel-off is a type of face mask and

EverYuth, commands the leading position in the industry.

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6.3. Key growth drivers, challenges for the skincare products sector in India

Key growth drivers

1. Increasing per capita incomes: Increase in per-capita income enhances the purchasing power of

consumers and provides a boost to discretionary spending. India’s per-capita income has grown at a slightly

faster pace over the past few years and it has helped to increase personal disposable income among

consumers. Growth in incomes has led to improved living standards and consumers are open to spend extra

on different personal-care and skin-care products based on factors such as quality and product functions.

2. Rising number of working women and rise in number of men consumers: The increasing number of

women in the work force is leading to higher demand for skincare products. Elevated sense of

individualism in purchases and choice among young girls and women, more frequent meetings at work and

social gatherings fuel the demand for skincare products in women. On the other hand, growing adoption

of skincare products among males also represents a huge opportunity for manufacturers. Many companies

are expected to capitalise on the need for men to care for their skin by offering products specifically targeted

to this section.

3. Low penetration: In India, penetration level for skincare products, such as face washes, face masks and

hand washes is significantly low in comparison to other FMCG products, such as toothpastes, soaps, hair

oil, and shampoo. Further, rural market penetration for skincare products remains much lower than the

urban market. This offers huge potential for growth of these segments.

4. Increasing consumer awareness: Awareness about the harmful effects of climatic factors, such as UV

rays and pollution on skin, has made Indian consumers very conscious about their skin care. Moreover,

awareness among consumers about the availability of various skincare products, according to their

respective skin type, is also growing. Dermatologists and clinics too are playing a very crucial role in

raising awareness on sun-protection, thereby contributing in demand generation of this particular skincare

category.

Thus, rising awareness towards body aesthetics and increased sense of self-care has attributed to the growth

of skincare industry in India.

5. Rapid urbanisation: According to the UN World Urbanization Prospects, about 34% of India’s population

now lives in urban areas. India’s average annual urban population growth rate has been almost double the

overall population growth rate. This trend is expected to continue in the future as well. Urban areas present

more job opportunities, higher income and better access to personal and skincare products. Rapid

urbanisation results in increase in spending power and also leads to a rise in aspiration levels. All these

factors augur well for the personal-care product segment, particularly body and facial care products.

6. Higher R&D spending by companies: Competition from domestic and global players is increasing every

year. Companies are modifying their product portfolio as per the continuously changing needs and

preferences of the consumers. This has resulted in higher spending on R&D and consumer-focused studies.

Companies need to use customer insights to create and launch new products and categories.

For instance, over the past few years, demand for natural, herbal, organic and Ayurvedic products is on

rise, indicating a strong growth in this sub-category. To sustain healthy growth in the segment, companies

are developing their R&D capabilities to customise and innovate their products for Indian consumers.

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7. Increasing e-commerce penetration, strong distribution network and advanced marketing

initiatives: Fast-growing e-commerce and increasing online shopping have increased the opportunity to

cater to untapped markets in semi-urban and rural markets. Also, improving road networks in the rural

regions will further boost the reach of skincare and overall FMCG products to remote areas of the country.

Efficient distribution and sales channels play an important role for a product to succeed. Low penetration

of skin products in rural areas and their rising demand calls for efficient distribution and sales network for

skin-care products. While many players in the industry have increased reach, there is still huge scope to

further improvement.

Growth in digital, TV and print advertisements, increase in organized retail and internet penetration, launch

of various domestic and foreign brands and growth in e-commerce channels have fueled consumer

awareness for personal care and hygiene products in India.

Other demand drivers of the industry include: exposure to global trends, need for solution to skin problems

that go beyond cosmetic fixes, growing importance of peer feedback and product reviews, better sense of

individualism among millennials, consumers opting for at-home services, busy lifestyle driving the

convenience factor, increasing demand for herbal cosmetic products among others.

Key challenges

1. High competition: The skincare product industry is highly fragmented. Favourable growth dynamics have

attracted many domestic and global players to the Indian skincare industry. Many online brands have also

emerged to cater to the demand. Players offering natural and herbs-based products have intensified

competition for established brands, thereby forcing them to expand their product portfolio. The unorganised

market, which majorly competes on costs, remains the major challenge for the growth of established brands.

2. Counterfeit products: A huge market exists for counterfeit or spurious skincare products in India. While

these products are a threat to branded players’ revenues and their brand image, they also pose risks and

health hazards for customers as well. With the advancement of technology, improved penetration of internet

and smartphones, and ease of availability of personal care and skin care products on e-commerce websites

and social media, the threat of counterfeit skincare products has increased manifold.

3. Fluctuations in input costs: As raw material cost accounts for a significant proportion of the overall cost,

volatility in raw material prices impacts the profitability of players. Prices of imported raw material

fluctuate with currency fluctuations. Also, increase in the usage of natural and herbs-based ingredients in

skincare products increases the cost compared with chemical-based products. It is difficult for the players

to pass on the price rise to their customers due to high competition.

4. Failure of new product launches: Any new personal care product has to undergo a long gestation period

of multiple trials and testing. Companies make huge investments in R&D, product development, marketing

and distribution of these products. The adaptability and success of new products depend on multiple factors,

such as the consumer’s preference, competition, price and customers’ brand association. Launch of new

products is relatively easier for an established brand compared to a new entrant in the segment. Hence,

every new product has a high risk of failure associated with it.

6.4. Key government regulations impacting the industry

The Drugs and Cosmetics Act, 1940

Manufacturing, distribution, packaging, labelling, imports, exports and clinical research of drugs and cosmetics,

including personal care products, is regulated by The Drugs and Cosmetics Act, 1940. The primary objective of

the Act is to ensure that the products (covered under the Act) sold in India are safe and adhere to prescribe quality

standards. The Act prohibits imports and sales of ‘misbranded’ and ‘spurious’ products. Stringent punishment,

extending from fines to even imprisonment in case of violation of any provision laid down under the Act, has been

mandated.

Unregulated and untested products that do not prescribe to the manufacturing and/or imports standards laid down

under the Act are posing as a major challenge for the industry and regulatory bodies. These counterfeit products

have increased manifold, due to increased penetration of e-commerce websites. To control sales of such products

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through these platforms, the Drug Controller General of India (DCGI) issued notices to popular e-commerce

websites in 2018. The online retailers were asked by the government to remove counterfeit products and enter into

agreements with the sellers to control the sales of ‘fake’ products.

All the imported cosmetics, including personal care products and their manufacturing sites, should mandatorily

be registered with the Central Drugs Standard Control Organisation (CDSCO).

Drugs and Magic Remedies (Objectionable Advertisements) (DMR) (Amendment) Bill, 2020

With an aim to combat misleading advertisements and promotions, the Ministry of Health and Family Welfare has

drafted Drugs and Magic Remedies (Objectionable Advertisements) (Amendment) Bill, 2020. The draft is

amendment to The Drugs and Magic Remedies Act, 1954, which aims to protect public from being exploited

through advertisements for drugs/cosmetic products for certain health or cosmetic disorders. The misleading

advertisement promoting rescue from hair loss and fair skin, too are under the government scrutiny now. The

drafts include electronic media, the Internet and websites under the media for advertisement.

7. A qualitative overview on the margarine industry in India

7.1. An overview about margarine

Based on the end-user segment, margarine can be classified either as table margarine or industrial margarine.

Table margarine is used in households by retail customers, while industrial margarine is used by institutional

consumers, such as bakeries, hotels and restaurants.

Key players in the margarine industry

The key players offering margarine in India are Zydus Wellness Limited with their brands ‘Nutralite’ and GCMMF

who market margarine under the brand name ‘Delicious Fat Spread’.

7.2. Growth drivers and challenges

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Key growth drivers

1. Low cost substitute for butter: Margarine is typically sold at a discounted price as compared with regular

butter. Consequently, it finds high industrial usage in hotels, restaurants, bakeries, etc., for food preparation.

With industrial users on a cost-cutting spree amid pandemic-induced losses, margarine has potential to

increase penetration in the market.

2. Increasing health conscious population: The sedentary and laidback lifestyle in urban areas have resulted

in the growing incidence of lifestyle diseases in India. The number of obese men and women has doubled

in the country, according to the National Family Health Survey (NFHS-4). Obesity in men has grown from

9.3% in fiscal 2006 to 18.6% in fiscal 2016, whereas for women obesity has grown from 12.6% to 20.6%.

This has prompted the consumer to become more health conscious. Thus, mainly in urban India, there will

be immense growth potential for healthier food options such as margarine.

Obesity in India

Source: NFHS-4, CRISIL Research

3. Product innovations: Margarine is also used as a spread (applying over bread and other bases). Thus,

many prominent players in the industry are introducing innovative flavours to satisfy the taste buds.

Key challenges

1. Preferential customer bias towards butter: Indian consumers have a preferential bias towards butter

owing to its taste and habitual usage for a long period of time. This acts as one of the biggest challenges

for the growth of margarine.

2. Lack of awareness about margarine: Retail consumers are still unaware about the margarine and its

health benefits. Increased spend on marketing and promotional is thus required to improve product

awareness among retail consumers.

7.3. FSSAI regulations

As per the Food Safety and Standards Authority of India (FSSAI), the definitions of margarine are as follows:

Table margarine - means an emulsion of edible oils and fats with water. It should be free from rancidity, mineral

oil and animal body fats. It may contain common salt not exceeding 2.5% and skimmed milk powder not

exceeding 2%.

Bakery and industrial margarine - means an emulsion of vegetable oil product with water. It should be free

from added colour and flavour, rancidity, mineral oil and animal body fats. It may contain common salt not

exceeding 2.5%.

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The FSSAI has notified the following regulations covering quality and safety parameters of table

margarine:

Source: FSSAI, CRISIL Research

* Sufficient to ensure that when separated fat is mixed with refined groundnut oil in the proportion of 20:80, the

red colour produced by the Baudouin test shall not be lighter than 2.5 red units in 1 cm cell on a Lovibond scale.

The regulations also state that coloured and flavoured margarine should also contain starch not less than 100 ppm

and not more than 150 ppm. Coloured and flavoured margarine should only be sold in sealed packages weighing

not more than 500gms.

The FSSAI has notified the following regulations covering quality and safety parameters of industrial

margarine:

Source: FSSAI, CRISIL Research

8. Competitive mapping of key players operating in the Indian FMCG segment

8.1 Comparative analysis of players in the FMCG industry

In this section, CRISIL Research has compared key players in the FMCG industry. Data in this section is obtained

from publicly available sources, including annual reports and investor presentations of listed players, regulatory

filings, rating rationales, and/or company websites as relevant.

Indian FMCG players offer a gamut of products. Some of the key segments FMCG players are present in include

health food drinks, glucose powder, skin care, sugar substitute, margarine and others. An indicative list of

segments that key players in the industry are present in is depicted in the table below.

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Companies considered

Source: Company annual reports, CRISIL Research

8.2 Key financial parameters

Notes:

* Financials for the year ending December 2019; 4-year CAGR from December 2015 to December 2019

** Financials for the year ending Mach 2019; 4-year CAGR from March 2015 to March 2019

# Financials for the year ending June 2019; 4-year CAGR from June 2015 to June 2019

## 3 year CAGR from Mar 17 to Mar 20

Source: Company annual reports, CRISIL Research

8.3 Key observations

• Among the companies compared above, Zydus Wellness Ltd reported the highest operating income growth

over the four-year period from fiscals 2016 to 2020 at a CAGR of 45%

• In terms of OPBDIT, Zydus Wellness Ltd posted the highest CAGR of 37% among its peers for the four-year

period from fiscals 2016 to 2020

• PAT growth of Nestle India Ltd stood at 38% for 2015 to 2019, the highest among the companies compared

above

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8.4 Key financial ratios

Source: Company annual reports, CRISIL Research

Source: Company annual reports, CRISIL Research

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Ratios calculated as per CRISIL Research standards as described below:

• Operating margin = OPBDIT / Operating income

• Net profit margin = Profit after tax / Operating income

• RoCE = Profit before interest and tax (PBIT) / (Total debt + Adjusted net worth + Deferred tax liability)

• Interest coverage ratio = Profit before depreciation, interest, and tax (PBDITl)/ Interest and finance charges

• Gearing = Adjusted total debt /Adjusted net worth

N m: Not meaningful

CRISIL Research has taken into account Tangible net worth’ for calculation of both ROCE and gearing ratio.

Source: Company annual reports, CRISIL Research

Key observations:

• OPBDIT and net profit margins of majority players compared above are greater than 20% and 10%

respectively thus indicating healthy profitability ratios.

• For the fiscal ending 2020 (among the companies compared above), Hindustan Unilever Ltd. reported the

highest ROCE of 131% followed by Godrej Consumer Products Ltd. (74%) and Zydus Wellness Limited

(60%).

• For the fiscal ending 2020 (among the companies compared above), Emami Ltd. reported the highest

operating margin of 26% followed closely by HUL (24.8%), and Bajaj Consumer Care Ltd. (24%).

• For the fiscal ending 2020 (among the companies compared above), Hindustan Unilever Ltd. reported the

highest interest coverage ratio of 88 times followed by Bajaj Consumer Care Ltd. (55 times).

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OUR BUSINESS

In this section, unless the context otherwise requires, indicates or implies, “we”, “us” and “our”, refer to our

Company together with our Subsidiaries. Some of the information in the following discussion, including

information with respect to our plans and strategies, contain forward-looking statements that involve risks and

uncertainties. You should read “Forward Looking Statements” on page 14 for a discussion of the risks and

uncertainties related to those statements. Our actual results may differ materially from those expressed in or

implied by these forward-looking statements. Also read “Risk Factors”, “Industry Overview”, and

“Management’s Discussion and Analysis of Financial Condition and Results of Operations- Factors affecting our

Financial Results” on pages 39, 90 and 69, respectively, for a discussion of certain factors that may affect our

business, financial condition or results of operations.

Overview

Our Company is one of the leading consumer health and wellness product manufacturing company with over 25

years of operational experience. We develop, manufacture and market a broad range of products, including under

the market leading brands Glucon-D, SugarFree, NYCIL, and other well-known brands like Complan, EverYuth,

Nutralite and Sugarlite. We believe that, our business combines healthcare, nutrition and cosmeceutical products

to provide quality wellness products. Our products in sugar substitute segment, fat spread segments, various

skincare segments such as peel offs and face scrub and other healthcare segments enjoy leading positions.

Headquartered in Ahmedabad, India, we enjoy a pan-India marketing and distribution network comprising more

than 1,700 distributors and approximately 2,000 “feet-on-street” representatives who facilitate the distribution of

our products to retailers across India.

We have a diversified portfolio with our product basket consisting of eight products used for various purposes

such as sugar substitutes, butter substitutes, health drinks, nutrition supplements, skin and personal care, products.

We believe that we are well positioned to sustain our existing leadership positions in key markets as well as exploit

significant growth opportunities that exist in the expanding FMCG sector, both in India and abroad.

We manufacture our products through five manufacturing facilities across four states in India (one in Gujarat,

Uttar Pradesh, Uttarakhand and two at Sikkim). The quality of our manufacturing facilities is evidenced by the

quality of certifications and accreditations, including the FSSC 22000, that our facilities have obtained from

various local and international accreditation agencies validating our process and quality consistency. Our

manufacturing facilities are supported by, our R&D facilities located in Gujarat and Maharashtra with capabilities

that enable us to support our growth strategy by developing new products and processes, which enhance our range

of products and their variants in the market, to cater to evolving consumer trends and preferences.

We are further supported by our distribution capabilities, which include 20 cold chain warehouses, 25 ambient

warehouses, more than 1,700 distributors and 23 carry forward agents (“CFAs”). We believe that our structured

distribution network enables us to facilitate sales to address different consumer demands. Our products are

primarily sold by distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies,

institutional channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department),

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CPC (Central Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores). Supplies are made available either

through distributors or directly by the Company. We have received a number of industry awards in recent years,

including Frost and Sullivan India Manufacturing Excellence Awards 2019 for Zydus Wellness Sikkim. We are a

part of the Zydus Cadila Group and our association provides us with a competitive edge on account of the goodwill

enjoyed by the Zydus Cadila Group. Cadila Healthcare Limited (“Cadila”), our corporate promoter is ranked 5th

in Indian pharmaceutical industry with a 4.18% market share in July 2020 (Source: AWACS July MAT 2020), and

revenue of ₹142,531 million with an EBITDA margin of 19.5% in Fiscal 2020. Cadila, is also promoted by Pankaj

Patel and Dr. Sharvil Patel, who have both been instrumental in the growth of our business. Our Promoters together

with the Promoter Group hold 67.85% of the shareholding of our Company as on June 30, 2020.

Our total income from operations in Fiscal 2020 was ₹1,76,682 lakhs, derived principally from the sale of branded

products. Over a period of three years from Fiscal 2018 to Fiscal 2020, our total income from operations has

grown at a CAGR of 84.1%. The last three months ended June 30, 2020 have witnessed a consolidated revenue

decline of 13.4%, as compared to the same period in the prior year. During the period of three years from Fiscal

2018 to Fiscal 2020, our PAT grew from ₹13,651 lakhs to ₹14,172 lakhs, registering a CAGR of 1.9%. The PAT

for Fiscal 2020 includes exceptional items pertaining to various expenses amounting to ₹4,420 lakhs incurred due

to integration of the business acquired from Heinz India Private Limited (“Heinz”). The CAGR growth excluding

this exceptional item would be 16.7%. For the three months ended June 30, 2020, the PAT was ₹8,920 lakhs,

registering a growth of 10.9% over the same period from the previous year. The acquisition was completed on

January 30, 2019. For a discussion on the acquisition of Heinz and its economic impact on our Company’s

financials, please refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and

Results of Operations - Acquisitions” beginning on page 71.

Our History and Parentage

Our Company traces its beginning to November 1, 1994 as Carnation Health Foods Limited, the manufacturer

and marketer of Nutralite, a butter substitute and low-fat table spread. Our name was changed to Carnation Nutra

– Analogue Foods Limited in 1995. In 2006, Cadila acquired 61.56% controlling stake capital of our Company,

and we became a subsidiary of Cadila. In 2008, pursuant to the approval by the High Court of Gujarat to the

composite scheme of arrangement, the consumer products division of Cadila, consisting of ‘SugarFree’ and

‘EverYuth’ products, was demerged to form our Company. Following the de-merger, the product portfolio of our

Company comprised of Nutralite, SugarFree and EverYuth. Subsequently, our name was changed to Zydus

Wellness Limited on January 5, 2009. On October 24, 2018, we entered into an agreement (jointly with Cadila)

to acquire 100% equity shares of Heinz. Pursuant to the Heinz acquisition, our portfolio brands expanded to

comprise of Glucon-D, NYCIL, Complan and Sampriti.

Competitive Advantages/Our Strengths

We are a people-centric and value-driven organization, and we have identified the following sources of

competitive advantages that present the right recipe for growth.

Compelling market fundamentals and consumer dynamics

We believe that the market fundamentals and consumer dynamics in India are conducive to our future growth. For

example, India’s GDP increased at a CAGR of 7% to Rs 146 trillion from Rs 87 trillion between fiscals 2012 and

2020 (Source: CRISIL Report), and the FMCG industry grew at a 8% CAGR between fiscals 2017 and 2020,

backed by strong growth especially in the food and beverages (F&B) segment (which grew at 12% CAGR)

(Source: CRISIL Report). The F&B industry accounted for more than 50% of the overall FMCG industry as of

Fiscal 2020 (Source: CRISIL Report). The factors contributing to the growth of the FMCG industry are increased

urbanization and a rise in disposable income, an underpenetrated rural market, government support, an increase

in the number of working women, an improvement in supply chain infrastructure and innovation in product mix

(Source: CRISIL Report).

At present, sugar holds more than a 99% share in the Indian sweetener market industry, with sugar substitutes

holding less than 1%. Although the proportion of sugar substitutes in India’s sweetener market is currently

negligible, it is expected to gain share in future as Indian consumers seek alternatives to avoid obesity, diabetes

and serious health problems (Source: CRISIL Report). Diabetes is considered a particularly serious threat to global

health and is among the top ten causes of death, globally; India was the second largest country, preceded only by

China, in terms of numbers of adults with diabetes in 2019 (Source: CRISIL Report). Given the growing diabetic

population, the increasing prevalence of lifestyle diseases, a rising number of health-conscious consumers, the

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sugar substitute industry is estimated to grow at 8 – 9% CAGR between Fiscals 2020 to 2025. Our Company holds

a dominant market share in the sugar substitute industry through our branded products such as SugarFree and

Sugarlite (Source: CRISIL Report).

Similarly, in the health food drink industry, children account for the majority of consumers of Indian health food

drinks, with a share of approximately 80%, while toddlers account for 8 – 9% and adults account for approximately

10 -12%. Complan, our branded product offering, is a key player in this market and has gained market share on

account of innovative strategies deployed by our Company (Source: CRISIL Report). The innovative strategies

that helped our Company gain market share are (i) launching Complan in sachets, which increased rural

consumption on account of a preference in rural India to buy smaller packets over large ones, (ii) entering the

toddler category with the launch of Complan Nutrigro, and (iii) introducing new flavours and variants of Complan

Nutrigro i.e. vanilla, chocolate and badam kheer for enhanced taste. As consumer disposable income continues to

increase further, and consumers become more inclined to adopting healthy food habits, we believe we are well

positioned to capitalize on the market growth in such categories owing to our Company’s well-established supply

chain network and strong focus on innovation across product lines. For further details on our various branded

products, please refer to the section entitled “Industry Overview” beginning on page 90 of this Preliminary

Placement Document.

Portfolio of several market and popular leading brands

We have a portfolio of strong brands that occupy leadership positions in their respective product market segments

in India and overseas with a high brand recall value for our products We focus on branded products, and our key

brands and brand extensions are set out in the chart below.

Source: Market rank data for Glucon-D and NYCIL sourced from Nielsen Report; For SugarFree, report as per Nielsen as of MAT December

2019; For SugarFree, report as per Nielsen as of MAT December 2019.

We believe that a strong and reputed brand is a key attribute in our industry, which increases customer confidence

and influences a purchase decision. Our flagship product ‘SugarFree’ has a strong identity especially in the urban,

semi-urban and rural markets in India with a market share of 93.6% (Source: report as per Nielsen as of MAT

December 2019). NYCIL, our prickly heat powder commands a market share of 32.8% (Source: Nielsen Report).

Glucon-D, our glucose powder commands a market share of 56.1% (Source: Nielsen Report). Glucon-D, our

glucose powder commands a market share of 56.1% (Source: Nielsen Report). Furthermore, ‘Nutralite’ is a key

player in the margarine industry (Source: CRISIL Report).

In addition, keeping in mind changing consumer preferences we have also introduced new products to appeal to

health-conscious consumers who seek to avoid artificial flavours, excessive calories from sugar and butter, we

have recently launched ‘Sugarlite’, 100% natural blended sugar, SugarFree Green (100% natural Stevia based

sugar substitute), SugarFree Green Veda (ayurvedic sweet drops), Nutralite Mayonnaise range, Nutralite flavours

(in the butter substitute category). Similarly, in the skin category, under the ‘EverYuth’ brand, we have introduced

range of tan-removal products, neem scrub, lemon cherry face wash in the recent past. We believe that the

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development and launch of these product concepts in a short span of time demonstrates our ability to roll out and

execute sales and marketing initiatives to introduce new products and meet consumers’ expectations.

Strong distribution network with presence across multiple channels

We have a pan-India presence and operations spanning across business verticals - healthier food alternatives and

skin care, and hence are not dependent on any particular region. Our widespread domestic presence not only

mitigates the risk of dependence on certain regions, but also helps us to leverage our brand value. We have

established a strong distribution network in India comprising more than 1,700 distributors and approximately

2,000 “feet-on-street” representatives, who facilitate the distribution of our products to retailers across India. Our

distribution capabilities include 20 cold chain warehouses and 25 ambient warehouses. Our products are primarily

sold by distributors to retail outlets and chains, in addition to various e-commerce platforms, pharmacies,

institutional channels, chains in the HORECA segment and institutions like CSD (Canteen Stores Department),

CPC (Central Police Canteens), UPGE (Uttar Pradesh Govt Employees Stores). Supplies are made either through

distributors or directly by the Company. As on August 31, 2020, our distribution network included 23 CFAs and

more than 1,700 distributors across India, to whom we sell directly. In addition, our distributors also engage

several other distributors and sub-distributors who distribute our products to a number of retail outlets.

Furthermore, with a view to grow our distribution presence and ensure separate brand visibility, we have

established dedicated distribution networks for all our products except Nutralite. Since Nutralite is a cold chain

product, there is separate cold chain distribution network for the same. Our sales and distribution network are

strategically spread across different regions in India and has an especially strong outreach in certain semi-urban

and rural markets, where we expect growth to be more significant. We work closely with distributors to understand

consumer preferences, to receive feedback on our products and that of our competition, which enables us to

formulate an effective strategy for sales, marketing and pricing. Our distribution network is also well integrated

with our marketing and promotional activities, and helps in strengthening our brand image, especially in rural

markets where the reach of mainstream media is typically limited. We believe that the initiatives that we have

taken as outlined below will drive change and enable our business to become more efficient and cost effective.

Initiatives taken to improve “Go to Market” capabilities:

1. Reducing the number of distributors post acquisition of Heinz to transition to distributors who can handle

large capacities and support our distribution network and reduce cost; and

2. Resizing and restructuring the method of last mile delivery by allocating best-beat plan which helps us

optimise routing for our last mile field delivery team. Generally, our products are delivered through

distributors. Undertaking last-mile delivery using best-beat plan increases efficiency and makes it more

cost-effective by allowing our field team to choose the best route that effectively cater to more number of

distributors who are likely to give orders for our Company’s products.

Stable and well-established supply chain with high quality manufacturing facilities

We believe that our extensive network of distribution agents and suppliers spread across India enables us to

effectively deliver our products at competitive prices in a timely manner. We believe we have developed an

effective strategy for procurement of raw materials and an effective delivery strategy that helps us attract new

customers and retain our existing customer base. Retention of our existing customer base with stable demand and

brand recall value of our products, allows us to maintain margins, as we are able to adjust the price of our products

to reflect any increase in production and distribution costs.

Our manufacturing facilities are equipped with advanced equipment and modern technology and we maintain high

standards of quality for each of our manufacturing facilities located in Ahmedabad, Aligarh, Sitarganj and Sikkim

by adhering to global food safety management compliance standards and implementing self-inspection strategies.

Majority of our manufacturing facilities is accredited with the FSSC 22000 given by the GFSI, a division of the

Consumer Goods Forum, and the accreditations are given after a thorough audit of SOP and protocols. Our plants

at Ahmedabad and Sikkim have been awarded gold medals in the National Awards for Manufacturing

Competitiveness, 2019. Furthermore, our Sikkim plant won a gold award at the Indian Manufacturing Excellence

Awards, 2019. Maintaining high standards of safety and quality enable us to effectively participate in meeting the

changing needs of our customers. We also have a dedicated team on site to continuously monitor recent changes

in the regulatory requirements and evaluate their likely impact on the Company. This enables us to take proactive

measures rather than reactive; and to mitigate any possible risks of regulatory actions.

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Strong focus on innovation across products and agile actions during the COVID-19 crisis

We devote significant attention and resources for product innovations. We endeavour to foster a culture of

scientific promotion and experimentation wherein our employees are encouraged to constructively challenge

status quo and assume leadership and responsibility. For example, the COVID-19 pandemic in India in March

2020 triggered a nationwide lockdown, in the immediate aftermath of the lockdown, the demand and consumption

of FMCG and household products increased significantly, owing to panic buying by consumers. In response, our

teams underwent competency building training programs to gain better insight into consumer needs, and we

created opportunities from the situation and took the following actions:

1. Apex Committee: we created a war room comprising of leadership team to have rapid information

exchange and active decision making;

2. Sales operation: we built a focused team to manage and innovate ways to work around the challenge to

get business back to normal;

3. Supply chain and manufacturing: we developed ways to engage clearing and forwarding agents and open

factories with the help from regulatory authorities to keep the arteries of our business flowing; and

4. People and IT infrastructure: we mobilized the information technology backbone of our Company to

enable ‘work from home’ for employees in certain functions and created a “central assistance cell” to

keep people motivated and focused on running the business through the crisis.

To contribute and support India’s fight against COVID-19, we also spearheaded Project Urja, a national outreach

programme by our field team for police/ enforcement/ sanitation frontline workers to provide free distribution of

Glucon-D across various towns in India. Realizing that consumer preference was shifting to digital purchase

options due to the COVID-19 pandemic, we leveraged e-commerce platforms by setting up telesales channels for

retailers across many cities in India.

In addition, during the COVID-19 crisis, we innovated and launched the following five products:

1. NYCIL hand sanitizers: a ‘herbal hand sanitizer’, enriched with neem and aloe vera to ensure hand hygiene.

2. Complan Nutrigro: a scientifically formulated milk protein-based health drink for toddlers, with a balance of

50% whey protein and 50% casein. Our product is marketed and distributed leveraging doctor’s

recommendation and prescription.

3. Nutralite chocospread: a healthy variant of chocolate, enriched with calcium and protein from roasted quinoa.

4. Glucon-D ImmunoVolt: a powder mix containing vitamin C, D, zinc and glucose in orange and strawberry

flavours to boost immunity.

5. Complan Sachet: in order to address the stock-keeping unit portfolio gap, we launched the Complan sachets

in the northern and western regions of India to participate in the sachet market.

Track record of strong financial performance

Our business has demonstrated attractive financial performance over the last three fiscal years. From Fiscal 2018

to Fiscal 2020, our total income from operations grew from ₹52,114 lakhs to ₹176,682 lakhs, representing a

CAGR of 84.1%; our EBITDA before exceptional items grew from ₹12,526 lakhs to ₹32,106 lakhs, representing

a CAGR of 60.1%.

Our robust financial performance is principally due to (i) the growth and expansion of our product portfolio, (ii)

improvements in our operating efficiency, including management of costs and expenses, (iii) the growth of our

“Go to Market” capabilities, (iv) expansion operations beyond India to international territories, (v) enhancement

of the market share of our business from e-commerce and modern trade channels, and (vi) inorganic growth by

way of acquisition.

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Our financial performance has also been strengthened by the acquisition of 100% shareholding in Heinz. Our

strategic acquisition of Heinz supplemented our business verticals, augmented growth of our product portfolio,

and increased our sales volume and market share. The acquisition of Heinz enabled us to become one of the

leading consumer wellness companies in India. We achieved this by successfully integrating Heinz into our

Company’s operations in the following manner:

1. Human resources integration: we rationalized various positions (direct and indirect) in the combined entity

structure and harmonized policies across various levels;

2. Supply chain synergies delivered value through cost savings: we reduced logistics costs through warehouse

and clearing and forwarding enhancement by consolidating the number of CFAs post the acquisition of Heinz.

We optimized from nine branches to six branches, increased efficiency by reducing distributor count, while

continuing to expand our product outreach;

3. Stronger IT backbone and digital footprint: we implemented SAP® mechanism to integrate our business with

Heinz, by bringing in industry best practices to the acquired business including standard operating procedure,

in a phased manner, resulting in efficiency and distribution enhancement; and

4. Seller and outlet coverage integration: we launched Project Shakti to identify active and unique outlets of

distribution, thereby adding complementary avenues of large general trade channels to our existing pharmacy

distribution channel.

Experienced board of directors and management team and strong parentage

We believe that a strong employee base is a key competitive advantage. As at June 30, 2020, we employed a work

force of over 1,153 full-time employees in India and abroad. Our senior management team has wide and relevant

industry experience; 504 out of 1,153 team members have been with us for over 8 years and above. The skills and

diversity our employees give us the flexibility to respond best to the needs to customers. We are dedicated to the

development of expertise and know-how of our employees and continue to invest in them through training and

skill building.

Our Board is headed by the Non-executive Chairman, Dr. Sharvil Patel, who has extensive knowledge and

expertise in the FMCG sector, manufacturing, marketing and business management. Our Whole-time Director and

Chief Executive Officer, Mr. Tarun Arora, was previously associated with Danone Narang Beverages as General

Manager. Dr. Sharvil Patel and Mr. Tarun Arora provide strategic leadership to our Company and are closely

involved in our operations. We believe that our management team’s in-depth understanding of target markets and

consumer demand and preferences has enabled us to continue to grow our business and expand our operations.

Our well-qualified and experienced management team has played a key role in the development of good corporate

governance, effective internal controls and accounting policies, strong employee relations, and stable supply chain

relationships.

Business Strategy

India’s FMCG sector has changed dramatically in recent years. An increasing demand for healthier lifestyles and

the willingness to consume products with health benefits have changed the consumption and demand patterns for

these products. Our overall business goal is to leverage our core strengths in innovation, scientific promotion and

a “good-for-you” portfolio that would help us maintain and build upon our position as a leading FMCG player in

product categories in which we operate.

We believe that the three pillars to drive our growth forward are:

1. Accelerate growth of core brands: innovate to focus on portfolio diversification and expansion with an

aim to recruit new consumers with differentiated ‘Go to Market’ propositions.

2. Build international presence: using our Dubai subsidiary, Zydus Wellness International DMCC (“Zydus

DMCC”) as a base, we aim to leverage our brands to build scale and enter new markets internationally

with relevant offering of products.

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3. Leverage M&A to significantly grow scale: we have already demonstrated a successful integration of the

Heinz acquisition, which will enable our Company to accelerate the growth of its brand portfolio with the

help of synergies of the combined entity.

To achieve these goals, we intend to implement the following key strategies:

1. Innovation fuelled growth on the back of Company’s strong research and development capabilities to launch

products with differentiated offering that suit customer needs;

2. Expand geographical presence by offering products tailored to the needs of customers in those markets and

leveraging an international distributor franchise model; and

3. Seek bolt-on acquisitions that can fill in the product gaps and best fit in with our plans of health and wellness

portfolio.

Innovation led organic growth and penetration of brands through increased distribution and operation

We aim to grow our existing business in a number of ways. With the changing demands of consumers and a shift

towards a healthier lifestyle over the past decade, we expect an increase in the use of mobile analytics, artificial

intelligence and cloud technology, which will help the FMCG sector to transform and drive the next phase of

growth. We intend to increase our initiatives in R&D in order to attain innovation driven growth with an increase

in our capability and enhancement of our differentiated product portfolio in both domestic and export markets.

Our R&D and manufacturing initiatives are determined by market demand and driven by technological updates.

We aim to digitise fast, customise and improve customer experience by taking the following steps:

1. Launch Sales Force Automation (SFA) application on mobile for our sales team that will connect to

BoTree’s distributor management system (DMS) and help distributors to manage orders effectively and

thereby reduce time taken to deliver our products. DMS is a software tool installed in the distributor’s

computer system by which the distributor sells our products. This system provides us with real time data

on sales being effected to trade through different channels, thereby assisting our management take decisions

on ground level to counter competition, increase distribution and availability of our products and take other

suitable measures;

2. Implement business analytics and predictive analytics that will provide (i) price insights – know what price

point will draw customers and increase profitability, (ii) customer insights – sell what customers want at

their preferred point of purchase, (iii) sales insights – adopt new ways to sell based on how customers are

buying, (iv) marketing insights – deliver personalised promotions and optimise marketing spend, and (v)

supply chain insights – optimise inventory levels with minimal stock-outs. Armed with deeper insights into

consumer behaviour, we will be able to direct research and development investment, improve the

effectiveness of marketing and maximise supply chain efficiencies; and

3. Apply demand forecasting and planning using SAP Integrated Business Planning (IBP); a cloud-based

planning software for supply chain management that would use real-time information to predict how much

of a specific product are customers likely to purchase during a specific time period. Accurate demand

forecasting and planning can help us evaluate the level of customer demand and accordingly manufacture

supply orders. Moreover, it can help us reduce costs associated with inventory lying unused in our

warehouse.

We also intend to expand our e-commerce business, which has become an important distribution medium in the

health and wellness sector. As the e-commerce sector matures, we believe e-commerce platforms combined with

modern trade channels and communications will likely become a major component of product distribution and

may have a profound impact on the health and wellness industry and the supply chain. The COVID-19 crisis has

affected the development of our e-commerce capabilities positively. We launched Project Garuda at the peak of

the COVID-19 crisis and engaged with third party logistics vendors to revive last mile connectivity. We have also

partnered with 1mg website to sell our products at a discounted rate for our employees. We aim to widen our

geographical outreach and bridge the gap between our Company and the consumers by strengthening and

investing in our e-commerce distribution model. All our Company’s products are available at various e-commerce

platforms like Amazon, Flipkart, Grofers, Big Basket, Nykaa, Udaan, Jio Mart etc.

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To support our plans for increasing sales volume, we intend to expand and integrate our distribution network by

optimizing our distribution operations and increasing product supply to under-penetrated markets, particularly

semi-urban and rural areas. We aim to focus on the optimal utilization of our existing distribution infrastructure

by implementing effective brand and product promotion strategies through intensive interaction with distributors,

effective involvement of our sales team at points of sale, and expanding the range of product offerings in certain

markets and areas to specifically cater to regional and local consumer preferences.

Finally, we plan to support our organic growth plans by continuing to focus on increasing our operations and

improving operational effectiveness at our production facilities. Higher operational effectiveness results in greater

production volumes and higher sales, and therefore allows us to spread fixed costs over a higher number of units

sold, thereby increasing profit margins. We plan to continue to focus on investing in innovation, automation,

modern technology and equipment to continually upgrade our products including the quality of our products to

address changing customer preferences as well as to improve operational efficiency. We intend to continue to

launch other innovative products that are relevant for our consumers.

International expansion by creating geographical footprints in emerging markets like SAARC, Middle East

and Africa and South East Asia

While historically we have had a strong presence in the Indian market, as our Company continues to expand its

footprints in new international markets to access a more diversified customer base, we incorporated Zydus DMCC,

a wholly owned subsidiary in Dubai, UAE during Fiscal 2020, which acts as a distributor for the Company.

Through this subsidiary, we aspire to grow our portfolio of products in 23 countries and enter new markets as

well. Our Company manages majority of its international operations through Zydus DMCC. During Fiscal 2020,

our Company entered new markets such as New Zealand and Kenya to build our international business. Our

Company also enhanced its portfolio with the launch of Complan products in countries such as UAE, Bahrain,

Qatar, Mauritius Oman, Saudi Arabia and Kuwait, as we launched Nutralite products in Malaysia as well. We plan

to expand into new geographical markets within South East Asia, New Zealand and the Middle East where we see

opportunities in the business segments in which we operate.

Inorganic opportunities

We have identified inorganic growth as one of the avenues for our future growth and accordingly, undertook the

acquisition of Heinz in 2019. We believe that we have demonstrated a track record of building new emerging

categories, with differentiated product propositions. We intend to continue to make acquisitions that are

complementary in nature and enter into strategic relationships in the future as part of our strategy in India and

overseas as a means to expand our operations, enhance our competitive position and capitalise on potential

operational synergies. We continuously evaluate acquisition opportunities that arise in business segments in which

we operate, both in India and overseas.

We continue to focus on growing our business through inorganic channels to expand our capabilities, product

offerings, and geographical reach. The acquisition of Heinz is an example of a successful integration that has

helped our Company increase market share for some of our brands namely Complan, SugarFree and NYCIL,

enabled access to new clients and helped us enter high-growth geographies in a cost-effective manner. While

targeting a robust topline growth, we will continue to realign our portfolio in favour of our focus brands. We

believe that strategic acquisitions are effective catalysts for business growth and consider tactical considerations

to make investments that are complementary to our existing operations. In addition, we have systems to manage

back office matters and facilitate increased connectivity and functionality, because we aim to expand our

operations.

Product portfolio

Our Company aims to protect and prevent health issues arising out of deficiency of nutrients. With an operating

history of more than two decades, we are primarily known for our premium range of health and wellness products.

We have a diversified product portfolio and offer the following products:

1. Glucon-D: an instant energy health drink with 56.1% market share (Source: Nielsen Report). Positioned as

an energy booster, this powdered drink is augmented with vitamin C and D. Ranked 12th in the list of ‘Top

100 Brand’ (as per the Brand Equity Survey conducted by Economic Times in 2020).

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2. Complan: a milk-based health food drink consisting of 18% protein content. Clinically proven to accelerate

growth, improve weight, support immunity, brain development and strengthen bones. Ranked 48th in the

list of ‘Top 100 Brand’ (as per the Brand Equity Survey conducted by Economic Times in 2020).

3. SugarFree: a low-calorie sugar substitute launched in 1988 with 93.6% market share (Source: report as per

Nielsen as of MAT December 2019). Available in three different variants such as SugarFree Gold (made

from aspartame, a protein derivative), SugarFree Natura (made from sucralose, a derivative of sugar with

lower calories) and SugarFree Green (made from stevia leaves).

4. NYCIL: a prickly heat powder without any additives. Strengthened with anti-germ formula, NYCIL is

clinically proven to fight against rashes caused by sweat, body odour, itching and heat. Heritage brand for

over 65 years with a market share of 32.8% (Source: Nielsen Report).

5. Nutralite: a butter substitute and low-calorie spread. Provides healthier alternative that is cholesterol free

with no hydrogenated fat. Contains cholesterol fighters like PUFA and MUFA and is enriched with vitamin

A, D and E to meet 30% of daily nutrition requirement. We also launched Nutralite mayonnaise in 2018,

available in three different flavours – cheesy garlic, classic veg and achari.

6. Sampriti: clarified butter (i.e. premium healthy ghee) made from buffalo milk used in Indian cooking.

7. EverYuth: a cleansing face wash with strong link to natural ingredients. Launched tan removal kit (includes

scrub and face pack) enriched with detoxifying chocolate and vitamin-rich cherries to increase market

penetration.

8. Sugarlite: a healthy form of sugar, completely natural with 50% less calories than regular sugar. Positioned

as a weight management tool without the need to make a significant lifestyle change.

Sales and marketing

We focus on above the line advertising, using various media channels to communicate directly with consumers

and create consumer pull. We believe that this strategy is more effective in the long term, and more in line with

the brand positioning of our products.

We use various media, such as television, digital, radio, press, outdoor hoarding to communicate with our

customers. This helps us establish several touch points with them. In the recent past, we have effectively used

celebrity endorsements for our brands such as Kareena Kapoor Khan and Saif Ali Khan for Sugarlite, Parineeti

Chopra and Abhay Deol for SugarFree, Sanjeev Kapoor for Nutralite, and Sourav Ganguly for Complan. Recently,

Brand Equity from Economic Times included Glucon-D and Complan among the Top 10 most Trusted brands in

India for 2020.

Manufacturing footprint

The below chart provides the geographical location of our manufacturing facilities in India.

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Production/ Manufacturing process

Our product manufacturing process starts with procurement of right quality ingredients. These ingredients are

classified as herbal, natural ingredients, processed ingredients, organic ingredients, inorganic ingredients extracts,

oils, flavours, tastemakers, natural colours, fragrance and packing materials. The quality paraments of ingredients

used for a product as set by R&D during the process of development of the product.

The ingredients are stored in required prescribed storage conditions at the factory. Based on the market

requirement and orders of the finished products, the production order is released by the unit head. The production

process from here is SOP driven. These SOP’s are designed by R&D during development and batch scale up of

the products for commercial production. As per the SOP of the product to be manufactured, the ingredients are

dispensed, under strict vigil of quality assurance, production manager and quality control personnel.

We have adopted advanced technologies and processes at our manufacturing facilities to ensure operational

efficiencies. For instance, utilities like refrigeration are run on vapour absorption mechanism (VAM) for greater

efficiency, and electricity supply system, and our facilities are equipped with express feeders’ connection (EFC)

to ensure continuous availability of industrial grade power.

Product packaging is also crucial to our business. We pack different kinds of edible products in food grade poly

packs of different weights. For the products based in powder form, all ingredients are shifted then dry mixed in

cone blender, homogenised, and sterilised. The powder products are stored and packed in oxygen and moisture

less inert conditions to prevent oxidation of ingredients and maintain the shelf life of the product. Thereafter, the

product passes through stringent quality checks as prescribed and then packed as per SOP. The finished product

is quarantined and tested before release to the commercial sales store.

Quality Control

We are focused on providing high quality products. We place great emphasis on quality control and product safety

at each step of the manufacturing process, from the procurement of raw materials through the packaging and

distribution of final products to our customers. We constantly strive to improve our industrial processes at every

step in the manufacturing chain – from the sourcing, manufacturing, packing and dispatches and how we use

technological additives to maintain the nutritional value and enhance the flavour and appearance of our products.

Our focus on quality is evidenced by the quality of certifications and accreditations that our facilities have obtained

on food safety management system, Good Manufacturing Practice (GMP) etc, validating process and quality

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consistency from various local and international accreditation agencies. Our manufacturing plant in Sikkim is

accredited with the International Organization for Standardization (ISO) 22000 which provides a layer of

reassurance within the global food supply chain, helping our products cross borders and bringing consumers

products that they can trust. All our other plants are certified with the FSSC 22000. The FSSC 22000 is a GFSI

recognized food safety certification that allows our customers to have confidence in our food safety measures and

benefit from our processes deployed to control and minimize food safety hazards.

We have a dedicated quality control team which ensures that people working in all departments from procurement

to sales and marketing are trained on important quality control aspects. To ensure compliance with our quality

management systems and statutory and regulatory compliance, our quality control team is equipped to train our

staff on updates in quality, regulatory and statutory standards. We have implemented occupational health and

safety standards at our facilities and we regularly train our employees to ensure compliance with these standards.

We have also implemented quality control standards for raw material suppliers and vendors. Our quality checks

comprise testing of each batch of raw materials, packaging materials, in process and finished goods at various

stages of our manufacturing processes. We ensure compliance with supplier quality assurance systems and

controls in the selection of our vendors and it includes use of vendor questionnaire which includes details of the

site and infrastructure capacity along with process checks. On-site inspections and routine audits are conducted

for our vendors and suppliers to ensure constant supply of quality products.

Distribution

We have structured our distribution networks to facilitate the sales of our consumer products to address different

consumer demands. Our distribution network comprises of general trade channels such as super-stockists, grocers,

cosmetic stores, modern trade channels such as D-Mart, Walmart, Reliance retail, pharmacy and drug stores such

as Apollo Pharmacy and MedPlus, and specialty channels, such as e-commerce (including Amazon, Flipkart, Big

Basket, Grofers, Nykaa, Udaan and Jio Mart). In India, our products are primarily sold by distributors to retail

outlets and retail chains. We also directly supply to certain retail chains under the business to business (B2B)

model.

Our institutional customers primarily comprise of canteen stores department and central police canteen. We also

export our products to 23 countries across the continents of Asia, Africa, Middle East and Australia.

Raw Materials

The Company’s total cost of goods sold comprises of 44% of our total revenue from operations for the three

months ended June 30, 2020. One of the main component of cost of goods sold are the raw materials which are

used to produce the finished goods. Raw materials essentials to our business are procured in the ordinary course

of business from numerous suppliers. Our major raw materials are milk, dextrose monohydrate, refined palm oil,

arachis oil, and crystal sugar, which are procured from various vendors, stored and used for manufacturing

products.

Milk: During Fiscal 2020, we procured approximately 68.16 million litres of raw milk for our production

operations. Our milk procurement model involves direct purchase of a majority of our raw milk requirements

from farmers and registered milk vendors in the U.P. through purchase orders (i.e. spot buying). We also procure

raw milk from contract milk suppliers. Our procurement model enables us to control our raw milk costs and

exercise greater control over the quality of milk supplied. In Fiscal 2020, the cost of milk represented 37.62% of

our cost of raw materials and packing materials consumed in India.

Dextrose Monohydrate: In Fiscal 2020, the cost of dextrose monohydrate represented 11.95%, of our cost of raw

materials and packing materials consumed in India. We purchase dextrose monohydrate, mainly from the States

of Uttaranchal, Gujarat, and West Bengal through purchase orders.

Refined Palm Oil: In Fiscal 2020, cost of refined palm oil represented 8.1%, of our cost of raw materials

consumed in India. We procure refined palm oil, mainly from the State of Gujarat, through purchase orders.

Arachis Oil: In India, we procure arachis oil from the State of Rajasthan. In Fiscal 2020, cost of arachis oil

represented 1.9%, of our cost of raw materials consumed in India. We procure arachis oil, mainly from the State

of Rajasthan, through short-term and long-term contracts.

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Crystal Sugar: In India, we procure sugar from various sugar mills and wholesale distributors, primarily from

U.P. Sugar prices tend to be volatile, and hence we do not enter into any long term supply contracts in place. We

place orders depending on our production requirements at negotiated prices, and typically procure sugar from a

few key suppliers in India. In Fiscal 2020, cost of sugar represented 6.6% respectively, of our cost of raw materials

consumed in India. We procure sugar, mainly from U.P., through purchase orders.

Prices of the key ingredients used in the products manufactured and marketed by our Company, remain volatile

due to several market-related factors, including changes in government policies and fluctuations in the foreign

exchange rates. However, our Company keeps a close watch on the prices and enters into long term contracts,

wherever feasible, to minimise the risk of fluctuations in the input prices.

Competition

The branded foods industry is fairly concentrated among organised players with at least one player being dominant

in a particular segment. The personal care segment is dominated by organised players. Players in the organised

segment compete on brand image and ability to launch relevant innovative products. Rising competition from

regional and national players coupled with the entry of new players has made pricing competitive. While

competition is oligopolistic in nature, especially in oral care and hair care, it is fragmented in case of skin care.

Under cosmetics, it is again oligopolistic in the premium category, while it is fragmented in case of other products.

(Source: CRISIL Report)

India being a price-sensitive market, cosmetics and personal care product companies, especially new entrants,

have had to constantly chalk out new strategies to suit local preferences and budgets and to carve a niche in the

market. However, organised players have been successful in combating this competition by offering products in

the low-end segment and introducing products at affordable price points. Economic and demographic trends

continue to influence the sales of cosmetics and toiletries in India. (Source: CRISIL Report)

Our main competitors across product lines are set out below:

Category/ Product Our Brands Principal Competitors

Low calorie sugar substitute SugarFree Splenda, manufactured by Johnson & Johnson and Sweet n

Healthy, manufactured by Wipro

Butter substitute and low calorie

spreads

Nutralite Amul

Milk-based health food drink Complan Bournvita, manufactured by Cadbury and Horlicks

manufactured by Hindustan Unilever Ltd

Prickly heat powder NYCIL Santoor, manufactured by Wipro and Ponds manufactured

by Unilever

Facial scrub EverYuth Himalaya, manufactured by the Himalaya Drug Company

Peel off mask EverYuth Himalaya, manufactured by the Himalaya Drug Company

Glucose powder Glucon-D Dabur Glucose, manufactured by Dabur

Premium healthy ghee/ clarified

butter

Sampriti Amul ghee manufactured by Amul and Gowardhan ghee

manufactured by Parag Milk Foods Ltd.

Environment, Health and Safety

In the consumer healthcare and wellness segment, our products and their manufacturing and supply chain

processes are required to maintain high quality standards. Any deviation from prescribed regulations or any

variation in quality from standards laid down by regulatory authorities can lead to actions from these authorities

or litigation from its customers. We have implemented various policies such as quality risk management, food

safety management systems and regulatory controls. We are committed to upholding procedures to protect the

environment and enforce environmental, health, safety and security mechanisms through accountability at all

levels, suitable policies, feedback and full compliance by each of the stakeholders to all the policies that we

develop. We require adherence to these policies as they are crucial elements for sustainable development and

continued success. Our Company’s manufacturing facilities consume energy as per the prescribed standards, while

ensuring efficient utilisation of energy, i.e. implementing energy efficient techniques for green environment

through various audits. Our Company utilises well designed effluent treatment plant, which treats manufacturing

process contaminated wastewater and disposes in the manner and within the norms prescribed by the pollution

control board. We have implemented an environmental management system in compliance with the requirements

of ISO 14001:2015 at all of our manufacturing facilities. Our manufacturing facility I at Sikkim is ISO 22000

certified and our manufacturing facility III at Ahmedabad is FSSC 22000 certified.

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We believe that accidents and occupational health hazards can be significantly reduced through a systematic

analysis and control of risks and by providing appropriate training to our employees. We have implemented work

safety measures to ensure a safe working environment at our facilities and to the general public. We strive to

adhere to all applicable rules and regulations for its employees’ health and safety. Our Company has put in place

a centralized environment health and safety (“EHS”) cell, both at a group level and at the plant level. Furthermore,

at regular intervals, EHS interaction like seminars, group meetings, focused training, etc. are organised to create

awareness amongst all employees.

Our Company also has a well-designed effluent treatment plant, which treats manufacturing process contaminated

water and recycles or disposes it off safely. Our products undergo quality check at various levels of production to

ensure that any quality defects or product errors are rectified on a real time basis. We also have in-house

laboratories for conducting various tests for further improvements in our products. We aim to continue to supply

qualitative products at competitive prices.

Insurance

We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary, and

certain other losses and damages to buildings, plants, machinery, inventory and office equipment, loss of cash in

transit and loss or damage of incoming and outgoing materials and finished goods by water, road and railway. In

addition, we carry accident and medical insurance for our Indian operations. Furthermore, we also maintain group

personal accidental policy, group term-life insurance and group mediclaim insurance policies for our employees.

We have also obtained directors and officers liability insurance.

Awards and Recognition

Our Company and our brands have been recognized through a number of awards and recognition, several of which

are listed below:

1. ‘Most Trusted Brand’ in the Health and Personal Care category (as per the Brand Equity Survey conducted

by Economic Times for two consecutive years, in 2019 and 2020.

2. ‘India lead 25 (next) supply chains in 2020’ at the 12th Inflection Supply Chain Logistics Innovation by the

National Awards for Manufacturing Competitiveness, Indian Manufacturing Excellence Awards.

3. Gold Medal awarded by the National Awards for Manufacturing Competitiveness in its 2019 audit to both

our manufacturing facilities in Ahmedabad and Sikkim.

Human Resources

We are a professionally run company that has sought to build for itself a stimulating work culture that empower

people, promotes team building, encourages new ideas and motivates performance.

As of June 30, 2020, we employed, 1153 full-time employees in India and 5 full time employees in our

international operations. We place significant emphasis on training our personnel and increasing their skill levels

and fostering ongoing employee engagement in our Company.

Intellectual Property

Our intellectual property includes trademarks, copyrights and designs associated with our flagship brands

“SugarFree”, “Nutralite”, “EverYuth” and our affiliate brands such as “NYCIL”, “Complan”, “Glucon-D”,

“Sampriti”. Our brands are not only registered / applied in India, but also registered in most South East Asian

countries, Europe and Middle East and North Africa region countries too. Trademark “SugarFree” and “EverYuth”

have been licensed to our subsidiary Zydus Wellness Products Limited to manufacture and use in India and abroad.

These trademarks have also been licensed to be used in many other countries through Zydus DMCC. We have

applied for, but not yet obtained registration of some of our brands, such as “Nutralite” and “SugarFree”, and

applications for registration of the aforesaid brands are pending. For a discussion on the impact of non-registration

of certain trademarks on the Company’s intellectual property rights, please refer to the section entitled “Risk

Factor” beginning on page 39 of this Preliminary Placement Document.

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Information technology

Our facilities are connected to our central IT network that facilitated monitoring of our operations and

management of supply chain. Our IT infrastructure enables us to track procurement of raw materials, quality

parameters of raw materials procured, and payments to distributors, registered vendors and suppliers. We have

also implemented integrated business management software for planning and management of operations at our

production facilities, including an integrated SAP enterprise resource planning (ERP) solution covering

production (including monitoring of critical plant and machinery), finance, sales, stores, purchase, inventory and

payroll operations. In order to automate our widespread distribution activities, we have also deployed Distributor

Management System (DMS), which is a software tool installed in the distributor’s computer system by which the

distributor sells our products. This system provides us with real time data on sales being effected to trade through

different channels, thereby assisting our management take suitable decisions.

We regularly seek to evolve and upgrade our technology. We have also engaged technology service providers to

develop tools for our operations in order to increase our operational efficiencies.

Corporate Social Responsibility

We have set up a CSR committee of our Board of Directors under the chairmanship of Dr. Sharvil P. Patel

comprising of Ganesh Nayak and Savyasachi Sengupta and have adopted and implemented a CSR policy pursuant

to which we undertake CSR activities. Our recent CSR activities have been focused on promoting education,

providing safe water and sanitation, promoting preventing healthcare, environment sustainability.

In Fiscal 2019, we made financial contribution to support the Zydus Foundation; a company incorporated in India

with charitable objects. Zydus Foundation has also set up the Zydus Medical College and Hospital (“Zydus

Hospital”) to serve the needs of patients and provide medical education to the rural areas of Gujarat, India. The

Zydus Hospital contains 363 beds and more than 400 medical professionals providing free treatment for

investigations and surgeries to patients. The Zydus Hospital was converted into a 100-bed quarantine centre during

the COVID-19 crisis. The Zydus Hospital aims to develop communities, provide inclusive education and create

knowledge platforms, and it is the first medical college to be set up in Dahod, Gujarat with more than 350 students

enrolled into the bachelor of medicine and bachelor of surgery programme.

As a socially conscious business, we also spearheaded Project Urja at the peak of India’s fight against COVID-

19. Through this national outreach programme, our field team reached out to police officers and sanitation

frontline workers to provide free access to our products such as Glucon-D, across various towns in India.

Properties

Our registered office is situated at Zydus Corporate Park, Scheme No. 63, Survey No. 536 Khoraj (Gandhinagar),

Nr. Vaishnodevi Circle, Ahmedabad – 382 481, India and is held by our Company on a leasehold basis. Our

corporate office is situated at Unit No. 1901 & 1902, 19th Floor, E&G Wings, Lotus Corporate Park, Off Western

Express Highway, Goregaon East, Mumbai 400063, and is held by our Company on a leasehold basis. As of

August 31, 2020, we operated five manufacturing facilities, located across four states in India (one in Gujarat,

Uttar Pradesh (U.P.), Uttarakhand and two at Sikkim). Some of the land for these manufacturing facilities is held

by our Company on freehold basis and some are held on leasehold basis. We also have two R&D centres situated

at Plot No. R – 552, TTC, MIDC, Rabale, Navi Mumbai 400 701 in Maharashtra and at House no. 2, 3, 4 & 5

Sigma Commerce Zone, Near Isckon Temple, Ambli – Bopal Road, Ahmedabad – 3800 015 in Gujarat; both are

held on a leasehold basis.

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ORGANISATIONAL STRUCTURE

Corporate History

Our Company was originally incorporated as “Carnation Health Foods Limited” under the Companies Act, 1956

pursuant to a certificate of incorporation dated November 1, 1994 issued by the Registrar of Companies, Gujarat,

Dadra and Nagar Haveli. Our Company commenced its business on November 25, 1994, pursuant to a certificate

of commencement of business issued the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Subsequently,

the name of our Company was changed to “Carnation Nutra-Analogue Foods Limited”, pursuant to a fresh

certificate of incorporation consequent upon change of name issued by the Registrar of Companies, Gujarat, Dadra

and Nagar Haveli dated December 6, 1995. Subsequently, the name of our Company was changed to “Zydus

Wellness Limited” pursuant to a fresh certificate of incorporation consequent upon such change of name issued

by the RoC dated January 5, 2009.

The organizational structure of our Company as on this Preliminary Placement Document is as follows:

Liva Nutritions Limited

Zydus Wellness Products Limited

100% 100% 98%

Zydus Wellness Limited

2%

Zydus Wellness International

DMCC

100%

Liva Investment

Limited

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BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL

Board of Directors

The composition of our Board of Directors is governed by the provisions of the Companies Act, 2013, the SEBI

Listing Regulations and our Articles of Association. Our Articles of Association provide that the Board of

Directors of our Company shall not have less than three and not more than 15 Directors. Our Company may

appoint more than 15 Directors after passing a special resolution in a general meeting of our Shareholders.

As on the date of this Preliminary Placement Document, we have eight Directors, which includes an Executive

Director, a Nominee Director and six Non-executive Directors, of whom four are Independent Directors (including

a woman Independent Director).

The following table sets forth details of our Board as on the date of this Preliminary Placement Document:

Name, Address, Occupation, Nationality, Term, and DIN Age (in years) Designation

Dr. Sharvil Patel

Address: Shri Udhyan Bunglow, B/H Big Bazaar, Near Iskon Temple,

Bopal Road, Bopal, Ahmedabad – 380 058

Occupation: Industrialist

Nationality: Indian

Term: Liable to retire by rotation

DIN: 00131995

41 Non-executive Chairman

Tarun Arora

Address: 701, Samprat Residency 2, Satellite, Near Satyagrah Chavni,

Ahmadabad City, Ahmedabad – 380 015

Occupation: Service

Nationality: Indian

Term: Five years with effect from May 7, 2020

DIN: 07185311

48 Whole-time Director and

CEO

Ganesh Nayak

Address: 3, Ashwamegh Part 5, Jodhpur Satellite Road, Ambawadi,

Ahmedabad – 380 015

Occupation: Service

Nationality: Indian

Term: Liable to retire by rotation

DIN: 00017481

65 Non-executive Director

Ashish Bhargava

Address: B-1904, Rustomji Oriana, Road No. 7, N Dharmadhikari

Marg, MIG Colony, Behind MIG Club, Bandra East, Mumbai –400051

Occupation: Service

Nationality: Indian

Term: With effect from January 30, 2019

DIN: 02574919

49 Nominee Director

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Name, Address, Occupation, Nationality, Term, and DIN Age (in years) Designation

Dharmishtaben Raval

Address: 25, Saurabh Society, Manav Mandir Road, Near Sima

Society, Navrangpura, Ahmedabad – 380009

Occupation: Practicing Advocate

Nationality: Indian

Term: Five years with effect from March 11, 2019

DIN: 02792246

64 Independent Director

Kulin Lalbhai

Address: Lalbaug, Shahibaug, Near Underbridge Shahibaug,

Ahmedabad – 380 004

Occupation: Business

Nationality: Indian

Term: Five years with effect from November 18, 2016

DIN: 05206878

35 Independent Director

Savyasachi Sengupta

Address: 1, Amivision Society, Makrand Desai Road, Gotri, Near

Union Bank of India, Vadodara – 390 007

Occupation: Management Consultant

Nationality: Indian

Term: Five years with effect from November 2, 2018

DIN: 05158870

67 Independent Director

Srivishnu Nandyala

Address: Plot No. 616, Road No. 33, Jubilee Hills, Hyderabad – 500033

Occupation: Business

Nationality: Indian

Term: Five years with effect from March 11, 2019

DIN: 00025063

46 Independent Director

Brief profiles of our Directors

Sharvil Patel is the Chairman and Non-executive Director of our Company. He has been a director on our Board

since April 27, 2009. He holds a bachelor’s degree in chemical and pharmaceutical science and a doctorate in

philosophy from University of Sunderland, United Kingdom. He is associated with Young Indians as a member.

Tarun Arora is the Whole-time Director and CEO of our Company. He has been a director on our Board since

May 14, 2015. He holds a bachelor’s degree in science from University of Delhi and a post graduate diploma in

business management from Institute of Management Technology, Ghaziabad. Prior to joining our Company, he

has been associated with Danone Narang Beverages Private Limited in the capacity of general manager.

Ganesh Nayak is the Non-executive Director of our Company. He has been a director on our Board since July

27, 2006. He has completed the general manager program from Harvard Business School, United States of

America. He is the chief operating officer and executive director of Cadila Healthcare Limited.

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Ashish Bhargava is the Nominee Director of our Company He has been a director on our Board since January

30, 2019. He holds a bachelor’s degree in technology from the Indian Institute of Technology, Delhi and a master’s

degree in management from S.P. Jain Institute of Management and Research, Mumbai. He is a partner of True

North, a private equity fund and joined True North in 2008.

Dharmishtaben Raval is an Independent Director of our Company. She has been a director on our Board since

March 11, 2019. She holds a bachelor’s degree in law from Gujarat University and a master’s degree in law from

Gujarat University. She enrolled as an advocate of the Gujarat bar association in 1980. She has previously been

associated with SEBI as an executive director and was a standing member for the central government in the High

Court of Gujarat. Presently, she holds the position of secretary of the Indian Law Institute of Gujarat State Unit.

She was appointed as a member of the high powered advisory committee of SEBI. She is also a director on the

board of NSDL E-Governance Infrastructure Limited.

Kulin Lalbhai is an Independent Director of our Company. He has been a director on our Board since November

18, 2016. He holds a bachelor’s degree in science from Leland Stanford Junior University and a master’s degree

in business administration from Harvard Business School. He is currently serving as the executive director of

Arvind Limited. In the past, he has been associated with McKinsey & Co in the capacity of a business analyst.

Savyasachi Sengupta is an Independent Director of our Company. He has been a director on our Board since

November 2, 2018. He holds a bachelor’s degree in science from St. Xaviers College, Gujarat and a post graduate

diploma in management from Indian Institute of Management, Ahmedabad. In the past, he has been associated

with Alembic Pharmaceuticals Limited as senior vice president - marketing, Cadila Healthcare Limited as

president - operations and Sarabhai Piramal Pharmaceuticals Private Limited as CEO.

Srivishnu Nandyala is an Independent Director of our Company. He has been a director on our Board since

March 11, 2019. He holds a bachelor’s degree in engineering from Osmania University and an owner president

management programme from Harvard Business School. He is the director of Exciga Land Holdings Private

Limited, Excigia Properties Private Limited, Amara Raja Batteries Limited and Heritage Foods Limited.

Relationship between Directors

None of our directors are related to each other.

Borrowing powers of our Board

Our Company has, pursuant to a special resolution passed by the Shareholders dated January 4, 2019 and subject

to the provisions of our Articles of Association and applicable laws, authorised the Board to borrow, at its

discretion, from any one or more banks, financial institutions and other persons, firms, body corporate, from time

to time, such sums of money, and the sums to be borrowed together with the money already borrowed by our

Company (apart from temporary loans obtained from our Company’s bankers / in the ordinary course of business)

with or without security on such terms and conditions as they may think fit shall exceed the aggregate of our

Company’s paid-up share capital, free reserves, and securities premium (that is to say, reserves not set apart for

any specific purpose) provided that the total amount together with the money already borrowed shall not exceed

`3,00,000 lakhs at any time.

Shareholding of Directors

The following table sets forth details regarding the shareholding of the Directors as of the date of this Preliminary

Placement Document:

Name of the Director Number of Equity Shares held Percent of the issued and paid-up

Equity Share capital (in %)

Dr. Sharvil Patel* 1,599 Negligible

Ganesh Nayak 6,550 Negligible

Savyasachi Sengupta 173 Negligible

Tarun Arora 1,000 Negligible

*533 Equity Shares are held individually, 533 Equity Shares are held jointly with Pankaj Patel (P.R. Patel Smaller Trust), and

533 Equity Shares are held jointly with Pankaj Patel (Taraben Patel Family Will Trust)

145

Remuneration of the Directors

In accordance with applicable laws, our Company pays a sitting fee of `1.00 lakh per meeting of the Board, ₹1.00

lakh per meeting for each committee of the Board, to each of our Non-executive Directors. In addition to the

sitting fees, the directors are reimbursed for any expenditure incurred for travelling, accommodation and other

such expenses for attending the Board/ committee meetings. The Directors may also be paid a commission as may

be approved by the Board in each financial year.

The following table sets forth the remuneration (including sitting fees, commission and perquisites) paid by or

provided for our Company to the Directors during the last three Fiscals and the three month period ended June 30,

2020:

(in ₹ lakhs)

Name From April 1, 2020, to

June 30, 2020 Fiscal 2020 Fiscal 2019 Fiscal 2018

Unaudited Audited Audited Audited

Tarun Arora 29.5 110.0 328.1 303.3

Humayun Dhanrajgir NA NA 16.0 11.5

Indira Parikh NA NA 18.5 13.0

Kulin Lalbhai 4.0 4.5 19.0 10.5

Dr. Sharvil Patel 2.5 5.0 9.5 4.5

Ganesh Nayak 5.0 8.0 11.0 8.5

Savyasachi Sengupta 5.0 9.0 16.0 NA

Srivishnu Nandyala 4.0 5.0 10.0 NA

Dharmishtaben Raval 2.5 4.5 10.0 NA

Ashish Bhargava - - -* NA *A cheque for payment of sitting fees for Fiscal 2019 was issued by our Company to Ashish Bhargava for an amount of ₹12.00

lakhs and was accordingly accounted for in the financial statements for Fiscal 2019. Subsequently, Ashish Bhargava expressed

his unwillingness to accept any sitting fees for his tenure as a Nominee Director and returned the uncashed cheque to our

Company and accordingly the relevant accounting treatment for reversal was included in the financial statement for Fiscal

2020.

Executive Directors

Tarun Arora, CEO and Whole Time Directors

Our Company has entered into an agreement dated September 22, 2020 (“Employment Agreement”) with Tarun

Arora, recording the various terms and conditions of his employment with effect from May 7, 2020.

In terms of the Employment Agreement, Tarun Arora shall be entitled to remuneration as recommended by the

Nomination and Remuneration Committee, in accordance with the limits set forth by the Companies Act and

based on the performance of the Company and his individual performance, as evaluated by the Board.

In case of no profits or inadequate profits of the Company in a financial year, Tarun Arora shall be entitled to: (a)

a minimum remuneration by way of salary and perquisites, of the lower of, the remuneration received in the

preceding year or the maximum remuneration payable under the Companies Act; and (b) contribution by the

Company to the provident fund to the extent not taxable under the Income Tax Act, 1961, (c) gratuity payable at

the rate not exceeding half month’s salary for each completed year of service and; (d) encashment of leave at the

end of his tenure. Tarun Arora shall not be entitled to payment of sitting fees for attending any meeting of the

Board of Directors or Committees.

Further, Tarun Arora will be entitled to reimbursement of all expenses including for travelling, entertainment and

other out-of-pocket expenses incurred in connection with the business of our Company.

Key Management Personnel

In addition to Tarun Arora, our Chief Executive Officer and Whole-time Director, the following are the Key

Management Personnel of our Company:

Umesh Parikh, aged 52 years, is the Chief Financial Officer of our Company. He was appointed on February 7,

2018. He joined our Company on February 7, 2018 as the vice-president - finance. He holds a bachelor’s degree

in commerce from Gujarat University. He has also completed the Zydus Advanced Business Leadership Education

146

Programme from Indian Institute of Management, Ahmedabad. He is an associate of the Institute of Company

Secretaries of India and ICAI. During Fiscal 2020, he received a remuneration of ̀ 120.2 lakhs from our Company.

Dhanraj Dagar, aged 30 years, is the Company Secretary and Compliance Officer of our Company. He was

appointed on February 6, 2019. He joined our Company on March 1, 2018. He holds a bachelor’s degree in

commerce from Bangalore University and a bachelor’s degree in law from the Gujarat University. He is a qualified

company secretary and an associate member of the Indian Institute of Company Secretaries in India. During Fiscal

2020, he received a remuneration of `11.3 lakhs from our Company.

Relationship of Key Management Personnel

None of the other KMPs of our Company are related to each other.

Shareholding of Key Management Personnel

Other than as set forth in “- Shareholding of Directors”, the following table includes the details regarding the

shareholding of the KMPs as of the date of this Preliminary Placement Document:

Name Designation Number of Equity Shares

held

Percent of the issued and paid-

up Equity Share capital (in %)

Umesh Parikh Chief Financial Officer 6 Negligible

Interest of our Directors and Key Management Personnel

All our Directors may be deemed to be interested to the extent of their shareholding, remuneration, fees and

compensation payable to them for attending meetings of our Board or committees thereof, commission as well as

to the extent of reimbursement of expenses payable to them.

All of our Directors may also be regarded as interested in any Equity Shares held by them and also to the extent

of any dividend payable to them and other distributions in respect of such Equity Shares held by them. All

Directors may also be regarded as interested in the Equity Shares held by, or subscribed by and allotted to, their

relatives or the companies, firms and trust, in which they are interested as directors, members, partners, trustees.

Except as provided in “Related Party Transactions” beginning on page 67, we have not entered into any contract,

agreement or arrangement during the three Fiscals immediately preceding the date of this Preliminary Placement

Document in which any of our Directors are interested, directly or indirectly, and no payments have been made

to them in respect of any such contracts, agreements, arrangements which are proposed to be made with them. For

further details on the related party transactions, with our Directors during the last three Fiscals, see “Related Party

Transactions” beginning on page 67.

The Key Management Personnel of our Company do not have any interest in our Company other than to the extent

of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement

of expenses incurred by them and to the extent of the Equity Shares held by them or their dependants in our

Company, if any, and any dividend payable to them and other distributions in respect of such Equity Shares.

Other than a loan of `15.0 lakhs extended to one of our Directors, Tarun Arora, our Company has neither availed

of any loans from, nor extended any loans to the Directors and KMPs which are currently outstanding.

Our Company does not have any bonus or profit-sharing plan with its Directors or Key Management Personnel.

Corporate governance

The Board of Directors presently consists of eight Directors. In compliance with the requirements of the SEBI

Listing Regulations, the Board of Directors has four Independent Directors. Our Company is in compliance with

the corporate governance requirements including the constitution of Board and committees thereof, as prescribed

under the Companies Act and SEBI Listing Regulations.

147

Committees of the Board of Directors

The Board of Directors have constituted committees, which function in accordance with the relevant provisions

of the Companies Act and the SEBI Listing Regulations. The following table sets forth the members of the

aforesaid committees as of the date of this Preliminary Placement Document:

Committee Members

Audit Committee Dharmishta Raval (Chairperson); Ganesh Nayak; Srivishnu Raju

Nandyala; Kulin Lalbhai; Savyasachi Sengupta; and Ashish Bhargava

Nomination and Remuneration Committee Kulin Lalbhai (Chairman); Ganesh Nayak; Srivishnu Raju Nandyala;

Savyasachi Sengupta; and Ashish Bhargava

Stakeholders’ Relationship Committee Ganesh Nayak (Chairman); Tarun Arora; and Savyasachi Sengupta

Risk Management Committee Sharvil Patel (Chairman); Kulin Lalbhai; Savyasachi Sengupta; and

Umesh Parikh

Corporate Social Responsibility Committee Sharvil Patel (Chairman); Ganesh Nayak; and Savyasachi Sengupta

Other confirmations

None of the Directors, Promoters or Key Management Personnel of our Company has any financial or other

material interest in the Issue.

Our Promoters, Directors and Key Management Personnel will not participate in the Issue.

Neither our Company, nor any of our Directors or Promoters have been declared as a Wilful Defaulter in the last

ten years by any bank or financial institution or consortium thereof.

None of the Directors or the companies with which they are or were associated as promoters, directors are debarred

from accessing the capital markets under any order or direction passed by the SEBI or any other governmental

authority. Neither our Company, nor our Promoters or the companies with which our Promoters is or has been

associated with a promoter or a person in control have been debarred from accessing capital markets under any

order or direction passed by SEBI or any other governmental authority.

None of our Directors or Promoters have been declared as a Fugitive Economic Offender.

Policy on Disclosures and Internal Procedure for prevention of Insider Trading

SEBI Insider Trading Regulations applies to us and our employees and requires us to formulate and implement a

code of practices and procedures for fair disclosure of unpublished price sensitive information and a code of

conduct to regulate, monitor and report trading by designated persons. Our Company is in compliance with the

same and has implemented an insider trading code of conduct for prevention of insider trading in accordance with

the SEBI Insider Trading Regulations, in terms of which, Dhanraj Dagar, our Company Secretary and Compliance

Officer, acts as the Compliance Officer of our Company under the aforesaid code of conduct for the prevention

of insider trading.

148

SHAREHOLDING PATTERN OF OUR COMPANY

The following tables present information regarding the ownership of Equity Shares by the Shareholders as of June 30, 2020:

Summary statement showing the shareholding pattern of our Company

Category of shareholder Nos. of

shareholders

No. of fully paid

up equity shares

held

Total nos.

shares held

Shareholding as a % of

total no. of shares

(calculated as per SCRR,

1957) As a % of (A+B+C2)

No. of Voting

Rights

Total as a %

of Total

Voting right

No. of Locked in shares Number of equity

shares held in

dematerialized

form No.(a)

As a % of

total Shares

held(b)

(A) Promoter & Promoter Group 9 3,91,24,139 3,91,24,139 67.85 3,91,24,139 67.85 1,06,49,818 27.22 3,91,24,139

(B) Public 42,888 1,85,40,005 1,85,40,005 32.15 1,40,96,646 32.15 0 0.00 1,83,32,505

(C) Non Promoter- Non Public - - - 0.00 - 0.00 0.00 -

(C1) Shares underlying DRs - - - 0.00 - 0.00 0.00 -

(C2) Shares held by Employee

Trusts

- - - 0.00 - 0.00 0.00 -

Total 42,897 5,76,64,144 5,76,64,144 100.00 5,32,20,785 100.00 1,06,49,818 18.47 5,74,56,644

Statement showing shareholding pattern of the Promoter and Promoter Group

Category of shareholder Nos. of

shareholders

No. of fully paid up

equity shares held

Total nos. shares

held

Shareholding as a % of

total no. of shares

(calculated as per

SCRR, 1957)As a % of

(A+B+C2)

Number of Locked in shares Number of

equity shares

held in

dematerialized

form

No.(a)

As a % of

total Shares

held(b)

A1) Indian 0.00 0.00

Individuals/Hindu undivided Family 6 4,797 4,797 0.01 0.00 4,797

Pankajbhai Ramanbhai Patel 1 1,599 1,599 0.00 0.00 1,599

Pankajbhai Ramanbhai Patel (HUF) 1 1,066 1,066 0.00 0.00 1,066

Pankaj Ramanbhai Patel (Taraben Patel

Family Will Trust) 1 533 533 0.00 0.00 533

Pritiben Pankajbhai Patel 1 533 533 0.00 0.00 533

Sharvil Pankajbhai Patel 1 533 533 0.00 0.00 533

Shivani Pankajbhai Patel 1 533 533 0.00 0.00 533

Any Other (specify) 3 3,91,19,342 3,91,19,342 67.84 1,06,49,818 27.22 3,91,19,342

Zydus Family Trust 1 24,71,193 24,71,193 4.29 21,66,064 87.65 24,71,193

Cadila Healthcare Limited 1 3,66,47,509 3,66,47,509 63.55 84,83,754 23.15 3,66,47,509

Pripan Investment Private Limited 1 640 640 0.00 0.00 640

Sub Total A1 9 3,91,24,139 3,91,24,139 67.85 1,06,49,818 27.22 3,91,24,139

A2) Foreign 0.00 0.00

A=A1+A2 9 3,91,24,139 3,91,24,139 67.85 1,06,49,818 27.22 3,91,24,139

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Statement showing shareholding pattern of the public shareholder

Category & Name of the Shareholders No. of

shareholder

No. of fully paid

up equity shares

held

Total no.

shares held

Shareholding %

calculated as per

SCRR, 1957 As

a % of

(A+B+C2)

No of Voting

Rights

Total as a %

of Total

Voting right

No. of Locked in

shares

Number of

equity shares

held in

dematerialized

form (Not

Applicable)

No.(a)

As a %

of total

Shares

held(b)

B1) Institutions 0 0 0.00 0.00 0.00

Mutual Funds/ 11 22,46,591 22,46,591 3.90 22,46,591 3.90 0.00 22,46,499

Reliance Capital Trustee Co Ltd-A/C

Nippon India Small Cap Fund 1 10,02,375 10,02,375 1.74 10,02,375 1.74 0.00 10,02,375

PPFAS Mutual Fund - Parag Parikh Long

Term Equity Fund 1 7,49,267 7,49,267 1.30 7,49,267 1.30 0.00 7,49,267

Alternate Investment Funds 3 86,10,038 86,10,038 14.93 86,10,038 14.93 0.00 86,10,038

Threpsi Care LLP 1 72,20,216 72,20,216 12.52 72,20,216 12.52 0.00 72,20,216

Pioneer Investment Fund 1 13,24,413 13,24,413 2.30 13,24,413 2.30 0.00 13,24,413

Foreign Portfolio Investors 14 11,60,222 11,60,222 2.01 11,60,222 2.01 0.00 11,60,176

Matthews India Fund 1 9,93,440 9,93,440 1.72 9,93,440 1.72 0.00 9,93,440

Financial Institutions/ Banks 9 20,73,843 20,73,843 3.60 20,73,843 3.60 0.00 20,73,843

Life Insurance Corporation Of India 1 18,43,069 18,43,069 3.20 18,43,069 3.20 0.00 18,43,069

Insurance Companies 1 5,952 5,952 0.01 5,952 0.01 0.00 5,952

Sub Total B1 38 1,40,96,646 1,40,96,646 24.45 1,40,96,646 24.45 0.00 1,40,96,508

B2) Central Government/ State

Government(s)/ President of India 0 0.00 0.00 0.00

B3) Non-Institutions 0 0.00 0.00 0.00

Individual share capital upto Rs. 2 Lacs 40,629 23,47,554 23,47,554 4.07 23,47,554 4.07 0.00 22,10,004

Individual share capital in excess of Rs. 2

Lacs 4 5,55,702 5,55,702 0.97 5,55,702 0.97 0.00 5,55,702

NBFCs registered with RBI 2 1,300 1,300 0.00 1,300 0.00 0.00 1,300

Any Other (specify) 2,215 15,38,803 15,38,803 2.67 15,38,803 2.67 0.00 14,68,991

Sub Total B3 42,850 44,43,359 44,43,359 7.71 44,43,359 7.71 0.00 42,35,997

B=B1+B2+B3 42,888 1,85,40,005 1,85,40,005 32.15 1,40,96,646 32.15 0.00 1,83,32,505

Details of the shareholders acting as persons in Concert including their Shareholding (No. and %):

Details of Shares which remain unclaimed may be given here along with details such as number of shareholders, outstanding shares held in demat/unclaimed suspense account, voting rights

which are frozen etc.

150

Statement showing shareholding pattern of the non-promoter- non-public shareholder

Category & Name of the

Shareholders (I)

No. of

shareholder

(III)

No. of fully paid

up equity shares

held (IV)

Total No. shares

held (VII =

IV+V+VI)

Shareholding % calculated as

per SCRR, 1957 As a % of

(A+B+C2)(VIII)

Number of Locked in

shares(XII) Number of equity shares

held in dematerialized

form (XIV)(Not

Applicable) No

As a % of

total Shares

held

C1) Custodian/DR Holder 0 0 - 0.00 0.00 -

C2) Employee Benefit Trust 0 0 - 0.00 0.00 -

Details of disclosure made by the trading members holding 1% or more of the total number of shares of the Company

Name of the Trading Member Name of the Beneficial Owner No. of shares held % of total no. of shares Date of reporting by the Trading Member

Nil Nil Nil Nil Nil

151

ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application,

payment of Bid Amount, Allocation and Allotment of the Equity Shares. The procedure followed in the Issue may

differ from the one mentioned below and investors are assumed to have apprised themselves of the same from our

Company or the BRLM. Prospective Investors are advised to inform themselves of any restrictions or limitations

that may be applicable to them and are required to consult their respective advisers in this regard. Bidders that

apply in the Issue will be required to confirm and will be deemed to have represented to our Company, the BRLM

and their respective directors, officers, agents, affiliates and representatives that they are eligible under all

applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Also see “Selling

Restrictions” beginning on page 166.

Our Company, the BRLM and their respective directors, officers, agents, advisors, shareholders, employees,

counsel, affiliates and representatives are not liable for any amendment or modification or change to applicable

laws or regulations, which may occur after the date of this Preliminary Placement Document. Eligible QIBs are

advised to make their independent investigations and satisfy themselves that they are eligible to apply. Eligible

QIBs are advised to ensure that any single Bid from them does not exceed the investment limits or maximum

number of Equity Shares that can be held by them under applicable law or regulation or as specified in this

Preliminary Placement Document. Further, Eligible QIBs are required to satisfy themselves that their Bids would

not result in triggering an open offer under the SEBI Takeover Regulations and shall be solely responsible for

compliance with all the applicable provisions of the SEBI Takeover Regulations, the SEBI Insider Trading

Regulations, and other applicable laws.

Qualified Institutions Placement

THE ISSUE IS MEANT ONLY FOR ELIGIBLE QIBs ON A PRIVATE PLACEMENT BASIS AND IS

NOT AN OFFER TO THE PUBLIC OR TO ANY OTHER CLASS OF INVESTORS.

This Preliminary Placement Document has not been, and will not be, filed as a prospectus with the RoC and, no

Equity Shares will be offered in India or overseas to the public or any members of the public or any other class of

investors, other than Eligible QIBs.

The Issue is being made to Eligible QIBs in reliance upon Chapter VI of the SEBI ICDR Regulations and Section

42 and other applicable provisions of the Companies Act, through the mechanism of a QIP. Under Chapter VI of

the SEBI ICDR Regulations and Section 42 of the Companies Act and other applicable provisions of the

Companies Act, a listed company may issue eligible securities to Eligible QIBs provided that certain conditions

are met by such Company. Some of these conditions are set out below:

• the shareholders of the issuer have passed a special resolution approving such QIP. Such special

resolution must inter alia specify that, (a) the allotment of securities is proposed to be made pursuant to

the QIP; and (b) the relevant date for the QIP;

• the explanatory statement to the notice to the shareholders for convening the general meeting must

disclose, among other things, the particulars of the issue including the date of passing the board

resolution, the kind of securities being offered and the price at which they are offered, amount which the

company intends to raise by way of such securities and the material terms of raising such securities,

proposed issue schedule, the purpose or objects of offer, the contribution made by the promoters or

directors either as part of the offer or separately in furtherance of the objects, and the basis or justification

for the price (including premium, if any) at which the offer or invitation is being made;

• under Regulation 172(1)(b) of the SEBI ICDR Regulations, the equity shares of the same class of such

issuer, which are proposed to be allotted through the QIP, are listed on a recognised stock exchange in

India having nation-wide trading terminals for a period of at least one year prior to the date of issuance

of notice to its shareholders for convening the meeting to seek approval of the shareholders for the above-

mentioned special resolution;

• invitation to apply in the QIP must be made through a private placement offer-cum-application form

serially numbered and addressed specifically to the Eligible QIBs to whom the QIP is made either in

writing or in electronic mode, within 30 days of recording the name of such person in accordance with

applicable law; the issuer shall have completed allotments with respect to any earlier offer or invitation

152

made by the issuer or shall have withdrawn or abandoned such invitation or offer made by the issuer,

except as permitted under the Companies Act;

• the issuer shall not make any subsequent QIP until the expiry of two weeks from the date of the previous

QIP;

• an offer to Eligible QIBs will not be subject to a limit of 200 persons. Prior to circulating the private

placement offer-cum-application (i.e., this Preliminary Placement Document), the issuer shall prepare

and record a list of Eligible QIBs to whom the Issue will be made. The QIP must be made only to such

Eligible QIBs whose names are recorded by the issuer prior to the invitation to subscribe;

• the offering of securities by issue of public advertisements or utilisation of any media, marketing or

distribution channels or agents to inform the public about the QIP is prohibited. In accordance with the

SEBI ICDR Regulations, securities will be issued and allotment shall be made only in dematerialized

form to the allottees; and

• the promoters and directors of the issuer are not Fugitive Economic Offenders.

At least 10% of the equity shares issued to Eligible QIBs shall be available for Allocation to Mutual Funds,

provided that, if this portion, or any part thereof to be allotted to Mutual Funds remains unsubscribed, it may be

allotted to other Eligible QIBs.

Bidders are not allowed to withdraw or revise downwards their Bids after the Bid/ Issue Closing Date.

Additionally, there is a minimum pricing requirement under the SEBI ICDR Regulations. The floor price of the

equity shares issued under the QIP shall not be less than the average of the weekly high and low of the closing

prices of the issuer’s equity shares of the same class quoted on the stock exchanges during the two weeks preceding

the relevant date as calculated in accordance with Chapter VI of the SEBI ICDR Regulations. However, a discount

of up to 5% of the floor price is permitted in accordance with the provisions of the SEBI ICDR Regulations. Our

Board through its resolution dated August 27, 2020 and our Shareholders through a special resolution on

September 19, 2020, have authorised our Board to decide the quantum of discount up to 5% of the Floor Price at

the time of determination of the Issue Price.

The “relevant date” mentioned above in case of allotment of equity shares, refers to the date of the meeting in

which the board of directors or the committee of directors duly authorised by the board of the issuer decides to

open the proposed issue and “stock exchange” means any of the recognised stock exchanges in India on which

the equity shares of the issuer of the same class are listed and on which the highest trading volume in such shares

has been recorded during the two weeks immediately preceding the relevant date.

The securities must be allotted within 365 days from the date of the shareholders’ resolution approving the QIP

and also within 60 days from the date of receipt of subscription money from the relevant Eligible QIBs.

The Equity Shares issued pursuant to the Issue must be issued on the basis of this Preliminary Placement

Document and the Placement Document that shall contain all material information including the information

specified in Schedule VII of the SEBI ICDR Regulations and the requirements prescribed under PAS Rules and

Form PAS-4. This Preliminary Placement Document and the Placement Document are private documents

provided to only select Eligible QIBs through serially numbered copies and are required to be placed on the

website of the concerned Stock Exchanges and of our Company with a disclaimer to the effect that it is in

connection with an issue to Eligible QIBs and no offer is being made to the public or to any other category of

investors. Please note that if you do not receive a serially numbered copy of this Preliminary Placement Document

addressed to you, you may not rely on this Preliminary Placement Document or Placement Document uploaded

on the website of the Stock Exchanges or our Company for making an application to subscribe to Equity Shares

pursuant to the Issue.

The minimum number of allottees for each QIP shall not be less than:

• two, where the issue size is less than or equal to ₹25,000 lakhs; and

• five, where the issue size is greater than ₹25,000 lakhs.

153

No single Allottee shall be Allotted more than 50% of the Issue Size. Eligible QIBs that belong to the same group

or that are under common control shall be deemed to be a single Allottee for the purpose of the Issue. For details

of what constitutes “same group” or “common control”, see “Application Form – Bid Process” on beginning page

157.

Equity Shares being Allotted pursuant to the Issue shall not be sold for a period of one year from the date of

Allotment, except on the floor of a recognised stock exchange.

We have applied for and received the in-principle approval of the Stock Exchanges under Regulation 28(1)(a) of

the SEBI Listing Regulations for listing of the Equity Shares to be issued pursuant to the Issue on the Stock

Exchanges. We have filed a copy of this Preliminary Placement Document and will file a copy of the Placement

Document with the Stock Exchanges.

We shall also make the requisite filings with the RoC within the stipulated period as required under the Companies

Act and the PAS Rules.

The Issue has been authorised and approved by our Board on August 27, 2020 and our Shareholders through a

special resolution passed at the extra-ordinary general meeting on September 19, 2020.

Allotments made to VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable

to each of them respectively, including in relation to lock-in requirement. VCFs and AIFs should

independently consult their own counsel and advisors as to investment in and related matters concerning

the Issue.

The Equity Shares offered hereby have not been and will not be registered under the U.S. Securities Act

and may not be offered or sold within the United States except pursuant to an exemption from, or in a

transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state

securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in

“offshore transactions” as defined in, and in reliance on Regulation S.

The Equity Shares issued pursuant to this Issue have not been and will not be registered, listed or otherwise

qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made

by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Issue Procedure

1. On Bid / Issue Opening Date, our Company in consultation with the BRLM shall circulate serially

numbered copies of this Preliminary Placement Document and the serially numbered Application Form,

either in electronic or physical form to Eligible QIBs and the Application Form will be specifically

addressed to such Eligible QIBs. In terms of Section 42(3) of the Companies Act, our Company shall

maintain complete records of such Eligible QIBs in the form and manner prescribed under the PAS Rules,

to whom this Preliminary Placement Document and the serially numbered Application Form have been

dispatched or circulated, as the case may be. Our Company will make the requisite filings with RoC

within the stipulated time period as required under the Companies Act.

2. The list of QIBs to whom the Application Form is delivered shall be determined by our Company in

consultation with the BRLM. Unless a serially numbered Preliminary Placement Document along with

the serially numbered Application Form, which includes the details of the bank account wherein the Bid

Amount is to be deposited, is addressed to a particular Eligible QIB, no invitation to subscribe shall be

deemed to have been made to such Eligible QIB. Even if such documentation were to come into the

possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed

to have been made to such person and any application that does not comply with this requirement shall

be treated as invalid. The Application Form may be signed physically or digitally, if required under

applicable law in the relevant jurisdiction applicable to each Eligible QIB and as permitted under such

applicable law. An Eligible QIB may submit an unsigned copy of the Application Form, as long as the

Bid Amount is paid along with submission of the Application Form within the Bid/Issue Period. Once a

duly filled Application Form is submitted by an Eligible QIB, whether signed or not, and the Bid Amount

has been transferred to the Escrow Account, such Application Form constitutes an irrevocable offer and

cannot be withdrawn or revised downwards after the Bid/Issue Closing Date. In case Bids are being made

on behalf of the Eligible QIB and this Application Form is unsigned, it shall be assumed that the person

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submitting the Application Form and providing necessary instructions for transfer of the Bid Amount to

the Escrow Account, on behalf of the Eligible QIB is authorised to do so.

3. Eligible QIBs may submit an Application Form, including any revisions thereof, along with the Bid

Amount transferred to the escrow account specified in the application form and a copy of the PAN card

or PAN allotment letter and/or any other documents mentioned in the Application Form, during the Bid/

Issue Period to the BRLM.

4. Bidders will be required to indicate the following in the Application Form:

• full official name of the Bidder to whom Equity Shares are to be Allotted, complete address, e-

mail id, PAN details (if applicable), phone number and bank account details;

• number of Equity Shares Bid for;

• price at which they are agreeable to subscribe to the Equity Shares and the aggregate Bid Amount

for the number of Equity Shares Bid for;

• details of the beneficiary account maintained by the Depository Participant to which the Equity

Shares should be credited pursuant to the Issue;

• equity shares held by the Bidder in our Company prior to the Issue; and

• it has agreed to certain other representations set forth in the Application Form.

NOTE: Eligible FPIs are required to indicate their SEBI FPI registration number in the Application

Form. The Bids made by the asset management companies or custodian of Mutual Funds shall

specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual

Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI

and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple

Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. Application by

various schemes or funds of a Mutual Fund will be treated as one application from the Mutual Fund.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or

maximum number of Equity Shares that can be held by them under applicable laws.

5. Eligible QIBs shall be required to make the entire payment of the Bid Amount for the Equity Shares Bid

for, along with the Application Form, only through electronic transfer to the Escrow Account opened in

the name of “Zydus Wellness Limited – Escrow Account - Equity share issue FY 2020-21” with the

Escrow Agent, within the Bid/Issue Period as specified in the Application Form sent to the respective

Bidders. Please note that any payment of Bid Amount for the Equity Shares shall be made from the bank

accounts of the relevant Bidders and our Company shall keep a record of the bank account from where

such payment has been received. No payment shall be made in the Issue by the Bidders in cash. Bid

Amount payable on Equity Shares to be held by joint holders shall be paid from the bank account of the

person whose name appears first in the Application Form. Until Allotment, and the filing of return of

Allotment by our Company with the RoC, or receipt of final listing and trading approvals from the Stock

Exchanges, whichever is later, Bid Amount received for subscription of the Equity Shares shall be kept

by our Company in a separate bank account with a scheduled bank and shall be utilised only for the

purposes permitted under the Companies Act. Notwithstanding the above, in the event (a) any Bidder is

not allocated Equity Shares in the Issue, (b) the number of Equity Shares Allotted to a Bidder is lower

than the number of Equity Shares applied for through the Application Form and towards which Bid

Amount has been paid by such Bidder, (c) the Bid Amount has been arrived at using an indicative price

higher than the Issue Price, or (d) any Eligible QIB lowers or withdraws their Bid after submission of the

Application Form but on or prior to the Issue Closing Date, the excess Bid Amount will be refunded to

the same bank account from which it was remitted, in the form and manner set out in “– Refunds” on

page 162.

6. Once a duly completed Application Form is submitted by a Bidder and the Bid Amount is transferred to

the Escrow Account, such application constitutes an irrevocable offer and the Bid cannot be withdrawn

or revised downwards after the Bid/ Issue Closing Date. In case of an upward revision before the Bid/

Issue Closing Date, an additional amount shall be required to be deposited towards the Bid Amount in

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the Escrow Account along with the submission of such revised Bid. The Bid/ Issue Closing Date shall

be notified to the Stock Exchanges and the Eligible QIBs shall be deemed to have been given notice of

such date after receipt of the Application Form.

7. Upon receipt of the duly completed Application Form and the Bid Amount in the Escrow Account, on

or after the Bid/ Issue Closing Date, our Company shall, in consultation with BRLM determine the final

terms, including the Issue Price of the Equity Shares to be issued pursuant to the Issue and Allocation.

Upon such determination, the BRLM, on behalf of our Company, will send the serially numbered CAN

and the Placement Document to the Successful Bidders. The dispatch of a CAN, and the Placement

Document (when dispatched) to a Successful Bidder shall be deemed a valid, binding and irrevocable

contract for the Successful Bidders to subscribe to the Equity Shares Allocated to such Successful

Bidders at an aggregate price equivalent to the product of the Issue Price and Equity Shares Allocated to

such Successful Bidders. The CAN shall contain details such as the number of Equity Shares Allocated

to the Successful Bidders, Issue Price and the aggregate amount received towards the Equity Shares

Allocated. Please note that the Allocation will be at the absolute discretion of our Company and

shall be in consultation with the BRLM.

8. Upon determination of the Issue Price and before Allotment of Equity Shares to the Successful Bidders,

the BRLM, shall, on our behalf, send a serially numbered Placement Document either in electronic form

or through physical delivery to each of the Successful Bidders who have been Allocated Equity Shares

pursuant to dispatch of a serially numbered CAN.

9. Upon dispatch of the serially numbered Placement Document, our Company shall Allot Equity Shares

as per the details in the CANs sent to the Successful Bidders. Our Company will inform the Stock

Exchanges of the details of the Allotment.

10. After passing the resolution passed by the Board or its committee approving the Allotment and prior to

crediting the Equity Shares into the beneficiary account of the Successful Bidders maintained by the

Depository Participant, as specified in the records of the depositories or as indicated in their respective

Application Form, our Company shall apply to the Stock Exchanges for listing approvals in respect of

the Equity Shares Allotted pursuant to the Issue.

11. After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity Shares

Allotted pursuant to this Issue into the beneficiary accounts of the respective Allottees.

12. Our Company will then apply for the final trading approvals from the Stock Exchanges.

13. The Equity Shares that would have been credited to the beneficiary account with the Depository

Participant of the Successful Bidders shall be eligible for trading on the Stock Exchanges only upon the

receipt of final trading and listing approvals from the Stock Exchanges.

14. As per applicable law, the Stock Exchanges will notify the final listing and trading approvals, which are

ordinarily available on their websites, and our Company may communicate the receipt of the listing and

trading approvals to those Eligible QIBs to whom the Equity Shares have been Allotted. Our Company

and the BRLM shall not be responsible for any delay or non-receipt of the communication of the final

trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non-

receipt. Investors are advised to apprise themselves of the status of the receipt of the permissions from

the Stock Exchanges or our Company.

15. A representation that it is outside the United States acquiring the Equity Shares in an “offshore

transaction” as defined in, and in reliance on, Regulation S, and it has agreed to certain other

representations set forth in the Application Form.

Eligible QIBs

Only Eligible QIBs as defined under Regulation 2(1)(ss) of the SEBI ICDR Regulations, and not

otherwise restricted from participating in the Issue under the applicable law, will be considered as

Eligible QIBs. FVCIs are not permitted to participate in the Issue. Currently, QIBs, who are eligible to

participate in the Issue and also as defined under Regulation 2(1)(ss) of the SEBI ICDR Regulations, are

set forth below:

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• Eligible FPIs;

• insurance companies registered with the Insurance Regulatory and Development Authority of India;

• insurance funds set up and managed by army, navy or air force of the Union of India;

• insurance funds set up and managed by the Department of Posts, India.

• multilateral and bilateral development financial institutions eligible to invest in India;

• Mutual Funds, VCFs, AIFs;

• pension funds with minimum corpus of ₹2,500 lakhs;

• provident funds with minimum corpus of ₹2,500 lakhs;

• public financial institutions as defined under Section 2(72) of the Companies Act;

• scheduled commercial banks;

• state industrial development corporations;

• systemically important non-banking financial companies; and

• the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005

of the Government published in the Gazette of India.

ELIGIBLE FPIS ARE PERMITTED TO PARTICIPATE UNDER SCHEDULE II OF FEMA RULES IN

THIS ISSUE. ELIGIBLE FPIS ARE PERMITTED TO PARTICIPATE IN THE ISSUE SUBJECT TO

COMPLIANCE WITH ALL APPLICABLE LAWS AND SUCH THAT THE SHAREHOLDING OF THE

FPIS DO NOT EXCEED SPECIFIED LIMITS AS PRESCRIBED UNDER APPLICABLE LAWS IN

THIS REGARD. FVCIS ARE NOT PERMITTED TO PARTICIPATE IN THIS ISSUE.

Other eligible non-resident QIBs shall participate in the Issue under Schedule I of the FEMA Rules.

In terms of the FPI Regulations, the Equity Shares issued to a single Eligible FPI or an investor group (multiple

entities registered as FPIs and directly or indirectly, having common ownership of more than fifty per cent or

common control) should not exceed 10% of post-Issue Equity Share capital of our Company. Further, in terms of

the FEMA Rules, the total holding of each FPI or its investor group shall be below 10% of the total post issue

paid-up Equity Share capital of our Company on a fully diluted basis. With effect from April 1, 2020, the aggregate

limit for FPI investments shall be the sectoral cap applicable to our Company on a fully diluted basis. Hence,

Eligible FPIs may invest in such number of Equity Shares in the Issue such that (i) the individual investment of

the FPI in our Company does not exceed 10% of the post -Issue paid-up capital of our Company on a fully diluted

basis, and (ii) the aggregate investment by FPIs in our Company does not exceed the sectoral cap applicable to

our Company on a fully diluted basis.

In case the holding of an FPI including its investor group increases to 10% or more of the total post-Issue paid-up

equity capital, on a fully diluted basis, the FPI including its investor group is required to divest the excess holding

within five trading days from the date of settlement of the trades resulting in the breach. In the event that such

divestment of excess holding is not done within the above prescribed time, the total investment made by such FPI

together with its investor group will be re-classified as FDI as per procedure specified by SEBI and the FPI and

its investor group will be prohibited from making any further portfolio investment in our Company under the

SEBI FPI Regulations. However, in accordance with Regulation 22(4) of the SEBI FPI Regulations, the FPIs who

are: (i) appropriately regulated public retail funds; (b) public retail funds where the majority is owned by

appropriately regulated public retail fund on look through basis; or (c) public retail funds and investment managers

of such foreign portfolio investors are appropriately regulated, the aggregation of the investment limits of such

FPIs having common control, shall not be applicable.

As per the circular issued by SEBI on November 24, 2014, these investment restrictions shall also apply to

subscribers of P- Notes. Two or more subscribers of P-Notes having a common beneficial owner shall be

considered together as a single subscriber of the P-Note. In the event an investor has investments as an FPI and

as a subscriber of P-Notes, these investment restrictions shall apply on the aggregate of the FPI and P-Note

investments held in the underlying company.

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Pursuant to the SEBI Circular dated April 5, 2018 (Circular No: IMD/FPIC/CIR/P/2018/61), our Company has

appointed Central Depository Services (India) Limited as the designated depository to monitor the level of FPI /

NRI shareholding in our Company on a daily basis and once the aggregate foreign investment of a company

reaches a cut-off point, which is 3% below the overall limit a red flag shall be activated. SEBI however, pursuant

to its Circular dated May 17, 2018 (Circular No: SEBI/HO/IMD/FPIC/CIR/P/2018/81), directed that this system

of monitoring foreign investment limits in Indian listed companies be made operational with effect from June 1,

2018. The depository is then required to inform the Stock Exchanges about the activation of the red flag. The

stock exchanges are then required to issue the necessary circulars/ public notifications on their respective websites.

Once a red flag is activated, the FPIs must trade cautiously, because in the event that there is a breach of the

sectoral cap, the FPIs will be under an obligation to disinvest the excess holding within five trading days from the

date of settlement of the trades.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which

may be specified by the Government from time to time.

In terms of the FEMA Rules, for calculating the aggregate holding of FPIs in a company, holding of all registered

FPIs shall be included. For a description of the restrictions applicable to the offer and sale of the Equity Shares in

the Issue in certain jurisdictions, see “Selling Restrictions” beginning on page 166.

Restriction on Allotment

Pursuant to Regulation 179(2)(b) of the SEBI ICDR Regulations, no Allotment shall be made pursuant to the

Issue, either directly or indirectly, to any Eligible QIB being a promoter, or any person related to, the promoter.

QIBs, which have all or any of the following rights, shall be deemed to be persons related to the promoter:

• rights under a shareholders’ agreement or voting agreement entered into with the promoters or members of

the promoter group;

• veto rights; or

• a right to appoint any nominee director on the board of the issuer.

Provided, however, that an Eligible QIB which does not hold any Equity Shares in our Company and which has

acquired the aforesaid rights in the capacity of a lender shall not be deemed to be related to the promoter.

Our Company, the BRLM and any of their respective shareholders, employees, counsel, officers, directors,

representatives, agents, advisors or affiliates shall not be liable for any amendment or modification or

change to applicable laws or regulations, which may occur after the date of this Preliminary Placement

Document. Eligible QIBs are advised to make their independent investigations and satisfy themselves that

they are eligible to apply. Eligible QIBs are advised to ensure that any single application from them does

not exceed the investment limits or maximum number of Equity Shares that can be held by them under

applicable law or regulation or as specified in this Preliminary Placement Document. Further, Eligible

QIBs are required to satisfy themselves that their Bids would not eventually result in triggering a tender

offer under the SEBI Takeover Regulations and ensure compliance with applicable laws.

A minimum of 10% of the Equity Shares offered in the Issue shall be Allotted to Mutual Funds. In case of

undersubscription in such portion, such portion or part thereof may be Allotted to other Eligible QIBs.

Note: Affiliates or associates of the BRLM who are Eligible QIBs may participate in the Issue in compliance with

applicable laws.

Bid Process

Application Form

Eligible QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by

our Company and the BRLM in either electronic form or by physical delivery for the purpose of making a Bid

(including revision of a Bid) in terms of this Preliminary Placement Document and the Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to

the terms of this Preliminary Placement Document, the Eligible QIB will be deemed to have made all the following

representations and warranties and the representations, warranties and agreements made under “Notice to

Investors”, “Representations by Investors” and “Selling Restrictions” beginning on pages 1, 3 and 166,

respectively:

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1. Each Eligible QIB confirms that it is a QIB in terms of Regulation 2(1)(ss) of the SEBI ICDR Regulations

and is not excluded under Regulation 179(2)(b) of the SEBI ICDR Regulations, has a valid and existing

registration under the applicable laws in India (as applicable) and is eligible to participate in this Issue;

2. Each Eligible QIB confirms that it is not a Promoter and is not a person related to the Promoter(s), either

directly or indirectly and its Application Form does not directly or indirectly represent the Promoter(s)

or members of the Promoter Group or persons related to the Promoter(s);

3. Each Eligible QIB confirms that it has no rights under a shareholders’ agreement or voting agreement

with the Promoter or members of the Promoter Group, no veto rights or right to appoint any nominee

director on the Board other than those acquired in the capacity of a lender not holding any Equity Shares

which shall not be deemed to be a person related to the Promoter(s);

4. Each Bidder confirms that in the event it is resident outside India, it is an Eligible FPI, having a valid

and existing registration with SEBI under the applicable laws in India or a multilateral or bilateral

development financial institution, and is eligible to invest in India under applicable law, including the

FEMA Rules, as amended, and any notifications, circulars or clarifications issued thereunder, and has

not been prohibited by SEBI or any other regulatory authority, from buying, selling, dealing in securities

or otherwise accessing the capital markets and is not an FVCI;

5. Each Eligible QIB acknowledges that it has no right to withdraw or revise its Bid downwards after the

Bid / Issue Closing Date;

6. Each Eligible QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period

of one year from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

7. Each Eligible QIB confirms that the Eligible QIB is eligible to Bid and hold Equity Shares so Allotted

together with any Equity Shares held by it prior to the Issue, if any. Each Eligible QIB further confirms

that the holding of the Eligible QIB, does not and shall not, exceed the level permissible as per any

applicable regulations applicable to the Eligible QIB;

8. Each Eligible QIB confirms that its Bids would not eventually result in triggering a tender offer under

the SEBI Takeover Regulations;

9. The Eligible QIB agrees that it will make payment of its Bid Amount along with submission of the

Application Form within the Issue Period. Each Eligible QIB agrees that once a duly filled Application

Form is submitted by an Eligible QIB, whether signed or not, and the Bid Amount has been transferred

to the Escrow Account, such Application Form constitutes an irrevocable offer and cannot be withdrawn

or revised downwards after the Bid/Issue Closing Date;

10. The Eligible QIB agrees that although the Bid Amount is required to be paid by it along with the

Application Form within the Issue Period in terms of provisions of the Companies Act, our Company

reserves the right to Allocate and Allot Equity Shares pursuant to this Issue on a discretionary basis in

consultation with the BRLM. The Eligible QIB further acknowledges and agrees that the payment of Bid

Amount does not guarantee Allocation and/or Allotment of Equity Shares Bid for in full or in part;

11. The Eligible QIB acknowledges that in terms of the requirements of the Companies Act, upon Allocation,

our Company will be required to disclose names as “proposed Allottees” and percentage of post-Issue

shareholding of the proposed Allottees in the Placement Document and such QIB consents of such

disclosure, if any Equity Shares are Allocated to it. However, the Eligible QIB further acknowledges and

agrees that, disclosure of such details as “proposed Allottees” in the Placement Document will not

guarantee Allotment to them, as Allotment in the Issue shall continue to be at the sole discretion of our

Company, in consultation with the BRLM;

12. The Eligible QIB confirms that the number of Equity Shares Allotted to it pursuant to the Issue, together

with other Allottees that belong to the same group or are under common control, shall not exceed 50%

of the Issue. For the purposes of this representation:

(a) QIBs “belonging to the same group” shall mean entities where (a) any of them controls, directly or

indirectly, through its subsidiary or holding company, not less than 15% of the voting rights in the

other; (b) any of them, directly or indirectly, by itself, or in combination with other persons, exercise

control over the others; or (c) there is a common director, excluding nominee and Independent

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Directors, amongst an Eligible QIB, its subsidiary(ies) or holding company and any other Eligible

QIB; and

(b) ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the SEBI

Takeover Regulations;

13. The Eligible QIBs acknowledge that no Allocation shall be made to them if the price at which they have

Bid for in the Issue is lower than the Issue Price.

14. Each Eligible QIB confirms that it shall not undertake any trade in the Equity Shares credited to its

beneficiary account maintained with the Depository Participant until such time that the final listing and

trading approvals for the Equity Shares are issued by the Stock Exchanges.

15. Each Eligible FPI, confirms that it will participate in the Issue only under and in conformity with

Schedule II of FEMA Rules. Further, each Eligible FPI acknowledges that Eligible FPIs may invest in

such number of Equity Shares such that the individual investment of the Eligible FPI or its investor group

(multiple entities registered as FPIs and directly or indirectly, having common ownership of more than

fifty per cent or common control) in our Company does not exceed 10% of the post-Issue paid-up capital

of our Company on a fully diluted basis. The Bidder confirms that it, individually or together with its

investor group, is not restricted from making further investments in our Company through the portfolio

investment route, in terms of Regulation 22(3) of the SEBI FPI Regulations.

ELIGIBLE QIBs MUST PROVIDE THEIR NAME, COMPLETE ADDRESS, PHONE NUMBER,

EMAIL ID, BANK ACCOUNT DETAILS, BENEFICIARY ACCOUNT DETAILS, PAN, DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. ELIGIBLE QIBs MUST

ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS

THE NAME IN WHICH THEIR BENEFICIARY ACCOUNT IS HELD.

IF SO REQUIRED BY THE BRLM, THE ELIGIBLE QIBs SUBMITTING A BID, ALONG WITH THE

APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE

BRLM TO EVIDENCE THEIR STATUS AS A “QIB” AS DEFINED HEREINABOVE.

IF SO REQUIRED BY THE BRLM, ESCROW AGENT OR ANY STATUTORY OR REGULATORY

AUTHORITY IN THIS REGARD, INCLUDING AFTER BID/ISSUE CLOSING DATE, THE ELIGIBLE

QIBs SUBMITTING A BID AND/OR BEING ALLOTTED EQUITY SHARES IN THE ISSUE, WILL

ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO FULFILL THE APPLICABLE KNOW

YOUR CUSTOMER (KYC) NORMS.

Demographic details such as address and bank account will be obtained from the Depositories as per the

Depository Participant account details provided in the Application Form. However, for the purposes of refund of

all or part of the Bid Amount submitted by the Bidder, the bank details as mentioned in the Application Form

from which the Bid Amount shall be remitted for the Equity Shares applied for in the Issue, will be considered.

The submission of an Application Form and payment of the Bid Amount pursuant to the Application Form by a

Bidder shall be deemed a valid, binding and irrevocable offer for such Bidder and becomes a binding contract on

a Successful Bidder upon issuance of the CAN and the Placement Document (when dispatched) by our Company

(by itself or through the BRLM) in favour of the Successful Bidder.

Submission of Application Form

All Application Forms must be duly completed with information including the number of Equity Shares applied

for along with proof of payment and a copy of the PAN card or PAN allotment letter (as applicable). The Bid

Amount shall be deposited in the Escrow Account as is specified in the Application Form and the Application

Form shall be submitted to the BRLM either through electronic form or through physical delivery at either of the

following addresses:

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Name Address Contact Person Website and Email Phone (Telephone)

J.P. Morgan India

Private Limited

J.P. Morgan Tower, Off CST

Road, Kalina, Santacruz East,

Mumbai 400 098

Shagun Gupta www.jpmipl.com and

investorsmb.jpmipl@j

pmorgan.com

+91 22 6157 3000

The BRLM shall not be required to provide any written acknowledgement of the receipt of the Application Form

and the Bid Amount.

Bidders Bidding in the Issue shall pay the entire Bid Amount along with the submission of the Application Form,

within the Issue Period.

Payment of Bid Amount

Our Company has opened the Escrow Account in the name of “Zydus Wellness Limited – Escrow Account -

Equity share issue FY 2020-21” with the Escrow Agent, in terms of the Escrow Agreement. Each Bidder will

be required to deposit the Bid Amount payable for the Equity Shares Bid by it along with the submission of the

Application Form and during the Bidding Period. Bidders can make payment of the Bid Amount only through

electronic transfer of funds from their own bank account.

Note: Payments are to be made only through electronic fund transfer. Payments made through cash,

demand draft or cheques are liable to be rejected. Further, if the payment is not made favouring the Escrow

Account, the Application Form is liable to be rejected.

Pending Allotment, our Company undertakes to utilise the amount deposited in “Zydus Wellness Limited –

Escrow Account - Equity share issue FY 2020-21” only for the purposes of (i) adjustment against Allotment of

Equity Shares in the Issue; or (ii) repayment of Bid Amount if our Company is not able to Allot Equity Shares in

the Issue.

Pricing and Allocation

There is a minimum pricing requirement under the SEBI ICDR Regulations. The Floor Price shall not be less than

the average of the weekly high and low of the closing prices of the Equity Shares quoted on the stock exchange

during the two weeks preceding the Relevant Date. However, our Company may offer a discount of not more than

5% of the Floor Price in accordance with the approval of our Shareholders, accorded through their special

resolution passed through a special resolution at our extra-ordinary general meeting on September 19, 2020 and

in terms of Regulation 176(1) of the SEBI ICDR Regulations.

Our Company, in consultation with the BRLM, shall determine the Issue Price, which shall be at or above the

Floor Price.

The “Relevant Date” referred to above will be the date of the meeting in which the Board (or a duly constituted

committee thereof) decides to open the Issue and “stock exchange” means any of the recognized stock exchanges

in India on which the Equity Shares are listed and on which the highest trading volume in such Equity Shares has

been recorded during the two weeks immediately preceding the Relevant Date. After finalisation of the Issue

Price, our Company shall update this Preliminary Placement Document with the Issue details and file the

Placement Document with the Stock Exchanges.

Build-up of the Book

The Eligible QIBs shall submit their Bids (including any revision thereof) through the Application Forms within

the Issue Period to the BRLM. Such Bids cannot be withdrawn or revised downwards after the Bid/ Issue Closing

Date. The book shall be maintained by the BRLM.

Method of Allocation

Our Company shall determine the Allocation in consultation with the BRLM on a discretionary basis and in

compliance with Chapter VI of the SEBI ICDR Regulations.

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Application Forms received from the Eligible QIBs at or above the Issue Price shall be grouped together to

determine the total demand. The Allocation to all such Eligible QIBs will be made at the Issue Price. Allocation

to Mutual Funds for up to a minimum of 10% of the Issue Size shall be undertaken subject to valid Bids being

received at or above the Issue Price.

In case of cancellations or default by the Eligible QIBs, our Company in consultation with BRLM have the right

to reallocate the Equity Shares at the Issue Price among existing or new Bidders at their sole and absolute

discretion subject to the applicable laws.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BRLM IN RESPECT OF

ALLOCATION SHALL BE FINAL AND BINDING ON ALL ELIGIBLE QIBs. ELIGIBLE QIBs MAY

NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE

DISCRETION OF OUR COMPANY IN CONSULTATION WITH THE BRLM AND ELIGIBLE QIBs

MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID

APPLICATION FORMS AND PAID THE ENTIRE BID AMOUNT AT OR ABOVE THE ISSUE PRICE

WITHIN THE ISSUE PERIOD. NEITHER OUR COMPANY NOR THE BRLM ARE OBLIGED TO

ASSIGN ANY REASON FOR ANY NON-ALLOCATION.

CAN

Based on receipt of the serially numbered Application Forms and Bid Amount, our Company, in consultation with

the BRLM, in their sole and absolute discretion, shall decide the Successful Bidders. Our Company will dispatch

a serially numbered CAN to all the Bidders pursuant to which the details of the Equity Shares Allocated to them

(if any), the Issue Price and the Bid Amount for the Equity Shares Allocated to them shall be notified to such

Successful Bidders. The CAN shall also include details of amount to be refunded, if any, to such Bidders.

Additionally, the CAN will include the probable Designated Date, being the date of credit of the Equity Shares to

the Bidders’ account, as applicable to the respective Bidder.

The Successful Bidders would also be sent a serially numbered Placement Document (which will include the

names of the proposed Allottees along with the percentage of their post-Issue Shareholding in our Company)

either in electronic form or by physical delivery.

The dispatch of the serially numbered CAN and the Placement Document (when dispatched), to the Eligible QIBs

shall be deemed a valid, binding and irrevocable contract for the Eligible QIBs to subscribe to the Equity Shares

Allocated to such Successful Bidders. Subsequently, our Board will approve the Allotment of the Equity Shares

to the Allottees in consultation with the BRLM.

QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be Allotted

to them pursuant to the Issue.

By submitting the Application Form, an Eligible QIB would have deemed to have made the representations and

warranties as specified in section “Notice to Investors” beginning on page 1 and further that such Eligible QIB

shall not undertake any trade on the Equity Shares credited to its Depository Participant account pursuant to the

Issue until such time as the final listing and trading approval is issued by Stock Exchanges.

Designated Date and Allotment of Equity Shares

1. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Company will

ensure that the Allotment of the Equity Shares is completed by the Designated Date provided in the CAN.

2. In accordance with the SEBI ICDR Regulations, Equity Shares will be issued and Allotment shall be made

only in the dematerialized form to the Allottees. Allottees will have the option to re-materialize the Equity

Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act. However,

transfer of securities of listed companies in physical form is not permitted pursuant to Regulation 40 of the

SEBI Listing Regulations.

3. Our Company, at its sole discretion, reserves the right to cancel the Issue at any time up to Allotment

without assigning any reasons whatsoever.

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4. Following the Allotment of the Equity Shares pursuant to the Issue, our Company shall apply to the Stock

Exchanges for listing approvals and post receipt of the listing approvals from the Stock Exchanges, our

Company shall credit the Equity Shares into the beneficiary accounts of the Eligible QIBs.

5. Following the credit of Equity Shares into the Successful Bidders’ beneficiary accounts with the

Depository Participants, our Company will apply for the final listing and trading approvals from the Stock

Exchanges.

6. The monies lying to the credit of the Escrow Account shall not be released until the final listing and trading

approvals for the listing and trading of the Equity Shares issued pursuant to this Issue are received by our

Company from the Stock Exchanges and our Company files the return of Allotment in connection with the

Issue with the RoC within the prescribed timelines under the Companies Act.

7. After finalization of the Issue Price, our Company shall update this Preliminary Placement Document with

the Issue details and file it with the Stock Exchanges as the Placement Document, which will include names

of the proposed Allottees and the percentage of their post-Issue shareholding in the Company. Pursuant to

a circular dated March 5, 2010 issued by the SEBI, Stock Exchanges are required to make available on

their websites the details of those Allottees in Issue who have been allotted more than 5% of the Equity

Shares offered in the Issue, namely, names of the Allottees, and number of Equity Shares Allotted to each

of them, pre and post Issue shareholding pattern of our Company along with the Placement Document.

Refunds

In the event that the number of Equity Shares Allocated to a Bidder is lower than the number of Equity Shares

applied for through the Application Form and towards which Bid Amount has been paid by such Bidder, or the

Bidder has deposited the Bid Amount arrived at using a price higher than the Issue Price or Equity Shares are not

Allocated to a Bidder for any reasons or the Issue is cancelled prior to Allocation, or a Bidder lowers or withdraws

the Bid prior to the Bid/ Issue Closing Date, any excess Bid Amount paid by such Bidder will be refunded to the

same bank account from which Bid Amount was remitted as set out in the Application Form. The Refund Amount

will be transferred to the relevant Bidders within two Working Days from the issuance of the CAN.

In the event that we are unable to issue and Allot the Equity Shares offered in the Issue or if the Issue is cancelled

within 60 days from the date of receipt of application monies, our Company shall repay the application monies

within 15 days from the expiry of 60 days, failing which our Company shall repay that monies with interest at the

rate of 12% p.a. from expiry of the sixtieth day. The application monies to be refunded by us shall be refunded to

the same bank account from which application monies was remitted by the Bidders, as mentioned in the

Application Form.

In accordance with the SEBI ICDR Regulations, Equity Shares will be issued and Allotment shall be made only

in dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they

so desire, as per the provisions of the Companies Act, the Depositories Act and other applicable laws.

We, at our sole discretion, reserve the right to cancel the Issue at any time up to Allotment without assigning any

reason whatsoever.

Following the Allotment and credit of Equity Shares into the Eligible QIBs’ Depository Participant accounts, we

will apply for final trading and listing approvals from the Stock Exchanges. In the event of any delay in the

Allotment or credit of Equity Shares, or receipt of trading or listing approvals or cancellation of the Issue, no

interest or penalty would be payable by us.

Release of Funds to our Company

The monies lying to the credit of the Escrow Account shall not be released until the final listing and trading

approvals of the Stock Exchanges for the listing and trading of the Equity Shares issued pursuant to this Issue are

received by our Company and our Company files the return of Allotment in connection with the Issue with the

RoC.

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Other Instructions

Submission of Documents

A physical copy of the Application Form and relevant documents as required to be provided along with the

Application Form shall be submitted as soon as practicable.

Permanent Account Number or PAN

Each Bidder should mention its PAN (except Bids from any category of Bidders, which may be exempted from

specifying their PAN for transacting in the securities market) allotted under the IT Act. A copy of PAN card is

required to be submitted with the Application Form. Further, the Application Forms without this information will

be considered incomplete and are liable to be rejected. It is to be specifically noted that applicants should not

submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this ground.

Bank account details

Each Bidder shall mention the details of the bank account from which the payment of Bid Amount has been

made along with confirmation that such payment has been made from such account.

Right to Reject Applications

Our Company, in consultation with the BRLM, may reject Bids, in part or in full, without assigning any reason

whatsoever. The decision of our Company in consultation with the BRLM in relation to the rejection of Bids shall

be final and binding. In the event the Bid is rejected by our Company, the Bid Amount paid by the Bidder shall

be refunded to the same bank account from which the Bid Amount was remitted by such Bidder as set out in the

Application Form. For details, see “- Bid Process” and “- Refunds” beginning on pages 157 and 162 respectively.

Equity Shares in dematerialised form with NSDL or CDSL

The Allotment of the Equity Shares in this Issue shall be only in dematerialised form (i.e., not in physical

certificates but be fungible and be represented by the statement issued through the electronic mode).

An Eligible QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary

account with a Depository Participant of either NSDL or CDSL prior to making the Bid. Equity Shares Allotted

to a Successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository

Participant) of the Successful Bidder, as indicated in the Application Form.

Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with

NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL.

The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all

QIBs in the demat segment of the respective Stock Exchanges.

Our Company and the BRLM shall not be responsible or liable for the delay in the credit of Equity Shares to be

issued pursuant to the Issue due to errors in the Application Form or otherwise on the part of the Bidders.

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PLACEMENT

Placement Agreement

The BRLM has entered into the Placement Agreement with our Company, pursuant to which the BRLM has

agreed, subject to certain conditions, to manage this Issue and to act as placement agents in connection with the

proposed Issue and procure subscription to Equity Shares.

The Equity Shares will be placed with the QIBs pursuant to this Issue under Chapter VI of the SEBI ICDR

Regulations and Section 42 of the Companies Act and the rules made thereunder. The Placement Agreement

contains customary representations and warranties, as well as indemnities from our Company and is subject to

satisfaction of certain conditions and termination in accordance with the terms contained therein.

Applications shall be made to list the Equity Shares issued pursuant to this Issue and admit them to trading on the

Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such

Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders

of the Equity Shares will be able to sell their Equity Shares.

This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the Registrar

of Companies, and no Equity Shares will be offered in India or overseas to the public or any members of the

public in India or any other class of investors, other than Eligible QIBs.

The Equity Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered

or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity

Shares are being offered and sold by the Company outside the United States, in “offshore transactions”, as defined

in, and in reliance on, Regulation S and the applicable laws of the jurisdiction where those offers and sales occur.

Relationship with the Book Running Lead Manager

In connection with the Issue, the Book Running Lead Manager or its affiliates may, for their own account,

subscribe to the Equity Shares or enter into asset swaps, credit derivatives or other derivative transactions relating

to the Equity Shares to be issued pursuant to the Issue at the same time as the offer and subscription or sale of the

Equity Shares, or in secondary market transactions. As a result of such transactions, the Book Running Lead

Manager may hold long or short positions in such Equity Shares. These transactions may comprise a substantial

portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Book Running

Lead Manager may purchase or subscribe to the Equity Shares or be Allotted Equity Shares for proprietary

purposes and not with a view to distribute or in connection with the issuance of P-Notes. For further details, see

the section “Offshore Derivative Instruments” beginning on page 9.

From time to time, the Book Running Lead Manager, and its affiliates and associates may have engaged in or may

in the future engage in transactions with and perform services including but not limited to investment banking,

advisory, commercial banking, trading services for our Company, our Subsidiaries, group companies, affiliates

and the Shareholders, as well as to their respective associates and affiliates, pursuant to which fees and

commissions have been paid or will be paid to the Book Running Lead Manager and its affiliates and associates.

Lock up

The Company will not, for a period commencing from the date hereof and ending 90 days from the date of

Allotment, without the prior written consent of the BRLM, directly or indirectly: (a) issue, offer, lend, pledge,

sell, contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell or

issue, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly,

any equity shares, or any securities convertible into or exercisable or exchangeable for Equity Share; (b) enter

into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic

consequences of ownership of equity shares; or (c) publicly announce any intention to enter into any transaction

described in (a) or (b) above, whether any such transaction described in (a) or (b) above is to be settled by delivery

of Equity Shares, or such other securities; provided that, the foregoing restrictions do not apply to any sale, transfer

or disposition or issue of Equity Shares (including, without limitation, securities convertible into or exercisable

or exchangeable for Equity Shares) pursuant to (A) any transaction required by law or an order of a court of law

or a statutory authority, or (B) an issuance of Equity Shares or options pursuant to any employee stock option

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scheme formulated by the Company.

Lock-up by Promoters

Two of our Promoters, namely, Cadila Healthcare Limited and Zydus Family Trust agree that without the prior

written consent of BRLM, they shall not, announce any intention to enter into any transaction whether any such

transaction which is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise,

during the period commencing on the date of the Preliminary Placement Document and ending 90 days from the

date of the filing of the Placement Document (both dates inclusive) (“Lock-up Period”)directly or indirectly: (1)

offer, issue, pledge, sell, encumber, contract to sell or announce the intention to sell, lend, purchase any option or

contract to sell, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or

otherwise transfer or dispose of any Equity Shares or any other securities of our Company substantially similar to

the Equity Shares acquired or purchased during the Lock-Up Period, including, but not limited to options, warrants

or other securities that are convertible into, exercisable or exchangeable for, or that represent the right to receive

Equity Shares or any such substantially similar securities, whether now owned or hereinafter acquired; (2) enter

into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the

economic consequences of ownership of the Equity Shares and the securities that are convertible into, exercisable

or exchangeable for or any such substantially similar securities, whether now owned or hereinafter acquired;

whether any such transaction described in clause (1) or (2) above is to be settled by delivery of the Equity Shares

or such other securities, in cash or otherwise, (3) enter into any transaction (including a transaction involving

derivatives) having an economic effect similar to that of an issue, offer, sale or deposit of the Equity Shares in any

depository receipt facility, or (4) publicly announce its intention to enter into the transactions referred to in (1) to

(3) above.

Nothing would restrict the inter-se transfer of any Equity Shares between the Promoters and members of the

Promoter Group.

In addition, the Cadila Healthcare Limited and Zydus Family Trust shall not, without the prior written consent of

the BRLM, during the Lock-up Period, make any demand for or exercise any right with respect to, the registration

of any Equity Shares or any other securities of the Company substantially similar to the Equity Shares, including,

but not limited to options, warrants or other securities that are convertible into, exercisable or exchangeable for,

or that represent the right to receive Equity Shares or any such substantially similar securities, whether now owned

or hereinafter acquired.

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SELLING RESTRICTIONS

The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares in

this Issue is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this

Preliminary Placement Document are advised to consult with their own legal advisors as to what restrictions may

be applicable to them and to observe such restrictions. This Preliminary Placement Document may not be used

for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.

This Issue is being made only to Eligible QIBs through a QIP, in reliance upon Chapter VI of the SEBI ICDR

Regulations and the Companies Act. Each purchaser of the Equity Shares in this Issue will be deemed to have

made acknowledgments and agreements as described under “Notice to Investors” and “Representations by

Investors” on pages 1 and 3, respectively.

General

No action has been taken or will be taken that would permit a public offering of the Equity Shares to occur in

any jurisdiction other than India, or the possession, circulation or distribution of this Preliminary Placement

Document or any other material relating to our Company or the Equity Shares in any jurisdiction where action

for such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly,

and neither this Preliminary Placement Document nor any offering materials or advertisements in connection with

the Equity Shares may be distributed or published in or from any country or jurisdiction except under

circumstances that will result in compliance with any applicable rules and regulations of any such country

or jurisdiction. The Issue will be made in compliance with the applicable SEBI ICDR Regulations, Section

42 of the Companies Act, 2013 read with Rule 14 of the PAS Rules and other applicable provisions of the Companies

Act, 2013 and the rules made thereunder.

Republic of India

This Preliminary Placement Document may not be distributed directly or indirectly in India or to residents of India

and any Equity Shares may not be offered or sold directly or indirectly in India to, or for the account or benefit

of, any resident of India except as permitted by applicable Indian laws and regulations, under which an offer is

strictly on a private and confidential basis and is limited to Eligible QIBs and is not an offer to the public. This

Preliminary Placement Document has not been and will not be filed as a prospectus with the RoC and will not be

circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in

India or any other jurisdiction.

United States

Each purchaser of the Equity Shares offered and sold in “offshore transactions” as defined in, and reliance on

Regulation S will be deemed to have represented and agreed as follows:

(a) the purchaser (i) is, and the person, if any, for whose account it is acquiring such Shares is, outside the United

States, and (ii) is acquiring the Shares in an “offshore transaction” as defined in Regulation S;

(b) the purchaser has not been offered the Shares by means of any “directed selling efforts” as defined in

Regulation S;

(c) the purchaser is aware that the Shares have not been and will not be registered under the Securities Act and

are being distributed and offered outside the United States in reliance on Regulation S, and, subject to certain

exceptions, may not be offered or sold within the United States; and

(d) the purchaser acknowledges that the Company, the Book Running Lead Manager, their affiliates and others

will rely upon the truth and accuracy of the foregoing representations and agreements.

European Economic Area

In relation to each member state of the European Economic Area and the United Kingdom (each, a “Relevant

State”), no Equity Shares have been offered or will be offered pursuant to the Issue to the public in that Relevant

State prior to the publication of a prospectus in relation to the Equity Shares that has been approved by the

competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified

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to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that

offers of the Equity Shares may be made to the public in that Relevant State at any time under the following

exemptions under the Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus

Regulation), subject to obtaining the prior consent of the Book Running Lead Manager and the Syndicate

Members for any such offer; or

(c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of the Equity Shares shall require the Company or any manager to publish a prospectus

pursuant to article 3 of the Prospectus Regulation or supplement a prospectus pursuant to article 23 of the

Prospectus Regulation.

For the purposes of this provision, the expression “offer to the public” in relation to any Equity Shares in any

Relevant State means the communication in any form and by any means of sufficient information on the terms of

the offer and any Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for any

Equity Shares and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

Hong Kong

The Equity Shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any

document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Chapter

571 of the Laws of Hong Kong) (the “SFO”) and any rules made under the SFO; or (b) in other circumstances

which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and

Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the “C(WUMP)O”) or which do not constitute

an offer to the public within the meaning of the C(WUMP)O.

No advertisement, invitation or document relating to the Equity Shares, which is directed at, or the contents of

which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the

securities laws of Hong Kong) other than with respect to Equity Shares which are or are intended to be disposed

of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules

made under the SFO has been or will be issued, whether in Hong Kong or elsewhere.

Japan

The Equity Shares offered hereby have not been and will not be registered under the Financial Instruments and

Exchange Act of Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and Exchange Act”). The

Preliminary Placement Document is not an offer of shares for sale, directly or indirectly, in Japan or to, or for the

benefit of, any resident of Japan (which term as used in the Preliminary Placement Document means any person

resident in Japan, including any corporation or entity organized under the laws of Japan) or to others for reoffer

or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an

exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and

Exchange Act and other relevant laws and regulations of Japan.

Singapore

The Preliminary Placement Document has not been and will not be registered as a prospectus with the Monetary

Authority of Singapore, and the Equity Shares will be offered pursuant to exemptions under the Securities and

Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”). Accordingly, the

Equity Shares may not be offered or sold or made the subject of an invitation for subscription or purchase nor may

the Preliminary Placement Document or any other document or material in connection with the offer or sale or

invitation for subscription or purchase of the Equity Shares be circulated or distributed, whether directly or

indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the

SFA) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA)

pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance

with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the

conditions of, any other applicable provision of the SFA.

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Where Equity Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business

of which is to hold investments and the entire share capital of which is owned by one or more individuals,

each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each

beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that

corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred

within six months after that corporation or that trust has acquired the Equity Shares pursuant to an offer made

under Section 275 of the SFA except:

(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in

Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(ii) where no consideration is or will be given for the transfer;

(iii) where the transfer is by operation of law;

(iv) as specified in Section 276(7) of the SFA; or

(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and

Securities-based Derivatives Contracts) Regulations 2018.

United Kingdom

The Preliminary Placement Document is only directed at, and will only be provided to, persons to whom interests

may lawfully be promoted pursuant to section 21 of the Financial Services and Markets Act 2000 (the “FSMA”).

In particular, the Preliminary Placement Document is only directed at, and will only be provided to, investment

professionals (“Relevant Persons”) within the meaning of article 19 of the Financial Services and Markets Act

2000 (Financial Promotion) Order 2005 (“FPO”). Any investment or investment activity to which the Preliminary

Placement Document relates is available only to Relevant Persons and dealings hereunder will be made only with

Relevant Persons. Persons who are not investment professionals within the meaning of article 19 of the FPO

should not rely on the Preliminary Placement Document.

The Preliminary Placement Document has not been delivered for approval to the United Kingdom Financial

Conduct Authority in the United Kingdom or to an authorized person within the meaning of the FSMA. No

approved prospectus within the meaning of section 85 of the FSMA or of the Prospectus Regulation has been

published or is intended to be published in relation to the Offer. The Preliminary Placement Document does not

constitute a prospectus for the purposes of the FSMA or the Prospectus Regulation.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the Stock

Exchanges and has not been prepared or independently verified by our Company, the BRLM or any of their

respective affiliates or advisors.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in

Mumbai. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the

number of listed companies, market capitalisation and trading activity.

Stock Exchanges Regulation

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry

of Finance, Capital Markets Division, under the SCRA and the SCRR. On October 3, 2018, SEBI, in exercise of

its powers under the SCRA and the SEBI Act, notified the Securities Contracts (Regulation) (Stock Exchanges

and Clearing Corporations) Regulations, 2018 (the “SECC Regulations”), which regulate inter alia the

recognition, ownership and internal governance of stock exchanges and clearing corporations in India together

with providing for minimum net worth requirements for stock exchanges. The SCRA, the SCRR and the SECC

Regulations along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the

recognition of stock exchanges, the qualifications for membership thereof and the manner, in which contracts are

entered into, settled and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and

intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent

and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public

companies, rules and regulations concerning investor protection, insider trading, substantial acquisitions of shares

and takeover of companies, buy-backs of securities, employee stock option schemes, stockbrokers, merchant

bankers, underwriters, mutual funds, foreign portfolio investors, credit rating agencies and other capital market

participants have been notified by the relevant regulatory authority.

Listing and delisting of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws including

the Companies Act, the SCRA, the SCRR, the SEBI Act, and various guidelines and regulations issued by SEBI

including the SEBI ICDR Regulations SEBI Listing Regulations. The SCRA empowers the governing body of

each recognised stock exchange to suspend trading of or withdraw admission to dealings in a listed security for

breach of or non-compliance with any conditions or breach of company’s obligations under the SEBI Listing

Regulations or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange and

upon granting of a hearing in the matter. SEBI also has the power to amend the SEBI Listing Regulations and

bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw recognition

of a recognized stock exchange.

SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, to

govern the voluntary and compulsory delisting of equity shares from the stock exchanges which were significantly

modified in 2015. In addition, certain amendments to the SCRR have also been notified in relation to delisting.

Minimum Level of Public Shareholding

All listed companies (except public sector undertakings) are required to maintain a minimum public shareholding

at 25%. In this regard, SEBI has provided several mechanisms to comply with this requirement. Further, where

the public shareholding in a listed company falls below 25% (except public sector undertakings) at any time, such

company is required to bring the public shareholding to 25% within a maximum period of 12 months from the

date of such fall. Consequently, a listed company may be delisted from the stock exchanges for not complying

with the above-mentioned requirement. Our Company is in compliance with this minimum public shareholding

requirement.

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Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to

apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index-

based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index

movement, at 10%, 15% and 20%. The stock exchanges on a daily basis translate the circuit breaker limits based

on previous day’s closing level of the index. These circuit breakers, when triggered, bring about a co-ordinated

trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered

by movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached

earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise

circuit breakers. However, no price bands are applicable on scrips on which derivative products are available or

scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.

Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

BSE is one of the stock exchanges in India on which our Equity Shares are listed. Established in 1875, it is the

oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition

from the Government under the SCRA. Pursuant to the BSE (Corporatization and Demutualization) Scheme 2005

of SEBI, with effect from August 19, 2005, BSE was incorporated as a company under the Companies Act, 1956.

BSE was listed on NSE with effect from February 3, 2017. It has evolved over the years into its present status as

one of the premier stock exchanges of India.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen-

based trading facilities with market-makers and electronic clearing and settlement for securities including

government securities, debentures, public sector bonds and units. Deliveries for trades executed “on- market” are

exchanged through the National Securities Clearing Corporation Limited. It has evolved over the years into its

present status as one of the premier stock exchanges of India. The NSE was recognised as a stock exchange under

the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The

capital market (equities) segment commenced operations in November 1994 and operations in the derivatives

segment commenced in June 2000. NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April

22, 1996 and the Mid-cap Index on January 1, 1996.

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading systems

for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant

stock exchange and also have to comply with certain minimum conditions stipulated by SEBI. The NSE became

the first exchange to grant approval to its members for providing internet-based trading services. Internet trading

is possible on both the “equities” as well as the “derivatives” segments of the NSE.

Trading Hours

Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST

(excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on

public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash

and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.;

and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the trading

hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading

(“BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice nation-

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wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles

and improving efficiency in back-office work. In the year 2014, BSE introduced its new generation trading

platform, BOLT Plus

NSE has introduced a fully automated trading system called National Exchange for Automated Trading

(“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth

in the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

SEBI Listing Regulations

Public listed companies are required under the SEBI Listing Regulations to prepare and circulate to their

shareholders audited annual accounts which comply with the disclosure requirements and regulations governing

their manner of presentation and which include sections relating to corporate governance, related party

transactions and management’s discussion and analysis as required under the SEBI Listing Regulations. In

addition, a listed company is subject to, inter alia, continuing disclosure requirements pursuant to the terms of the

SEBI Listing Regulations.

SEBI Takeover Regulations

Disclosure and mandatory bid obligations for listed Indian companies are governed by the SEBI Takeover

Regulations which provide specific regulations in relation to substantial acquisition of shares and takeover. Once

the equity shares of a company are listed on a stock exchange in India, the provisions of the SEBI Takeover

Regulations will apply to any acquisition of the company’s shares/voting rights/control. The SEBI Takeover

Regulations prescribe certain thresholds or trigger points in the shareholding a person or entity has in the listed

Indian company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain

threshold prescribed under the SEBI Takeover Regulations mandate specific disclosure requirements, while

acquisitions crossing particular thresholds may result in the acquirer having to make an open offer of the shares

of the target company. The SEBI Takeover Regulations also provide for the possibility of indirect acquisitions,

imposing specific obligations on the acquirer in case of such indirect acquisition.

SEBI Insider Trading Regulations

The SEBI Insider Trading Regulations have been notified to prohibit and penalise insider trading in India. An

insider is, among other things, prohibited from dealing in the securities of a listed company when in possession

of unpublished price sensitive information (“UPSI”).

The SEBI Insider Trading Regulations were notified on January 15, 2015 and came into effect on May 15, 2015,

which repealed the erstwhile regulations of 1992. The SEBI Insider Trading Regulations, inter alia, impose certain

restrictions on the communication of information by listed companies. Under the SEBI Insider Trading

Regulations, (i) no insider shall communicate, provide or allow access to any UPSI relating to such companies

and securities listed or proposed to be listed, to any person including other insiders; and (ii) no person shall procure

or cause the communication by any insider of UPSI relating to such companies and securities listed or proposed

to be listed, except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.

However, UPSI may be communicated, provided or allowed access to or procured, under certain circumstances

specified in the SEBI Insider Trading Regulations.

The SEBI Insider Trading Regulations make it compulsory for listed companies and certain other entities that are

required to handle UPSI in the course of business operations to establish an internal code of practices and

procedures for fair disclosure of UPSI and to regulate, monitor and report trading by insiders. To this end, the

SEBI Insider Trading Regulations provide principles of fair disclosure for purposes of code of practices and

procedures for fair disclosure of UPSI and minimum standards for code of conduct to regulate, monitor and report

trading by insiders. There are also initial and continuing shareholding disclosure obligations under the SEBI

Insider Trading Regulations.

The SEBI Insider Trading Regulations also provides for disclosure obligations for promoters, members of the

promoter group, designated person or director in case value of trade exceed monetary threshold of `10 lakh over

a calendar quarter, within two days of reaching such threshold. The board of directors of all listed companies are

required to formulate and publish on the company’s website a code of procedure for fair disclosure of UPSI along

with a code of conduct for its employees for compliances with the SEBI Insider Trading Regulations.

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Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership details

and effect transfer in book-entry form. Further, SEBI framed regulations in relation to the formation and

registration of such depositories, the registration of participants as well as the rights and obligations of the

depositories, participants, companies and beneficial owners. The depository system has significantly improved

the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in

February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA.

Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a

separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock

exchange functions as a self-regulatory organisation under the supervision of SEBI.

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DESCRIPTION OF THE EQUITY SHARES

The following is information relating to the Equity Shares including a brief summary of the Memorandum and

Articles of Association and the Companies Act. Bidders are urged to read the Memorandum and Articles of

Association carefully, and consult with their advisers, as the Memorandum and Articles of Association and

applicable Indian law, and not this summary, govern the rights attached to the Equity Shares.

Share capital

The authorized share capital of our Company is `100,00,00,000 divided into 10,00,00,000 Equity Shares of `10

each. For further details, see “Capital Structure” beginning on page 64.

Dividends

Under Indian law, a company pays dividends upon a recommendation by its Board of Directors and approval by

a majority of the shareholders at the AGM held each Fiscal. Subject to certain conditions laid down by Section 123

of the Companies Act, no dividend can be declared or paid by a company for any Fiscal except out of the profits

of the company for that year, calculated in accordance with the provisions of the Companies Act or out of the

profits of the company for any previous Fiscal(s) arrived at as laid down by the Companies Act and remaining

undistributed or out of both or out of money provided by the Central Government or a State Government for the

payment of dividend by the company in pursuance of a guarantee given by that Government.

Further, as per the Companies Act, read with the Companies (Declaration and Payment of Dividend) Rules, 2014,

in the inadequacy or absence of profits in any year, a company may declare dividend out of the accumulated

profits earned in previous years and transferred to the free reserves, provided: (a) the rate of dividend declared

shall not exceed the average of the rates at which dividend was declared by it in the three years immediately

preceding that year; provided, this rule shall not apply to a company, which has not declared any dividend in each

of the three preceding financial years (b) the total amount to be drawn from such accumulated profits shall not

exceed one-tenth of the sum of the paid-up share capital of our Company and free reserves as per the most recent

audited financial statement; (c) the amount so drawn shall be first utilised to set off the losses incurred by our

Company in the financial year in which the dividend is declared before any dividend in respect of equity shares

is declared; and (d) the balance of reserves of our Company after such withdrawal shall not fall below 15% of the

Company’s paid-up share capital as per the most recent audited financial statement of the company.

Unclaimed and unpaid dividend shall not be forfeited by our Company unless the claim thereof becomes barred

by law. Subject to applicable provisions of the Companies Act, if our Company has declared a dividend but which

has not been paid or claimed or dividend warrant or such other instrument has not been posted within 30 days

from the date of declaration to any member entitled to the payment of the dividend, our Company shall within

seven days from the date of the expiry of the aforesaid 30 days period transfer the total amount of dividend which

remains unpaid or unclaimed to a special bank account to be opened in that behalf in any scheduled bank called

“Unpaid Dividend of Zydus Wellness Limited” or such other name as the Board of Directors may decide and

transfer to the said account, the total amount of dividend which remains unpaid or in relation to which no dividend

warrant has been posted.

Capitalisation of profits and issue of bonus shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the

Companies Act permits the Board of Directors of a company subject to approval of shareholders in a general

meeting to issue fully paid-up bonus shares to its members out of (a) the free reserves of the company (b) the

securities premium account, or (c) the capital redemption reserve account. However, a company may capitalize

its profits or reserves for issue of fully paid-up bonus shares, provided: (a) it is authorised by articles, (b) it has

been, on the recommendation of the Board of Directors, been authorised by the shareholders in a general meeting,

(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by

it, (d) it has not defaulted on payment of statutory dues such as contribution to provident fund, gratuity and

bonus(e) there are no partly paid-up shares. The issue of bonus shares once declared cannot be withdrawn.

These bonus shares must be distributed to shareholders in proportion to the number of equity shares owned by

them as recommended by the Board of Directors. No issue of bonus shares may be made by capitalising reserves

created by revaluation of assets, and no bonus shares shall be issued in lieu of dividend. Further, any issue of

bonus shares would be subject to the SEBI ICDR Regulations.

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Our Company may by a resolution passed in a general meeting of the shareholders, upon a recommendation by

the Board, resolve to capitalise whole or any part of the amount for the time being standing to the credit of any of

our Company’s reserve accounts or to the credit of the profit and loss account or otherwise available for

distribution and distribute amongst such of the shareholders as would be entitled to receive the same if distributed

by way of dividend and in the same proportions and that all or any part of such capitalized fund shall be applied

on behalf of such shareholders in paying up any amounts for the time being unpaid on any Equity Shares held by

such Shareholders and/or in paying up in full, unissued shares of our Company to be allotted and distributed,

credited as fully paid-up in the proportion aforesaid, provided that a securities premium account and a capital

redemption reserve fund may, for the purposes of the Article, be applied in the paying of any unissued shares to

be issued to members of our Company as fully paid bonus shares.

Pre-emptive rights and alteration of share capital

Subject to the provisions of the Companies Act, our Company may increase its share capital by issuing new shares

on such terms and with such rights as it, by action of its shareholders in a general meeting may determine. The

Board is entitled to make private placement and preferential issue of Equity Shares, debentures, preference shares

or any other instruments to such class of persons as the Board may deem fit which would be convertible or

exchanged with Equity Shares, at a later date or such other securities as may be permissible to be issued by our

Company under any law from time to time. According to the Articles of Association, the Company or Zydus

Wellness Products Limited shall not issue any Equity Shares or other securities/instruments convertible into

Equity Shares with more favourable rights than those provided to True North Fund V LLP and True North Fund

VI LLP (together, the “Investor”). If the Company issues Equity Shares or other securities/instruments

convertible into Equity Shares to any person, with more favourable rights to any new shareholder, then all such

favourable terms offered in connection with such issuance shall also be made available to the Investor.

According to Section 62(1)(a) of the Companies Act such new shares shall be offered to existing shareholders in

proportion to the amount paid-up on those shares at that date. The offer shall be made by notice specifying the

number of shares offered and the date (being not less than 15 days and not exceeding 30 days from the date of the

offer) within which the offer, if not accepted, will be deemed to have been declined. After such date, the board

may dispose of the shares offered in respect of which no acceptance has been received which shall not be

disadvantageous to the Shareholders. The offer is deemed to include a right exercisable by the person concerned

to renounce the shares offered to him in favour of any other person.

Under the provisions of Section 62(1)(c) of the Companies Act, new shares may be offered to any persons whether

or not those persons include existing shareholders, either for cash or for a consideration other than cash, if the

price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may

be prescribed, if a special resolution to that effect is passed by our shareholders in a general meeting.

The Articles of Association authorises our Board to increase our authorised capital by issuing new shares

consisting of equity and/or preference shares, as our Company may determine in a general meeting. The Articles

of Association provide that our Company, subject to compliance with requirements under the Companies Act and

the rules thereto, or any other applicable law in force in the general meeting, from time to time, may consolidate,

divide or sub-divide or cancel its share capital.

General meetings of shareholders

There are two types of general meetings of the shareholders, namely, AGM and EGM. Our Company must hold

its AGM in each Fiscal year provided that not more than 15 months shall elapse between each AGM, unless

extended by RoC at its request for any special reason for a period not exceeding three months. Our Board of

Directors may convene an EGM when necessary or at the request of a shareholder or shareholders holding in the

aggregate not less than one tenth of our Company’s issued paid-up capital carrying a right to vote on such date.

Notices, along with statement containing material facts concerning each special item, either in writing or through

electronic mode, convening a meeting setting out the date, day, hour, place and agenda of the meeting must be

given to every member or the legal representative of a deceased member, auditors of the company and every

director of the company, at least 21 clear days prior to the date of the proposed meeting. A general meeting may

be called after giving shorter notice if consent is received, in writing or electronic mode, from not less than 95%

of the shareholders entitled to vote. Unless, the Articles of Association provide for a larger number, (i) five

shareholders present in person, if the number of shareholders as on the date of meeting is not more than 1,000;

(ii) 15 shareholders present in person, if the number of shareholders as on the date of the meeting is more than

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1,000 but up to 5,000; and (iii) 30 shareholders present in person, if the number of shareholders as on the date of

meeting exceeds 5,000, shall constitute a quorum for a general meeting of our Company, whether AGM or EGM.

The quorum requirements applicable to shareholder meetings under the Companies Act have to be physically

complied with.

In accordance with Section 110 of the Companies Act, a company intending to pass a resolution relating to matters

such as, but not limited to, amendments to the objects clause of the Memorandum, a variation of the rights attached

to a class of shares or debentures or other securities, buy-backs of shares, giving loans or extending guarantees in

excess of limits prescribed, is required to obtain the resolution passed by means of a postal ballot instead of

transacting the business in our Company’s general meeting. A notice to all the shareholders shall be sent along

with a draft resolution explaining the reasons thereof and requesting them to send their assent or dissent in writing

on a postal ballot within a period of 30 days from the date of posting the notice. Postal ballot includes voting by

electronic mode.

Voting rights

At a general meeting, every member holding shares is entitled to vote through e-voting process and has one vote.

Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy is in the same

proportion as the shall be as provided under the Companies Act and rules framed thereunder. The Chairman of

the meeting has a casting vote or second vote.

Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require

that the votes cast in favour of the resolution must be at least three times the votes cast against the resolution. A

shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of Association.

The instrument appointing a proxy is required to be lodged with our Company at least 48 hours before the time of

the meeting. A proxy may not vote except on a poll and does not have a right to speak at meetings. No proxy shall

be entitled to vote on a show of hands unless such proxy is present on behalf of a company or corporation.

Registration of transfers and register of members

Our Company is required to maintain a register of members wherein the particulars of the members of our

Company are entered. We recognize as shareholders only those persons whose names appear on the register of

shareholders and cannot recognize any person holding any share or part of it upon any express, implied or

constructive trust, except as permitted by law. In respect of electronic transfers, the depository transfers shares by

entering the name of the purchaser in its books as the beneficial owner of the shares. In turn, the name of the

depository is entered into our records as the registered owner of the shares. The beneficial owner is entitled to all

the rights and benefits as well as the liabilities with respect to the shares held by a depository.

For the purpose of determining the shareholders, entitled to corporate benefits declared by our Company, the

register may be closed for such period not exceeding 45 days in any one year or 30 days at any one time at such

times, as the Board of Directors may deem expedient in accordance with the provisions of the Companies Act.

Under the SEBI Listing Regulations of the stock exchanges on which our Company’s outstanding Equity Shares

are listed, our Company may, upon at least seven working days’ (excluding the date of intimation and the record

date) advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order

to ascertain the identity of shareholders. The trading of Equity Shares and the delivery of certificates in respect

thereof may continue while the register of shareholders is closed.

Transfer of shares

Shares held through depositories are transferred in the form of book entries or in electronic form in accordance

with the regulations laid down by the SEBI. These provisions provide the regime for the functioning of the

depositories and the participants and set out in the manner in which the records are to be kept and maintained and

the safeguards to be followed in this system. We have entered into an agreement for such depository services with

NSDL and CDSL. SEBI requires that our shares for trading and settlement purposes be in book-entry form for all

investors, except for transactions that are not made on a stock exchange and transactions that are not required to

be reported to the stock exchange. The registrar and transfer agent shall keep a book in which every transfer or

transmission of shares will be entered. In addition to complying with the Companies Act, 2013 and the other

applicable laws, our Company is also required to comply with the provisions of the SEBI Listing Regulations for

effecting the transfer of shares. In terms of the SEBI Listing Regulations, except in case of transmission or

transposition of shares, requests for effecting transfer of shares shall not be processed unless the shares are held

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in the dematerialized form with a depository. The Equity Shares shall be freely transferable, subject to applicable

laws.

Directors

The Articles provide that the number of Directors shall not be less than three and not be more than fifteen. The

Directors shall be appointed by our Company in the general meeting subject to the provisions of the Companies

Act and the Articles. Two-thirds of the total number of Directors is subject to retirement by rotation. Of such

Directors, one-third, or if their number is not three or multiples of three, then the number nearest to one-third,

must retire every year. The Directors to retire are those who have been the longest in office.

As provided under Section 161 of the Companies Act, 2013, the Director may be appointed by the Board or by

the general meeting of the Shareholders. The Directors have the power to appoint any other persons as an

additional Director but any Director so appointed shall hold office only up to the date of the next following AGM

of our Company but the total number of Directors shall not at any time exceed the maximum strength. The Board

shall also have the power to appoint any person to act as an alternate Director for a Director during the latter’s

absence for a period of not less than three months from India. The alternate Director shall vacate the office if and

when the original Director returns to India and in case the office of the original Director is determined before he

returns, the provisions of the Companies Act, 2013, and the Articles for automatic reappointment shall apply to

the original Director and not the alternate Director.

In terms of the Articles of Association, the Investor is entitled to nominate one director on the Board of the

Directors of the Company as its nominee and such right of the Investor shall continue until the Investor holds at

least 10% of the equity share capital of the Company (on a fully diluted basis). Such director on the Board of

Directors nominated by the Investor shall be referred to as the ‘Investor Nominee Director’ and shall be a non-

executive Director who shall not be liable to retire by rotation. The Investor Nominee Director shall also have the

right to be a voting member of the audit committee and the nomination and remuneration committee, and such

other key committees as may be constituted by the Board of Directors from time to time, with respect to financial,

business-related, strategic and regulatory matters (together, the “Identified Committees”). Additionally, the

Investor also has the right to appoint one director on the Board of our subsidiary, Zydus Wellness Products Limited

and all such rights and obligations of the Investor Nominee Director with regard to the Company also apply to

such director on the board of Zydus Wellness Products Limited.

In case the Investor does not appoint any person as the Investor Nominee Director, the Investor shall have the

right to appoint one representative as its observer on the Board of the Company. The observer, so appointed, shall

have the right to attend each meeting of the Board and each of the Identified Committees (whether in person, by

telephone, via videoconference or otherwise), in a non-voting, non-participative observer capacity.

The Articles of Association also provide that as long as any money is owed by the Company to any financial

institution or to any other finance corporation or credit corporation or to any other financing company or body or

any bank (“Financing Entity”) for any loans granted by such Financing Entity to the Company or so long as any

such Financing Entity hold (a) debentures of the Company by direct subscription or private placement, or hold

Equity Shares of the Company as a result of underwriting or direct subscription or so long as any liability of the

Company arising out of any guarantee furnished by any such Financing Entity, on behalf of the Company, is

outstanding, such Financing Entity shall have a right to appoint any person or persons as a director on the Board

of the Company.

Liquidation rights

In the event of our winding up, if the assets available for distribution among the members as such shall be

insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that as nearly as may be,

the losses shall be borne by the members in proportion to the capital paid-up, or which ought to have been paid-

up, at the commencement of the winding up, on the shares held by them respectively. And if in a winding up the

assets available for distribution among the members shall be more than sufficient to repay the whole of the capital

paid-up at the commencement of the winding up, the excess shall be distributed amongst the members in

proportion to the capital, at the commencement of the winding up, paid-up or which ought to have been paid-up

on the shares held by them. On winding up, any preference shares issued by our Company, shall rank in priority

to Equity Shares but shall not be entitled to any further participation in profits or assets.

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Buy back

Our Company may buy back its own Equity Shares or other specified securities subject to the provisions of the

Companies Act, 2013 and the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018

issued in connection therewith.

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STATEMENT OF SPECIAL TAX BENEFITS

To,

The Board of Directors

Zydus Wellness Limited

Zydus Corporate Park, Scheme No. 63,

Survey No.536, Khoraj (Gandhinagar),

Near Vaishnodevi Circle,

Ahmedabad 382481

Dear Sirs,

Sub: Qualified institutions placement of equity shares of face value ₹ 10 each (“Equity Shares”) (such

placement, the “Issue”) by Zydus Wellness Limited (the “Company”)

1. The accompanying Special and Possible Tax Statement in relation to the Company and its Shareholders

(hereinafter referred to as the “Statement”) under the Income Tax Act, 1961 (read with Income Tax Rules,

circulars, notifications) as amended by the Finance Act, 2020 (hereinafter referred to as the “Income Tax

Regulations”) presently in force in India. has been prepared by the management of the Company in

connection with the proposed Issue, which we have initialed for identification purposes.

Management’s Responsibility

2. The preparation of this Statement as of the date of our report which is to be included in the Preliminary

Placement Document and the Placement Document is the responsibility of the management for the purpose

set out in paragraph 9 below.

3. The management’s responsibility includes designing, implementing and maintaining internal control

relevant to the preparation and presentation of the Statement, and applying an appropriate basis of

preparation; and making estimates that are reasonable in the circumstances. The Management is also

responsible for identifying and ensuring that the Company complies with the laws and regulations applicable

to its activities.

Auditor’s Responsibility

4. Our work has been carried out in accordance with Standards on Auditing, the ‘Guidance Note on Reports or

Certificates for Special Purposes (Revised 2016)’ and other applicable authoritative pronouncements issued

by the Institute of Chartered Accountants of India.

5. Pursuant to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations 2018, as amended (the “SEBI ICDR Regulations”) and the Companies Act 2013, as amended

(“Act”), it is our responsibility to report whether the Statement prepared by the Company, presents, in all

material respects, the possible special tax benefits available as of September 23, 2020 to the Company and

the shareholders of the Company, in accordance with the Income Tax Regulations as at the date of our report.

6. Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance

with the Act and the SEBI ICDR Regulations in connection with the proposed Issue.

7. Our confirmation is based on the information, explanations and representations obtained from the Company

and on the basis of our understanding of the business activities and operations of the Company.

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Inherent Limitations

8. We draw attention to the fact that the Statement includes certain inherent limitations that can influence the

reliability of the information.

9. Several of the benefits mentioned in the accompanying statement are dependent on the Company or its

shareholders or material subsidiaries fulfilling the conditions prescribed under the relevant provisions of the

tax laws. Hence, the ability of the Company or its shareholders or material subsidiaries to derive the tax

benefits is dependent upon fulfilling such conditions, which may or may not be fulfilled. The benefits

discussed in the accompanying statement are not exhaustive.

10. The Statement is only intended to provide general information to the investors and is neither designed nor

intended to be a substitute for professional tax advice. In view of the individual nature of the tax

consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant

with respect to the specific tax implications arising out of their participation in the proposed offer of qualified

institutions placement for sale of equity shares by the Company. Neither are we suggesting nor are we

advising the investor to invest money based on this Annexure.

11. Our views are based on the existing provisions of law and its interpretation, which are subject to change

from time to time. We do not assume responsibility to update the views consequent to such changes.

Opinion

12. In our opinion, the Statement prepared by the Company presents, in all material respects, the possible special

tax benefits available as of September 23, 2020, to the Company and its shareholders and material

subsidiaries, in accordance with the Income Tax Regulations as at the date of our report.

Considering the matter referred to in paragraph 5 above, we are unable to express any opinion or provide

any assurance as to whether:

(i) The Company or its shareholders will continue to obtain the benefits per the Statement in future; or

(ii) The conditions prescribed for availing the benefits per the Statement have been/ would be met with;

or

(iii) The revenue authorities/courts will concur with the views expressed herein.

Restriction on Use

13. We hereby confirm that the aforesaid information is true, complete and not misleading. This report is

addressed to and is provided to enable the Board of Directors of the Company to include this report in the

Preliminary Placement Document and the Placement Document (together, the “Placement Documents”),

prepared in connection with the Issue to be filed by the Company with the concerned stock exchanges on

which the Equity Shares of the Company are listed (the “Stock Exchanges”), and the Registrar of

Companies, Gujarat at Ahmedabad, and any other authority and such other documents as may be prepared

in connection with the Issue.

14. The aforesaid information may be relied upon by the BRLMs and legal counsels appointed pursuant to the

Issue and may be submitted to the Stock Exchanges, the Securities and Exchange Board of India, and any

other regulatory or statutory authority in respect of the Issue. The BRLMs may also rely on the information

contained herein for the purpose of conducting due-diligence and maintaining records by the BRLMs in

connection with the Issue and for any defense, the BRLMs may advance in any claim or proceeding or any

other matter in connection with the contents of the Placement Documents.

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15. We undertake to immediately inform the BRLMs and legal counsels in case of any changes to the above

until the date when the Equity Shares pursuant to the Issue commence trading on the Stock Exchanges. In

the absence of any such communication, you may assume that there is no change in respect of the matters

covered in this certificate.

For M/s. Mukesh M. Shah & Co.

Chartered Accountants

Firm Registration No. 106625W

Chandresh S. Shah

Partner

Membership Number: 042132

Ahmedabad

Date: September 23, 2020

UDIN: 20042132AAAAZF4353

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ANNEXURE 1

Statement of possible tax benefits available to Zydus Wellness Limited and its shareholders under the

income-tax act, 1961 (‘the act’)

A. TAX BENEFITS AVAILABLE TO THE COMPANY

I POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY

1. Deductions from Gross Total Income

Deduction in respect of employment of new employees:

Subject to the fulfilment of prescribed conditions, the Company is entitled to claim deduction of an

amount equal to thirty per cent of additional employee cost (relating to specified category of employees)

incurred in the course of business in the previous year, for three assessment years including the

assessment year relevant to the previous year in which such employment is provided under section

80JJAA of the Act.

Deduction in respect of donation to certain funds, charitable institution, etc

Donations made by the company towards certain specified funds and charitable institution as prescribed

under section 80G of the Act shall be eligible for 100%/50% deduction subject to the conditions as

prescribed.

Section 80M: Deduction on inter-corporate dividends

The Dividend Distribution Tax (DDT) applicable to Companies on declaration of dividend has been

deleted by the Finance Act 2020 with effect from 1st April 2020. Dividend income shall be taxable in the

hands of shareholders with effect from AY 2021-22.

The Finance Act, 2020 has inserted section 80M effective 1st April 2020 to eliminate the cascading tax

effect in case of inter-corporate dividends by providing a deduction in respect of dividends received by

a domestic company, to the extent such dividend is distributed by it on or before the due date. In this

case, due date means one month prior to the date for furnishing the return of income under sub -section

(1) of section 139 of the Act.

B. TAX BENEFITS AVAILABLE TO THE SHAREHOLDER OF THE COMPANY

The shareholders of the Company are not entitled to any special tax benefits under the Act.

Dividend taxation in case of Non-resident Shareholders:

The dividend income will be subject to tax in the hands of the non-residents at the rate of 20% (plus

applicable surcharge and cess) as per the provisions of section 115AD (for FPI’s) and section 115A (other

non-residents) of the Act. The shareholder may choose to be governed by the provisions of Double Taxation

Avoidance Agreement, to the extent they are more beneficial subject to fulfillment of certain conditions.

The Company is required to withhold taxes while remitting dividend to non-resident shareholders at the rate

of 20% or the rate prescribed under the Double Taxation Avoidance Agreement, whichever is more

beneficial to the shareholder.

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Notes:

1. These special tax benefits are dependent on the Company or its shareholders or material subsidiaries

fulfilling the conditions prescribed under the relevant provisions of the Act. Hence, the ability of the

Company or its shareholders or material subsidiaries to derive the tax benefits is dependent upon

fulfilling such conditions, which based on the business imperatives, the Company or its shareholders or

material subsidiaries may or may not choose to fulfil.

2. As per section 115BAA of the Act, the Company has an option to pay income tax in respect of its total

income at a concessional tax rate of 25.168% (including applicable surcharge and cess) subject to

satisfaction of certain conditions with effect from Financial Year 2019-20 (i.e. Assessment Year 2020-

21). Such option once exercised shall apply to subsequent assessment years. In such a case, the Company

may not be allowed to claim any of the following deductions/exemptions:

i) Deduction under the provisions of section 10AA (deduction for units in Special Economic Zone

ii) Deduction under clause (iia) of sub-section (1) of section 32 (Additional depreciation)

iii) Deduction under section 32AD or section 33AB or section 33ABA (Investment allowance in

backward areas, Investment deposit account, site restoration fund)

iv) Deduction under sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-

section (2AA) or sub-section (2AB) of section 35 (Expenditure on scientific research)

v) Deduction under section 35AD or section 35CCC (Deduction for specified business, agricultural

extension project)

vi) Deduction under section 35CCD (Expenditure on skill development)

vii) Deduction under any provisions of Chapter VI-A other than the provisions of section 80JJAA or

Section 80M

viii) No set off of any loss carried forward or depreciation from any earlier assessment year, if such

loss or depreciation is attributable to any of the deductions referred from clause i) to vii) above

ix) No set off of any loss or allowance for unabsorbed depreciation deemed so under section 72A, if

such loss or depreciation is attributable to any of the deductions referred from clause i) to vii)

above

Further, it was clarified by CBDT vide Circular No. 29/ 2019 dated 2 October 2019 that if the Company

opts for concessional income tax rate under section 115BAA, the provisions of section 115JB regarding

Minimum Alternate Tax (MAT) are not applicable. Further, such Company will not be entitled to claim

tax credit relating to MAT

3. The tax benefits discussed in the Statement are not exhaustive and is only intended to provide general

information to the investors and hence, is neither designed nor intended to be a substitute for professional

tax advice. In view of the individual nature of the tax consequences aid the changing tax laws, each

investor is advised to consult his or her own tax consultant with respect to the specific tax implications

arising out of their participation in the issue.

4. The Statement has been prepared on the basis that the shares of the Company are listed on a recognized

stock exchange in India and the Company will be issuing shares.

5. The Statement is prepared on the basis of information available with the Management of the Company

and there is no assurance that:

i. the Company or its shareholders or material subsidiaries will continue to obtain these benefits

in future;

ii. the conditions prescribed for availing the benefits have been/ would be met with; and

iii. the revenue authorities/courts will concur with the view expressed herein.

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6. The above views are based on the existing provisions of law and its interpretation, which are subject to

change from time to time.

For Zydus Wellness Limited

Umesh Parikh

Chief Financial Officer

Place: Ahmedabad

Date: September 23, 2020

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LEGAL PROCEEDINGS Our Company is involved in various legal proceedings from time to time, which involve matters pertaining to, amongst others, trademark infringement proceedings, criminal proceedings, civil proceedings, consumer disputes, regulatory proceedings under Legal Metrology Act, 2009 and Food Safety And Standards Act, 2006 and tax disputes, which are pending before various adjudicating fora. In terms of our Company’s “Policy for determination and disclosure of materiality an event or information” (“Materiality Policy”) framed in accordance with Regulation 30 of the SEBI Listing Regulations, there are no outstanding litigations involving our Company that have been disclosed to the Stock Exchanges. However, solely for the purpose of the Issue, our Company has disclosed in this section (i) all outstanding criminal proceedings against our Company and its Subsidiaries; (ii) all outstanding actions by statutory or regulatory authorities against our Company, its Subsidiaries, Promoters and Directors; (iii) outstanding civil and tax litigations involving our Company and its Subsidiaries, where the amount involved in such proceeding exceeds `708.60 lakhs (approximately 5% of the profit after tax of our Company based on the Consolidated Audited Financial Statements for the Fiscal 2020) (“Materiality Threshold”); and (iv) any other outstanding litigation involving our Company and its Subsidiaries wherein the amount involved cannot be determined or is below the Materiality Threshold, but an adverse outcome of which could materially and adversely affect the reputation, operations or financial position of our Company. Further, all outstanding litigations involving our Directors, an adverse outcome of which could materially and adversely affect the business or operations of our Company or the director’s ability to be on the Board, have been disclosed herein. It is clarified that for the purposes of the above, pre-litigation notices received by our Company from third parties (excluding show cause notices issued by statutory/regulatory/tax authorities) have not been disclosed in this Preliminary Placement Document unless our Company is impleaded as defendant or respondent in a litigation proceeding before any judicial fora or arbitral tribunal. Further, given the nature of our business, our Company and the Subsidiaries have received various notices and are involved in regulatory proceedings under the Prevention of Food Adulteration Act, 1955, Legal Metrology Act, 2009 and Food Safety And Standards Act, 2006 in their ordinary course of business and accordingly, we have included a consolidated disclosure for such cases. All terms defined in a particular litigation disclosure below are for that particular litigation only. Litigation involving our Company Litigations against our Company Civil Proceedings

1. One case is pending against our Company, in relation to, inter alia, alleged disparagement and/or restraint in

the use of intellectual property on the products being sold by our Company. The matter is currently pending

before the Madras High Court at Chennai.

Regulatory proceedings

1. Four cases are pending against our Company and/or some of our employees, in relation to, inter alia, alleged

adulteration and misbranding of packaging and labelling of food products, and consequent violation of the

applicable provisions of the Food Safety and Standards Act, 2006, as applicable, and the Food Safety and

Standard Rules, 2011, as applicable. These matters are pending at various stages of adjudication before

various adjudication forums. Litigations by our Company Civil Proceedings 1. Five cases have been filed by our Company against various parties, in relation to, inter alia, alleged

infringement and passing-off of our intellectual property on the products being sold by such parties. These matters are pending at various stages of adjudication before various adjudication forums.

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Litigation involving our Subsidiaries Litigations against our Subsidiaries Civil Proceedings 1. Wipro Enterprises Limited (“Plaintiff”) filed a suit and an injunction application before the High Court of

Madras against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“ZWPL”) and others (“Defendants”) for alleged passing off in respect of one of our products, ‘GLUCON – D Volt’ on the basis that the Plaintiff is the absolute owner of the trademark ‘BOLTS’ which denotes its products exclusively. Our Company filed a written statement before the Court denying the allegations made by the Plaintiff and requesting the Court to dismiss the suit with appropriate orders. Subsequently, the Plaintiff and ZWPL entered into a joint memo of compromise, in January 2016, wherein ZWPL agreed to modify the label of its products to resolve the dispute amicably (“Memo of Compromise”). The Court passed a common order dated January 27, 2016, based on the Memo of Compromise, recording the compromise terms to be adhered to by the Plaintiff and our Company as an interim measure for a period of 90 days. The matter is currently pending.

2. Apart from (1) above, three cases are pending against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company), in relation to, inter alia, alleged disparagement and/or restraint in the use of intellectual property on the products being sold by our Company. These matters are pending at various stages of adjudication before various adjudication forums.

Criminal Proceedings

1. 14 cases are pending against Heinz India Private Limited (now owned by Zydus Wellness Products Limited,

one of the subsidiaries of our Company) and/or some of its employees, in relation to, inter alia, alleged

adulteration and misbranding of packaging and labelling of food products, and consequent violation of the

applicable provisions of the Prevention of Food Adulteration Act, 1954 and the Prevention of Food

Adulteration Rules, 1955, as applicable. These matters are pending at various stages of adjudication before

various adjudication forums.

Regulatory Proceedings

1. Mr. A. Halim (“Petitioner”) filed a public interest litigation before the High Court of Sikkim (“Court”)

alleging that APY Pharma had established their pharmaceutical medicines/drug factories at Singtam, East Sikkim which was discharging effluents and waste in the nearby Jhora used by public in the locality and thereby, endangering the human lives in the vicinity. The Court took suo moto action in the matter and vide an order dated December 5, 2017 directed the Member Secretary, State Pollution Control Board, Sikkim (“SPCB”) to visit the site and submit a report within two weeks. Subsequently, vide an order dated June 14, 2019, the Court impleaded all 48 pharma companies in the state of Sikkim as respondents in the matter. ZWPL was also issued notices on June 20, 2019, for both its units in Sikkim, stating that an inspection shall be conducted to, inter alia, examine the methods adopted by it for management of its solid waste. ZWPL submitted its compliance report before the Court stating that the report submitted by the SPCB to the Court did not indicate any non-compliance by ZWPL upon the inspection of its premises and accordingly, requested the Court for suitable orders. The matter is currently pending.

2. 17 cases are pending against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) and/or some of its employees, in relation to, inter alia, alleged adulteration and misbranding of packaging and labelling of food products, and consequent violation of the applicable provisions of the Food Safety and Standards Act, 2006, as applicable, and the Food Safety and Standard Rules, 2011, as applicable. These matters are pending at various stages of adjudication before various adjudication forums.

Tax Proceedings Zydus Wellness Products Limited

- Direct Tax

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1. The Deputy Commissioner of Income Tax, Circle – 6(3), Mumbai (“IT Department”) passed an assessment order dated December 24, 2013 (“Impugned Order”) against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2009, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas subsidiaries of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Impugned Order, further increased the quantum of disallowance claimed by the Assessee under Section 14A of the Income Tax Act, 1961 by a retrospective application of Rule 8D of Income Tax Rules, 1962 and consequently, raised a demand for `1,648.29 lakhs from the Assessee. Subsequently, the IT Department issued a revised demand notice of `1,095.59 lakhs accounting for an incorrect computation of interest in the earlier notice. Pursuant to an appeal filed by the Assessee before the Income Tax Appellate Tribunal – “K” Bench, Mumbai (“ITAT”), the ITAT vide its order dated April 27, 2016 (“ITAT Order”) held that the AMP Expenses do not constitute an international transaction and that the provisions of Section 92 of the Income Tax Act, 1961 were not applicable in the matter. Subsequently, the IT Department filed an appeal before the High Court of Bombay against the ITAT Order which has been admitted by the court. The matter is currently pending.

2. The Deputy Commissioner of Income Tax, Circle – 7(1)(2), Mumbai (“IT Department”) passed an

assessment order dated December 8, 2014 (“Impugned Order”) against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2010, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas group companies of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Impugned Order, further disallowed the excess depreciation claimed by the Assessee on the assets transferred by it from Aligarh to Sitarganj and raised a demand, under Section 156 of the Income Tax Act, 1961, for `3,136.49 lakhs from the Assessee. The IT Department further revised the total income of the Assessee, vide its order dated December 19, 2014, on the basis of the recomputation order passed by DCIT, Transfer Pricing – I(6), Mumbai. Pursuant to an appeal filed by the Assessee before the Income Tax Appellate Tribunal – “K” Bench, Mumbai (“ITAT”), the ITAT vide its order dated April 27, 2016 (“ITAT Order”) (a) held that the AMP Expenses do not constitute an international transaction; (b) partly allowed certain deductions claimed by the Assessee, and (c) restored the issues to the assessing officer for further investigation and a fresh adjudication. Accordingly, basis the ITAT Order, the IT Department issued a revised refund of `813.70 lakhs. Subsequently, the IT Department also filed an appeal before the High Court of Bombay against the ITAT Order which has been admitted by the court. The matter is currently pending.

3. The Deputy Commissioner of Income Tax, Circle – 7(1)(1), Mumbai (“IT Department”) passed a draft assessment order dated March 18, 2015 (“Draft Order”) against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2011, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas group companies of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Draft Order, further decreased the claim of the Assessee for weighted deduction in its income from 200% to 100%, in the absence of necessary documents from the Department of Scientific & Industrial Research. Subsequently, the Assessee filed an appeal before the Dispute Resolution Panel, which vide their order dated December 28, 2015, allowed the relief to the Assessee (“DRP Order”). Accordingly, the IT Department, in their final assessment order dated January 28, 2016, upheld the DRP Order in relation to the alleged international transactions and raised a demand of Nil. Pursuant to an appeal filed by the Assessee before the Income Tax Appellate Tribunal – “K” Bench, Mumbai (“ITAT”), the ITAT vide its order dated November 6, 2017 (“ITAT Order”) concurred with the view taken by the ITAT for the Fiscals 2008-2010 on this issue, DRP Order and dismissed the appeal. The matter is currently pending.

4. The Deputy Commissioner of Income Tax, Circle – 7(1)(2), Mumbai (“IT Department”) passed an assessment order dated January 30, 2017 (“Impugned Order”) against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2012, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then group companies of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Impugned Order, further, inter alia, (a) decreased the claim of the Assessee for weighted deduction in its income from 200% to 100% in the absence of necessary documents from the Department of Scientific & Industrial Research; (b) included certain amounts paid by the Assessee, as reimbursements to foreign entities, to its total income due to non-deduction of TDS and (c) raised a demand, under Section 156 of the Income Tax Act, 1961, for `1,714.22 lakhs from the Assessee. Pursuant to an appeal filed by the Assessee before the Income Tax Appellate Tribunal – “K” Bench, Mumbai (“ITAT”), the ITAT vide its order dated February 9,

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2018 (“ITAT Order”) partly allowed the appeal and concurred with the view taken by the ITAT for the Fiscals 2008-2011 on this issue and held that the AMP Expenses do not constitute an international transaction. The matter is currently pending.

5. The Assistant Commissioner of Income Tax, Circle – 12(2)(2), Mumbai (“IT Department”) passed an

assessment order dated February 13, 2018 (“Impugned Order”) against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2014, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas group companies of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Impugned Order, further, inter alia, (a) decreased the claim of the Assessee for weighted deduction in its income from 200% to 100% in the absence of necessary documents from the Department of Scientific & Industrial Research; (b) disallowed the deduction claimed by the Assessee for the cost of ESOPs granted to its employees; (c) disallowed certain deductions claimed by the Assessee under Section 80IC of the Income Tax Act, 1861 and raised a demand, under Section 156 of the Income Tax Act, 1961, for ̀ 1,491.22 lakhs from the Assessee. Subsequently, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) - XIII, challenging the Impugned Order. The matter is currently pending.

6. The Assistant Commissioner of Income Tax, Circle 12(2)(2), Mumbai (“IT Department”) passed a draft order dated October 22, 2019 (“Impugned Order”) under Section 143(3) read with Section 144C of the Income Tax Act, 1961 against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2015, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas group companies of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Impugned Order, further, inter alia, (a) decreased the claim of the Assessee for deductions claimed under Section 35(2AB) of the Income Tax Act, 1961; (b) disallowed certain deductions claimed by the Assessee under Section 80IC of the Income Tax Act, 1861 and raised a demand of `4,509.83 lakhs, under Section 156 of the Income Tax Act, 1961. Subsequently, the Assessee filed its objections, against the Impugned Order, before the Income Tax Appelate Tribunal. The matter is currently pending.

7. The Assistant Commissioner of Income Tax, Circle 12(2)(2), Mumbai (“IT Department”) passed a draft order dated December 10, 2019 (“Draft Order”) under Section 144C of the Income Tax Act, 1961 against Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging that, in Fiscal 2016, the Assessee had incurred substantial expenditure for advertising, marketing and sales promotion (“AMP Expenses”) for, inter alia, the brands owned by the then overseas subsidiaries of the Assessee and the Assessee was not compensated for such expenditure on an arms’ length basis. The IT Department, in the Draft Order, further, inter alia, (a) decreased the claim of the Assessee for weighted deduction in its income; and (b) disallowed certain deductions claimed by the Assessee under Section 80IC of the Income Tax Act, 1861. Subsequently, the Assessee filed its objections, against the Draft Order, before the Dispute Resolution Panel. The matter is currently pending.

- Indirect Tax

Zydus Wellness Products Limited

1. The Commissioner of Central Tax (Audit), Durgapur (“Commissioner”) issued a show cause-cum-demand

notice dated February 15, 2018 (“Notice”) against Zydus Wellness Products Limited (“ZWPL”) alleging that

ZWPL had availed self-credit of certain amounts in Fiscal 2015 and 2016 without fulfilling the conditions

laid down in clause 2B of the Notification no. 20/2007-CE dated April 25, 2007, as amended (“Notification”)

and accordingly, the Commissioner sought to recover the same from ZWPL under Section 11(A) of the

Income Tax Act, 1961 along with interest and penalty. ZWPL responded to the Notice clarifying the intention

of the Notification and that there was no actual loss to the exchequer. Subsequently, the Office of the

Commissioner, CGST & Central Excise, Siliguri (“CGST Department”) passed an order dated July 16, 2018

(“Order”) confirming the demand of excise duty of `912.90 lakhs under Section 11(A) of the Income Tax

Act, 1961 along with appropriate interest and imposition of a penalty of `912.90 lakhs, with a condition to

pay only 25% of the penalty amount if ZWPL fulfils the conditions prescribed under Section 11AC(1) of the

Central Excise Tax, 1944 (“Demand”). Subsequently, ZWPL filed an appeal before the Customs, Excise &

Service Tax, Appellate Tribunal, Kolkata seeking to set aside the Order and the Demand, respectively. The

matter is currently pending.

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2. The Office of the Assistant Commissioner, T. Nagar Assessment Circle, Chennai – 600 028 (“IT

Department”) issued various notices all dated December 26, 2014 to Heinz India Private Limited (now

owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“Assessee”) alleging

that, for the period between Fiscals 2010-2015, the Assessee had paid tax on the sale of ‘Complan’ at the rate

of 5%, however ‘Complan’ allegedly being a food supplement/health drink was liable to be taxed at 14.5%.

Accordingly, the IT Department, vide its order dated May 4, 2015, proposed to revise the assessment of the

Assessee and seek sales tax at 14.5% on the respective turnover of the Assessee in the relevant years. Pursuant

to a writ of certiorarified mandamus being filed by the Assessee before the Madras High Court (“Court”),

the Court, vide its order dated March 19, 2015 called for records of the IT Department for the period between

Fiscals 2010-2015 and remitted the matter to the IT Department for fresh consideration. The Assessee, vide

a letter dated May 4, 2015 to the IT Department requested the IT Department to defer the further proceedings

in the matter until receipt of the orders of the advance ruling authority on the advance ruling application filed

by Glaxo Smithkline Consumer Healthcare Limited and consider the issue in line with a past judgement by

the Court in another matter of a similar nature. The matter is currently pending.

3. Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our

Company) (“Assessee”) were issued notices dated August 19, 2009 and July 12, 2010 by the Assistant

Commissioner of Commercial Taxes, T Nagar (East) (“IT Department”) alleging that, for the Fiscals 2008

and 2009, the Assessee had paid tax on the sale of ‘Complan’ at the rate of 4%, however ‘Complan’ allegedly

being a branded proprietary food was liable to be taxed at 12.5% and were subsequently issued orders dated

July 9, 2010 and August 12, 2010 (“Impugned Orders”). The Assessee filed an appeal against the Impugned

Orders before the Joint Commissioner (CT) (Appeals), Chennai who, vide a common order dated April 27,

2011, dismissed the appeals (“CT Order”). Pursuant to an appeal filed by the Assessee, before the Tamil

Nadu Sales Tax Appelate Tribunal (Main Bench) (“TNSTAT”), Chennai against the CT Order, the TNSTAT

set aside the Impugned Orders and the CT Order and allowed the appeal (“TNSTAT Order”). The Assessee,

vide letters dated August 19, 2016 and April 27, 2017, requested the IT Department to provide a refund

against the amount deposited by it on the basis of the TNSTAT Order. The matter is currently pending.

4. The Deputy Commissioner – Fifth, Sales Tax, Ghaziabad issued a demand notice of `1,523.19 lakhs to Heinz

India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our

Company) (“Assessee”) for, inter alia, alleged non-submission of Form ‘F’ while undertaking stock transfer

from one of their C&F Agents during Fiscal 2005. The matter is currently pending.

5. The Deputy Commissioner – Fifth, Sales Tax, Ghaziabad issued a demand notice of `1,335.00 lakhs to Heinz

India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our

Company) (“Assessee”) for, inter alia, alleged non-submission of Form ‘F’ while undertaking stock transfer

from one of their C&F Agents during Fiscal 2004. The matter is currently pending. Litigations by our Subsidiaries Civil Proceedings 1. A.D.M. (F&R), Aligarh (“Authority”) issued a joint notice dated January 1, 1996 to Heinz India Private

Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) (“ZWPL”) and Glaxo India Limited (“Glaxo”) under Section 33 and 47-A of the Indian Stamps Act, 1899 alleging that less stamp duty was paid on the documents on the basis of which Glaxo transferred it assets of the ‘family products division’ to ZWPL. Subsequently, the Authority, vide an order dated May 17, 2002, held that ZWPL shall be liable to pay a stamp duty of `2,828 lakhs (“Impugned Order”). ZWPL filed an appeal before the Chief Controlling Revenue Authority (“CCRA”), challenging the Impugned Order, which was dismissed by CCRA, vide it order dated July 7, 2005, while upholding the Authority’s order (“CCRA Order”). ZWPL filed a joint appeal before the Allahabad High Court (“Court”) challenging the Impugned Order and CCRA Order. The Court, vide its interim order dated January 16, 2006, set aside the Impugned Order and CCRA Order and remanded the matter back to the Authority. CCRA, vide its order dated May 29, 2012 upheld the Impugned Order and directed ZWPL to pay ̀ 1,833 lakhs. (“CCRA Order – II”) Thereafter, ZWPL filed a writ petition before the Court challenging the CCRA Order – II. The claim amount involved is `2,828 lakhs as on date. The matter is currently pending.

2. Four cases have been filed by Heinz India Private Limited (now owned by Zydus Wellness Products Limited, one of the subsidiaries of our Company) against various parties, in relation to, inter alia, alleged infringement and passing-off of our intellectual property on the products being sold by such parties. These matters are pending at various stages of adjudication before various adjudication forums.

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Litigation involving our Promoters and Directors

Litigations involving our Directors

Sharvil Patel

1. The Drug Inspector, Food and Drug Administration, Jamshedpur has filed a complaint (No.21 of 2014) in

January, 2014 before Chief Judicial Magistrate Court against the directors of Cadila Healthcare Limited

(“CHL”), including Pankaj Patel and Sharvil R Patel for misbranding of a pharmaceutical product Zyrop,

manufactured by CHL, as in the inner zipper of the product, storage instructions were written as “Keep in

cool & dry place or between 2 degrees to 8 degrees Centigrade”, whereas in the outer container, it was only

written “keep in cool & dry place”. The Directors of CHL have challenged the said proceedings and the

matter is now pending before the High Court of Jharkhand vide Cr. MP No.2804/2018.

Dharmishta Raval

2. Pfizer Inc., filed a contempt case against Dharmishta Raval, in here capacity as the director of Cadila

Healthcare Limited (“CHL”) in Delhi High Court (“Court”) alleging infringement of patent no.241773 /

218212 by CHL and violation of the statement made to the Court in the patent suit no.1119 of 2016, citing

that CHL has received tentative approval from USFDA for the products covered under the said patents and

therefore CHL is in breach of their undertaking submitted to the Court.

In 2016, Pfizer Inc., filed a patent suit no.1119 of 2016 against CHL alleging infringement of Indian Patent

No.241773 and 218212 ‘Tofacitinib’ in the Court and also impleaded Dharmishta Raval being one of the

directors of CHL as a party to the suit. In the said matter, CHL submitted to the Court that no cause of action

had accrued as CHL was not manufacturing, selling and marketing the relevant products allegedly covered

under the said patents. The Court recorded the statement and accordingly disposed the suit on November 27,

2017. The matter is pending.

Litigations involving our Promoters

Cadila Healthcare Limited

1. The Drug Inspector, Food and Drug Administration, Jamshedpur filed a complaint (No.21 of 2014) in

January, 2014 before Chief Judicial Magistrate Court against Cadila Healthcare Limited (“CHL”), and its

directors including Pankaj Patel and Sharvil R Patel for misbranding of a pharmaceutical product ‘Zyrop’,

manufactured by CHL, as in the inner zipper of the product, storage instructions were written as “Keep in

cool & dry place or between 2 degrees to 8 degrees Centigrade”, whereas in the outer container, it was only

written “keep in cool & dry place”. The Directors of CHL have challenged the said proceedings and the

matter is now pending before the High Court of Jharkhand vide Cr. MP No.2804/2018.

2. The Drug Inspector, Food and Drug Administration, Nagpur filed a complaint (RCC No.1609 of 2006) in

the year 2006 before the Additional Chief Judicial Magistrate, Nagpur against Cadila Healthcare Limited

(“CHL”) and its officials for allegedly selling a sub-standard pharmaceutical product,‘Prot Syrup’

manufactured by Hema Laboratories and marketed by CHL. The matter is currently pending.

3. Reliance Medical Agency, the Informant, had filed a complaint in August, 2015 with the Competition

Commission of India (“CCI”) against the Chemists and Druggists Association of Baroda (“CDAB”) and

various pharmaceutical companies, including Cadila Healthcare Limited (“CHL”), alleging, inter alia, that

prior to being appointed as stockists, they were required to take No Objection Certificate (‘NOC’) from the

local Chemists and Druggists Association in the State of Gujarat. Based on the complaint, the CCI ordered

investigation by the Director General of CCI (“DG”) vide, its order dated November 17, 2015. After

investigation, the DG submitted a report on May 1, 2016 holding that CHL, inter alia, has contravened the

provisions of the Section 3(1) of the Competition Act, 2002 along with Pankaj Patel, the then chairman and

managing director of CHL, being the person in-charge of and responsible for conduct of the business of

CHL. CHL has challenged the jurisdiction of CCI and the matter is now pending before the Supreme Court

of India vide SLP (C) No.30641 of 2018.

190

Pankaj Patel

1. The Drug Inspector, Food and Drug Administration, Jammu has filed a complaint before Chief Judicial

Magistrate Court, Jammu against Cadila Healthcare Limited (“CHL”) and Pankaj Patel, Director, CHL

for not of standard quality of veterinary preparation, Esgipyrin N injection, based on the quality analysis

report of the government analyst. CHL challenged the report of the government analyst and the matter is

now pending for final hearing.

For further details in relation to the litigations involving Pankaj Patel, please see “– Litigation involving our

Promoters – Cadila Healthcare Limited” on page 189.

Sharvil Patel

For details in relation to the litigations involving Sharvil Patel, please see “ – Litigation involving our

Directors – Sharvil Patel” on page 189.

Litigation, inquiries, inspections, or investigations initiated or conducted under the Companies Act or any

previous company law against our Company and / or our Subsidiaries in the last three years

There are no litigations, inquiries, inspections or investigations initiated or conducted under the Companies Act

or any previous company law, against our Company and / or our Subsidiaries in the last three years immediately

preceding the date of this Preliminary Placement Document.

Prosecutions filed against, fines imposed on, or compounding of offences by our Company and / or our

Subsidiaries under the Companies Act in the last three years

There are no prosecutions filed against, fines imposed on, or compounding of offences by our Company and/or

our Subsidiaries under the Companies Act in the last three years immediately preceding the date of this

Preliminary Placement Document.

Details of acts of material fraud committed against our Company in the last three years, if any, and if so, the

action taken by our Company

There has been no material fraud committed against our Company in the last three years immediately preceding

the date of this Preliminary Placement Document.

Defaults by our Company in respect of dues payable including therein the amount involved, duration of default

and present status of repayment of statutory dues, debentures (including interest thereon), deposits (including

interest thereon) and loans (including interest thereon)

As of the date of this Preliminary Placement Document, there are no outstanding instances of defaults in payment

of undisputed or disputed statutory dues by the Company and its Subsidiaries.

Further, there are no outstanding defaults in repayment of debentures and interest thereon, repayment of deposits

and interest thereon, and repayment of loan from any bank or financial institution and interest thereon by our

Company and its Subsidiaries.

Litigation or legal action pending or taken against our Promoters by any Ministry or Department of the

Government or any statutory authority in the last three years immediately preceding the year of circulation of

this Preliminary Placement Document and directions issued by such Ministry or Department or statutory

authority upon conclusion of such litigation or legal action

There is no litigation or legal action pending or taken against our Promoters by any Ministry or Department of the

Government or any statutory authority in the last three years immediately preceding the year of circulation of this

Preliminary Placement Document and directions issued by such Ministry or Department or statutory authority

upon conclusion of such litigation or legal action.

Details of default in annual filings under the Companies Act or rules made thereunder

191

There has been no default by our Company in the annual filings under the Companies Act or the rules made

thereunder.

Details of significant and material orders passed by any Regulator, Court or Tribunal the going concern status

of our Company and its future operations

There have been no orders passed by any regulator, court or tribunal which impact the going concern status of

our Company and/or its future operations.

192

INDEPENDENT STATUTORY AUDITORS

M/s. Mukesh M. Shah & Co., Chartered Accountants, have been appointed as Statutory Auditors of our Company

by the shareholders at their AGM held on August 27, 2020, for a period of five years. The Statutory Auditors of

our Company are independent auditors with respect to our Company, as required by the Companies Act and in

accordance with the guidelines issued by the ICAI.

The Audited Consolidated Financial Statements and the Unaudited Interim Financial Results included in this

Preliminary Placement Document have been audited by the Previous Statutory Auditors, M/s. Dhirubhai Shah &

Co. LLP, Chartered Accountants.

193

GENERAL INFORMATION

1. Our Company was originally incorporated as “Carnation Health Foods Limited” under the Companies Act,

1956 pursuant to a certificate of incorporation dated November 1, 1994 issued by the Registrar of

Companies, Gujarat, Dadra and Nagar Haveli. Our Company commenced its business on November 25,

1994, pursuant to a certificate of commencement of business issued the Registrar of Companies, Gujarat,

Dadra and Nagar Haveli. Subsequently, the name of our Company was changed to “Carnation Nutra-

Analogue Foods Limited”, pursuant to a fresh certificate of incorporation consequent upon change of name

issued by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli dated December 6, 1995.

Subsequently, the name of our Company was changed to “Zydus Wellness Limited” pursuant to a fresh

certificate of incorporation consequent upon change of name issued by the RoC dated January 5, 2009. The

registration number of our Company is 023490 and our CIN is L15201GJ1994PLC023490. The Registered

Office of our Company is situated at Zydus Corporate Park, Scheme no. 63, Survey no. 536, Khoraj

(Gandhinagar), Near Vaishnodevi Circle, S.G. Highway, Ahmedabad - 382 481. The website of our

Company is www.zyduswellness.in.

2. The Issue was approved by the Board of Directors on August 27, 2020 and our Shareholders through a

special resolution passed in their extraordinary general meeting held on September 19, 2020.

3. The Equity Shares are listed on BSE and NSE.

4. Our Company has received in-principle approvals under Regulation 28(1) of the SEBI Listing Regulations

from both BSE and NSE on September 23, 2020. We will apply to the Stock Exchanges for the final listing

and trading approvals of the Equity Shares on the Stock Exchanges.

5. Copies of our Memorandum and Articles of Association will be available for inspection between 11:00 am

to 1:00 pm on any weekday (except public holidays) during the Bid/Issue Period at the Registered Office.

6. Our Company has obtained necessary consents, approvals and authorizations, wherever applicable, in

connection with the Issue.

7. Except as disclosed in this Preliminary Placement Document, there are no material litigation or arbitration

proceedings pending against or affecting us, or our assets or revenues, nor are we aware of any pending or

threatened litigation or arbitration proceedings, which may have a material adverse effect on the Issue. For

further details, see “Legal Proceedings” beginning on page 184.

8. There have been no defaults in the annual filings of our Company under the Companies Act or the rules

made thereunder.

9. Except as disclosed in this Preliminary Placement Document, there has been no material change in the

financial or trading position of our Company since the date of the Audited Consolidated Financial Statements

for the Fiscal 2020, which has been included in this Preliminary Placement Document.

10. Our Company confirms that it is in compliance with the requirement of minimum public shareholding

requirements as required under the terms of the SEBI Listing Regulations and SCRR.

11. The Floor Price for the Equity Shares under the Issue is `1,775.85 per Equity Share which has been

calculated in accordance with provisions of Chapter VI of the SEBI ICDR Regulations. Our Company may

offer a discount of not more than 5% on the Floor Price accordance with the approval of the shareholders

accorded through their special resolution passed in their extraordinary general meeting held on September

19, 2020 and in terms of Regulation 176(1) of the SEBI ICDR Regulations.

12. Our Company and the BRLM accept no responsibility for statements made otherwise than in this Preliminary

Placement Document and anyone placing reliance on any other source of information, including our website,

would be doing it at his or her own risk.

194

13. Details of the Company Secretary and Compliance Officer of our Company:

Dhanraj Dagar

Zydus Corporate Park, Scheme no. 63

Survey no. 536, Khoraj (Gandhinagar)

Near Vaishnodevi Circle, S.G. Highway

Ahmedabad - 382 481

Telephone: +91 70 48040336

E-mail: dhanraj.dagar@zyduswellness.com

195

FINANCIAL STATEMENTS

No. Financial Information Page No.

1. Unaudited interim financial results for the three-month period ended June 30, 2020 along

with the limited review report

196 to 201

2. Audited consolidated financial statements for Fiscal 2020 along with audit report issued 202 to 239

3. Audited consolidated financial statements for Fiscal 2019 along with audit report issued 240 to 275

4. Audited consolidated financial statements for Fiscal 2018 along with audit report issued 276 to 306

I Dhirubhai Shah & Co LLP CHARTERED ACCOUNTAN TS

4th Floor, Adi tya Building, Near Sardar Patel Seva Samaj, Mithakhali Six. Roads, Ellisbridge, Ahmedabad 380006.

Limited Review Report on Unaudited Quarterly Standalone Financial Results of Zydus Wellness Limited under Regulation 33 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015

To The Board of Directors of Zydus Wellness Limited

1. We have reviewed the accompanying Statement of unaudited standalone financial results

of Zydus Wellness Limited ('the Company') for the quarter ended 30th June, 2020 ('the

Statement'}.

2. This Statement, which is the responsibility of the Company's management and approved by

the Board of Directors, has been prepared in accordance with the recognition and

measurement principles laid down in Indian Accounting Standard 34 "Interim Financial

Reporting11 ("Ind AS 34"), prescribed under Section 133 of the Companies Act, 2013, and other

accounting principles generally accepted in India and in compliance with Regult1tion 33 of the

Listing Regulations. Our responsibility is to issue a report on the Statement based on our

review.

3. We conducted our review of the Statement in accordance with the Standard on Review

Engagements (SRE} 2410 "Review of Interim Financial Information Performed by the

Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India.

This standard requires that we plan and perform the review to obtain moderate assurance as

to whether the Statement is free of material misstatement. A review is limited primarily to

inquiries of company personnel and analytical procedures applied to financial data and thus

provides less assurance than an audit. We have not performed an audit and accordingly, we

do not express an audit opinion.

4. Attention is drawn to the fact that the figures for the 3 months ended 31st March, 2020 as

reported in these financial results are the balancing figures between audited figures in respect

of the full previous financial year and the published year to date figures up to the third

quarter of the previous financial year. The figures up to the end of the third

previous financial year had only been reviewed and not subjected to audit.

qua

Phone : (079) 2640 3325/26 I Website : www.dbsgroup.in I E-Mail : info@dbsgro

Branch: 204 Sakar Complex, Opp Abs Tower, Old Padro Road, Vadodara: 390015 196

5. Based on our review conducted as above, nothing has come to our attention that causes us

to believe that the accompanying Statement, prepared in accordance with applicable

accounting standards and other recognised accounting practices and policies has not disclosed

the information ~equired to be disclosed in terms of Regulation 33 of the SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015 including the manner in which it

is to be disclosed, or that it contains any material misstatement.

Place: Ahmedabad Date: July 31, 2020

For, Dhirubhai Shah & Co LLP Chartered Accountants Firm Registration No. 102511W/W100298

SCL~ \ p

Samip Shah Partner Membership No: 128531 ICAI UDIN: ~ () 1 ~ ~'S' ~ 1 A A A A A "

197

I Dhirubhai Shah & Co lLP CHARTERED ACCOUNTANTS

4th Floor, Aditya Building , Near Sardar Patel Seva Samaj, Mithakhali Six Roads, Ellisbridge, Ahmedabad 380006.

Limited Review Report on Unaudited Quarterly Consolidated Financial Results of Zydus Wellness Limited under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To the Board of Directors of Zydus Wellness Limited

1. We have reviewed the accompanying Statement of unaudited consolidated financial results of Zydus Wellness Limited ("the Parent") and its subsidiaries (the Parent and its subsidiaries together referred to as "the Group") for the quarter ended 30th June, 2020 ("the Statement"), being submitted by the Parent pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("Listing Regulations").

2. This Statement, which is the responsibility of the Parent's management and approved by the Parent's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 "Interim Financial Reporting" ("Ind AS 34"), prescribed under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. Our responsibility is to express a conclusion on the Statement based on our review.

3. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE} 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Institute of Chartered Accountants of India. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing specified under Section 143(10) of the Companies Act, 2013 and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33(8) of the SEBI (Listing Obligations and Disclosure Requirements} Regulations, 2015, as amended, to the extent applicable.

4. The Statement includes the financial results of following subsidiaries:

Zydus Wellness Products Limited

Liva Nutritions Limited

Liva Investment Limited

Zydus Wellness International DMCC Phone : (079) 2640 3325/26 I Website : www.dbsgroup.in I E-Mail : info@dbsgroup.in

Branch : 204 Sakar Complex, Opp Abs Tower, Old Padro Road, Vadodara: 390015 198

5. Attention is drawn to the fact that the figures for the 3 months ended 31st March, 2020 as reported in these financial results are the balancing figures between audited figure in respect of the full previous financial year and the published year to date figures up to the third quarter of the previous financial year. The figures up to the end of the third quarter of previous financial year had only been reviewed and not subjected to audit.

6. Based on our review conducted and procedures performed as stated in paragraph 3 above and based on the consideration of the review report of other auditors referred to in paragraph 7 below, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standard and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

7. We did not review the interim financial information of one (1) subsidiary, Zydus Wellness International DMCC, included in the Statement, whose interim financial information reflects total revenue of Rs. 822 Lakhs, total net profit after tax of Rs. 239 Lakhs and total comprehensive income of Rs. 239 Lakhs, for the quarter ended 30th June, 2020 as considered in the Statement. This interim financial information has been reviewed by other auditors whose report has been furnished to us by the management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures included in respect of this subsidiary, is based solely on the report of the other auditors and the procedures performed by us as stated in paragraph 3 above.

Our conclusion on the Statement is not modified in respect of the above matter.

Place: Ahmedabad Date: July 31, 2020

For, Dhirubhai Shah & Co LLP Chartered Accountants Firm Registration No. 102511W/W100298

Samip Shah Partner Membership No: 128531 ICAI UDIN: ' ~ t> 1-~ ~~11 f\l\ A F\AH ~9

199

ZY.dUs Zydus Wellness Limited

Registered office : Zydus Corporate Park, Scheme No. 63, Survey No. 536 Khoraj (Gandhinagar), Nr. Vaishnodevi Circle, S. G. Highway, Ahmedabad 382 481.

Wellnes: Tel. No. (+91-79) 48040000 Fax No.: (+91-79) 67775811 Website: www.zvduswellness.in CIN No: l15201GJ1994PLC023490 Statement of Unaudited Results for Quarter Ended June 30. 2020

fin Lakh fin Lakh CONSOLIDATED COMPANY

C >uarter Ended Year Ended Quarter Ended Year Ended June March June March Sr. No. Particulars June March June March

30,2020 31, 2020 30,2019 31, 2020 30, 2020 31, 2020 30,2019 31, 2020 runauditedl rAuditedl runauditedl [Auditedl runaudited] [Audited] [Unauditedl rAuditedl

1 Revenue 53,737 48,787 62,025 176,682 a Revenue from operations 1,080 3,432 3,692 15,343

182 130 303 1071 b Other income 2 632 3 056 2 605 10 948 53,919 48,917 62,328 177,753 Total Revenue 3,712 6,488 6,297 26,291

2 Expenses 10,945 30,123 12,926 75,382 a Cost of materials consumed 495 2,928 2,192 9,888 4,027 3,861 3,349 8,249 b Purchases of stock-in-trade - 1 23 112 8,858 (11,487) 9,020 (5,754) C Changes in inventories of finished goods, work-in-progress and 208 (750) (38) (605)

stock-in-trade 5,266 4,678 4,842 18,834 d Employee benefits expense 899 646 966 3,397 3,460 3,470 3,485 13,991 e Finance costs 3,463 3,445 3,561 14,029

642 688 1,035 2,639 f Depreciation and amortisation expense 82 100 63 295 4,914 4,635 9,719 23,802 g Advertisement and promotion expenses 98 74 343 594 7,492 6 519 7 298 24 063 h Other expenses 811 768 1 061 4 043

45.604 42 487 51674 161 206 Total expenses 6 056 7 212 8 171 31 753 8,315 6,430 10,654 16,547 3 Profit/ (Loss) before exceptional items and tax (1-2) (2,344) (724) (1,874) (5,462)

- 283 2 670 4 420 4 Exceptional items - 13 12 32 8,315 6,147 7,984 12,127 5 Profit/ (Loss) before tax (3-4) (2,344) (737) (1,886) (5,494)

6 Tax expense - (265) - (265) a Current tax - . . -

(605) (498' (56' {1 780' b Deferred tax (599) (174) (10) (1 421) . (605) (763) (56) {2,045) Total tax expenses (599) (174) (10) (1,421) 8,920 6,910 8,040 14,172 7 Net Profit (5-6) (1,745) (563) (1,876) (4,073)

8 Other Comprehensive Income (OCI) 25 193 (5) 201 a Items that will not be reclassified to profit or loss (net of tax) (7) 14 (10) (29) (1) 17 - 17 b Items that will be reclassified to profit or loss {net of tax) - - . -24 210 (S' 218 Other Comprehensive Income (net of tax) (71 14 (101 (29

8,944 7,120 8,Q35 14,390 9 Total Comprehensive Income (7+8) (1,752) (549) (1,886) (4,102} 10 Total Comprehensive Income attributable to:

8,944 7,120 8,Q35 14,390 a Owners of the company (1,752) (549) (1,886) (4,102) . - - - b Non-Controlling Interests - . . -

5,766 5,766 5,766 5,766 11 Paid-up equity share capital (Face Value l 10 each) 5,766 5,766 5,766 5,766 340,300 12 Reserve excluding Revaluation Reserve as per balance sheet of 315,704

previous accounting year (i.e. Other Equity) 37,500 13 Debenture Redemption Reserve 37,500

14 Earnings per share [EPS]

[EPS for quarter ended is not annualised] 15.47 11.98 13.95 24.58 a Basic(~) (3.03) (0.98) (3.25) (7.06} 15.47 11.98 13.95 24.58 b Diluted (l) (3.03) (0.98) (3.25) (7.06)

0.44 15 Debt Equity Ratio 0.47 1.87 16 Debt Service Coverage Ratio 0.61 1.87 17 Interest Service Coveraqe Ratio 0.61

200

Notes: l 2

3

~ 5

6

7

8

9

The above financial results for the quarter ended June 30, 2020 were reviewed by the Audit Committee and then approved by the s.»rd of Directors at their meeting held on July 31, 2020. The Statutory Auditors of the Company have earned out a "Umired Review" of the abo'ie financial r=ilts for the quarter ended June 30, 2020 pursuant IO Regulation 33 of SEBI (Usbng Obliaation and Disclosure Reauire.mentsl ReQulatiQns. 2015. The above results have been prepared in accardance with the Companies [Indian AecClunling Star>dards] Rules, 2015 [Ind AS] pl1!5Cribed unde,- Seclicn 133 of the Companies Act, 2013 and other recoanised accountir<1 oractices and oolldes to the extent aoolicab1e. The Company operaies in one segmen~ namely ''ConS\lmer Products", The Company had is:.ued Secured Redeemable Non·Convertlble Debentures (NCDs) of, IS0,000 lakhs, which are repayable in lhree equal yei,r1y instalments starting from January 16, 2022. Toese NCDs have been secured by way of charge on specific brancls. The asset wver of the said NCDs as on June 30, 2020 e)CO!eds hundred pe,cent of the principal amount of the NCOS. The Company obtained long term credit ratlng for ISS1Jance of NCDs an<! w.,s assigned credit ratings of 'CRlSlL AA+/ Stable" from CR!SIL Limited and "CARE AA+/ Stable" from CARE Rating Limited. There is no chance In the ratinqs of me NCDs by any of the ratinq aQencies durina the quarter, Due to seasonality of some of me Company's products, Company's Rl!Yenues and Pmfits are skewed in t.,,,oo, or the fim and last quarters of the financial yei,r. Hence the performaOOI! of th= auarters Is rot reo,=ntatlve and cannot be aeneralised fo, other ouart.ers. In the process of integration and a:mduding the merger of the acquired entity, Company incurred various expenses 11'.JWards transition service ag~ment (TSA), a,nsultancy fees, Stall1) duties, legal and professional cha~es and other lncidenral charges, The Corrpany would not have incurred these - In the normal course of business and hence these expenses are dasslfied as Exceotional Items, The figures of the quarter ended Mar 31, 2020 are the oolandng figure between audited figlJl'eS In respect of me fu ll financial year and restated year to date figures upro the third quarter of the orevious financial vear. As per me cu~nt assessment of Ille situation based on the Internal and e'Ktemal Information available up to me date of approval of these financial results by tile s.»rd of Directors, the Company continues to believe that the Impact of Covid·19 on its business, asset5, Internal ftnandal controls, profitabllity and liquidity, both present and future, would be limited and mere is no Indication of a~ material •~ on the carrying amounts or inventories, goodwill, Intangible assets, trade receivables, Investments and other fifli!ncial assets. The eventual outcome oJ the Impact of the global health pandemic may be different from mose estimated as on the date of approval of mese financial =,Its and the Company will dOsely monl10t any material changes to the economic environment and their imllllct on Its business In the times to come.

10 Agures of~ reporting perlods have been regrouped/ ~l\ed whereller necessary to correspond with the figures of the current reporting period.

Place: Ahmedab3d Date: July 31, 2020

By Order of e bttl. For Zvdus Welln ss Umited,

Dr. Sharvi P. atel airman

201

C/4\

Independent Auditors' Report

To the Members of Zydus Wellness limited

Report on the Audit of the Consolidated Financial Statements

Opinion

I Dhirubhai Shah & Co LLP CHARTERED ACCOUNTANTS

4th Floor, Aditya Building, Near Sardar Patel Seva Samaj, Mithakhali Six Roads, Ellisbridge, Ahmedabad 380006.

We have audited the accompanying consolidated financial statements of Zydus Wellness Limited ("the Holding Company") and its subsidiaries (the Holding Company and its subsidiaries together referred to as 'the Group'), which comprises of the consolidated balance sheet as at 31st March 2020, and the consolidated stc.tement of Profit and Loss (including other comprehensive income), and the consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies {Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the consolidated state of affairs of- the Group as at 31 March 2020, and its consolidated profit, total consolidated comprehensive income, its consolidated cash flows and the consolidated changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAl's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the consolidated financial statements.

Phone : (079) 2640 3325/26 I Website : www.dbsgroup .in I E-Mail : info@dbsgroup.in

Branch : 204 Sakor Complex, Opp Abs Tower, Old Padro Road, Yadodoro : 390015 202

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter Description Response to Key Audit Matter

Assessment of impairment of goodwill Principal Audit Procedures

amounting to Rs. 3,92,002 Lakhs and Procedures performed by us have been

Intangible assets having indefinite useful life enumerated herein below:

amounting to Rs. 53,868 Lakhs respectively (Refer Note {5] to the consolidated financial statements)

The Group's evaluation of goodwill and intangible assets for impairment testing, involves the comparison of its recoverable amount to its carrying amount as at 31 March 2020, the Group's carrying value of intangible assets includes intangible assets having indefinite useful life aggregating to Rs. 53,868 Lakhs in its consolidated financial statements relating to Consumer Health & Wellness Cash Generating Units ("CGU's"}. These intangibles are subject to test of impairment by the management in accordance with the applicable accounting standards.

The carrying value of goodwill and intangible assets will be recovered through future cash flows and there is a risk that the goodwill and assets will be impaired if these cash flows do not meet the Group's expectations.

• Assessed the appropriateness of the accounting policies in respect of impairment by comparing with applicable accounting standards.

• Evaluated the design, tested the implementation and operating effectiveness of the internal controls over impairment assessment process, including those over the forecast of future revenues, operating margins, growth rate and terminal values, external market conditions and the selection of the appropriate discount rate.

• Tested the reasonableness of the key business projections and valuation assumptions carried out by the management / independent valuer in determining the fair value of the CGU, discount rate, revenue growth rate, EBITDA growth rate, terminal growth rate used in computing the fair value of the components.

In addition to significance of the amounts involved, management's assessment process is • complex as it involves significant judgement in determining the assumptions to be used to estimate the future cash flow.

Performed retrospective review of projections by comparison with historical performance, inquiries with management and forecast trends in the industry.

It inter-alia involves forecasts, principally Considered sensitivity to reasonable possibility relating to long-term revenue growth rates, of changes in the key assumptions and inputs terminal values, EBIDTA margins, external to ascertain whether these possible changes

have a material effect on the fair value.

203

market conditions and the discount rate used.

Considering the materiality of amounts involved together with the inherent subjectivity related to principal assumptions, which are dependent on current and future economic factors and trading conditions varying for different economic and geographical territories, assessment of carrying value of goodwill and intangible assets is considered to be complex and determined to be a key audit matter in our current period audit.

Information other than the Consolidated Financial Statements and Auditor's Report thereon

The Holding Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

The Holding Company's Management and Board of Directors are responsible for the matters stated in section 134(5} of the Act with respect to the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS} specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

204

In preparing the consolidated financial statements, respective company's management and Board of Directors of the entities included in the Group are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless respective company's management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Respective company's Board of Directors are also responsible for overseeing the Group's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of Holding Company management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

205

Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the consolidated financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

A. As required by Section 143 (3) of the Act, based on our audit, we report, to the extent applicable that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b. In our opinion proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books.

c. The consolidated balance sheet, the consolidated statement of profit and loss, the consolidated cash flow statement and consolidated statement of changes in equity dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements.

d. In our opinion, the aforesaid consolidated financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors of the Holding Company as on 3pt March 2020 taken on record by the Board of Directors of the Holding Company and on the basis of written representations received by the management from directors of its subsidiaries as on 31st March, 2020, none of the directors of Holding Company and its subsidiary is disqualified as on 31st March 2020 from being appointed as a director in terms of Section 164 (2) of the Act.

206

f. With respect to the adequacy of the internal financial controls over financial reporting of the Holding Company and its subsidiaries, and the operating effectiveness of such controls, refer to our separate report in "Annexure A".

B. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group - Refer Note 28 to the consolidated financial statements;

ii. The Group has did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Group during the year ended 31st

March, 2020.

C. With respect to the matter to be included in the Auditors' report under Section 197(16) of the Act:

In our opinion and according to the information and explanation given to us, the remuneration paid during the current year by the Holding Company and its subsidiaries to its directors is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director by the Holding Company and its subsidiaries are not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16} of the Act which are required to be commented upon by us.

For, Dhirubhai Shah & Co LLP Chartered Accountants Firm's registration number: 102511W/W100298

r ~Jpt~ Harish B. Patel Partner Membership number: 014427 UDIN:20014427AAAAZP7619

Place: Ahmedabad Date: 02.06.2020

207

Annexure - A to the Auditors' Report

. . Report on the Internal Financial Controls under Clause {i) of Sub-section 3 of Section 143 of the Companies Act, 2013 {"the Act")

We have audited the internal financial controls over financial reporting of Zydus Wellness Limited ("the Company") as of 31st March 2020 in conjunction with our audit of the consolidated financial statements of the Group for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The respective company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ('ICAI') . These responsibilities include the design, Implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Group's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Group's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Group's internal financial controls system over financial reporting.

208

Meaning of Internal Financial Controls over Financial Reporting

Group's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Holding Company and its subsidiaries has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2020, based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Dhirubhai Shah & Co LLP Chartered Accountants Firm's registration number: 19,2511W/W100298

~t-r~ Harish B. Patel Partner Membership number: 014427 UDIN: 20014427AAAAZP7619

Place: Ahmedabad Date: 02.06.2020

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Particulars

Zydus Wellness limited Consolidated Balance Sheet as at March 31, 2020

Note No.

, in Lakh

As at March 31 2020 2019

ASSETS: Non-current assets:

Property, plant and equipment capital work-in-progress Right-of-use assets Goodwill Other intangible assets Financial assets:

Other financial assets Other non-current assets Deferred tax asset [net] Assets for tax [net]

Current assets: Inventories Financial assets:

Investments Trade receivables Cash and cash eQuivalents Bank balance other than cash and cash equivalents

Other current assets

Total EQUITY AND LIABILITIES: Equity:

Equity share capital other equity

Liabilities: Non-current Ila bilities:

financial liabilities: Borrowings Lease liabilities Other financial liabilities

Provisions other non-current liabilities

Current liabilities: Financial liabilities:

Borrowings Trade payables:

Due to Micro, Small and Medium EnterPrises Due to other than Micro, Small and Medium Enterprises

Lease Liabilities Other nnancial liabilities

Other current liabilities Provisions Current tax liabilities [net]

Total Significant accounting policies Notes to the consolidated financial statements As per our report of even date For Dhlrubhai Shah & Co LLP Chartered Accountants

Firm Registration Number: 102511W~.,29-::8:::=:;_=:::~ ...

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Membership Number: 014427 . , -Place: Ahmedabad • ~ Date : June 2, 2020 ro ACC\)'\'i '

Harish e. Patel ~ Umesh V. Parikh

Chief Financial Officer

3

4 5 5

6 7 8 9

10

11 12 13 14 15

16 17

18 19 20 21 22

23

24 24 19 25 26 27 9

2 1 to 47

18,877 353

1,590 3g2,002

54,883

977 465

12,079 163

481,389

29,234

11,041 11,820

5,448 2,794

17242 77,579

558 968

5,766 340 300 346,066

150,000 64 Sl

2,437 168

152 720

1,905

654 48,458

14 4,277 3,390 1,484 .

60182 558 968

For and oh behalf nf thP Bnard

D~~rv~

~ ~-;q~ ., .... ; , ... ,., A. .. ,. """ Company Secretary ,.. ±::le Time Director

20,742 1,031

381,974 54,026

667 4,054

10,299 3289

476,082

23,307

4,610 9,604

13,815 2,614

15 820 69770

545 852

5,766 332 862 338 628

150,000

63 2,283

252 152 598

6,925

989 38,240

3,948 3,174 1,074

276 54 626

545 852

210

Zvdus Wellness Limited Consolidated Statement of Profit and Loss for the year ended March 31, 2020

Particulars

REVENUE:

Revenue from operations Other income Total income

EXPENSES: Cost of materials consumed Purchases of stock-in-trade Changes In inventories of finished goods, work-in-Progress and stock-in-trade Employee benefits expense Finance costs Depreciation and amortisation expense Other expenses

Total expenses

Profit before exceptional items and tax Exceptional items

Profit before tax Less: Tax expense:

Current tax Deferred tax •

Profit for the year Other Comprehensive Income

Items that will not be reclassified to profit or loss: Re-measurement gains on post employment defined benefit plans, net of tax

!terns ttiat will be reclassmed to profit or loss: Exchange differences on transaction of financial statement of a foreign subsidary

Other Comprehensive Income for the year [net of tax] Total Comprehensive Income for the Vear[net of tax] Net profit c1ttributable to:

Owne~ of the parent Non-controlling interests

Other Comprehensive Income Attributable to: Owners of the parent Non·controlling interests

Total Comprehensive Income Attributable to: Owners of the parent Non-controlling interests

Basic &. diluted earning per equity share [EPS] [in '1 Significant accounting policies Notes to the Consolidated financial statements As per our report of even date For Dhirubhai Sh"h & Co LLP Chartered Accountants

Firm Registration Number: 102511W/WlOO,lafe::=:===::::::-....

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U mesh II. Parikh

Chief Financial Officer

Note

No.

30 31

32 33 3'l 35 35

3, 4, 5 37

38

8 8

39 2

1 to 47

'in Lakh Year ended March 31

2020

176,682 1,071

177,753

75,382 8,249

(5,754) 17,469 13,991

2,639 49,230

161 206

16,547 {4 420) 12,127

(265) (1 780) (2,045) 14172

201

1.7 218

14390

14,172 .

218 -

14,390 .

24.58

For and on behalf of the Board

Dr. Sharvil P. Patel

~ · °"j~~ , Tatun G. Arora

Company Secretary Whole Time Director

Z019

84,282 3888

88,170

29,263 3,002

(2,428) 8,560 3,009 1,251

27 405 70 062

18,108 fl 045) 17,0£3

3,109 (3 170

(61 17 124

2

-2

17 126

15,914 210

2 -

16,916 210

40.10

211

Zydus Wellness Umlted Consolidated Cash flow Statement for the year ended March 31, 2020

Particulars , in Lakh Year ended March 31

2020 2019

~ t~i:zh flowf from o,2erating activities

Profit before tax 12,127 17,063 Adjustments to reconcile the profit for the year to net cash generated from operating activities:

Depreciation and amortisation e•pense 2,639 1,251 Loss on sate of assets [net] 2 -Profit on sale of investments [net} (522) (1,842)

Interest income (535) (2,039)

Fair value gain on financial instrument at fair value through statement of profit and Loss (14) (7) rnterest expense 13,991 3,009 Profit elimination of acquired business - (1,139)

Changes in operating "ssets and liabilities; net of effects from acquisitions: Increase In trade receivables (1,898) (703)

Increase in other assets (3,493) (3,877)

[Increase] / Decrease In Inventories (5,927) 24 Increase In trade payables and other liabilities 9,287 8,501 Re-measurement of Employees benefits [net] 428 2,312 Change In Non- controlling interest - (1,316)

Cash generated from operations 26,D85 21,237 Direct taxes paid [net of refunds] (160) (6,299)

Net cash from operating actMtles 25 925 14 938

~ Cash flows from Investing activities: Purchase of property, plant and equipment and other Intangible assets (2,463) {1,707) Proceeds from sale of property , plant and equipment 13 1 Purchase of Non Current Investments in a subsidiary [net] - (464,292) Profit from sale of current investments 522 1,642

Proceeds from sale of current investments - ID, 153 Investment in mutual funds [net) (6,417)

Proceeds from fi-ed deposit [net] - 35,799 Investment in Fixed Deposit [net] (513)

Interest receised 535 2,039 Net cash used in investing activities (8 323} (416 1651

!;_ Cash flows from financing activities: Proceeds from issued of equity share capital - 1,859 Proceeds from share premium - 255,641 Proceeds of Long term borrowing - 150,000 Current borrowings [net] (5,020) 4,425

Interest paid (14,006) (3,009)

Dividends paid (5,758) (3,121) Ta• on dividend paid (1,185) (642)

Net cash (used In)/ generated financing activities (25 969} 405 153

Net (decrease)/ increase in cash and cash equivalents (8,367) 3,926

Cash and cash equivalents at the beginning of the year 13,815 2,959

Cash and cash equivalents of acquired Business - 6,930 Cash and cash equivalents at the end of the year 5 448 13 815

Notes to the Cash flow Statement

1 The above cash now statement has been prepared under the " Indirect method" as set out In Ind AS-7 "Statement of Cash Flows"

2 All figures in brackets are outflows.

3 Previous year's figures have been regrouped wherever necessary_

4 Cash and cash equivalents comprise of : l in Lakh

Particulars As at March 31

2020 2019 2018

a Cash In Hand 6 4 2

b Balances with Banks 5,442 13,811 2,957

Total 5 448 ,... 13 815 2 959

A~ m:c our rego[t Qf even date Fnr "'"'"' nn H h~lf nf thP Bn~rrl

For Dhirubhai Shah & Co LLP

Dr, S~J.)

Chartered Accountants w Firm Registration Number: lOZSllW/Wl~

~b, ~ Chairmafl..,.,-

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~ ~ nm . -~ /4~ Harish B, Patel I * 1025ll\\'I\Yi00298 * } Umesh V- Parikh Dhanraj P. Dagar Tar n G. Arora

Part,ier

~ '""'""" <-,

Chief Financial Officer Company Secretary Who e Time Director Membership Number: 014427

~ Place: Ahmedabad

Date: June 2, 2020 'tf£1 ACC\J

212

Zydus Wellness Limited Statement of Change in Consolidated Equity for the year ended March 31, 2020

a Equity Share Capital:

No. of Shares , in Lakh

Equity Shares of, 10/- each, Issued, Subscribed and Fully Paid-up:

As at March 31, 201B 39,072,0B9 3,907

Add : Shares issued during the year 18,592,055 1,859

As at March 31, 2019 . 57,664,144 5,766

As at March 31, 2020 57 664 144 5 766

b Other Equity: t in Lak.h

Particulars Reserves and Surplus Items of OCI

Debentures General Retained Foreign

FVTOCI Securities currency Total

Premium Redemption Reserve Earnings

translation Reserve

Reserve reserves

As at March 31, 2018 - 4,500 60,713 (1) 65,212 Add: Profit for the year - - 16,914 - 16,914 Add: Other Comprehensive income - - - - 2 2

Total comprehensive income - 16,914 - 2 16,916 Less: Profit elimination of acquired business (1,139) - (1,139} Transfer from Retained Earnings to Debenture Redemption

37,500 {37,500) - - -Reserve Add: Addition pursuant to Issue of shares 255,641 - 255,641 Transactions with Owners In their capacity as owners:

Dividends (3,126) - (3,126) Corporate Dividend Tax on Dividend - (642) (642}

As at March 31, 2019 255 641 37 500 4 500 35 220 - 1 332 862

Add: Profit for the year - 14,172 - 14,172

Add: Other Comprehensive income - - 17 201 218

Total Comprehensive Income - - - 14,172 17 201 14,390 Transactions with owners in their capacity as owners:

Dividends (5,767) (5,767}

Corporate Dividend Tax on Dividend - (1,185) - (1,185) As at March 31, 2020 255 641 37 500 4 500 42 -440 17 202 340 300

A~ Qtr oyr !J:(!!![I Q( i:ve:a di!!!: For •nrl on f;\.h,lf of th<> P.n-,rl

For Dhirubhai Shah & Co LLP .. ~~ Chartered Accountants

Firm Registration Number: 102511 W /W l~B

~ --- Chairman

~ ~ f'A½ c. HAHJ

~ jj~ · r~ jJl F?.rl . ~

Harish B. Patel j ; 102511 V,' I\\' 100296 * I Umesh V. Parikh ~anraj P. Dagar Taru G. Arora \

Partner ~ AHimAOAO ~

Chief Financia I Officer Company Secretary Whole Time Director

Membership Number: 014427 # Place: Ahmedabad

Date: June 2, 2020 ?t11ro ACC~i~ --

213

Zydus Wellness Limited Note: 1 - Group Overview

The consolidated financial statements comprise financial statements or Zydus Wellness Limited ["the Parent"] and its Subsidiaries [collectively, "the Group"] for the year ended

and as at March 31, 2020. The Group operates as an integrated consumer Group with business encompassing the entire value chain in the development, production, marketing

and distribution of health and wellness products. The product portfolio of the Group includes brands like Sugar free, Sugar lite, Everyuth, l'lutralite, Complan, Glucon D, Nycil

and samprili Ghee . The Parent's shares are listed on the National Stock Exchange of India Limited (NSEJ and BSE Limited (BSEJ.

The registered off,ce of the Parent is located at Zydus Corporate Park, Scheme No. 63, survey No. 536 Khoraj (Gandhinagar), Nr. Vaishnodevi Circle, S. G, Highway,

Ahmedabad 382 481. These financial statements were authorised fllr issue in accordance with a resolution passed by Bllard or the Directors at Its meeting held on June 2, 2020.

Note: 2 - Significant Accounting Pollcles

A The following note provides list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented unless otherwise stated.

1 Basis of preparation: A The fonanclal statements are in compliance with the Tndian Accounting Standards [Ind AS] notified under the Companies (Indian Accounting 'Standards] Rules,

2015, as amended and other relevant provislons of the Companies Act, 2013.

For all periods up to and including the year ended March 31, 2016, the Company had prepared its financial statements In accordance with the accounting standards

notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies [Accounts] Rules, 2014 [Indian GAAPJ. Effeclive from

Aprfl !, 2016, the Company has adopted Ind AS as per Companies [Indian Accounting Standards] [Ind AS] Rules, 2015 as notified under section 133 of the

Companies Act, 2013. The adoption was carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards.

B The financial statements have been prepared on historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

I Derivative financial instruments

ii Certain financial assets and liabilities measured at fair value [rerer accounting policy regarding financial Instruments]

iii Defined benefit plans

2 Basis of consolidation: A The consolidated financial statements comprise the financial statements of the Parent and its subsidiaries as at March 31, 2020. Control is achieved when the Group

Is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: a Power over the Investee [ I.e. existing rights that give it the current ability to direct the relevant activities of the Investee]

b Exposure, or rights, to variable returns from Its involvement with the Investee and

c The ability to use its power over the investee to aflect its returns and

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and ·when the Group has less than a majority or the

voting or similar rights of an investee, the Group considers all relevant racts and circumstances in assessing whether It has power over an investee, Including:

a The contractual arrangement with the other vote holders of the Investee.

b Rights arising from other contractual arrangements.

c The Group's voling rights and potential voting rights.

d The size of the group's holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders.

B The Company re-assesses whether or not it controls an Investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements rrum the date the

Group gains control until the date the Group ceases to control the subsidiary. C Consolidated f,nanclal statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the

group uses accounting policles other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that group member's financial statements In preparing the consolidated financial statements to ensure conformity with the group's accounting policies.

O The financial statements of all entiUes used for the purpose of consolidation are drawn up to same reporting date as that or the Group, I.e., year ended on March

31. When tfle end or the reporting period of the parent is different from that or a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial

information as.of the same date as tfle financial statements of the parent to enable the parent to consolidate the financial inrormation of the subsidiary.

J Use of Estimates: The preparation of the consolidated financial statements In conformity with Ind AS requires management to make estimates, judgments and assumptions. These

estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures or contingent

assets afld liabilities at the date of the financial statements and reported amounts of income and expenses during the period. Application or accounting policies that

require critical accounting estimates Involving complex and subjective Judgments are provided below. Accounting estimates could change from period to period.

Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes In circumstances

surrounding the estimates. Changes in estimates are reflected in the consolidated nnanclal statements in the period In which changes are made and, If material,

their errects are disclosed In the notes to the consolidated financial statements.

214

Critical estimates and judgments A Income Taxes:

Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions

and possibility of utilisation of Minimum Alternate Tax [MAT] credit in future.

B Property, plant and equipment: Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after

determining an estimate of an asset's expected useful life and the expected residual value at the end or its Ille. Management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognised prospectively

In current and future periods. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their

life, such as chancJes in technoioQv. C Employee Benefits:

Significant judgments are involved in making estimates about the life expectancy, discounting rate, salary increase, etc. which significantly affect the working

of the present value of future liabilities on account of employee benefits by way of defined benefit plans.

D Leases: When the entity has the option to extend a lease, management uses its judgement to determine whether or not an option would be reasonably certain to be exercised. Management considers all facts and cifcumstances including their past practice and any cost that will be inrnrred to change the asset If an option

to extend Is not taken, to help them determine the lease term.

£ Product warranty and expiry claims:

Significant judgments are Involved In determining the estimated stock lying in the market with product shelf life and estimates of likely claims on account of expiry of such unsold goods lying with stockist.

F [mpairment of assets and investments: Significant Judgment Is Involved in determining the estimated future cash flows from the investments, Property, Plant and Equipment. other Intangible assets

and Goodwill to determine its value in use to assess whether there is any Impairment in Its carrying amount as reflected In the financials.

4 Foreign Currency Transactions: The Group's consolidated financial statements are presented in Indian Rupees [l], which is the functional currency of the Parent Company. For each entity, the

Group determines the functional currency and items Included in the financial statements of each entity are measured using that functional currency.

A The transactions in foreign currencies Me translated Into functional currency at the rates of exchange prevailing on the dates of transactions. e Foreign Exchange gains and losses resulting from settlement of such transactions and from the translatioo of monetary assets and liabilities denominated in foreign

currencies at the year end exchange rates are recognised in the Statement of Profit and Loss. C Foreign exchange differences regarded as an adjustment to bonrowing costs are presented in the statement of Pront and Loss within finance costs. All the other

foreiQn exchanqe qains and losses are presented in the statement of Profit and Loss on a net basis. D Investments In foreign subsidiaries and other companies are recorded in INR [functional currency) at the rates of exchange prevailing at the time when the

investments were made. 5 Revenue Recognition:

A The Group has applied Ind AS I JS - Revenue horn Contracts with Customers which is effective for an annual period beginning on or after April 1, 2.018. The following is the significant accounting policy related to revenue recognition under Ind AS 11S.

a Sale of Goods: Revenue from the sale of goods is recognized as revenue on the basis of customer contracts and the performance obligations contained therein. Revenue is

recognised at a point in time when the control of goods or services is transferred to a customer. Control Mes with the customer 1r the customer can

Independently determine the use of and consume the benefit derived from a product or service. Revenues from product deliveries are recognised at a point In

time based on an overall assessment of the existence of a right to payment, the allocation of ownership rights, the transfer or significant risks and rewards

and acceptance by the customer. The goods are often sold with volume discounts/ pricing incentives and customers have a right to return damaged or

expired products. Revenue from sales is based on the price in the sales contracts, net of discounts. When a performance obligation Is satisfied, Revenue Is

recognised with the amount of the transaction priee (excluding estimates of variable conslderaUon] that Is allocated to that performance obligation. Historieal

experience, specific contractual terms and future expectations of sales returns are used to estimate and provide for damage or expiry claims. No element of

financing Is deemed present as the sales are made with the normal credit terms as per prevalent trade practice and credit poMcv followed by the Group.

b Service Income: Service income is recognised as per the terms of contracts with the customers when the related se,vlces are performed as per the stage of completion or on

the achievement of agreed milestones and are net of Indirect taxes, wherever applicable.

e Goods c111d Service Ta~ [GSTJ is not received by the Group on its own account. Rather, it is tax collected on value added to the goods by the Group on behalf of the

qovemment. Accordinqly, it is excluded from revenue. C The specific recognition criteria described below must also be met before revenue is recognised:

a Interest Income: For all debt instruments measurt!d at amortised cost, Interest income is recorded using the effective Interest rate [EIR]. EIR Is the rate that discounts the

estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying

amount or the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Group estimates the expected

cash flows by considering all the contr.,ctual terms of the ftnancial instrument but does not c_onsider the expected credit losses.

b Dividend: Dividend income is recognised when the Group's right to receive the payment is established.

c Other Income:

Other income Is recognised when no signifocant uncertainty as to its determination or realisation exists.

215

6 Govemment Grants: A Government grants are recognised in accordance with the terms of the respeaive grant on accrual basis considering the status of compliance of prescribed

conditions and ascertainment that the orant will be received. e Government grants related to revenue are recognised on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related

costs intended to be comoensated are incurred. C Government grants related to assets are recognised as income in equal amounts over the expected useful life of the related asset.

D When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of

this favourable interest Is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is

measured as the difference between the Initial carrying value of the loan and the proceeds received. The loan is subseQuently measured as per the accounting

policy applicable to financial liabilities. However, In accordance with the exemption as per Ind AS 101, for such loans that existed on April 1, 2015 the Group uses

the previous GAAP carrying amount of the loan at the date of transition as the carrying amount of loan.

7 Taxes on Income:

Tax expenses comprise of current and deferred tax.

A Current Ta,r:

a Current tax Is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

b current tax items are recognised in correlation to the underlying transaction either in Statement of Profit and Loss, Other Comprehensive Income {00) or directly in equity.

B Deferred Tax: a Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabiliUes and their carrying amounts for

financial reporting purposes at the reporting date.

b Deferred tax liabilities are recognised for all taxable temporary difrerences.

c Deferred tax assets are recognised for all deductible temporary differences including the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit wUI be available against which the deductible temporary differences, the

carry forward of unused tax credits and unused tax losses can be utilized. d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable

profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

e Deferred tax assets and liabilities are-measured at the tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date and are expected to apply in the year when the asset is realised or the liability is settled .

f Deferred tax items are recognised in correlation to the underlying transaaion either in DCI or directly in equity.

g Deferred taK assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities. h Minimum Alternate Tax [MAT] paid In a year is charged to the Statement of Profit and Loss as current tax.

The Group reco9ni2es MAT credit available as an asset based on historical experience of actual utilisation of such credit and only when and to the extent lliere is a convincing evidence that the Group wi!I pay normal income tax during the specified period i.e., the period for which MAT credit Is allowed to be carried forward. Such asset, If any recognised, is reviewed at each balance sheet date and the carrying amount is written down to the extent there is no longer a convincing evidence that the Group will be liable to pay normal tax during the specified period.

8 Property, Plant and Equipment: A Freehold land is carried at historical cost. All other Items of Property, Plant and Equipment are stated at historical cost of acquisition/construction less accumulated

depreciation and impairment loss. Historical cost (Net of Input tax credit received/ receivable] includes related expenditure and pre-operative & project expenses

for the period up to completion of construction/ assets are ready for its intended use, if the recognition criteria are met and the present value of the expected cost

for the decommissioning of an asset after Its use Is Included In the cost of the respective asset if the recognition criteria for a provision are met. The carrying

amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance costs charged to the statement of

profit and loss during the reporting period in which they are incurred, unless they meet the recognition criteria for capitalisation under Property, Plant and

Equipment . On transition to Ind AS, the Group has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 1, 2015

measured as per the previous GAAP and use that carrying value as the deemed cost or the property, plan and equipment.

8 Where components of an asset are significant in value In relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognised separately as independent Items and are depreciated over their estimated economic useful lives.

C Depreciation on tangible assets is provided on "straight line method" based on the useful lives as prescribed under Schedule II of the Companies Act, 2013. The

management believes that these estimated useful lives are realistic and renect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognised prospectively in current and future periods.

D Depreciation on impaired assets is calculated on Its residual value, If any, on a systematic basis over its remaining useful life.

E Depreciation on additions/ disposals of the Property, Plant and Equipment during the year Is provided on pro-rata basis according to the period during which assets are used.

F Where the actual cost of purchase or an asset is below { 10,000/-, the depreciation is provided at 100%.

G Capital work In progress is stated at cost less accumulated impairment loss, if any.

H An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset [calculated as the difference between the net disposal proceeds and the carrying amount of the asset] Is Included in the income statement when the asset is derecognised.

216

9 Intangible Assets: A Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value

at the date of acquisition. Following initial recognition, intangible assets are earned at cost less any accumulated amortisation and accumulated impairment losses.

e Internally generated intangibles are not capitalised and the related expenditure is reflected In statement of profit and loss in the period in which the expenditure is

Incurred.

c Goodwill arising on acquisition of business is assessed at each balance sheet date for any impairment loss. D Technical Know-how Fees and other similar rights are amortised over their estimated economic life.

E Capitalised cost Incurred towards purchase/ development of software is amortised using straight line method over its useful life as estimated bv the management at the time of capltallsatlon.

F Intangible assets with in<lefinlte useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

G An item of intangible asset initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or clisposal. Any gain or loss arising on de-recognition of the asset [calculated as the difference between the net disposal proceeds and the canying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.

10 Research and Development Cost: A Expenditure on research and development is charged to .the Statement of Profit and Loss of the year in which it is Incurred.

B Capital expenditure on research and development is given the same treatment as Propertv, Plant and Equipment.

11 Borrowing Costs: A Borrowing costs consist of Interest and other borrowing costs that are incurred in connection with the borrowing of funds. Other borrowing costs include ancillary

charges at the time of acquisition or a financial liability, which is n:cognised as per EIR method,

B Borrowing costs that are directly attributable to the acquisition/ construction of a qualifying asset are capitalised as part of the cost of such assets, up to the date the assets are ready far their intended use.

12 Expenditure during the Construction Period: The expenditure incidental to the expansion/ new projects are allocated to Propertv, Plant and Equipment In the year of commencement of the commercial production.

13 Impairment of Assets: The Propertv, Plant and Equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount

may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable

amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impalnment, the assets are grouped at the lowest

levels for which there are separately identifiable cash nows which are largely independent or the cash innows From other assets or groups of assets [cash

generating units]. Non-financial assets other than goodwill tnat suffered an Impairment loss are reviewed for possible reversal of Impairment at the end af each

reporting period. An Impairment loss Is charged to the Statement of Profit and Loss in the year in which an asset Is Identified as Impaired. The impairment loss

recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

14 Business combin~tions and Goodwill:

A Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred at

acquisition date !air value. B At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their acquisition date fair values. for this purpose, the liabilities

assumed include contingent liabilities representing present obligation and they are measured at tneir acquisition date fair values i<respective of the fact that outflow of resources embodying economic benefits is not probable. However, the Deferred tax assets or liabilities and the assets or liabilities related to employee benefit

arrangements acquired in a business combination are recognised and measured in accordance with Ind AS-12 "Income Tax• and Ind AS-19 "Employee Benefits" resoectivelv.

C When the Group acquires a business, it assesses the nnancial assets and llabllltles assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This Includes the separation of embedded derivatives in host contracts by the acquire.

D Goodwill is Initially measured at the excess of the aggregate of the acquisition cost and the amount recognised for non-controlling interests, and any previous

interest held, over the Group's net identinable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate of

acquisition cost, the Group re-assesses whether It has correctly identified all of the assets acquired and all of the liabllities assumed and reviews the procedures

used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the

aggregate consideration transferred, then the gain is recognised in OCI and accumulated in equity as Capital Reserve. However, if there is no clear evidence of

bargain purchase, the entity recognises the gain directly In equity as Capital Reserve, without routinQ the same through OC!.

E After initial recognition, Goodwill ts not amortised. Goodwlll is accordingly recognised at original value less any accumulated impairment. For the purpose of

impairment testing, Goodwill acquired In a business combination is, from the acquisition date, allocated to each or the Group's cash-generating units that are

expected to benent from the combination, Irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

F A cash generating unit to which Goodwill has been allocated is tested for impairment annually, or more frequently when there Is an lndlcation that the unit may be

impaired. If the recoverable amount of the cash generating unit is less than its carrying amount. the impairment loss is allocated first to reduce the carrving amount

of any Goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrvlng amount of each asset in the unit. Any impairment loss

for Goodwill is recognised in Statement of prom and loss. An Impairment loss recognised for Goodwill is nat reversed in subsequent periods.

G If the initial accounting for a business combination is incomplete by the end of the reporting period In which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provlslonal amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. These adjustments are called as measurement period adjustments. The measurement period does not

exceed one year from the acauisition date. H Wherever any business combination is governed by the Scheme approved by the Hon'ble High Court/ National Company Law Tribunal [ NCLTJ, the business

combination is accounted for as per the accounting treatment sanctioned in the Scheme. Goodwill arising on such business combination is amortised over the period, as provided in the Scheme, as approved by the Hon'ble High Court or NCLT.

217

1s Inventories:

Inventories are valued at the low~ or cost and net realisable value. Costs Incurred In bringing each product to its present locatlo<l and condition are accounted for as roClows:

A Raw Materials, Stores&. Spare Parts, Packing Materials, Anlshed Goods, Stock-in-Trade and Wori<s-in-Progress are valued at lower of cost and net reaUsable value.

B Cost (Net of Input ta• credit availed) of Raw Materials, Stores&. Spare Parts, Packing Materials, Finished Goods&. Stock-in-Trade Is determined on Moving Average Method.

C Costs of Finished Goods and Works-in-Progress are determined by taking material cost [Net of Input ta• credit availed), labour and relevant appropriate overheads based on the normal opera Ung capacity, but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Write down or Inventories to net realisable value Is recognised as an expenses and Included on "Changes In Inventories or Finished goods, Work-in­progress and Stock-In-Trade' and 'Cost of Material Consumed" In the relevant note In the Statement of Prom and Loss.

16 Cash and Cash Equivalents: Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the

original maturity Is three months or less.

17 Provisions, Contingent liabilities and Contingent Assets: A Provisions are recognised when the Group has a present obligation as a result or past events and it is probable that the outflow of resources will be required to

settle the obllgatlon and in respect of which reliable estimates can be made. A disclosure for contingent liablllty Is made when there Is a possible obligatlo<l, that

may, but probably wm not require an outflow of resO\Jrces. When there Is a possible obhgation or a present obligation In respect of which the likelihood of outflow

of resources is remote, no provision/ disclosure is made. Provisions and contingencies are reviewed at each balance sheet date and adjusted to rellect the correct

management estimates. COntlngent assets are not recognised but are disclosed separately in financial statements.

B If the effect of the time value of money is material, provisions are discounted using a current p,e-tax rate that renects, when appropriate, the risks speclf,c to the

liability. 18 Provision for Product Expiry Claims:

Provisions for product expiry related costs are recognised when the product Is sold to the customer. Initial recognition Is based on historical experience. The initial estimate of product expiry claim related costs Is revised annually.

19 Employee Benefits:

A Short term obligations: Liabilities for wages and salaries, Including leave encashment that are expected to be settled wholly within 12 months after the end of the period In which the employees render the related service are recognised in respect of employees' services up to the end of the reporting and are measured ay the amounts expected to be paid when the liabKilies are settled. The llabllltles are presented as current employee benefit obligations In the balance Sheet.

B long term employee benefits obligations:

a leave Wages and Sick Leave:

The llablllUes for earned leave and sick leave are not expected to be settled wholly within 12 months period after the end of the period In which the

employees render the related service. They are therelore, measured at the present value of expected future payments to be made In respect of services

provided by employees up to the end of the reporting period using the projected unit credit method, as determined by actuarial valuation, performed by an

Independent actuary. The benefits are discounted using the market yields at the end of reporting period that have the terms approximating to the terms of

the related obligation. Gains and losses through re-measurements are recognised In statement of profit and loss.

b Deflnl!d Benefit Plans:

Gratuity:

The Group operates a defined benefit gratuity plan with contributiOns to be made to a separately administered fund through life Insurance Corporation of

India through Employees Group Gratuity Plan. The Liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present

vallJe of the defined benefit plan obligation at the end or the reporting period less the fair value of the plan assets. The Llabllllles with regard to the Gratuity

Plan are determined by actuarial valuation, performed by an Independent actuary, at each balance sheet date using the prnjected unit credit method.

The present value of the defined beneflt obligation denominated In ~ Is determined by discounting the estimated future cash outflows by reference to the market yields at the reporting period on government bonds that have tenns approximating to the terms of the related obligation. The net Jnte~st cost in calculated by applying the discounting rate to the net balance of the def.,ed benefit obligation and the fair value of plan assets. Such costs are included in employee benefit expenses In the statement or Profit and Loss.

Re-measurements gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised Immediately In the period in which they occur dlrectJy in "Other comprehensive Income· and are Included In retained earnings In the Statement or Changes In Equity and In the balance sheet. Re-measurements are not reclassifted to profit or loss In subsequent periods.

The Group recognises the following changes in the net defined benellt obligation as an expense In the statement or profit and loss:

i Service costs comprising current service costs, past-service costs, gains and losses on rurtailments and non routine settlements; ii Net interest expense or income.

Company administered Provident Fund:

In case of a specllled dass of employees, such contributions are deposited to Heinz India Private limited Employee Provident Fund. The rate at which the annual Interest Is payable to the beneficiaries by the trust Is being administered by the government. The Company has an obligation to make good the shortfa0, if any, between the return from the investments of the Trust and the notified Interest rate. Contributions to such provident fund are recognised as employee benefits expenses when they are due In the statement of profit and loss.

c D"flned Contribution Plans - Provident Fund Contribution:

Eligible employees of the Group receive benefits from a provident fund, which is a defined conlrlbutlon plan. Both the eligible employee and the Group make monthly contributions to the provident fund plan equal to a specified percenrage of the covered employee's salary. Amounts coflected under the providerlt fund plan are deposited in a government administered provident rund. The Group have no further ob!Jgatlo<l to the plan beyond its monthly contributions. Such contributions are accounted for as defined contribution plans and are recognised as employees benefit expenses when t hey are due in the statement of profit and loss.

c Employee Separation Costs:

The compensation paid to the employees under Voluntary Retirement Scheme Is expensed In the year of payment.

218

20 Dividends: The final dividend on shares is recorded as a liability on the date of approval by the shareholders and Interim dividend Is recorded as liability on the date of declaration by the Parent's Board or Directors.

21 Financial Instruments: A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

A Financial assets:

a Initial recognition and measurement: All financial assets are recognised initially at fair value plus, In the case of financial assets not recorded at fair vatue through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place [regular way trades] are recognised on the settlement date, i.e., the date that tihe Group settle to

ourcttase or ~II the asset. b Subsequent measurement:

For purposes of subsequent measurement, financial assets are classified as follows:

Debt Instruments at amortised cost: A 'debt instrument' is measured at the amortised cost if both the following conditions are met:

- The asset is held with an objective of collecting contractual cash flows - Contractual terms of the asset give rise on specified dates to cash nows that are "solely payments of principal and tntenest" [SPPI] on the princlpa I amount outstandinq.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate [EIR] method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs tllat are an Integral part of the EIR, The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from Impairment are recognised In the Statement of profit and loss.

ii Debt instruments at fair value throu!Jh other comprehensive income [FVTOCI]: A 'debt instrument' is classified as at the FVTOO if both of the following criteria are met: - The asset is held with objectives of both collecting contractual cash nows and selling the financial assets - The asset's contractual cash nows represent SPPI. Debt instruments Included within the FVT0CI category are measured initially as well as at each reporting date at fair value. Fair value movements i>re

recognized In the 0CI. However, the Company recognizes interest income, impairment losses &. reversals and foreign e.change gain or loss in the Statement

of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised In 0CI is reclassified from the equity to Statement of Profit

and Loss. Interest earned whilst holding FVT0CI debt instrument is reported as interest income using the EIR method.

iii Debt instruments and derivatives at fair value through profit or loss [FVTI>LJ: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortiied cost or as FVTOCI,

is classified as at FVTPL. Instruments Included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and LOSS,

iv Equity instruments: All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other

equity Instruments, the Company may make an irrevocable election to present subsequent changes in the filir value In other comprehensive Income • The

Compariy has made such election on an Instrument by Instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVT0CI, then all ralr value changes on the Instrument, excluding dividends, are recognized In the oa. There is no necvclinq of the amounts from OCI to Statement of Profit and Loss, even on sale of invesbnent. However, the Company may transfer the cumulative gain or loss within equity. Equity Instruments included within the FVTPL category are measured at fair value with all changes recognized In the Statement of Profit and Loss.

c Derecognition: A financial asset [or, where applicable, a part of a financial asset] is primarily derecognlsed [i.e. removed from the Group's balance sheet] when:

The rights to receive cash nows from the asset have expired, or

The Group has transferred Its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows In rull without material delay to a third party under a 'pass-through' arrangement; and either [a] the Group has transferred substantially all the risks and rewards of the asset, or [b] the Group has neither transferred nor retained substantially all the risks and rewards or the asset, but has transferred control of the asset.

When the Group has transferred Its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it

has retained the risks and rewi>rds of ownership. When it has neither transferred nor retained substantially all of the risks and rewards or the asset, nor transferred

control of the asset, the Group continues to recognise the transferred asset to the e)(lent of the Group's continuing Involvement. In that case, the Group also

recognises an associated liability. The transferred asset and the associated liability are measured on a basis that renects the rights and obligations that the Group

has retained. When the Group has transferred the risk and rewards of ownership of the llnancial asset, the same Is derecognlsed.

d Impairment of financial assets: In accordance with Ind AS 109, the Group applies expected credit loss [ECL] model for measurement and recognition of Impairment loss on the following financial assets and credit risk exposure:

a Financial assets that are debt instruments, and are measured at amortised cost b Trade receivables or any contractual right to receive cash or another financial asset

c Financial assets that are debt instruments and are measured as at FVT0CI

The Group follows 'simplified approach' for recognition of impairment loss allowance on Point c provided above. The application of simplified approach does not require the Group to track changes in credit risk_ Rather, it requires the Group to recognise the impairment loss allowance based on lifetime ECLS at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and ri~k exposure, the Group detennines that whether there has been a significant increase in the credit

risk since initial recognition. If credit risk has riot increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased

significantly, lifetime ECL is used. If, in a subsequent period credit quality of the instrument improves such tflat there is no longer a significant increase in credit

risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

219

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial Instrument. The 12-month ECL is a portion

of the ~fetlme ECL which results from default events tllat are possible within 12 months after the reporting date ECL is the difference between all contractual cash flows that are due to the Group in accordance wltll the contract and all the cash flows that the entity expects to receive [i.e., all cash shortfalls], discounted at the

original EIR.

ECL impairment loss allowance [or reversal) recognized during the period iS recognized as income/ expense In the statement of profit and loss. The balance sheet

presentation for various financial Instruments Is described below:

Financial assets measured as at amortised cost and contractual revenue receivables: ECL is presented as an allowance , i.e., as an integral part of the measurement

of those assets In the balance sheet, which reduces the net carrylnq amount. Until the asset meets write-off criteria, tile Group does not reduce impairment

allowance from the gr05s carryirn;i amount.

For assessing Increase in c,edit risk and impairment loss, the Group combines financial instruments on the basis of shared credit risk characteristics. B Financial liabilities:

a Initial recognition and meuurement: financial liabilities are classified, at initial recognition, as f01andal llabillties at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments In an effecUve hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case

of loans and borrowings and payables, net of directly attributable transaction costs.

b Subsequent mea5urement:

Subsequently all financial liabilities are measured as amortised cost, using EIR method. Gains and losses are recognised in Statement ot profit and loss when

the liabilities are derecognised as well as through the EIR amortlsatio<> process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an Integral part or the EIR. The EIR amortisation is included as finance costs In the Statement of profit and loss.

c Derecognltion:

A financial liability is derecognised when the obligation under the liability is diSCharged or cancelled or expires. When an existing financial liability is replaced

by another from the same lender on substantlally different terms, or the terms of an existing iability are substantially modirled, such an exchange or modification IS treated as the derecognl~on or the original Nabllity and the recognition of a new liability. The difference in the respective carrying amounts Is

recognised in the statement of profit or loss.

d Embedded derivatives: An embedded derivative is a component of a hybrid [combined) instrument that also includes a non-derivative host contract - with the effect that some of the

cash nows of the combined Instrument vary In a way similar to a standalone denvative. Derivatives embedded in all other host contracts are accounted for as

separate derivatives and recorded at fair value If their economic characteristics and risks are not closely related to those oft~ ~ost contracts and the host

contracts are not held for trading or designated at fair value though profit or toss. These embedded derivatives are measured at fair value with changes in fair

value recognised In profit or loss, unless designated as effective hedging Instruments.

C Reclassification of financial assets: The Group determines classification or financial assets and liabilities on Initial recognition. After initial recognition, no reclassification IS made for financial

assets which are equity instruments and financial liabilities. For nnanclal assets which are debt instruments, a reclassirlcation Is made only if there is a change

In the business model for managing those assets. Changes to the business model are expected to be Infrequent.The Group's senior management determines

change in the business model as a result of external or Internal changes which are significant to the Group's operations. Such changes are evident to external

parties. A change In the business model occurs when the Group either begins or ceases to perform an activity that Is slgnlrocant to Its operauons. If the Group

reclassifies fr,ancial assets, it applies the reclassificauon prospectlvely from the reclassif1Cation date which is the first day ot the Immediately next reporting

period folowlng the change In business model as per Ind AS 109.

D Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount Is reported in the balance sheet if there is a currently enforceable legal right to offset the

recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

22 Fair Value Measurement:

Fair value is the price that would be received to sell an asset or paid to transfer a llablHty in an orderly transaction between market participants at the measurement

date. The fair value measurement Is based on the presumpUon that the transaction to sell the asset or transfer the llabllity takes place either:

a In the principal market for the asset or ijability, or b In the absence of a principal market, In the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability Is measured using the assumptions that market participants would use when pricing ltle asset or liability, assuming that

market participants act In their economic best Interest. A fair value measurement of a non-financial asset takes Into account a market participant's ability to

generate economic benefits by using the asset In its highest and best use or by selling it to another market participant that would use the asset In Its highest and best use. The Group uses valuation techniques that are appropriate In the circumstances and for which sufficient data are available to measure fair value,

maximising the use of relevant observable Inputs and minimising the use of unobservable Inputs.

All assets and liabiliUes for which fair value is measured or disclosed in the financial statements are categorised within the lair value hierarchy, described as follows, based on the lowest level input that Is slgnlrocant to the fair value measurement as a whole:

a Level I - Quoted [unadjusted] market prices In actl\le markets for Identical assets or liabilities

b Level 2 - Valuation techniques for which the lowest level Input that IS significant to the fair value measurement Is direcUy or Indirectly observable

c Level 3 - Valuation techniques for which the lowest level Input tllat Is significant to the fair value measurement Is unobservable

for assets and liabilities that are recognised in the fiMnclal statements on a recurring basis, the Group determines whether transfers have occurred between levels

In the hierarchy by re-assessing categorisation [based on the lowest level input that Is slgnlfocant to the fan- value measurement as a whole) at the end of each reportinq period.

220

23 Leases: Ttle Group has adopted Ind AS 116 "leases' whleh Is effective for an annual period beginning on or after from April I , 2019. The following is the slgnirlcant accounting policy related to Ind AS 116. Ttle adOj)llon of this new Standartl has resulted in the Group recognising a right-of-use asset and related lease liability in connection with au former Oj)eratlng leases eKcept for those Identified as low-value or having a remaining lease term of less than 12 months ffom the date of Initial application.

The new Standard has been applied using the modlfled retrospective approach, with the cumulative effect of adopting Ind AS 116 did not have any impact to be recognised In equity as an adjustment to the Oj)ening balance of retained earnings for the current period. Prior periods have not been restated. For contracts in

place at the date of initial appllcatlon, the Company has elected to apply the definiUon of lease from Ind AS 17 and has not applied Ind AS 116 to arrangements that were previously not ldentiried as lease under Ind AS 17. The Group has elected not to Include initial direct costs in the measurement of the right-of-use asset

for opera«ng leases in existence at the date of Initial applica~on of Ind AS 116, being April 1, 2019. At this date, the Group has also elected to measure the right -of­use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 rnonths and for leases of low-value assets the Group has applied the optional eKemptions to not recognise right-of-use assets but to account for the lease expense on a straight-line basis over the remaining

lease term . For those leases previously classified as finance leases, the right-of-use asset and lease liability are measured at t he date of initial appficatlon at the same amounts as under Ind AS 17 Immediately before the date of Initial application.

As a lessee: For any new contracts entered into on or after April J 2019, the Group considers whether a contract Is, or contains a lease. A lease Is defined as 'a contract. or part of a contract, that conveys the right to use an asset {the underlying asset) for a period of time in exchange for consideration'.

Measuremer1t ar1d recognition of leases as a lessee: At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost,

which Is made up of the Initial measurement of the lease liablllty, any Initial d irect costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any lncent!Ves received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of· use asset or the end of the lease term. The Group also assesses the right-of -use asset for Impairment when such Indicators exist. At the commencement date, the

Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate Implicit In the lease if that rate is readlly available or the Company's incremental borrowing rate.

Lease payments included In the measurement of the lease llabllity are made up of fixed payments (including In substance fixed], variable payments based on an lndeK or rate, amounts eKpected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to Initial measurement, the liabITity will be reduced for payments made and increased for Interest. It Is remeasured to reflect any reassessment or modification, or If there are changes to the In-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment Is reflected in the

right-of-use asset, or profit and loss If the right-of-use asset Is akeady reduced to zero. Tile Group has elected to account for short-term leases and leases or low­value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an

expense in Statement of Profit and Loss on a straight-line basis over the lease term.

As a lessor: The Group's accounting policy under Ind AS 116 has not changed from the comparative period. As a lessor the Group classlnes Its leases as either operating or

finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards Incidental to ownership of the underlying asset, and classnied as an ooeratino lease if It cloes not.

24 Se9ment Reporting:

Operating segments are reported in a manner consistent with the Internal reporting provided to the Chief Operating Decision Maker (CODM) of the Group.

25 Earnings per Share:

Basic earnings per share are calculated by dividing the net pront Of loss [excluding other coml)(ehensive Income] for the year attributable to equity shareholders by

the weighted average number of equity shares outstanding during the year, The weighted average nt.mber d equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element In a right issue, shares split and reserve share splits [consolidation of shares] that have changed the number of

eouity shares outstandln<1, without a correspondlnQ chanae in resources. For the purpose of calculating diluted earnings per share, the net profit or loss [excluding other comprehensive Income] for the year attributable to eQulty share

holders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dlluUve potential equity shares.

B Recent Accounting Pronouncements: The Ministry of Corporate Affairs notifies new standards or amendments to tile existing standards. There is no such notlfocation which would have been applicable effective from April 1, 2020.

221

Note: 3 • Property, plant and equipment:

l in Lakh

Freehold Leasehold Plant and Furniture

Office Particulars

Land Buildings

Equipment and Vehicles

Equipment Total

Land i:::-.,-r

Gross Block: As at March 31, 2018 49 570 3,485 8,218 30'1 244 230 13,llJO

Acquired Subsidiaries 4,288 1,037 5,910 9,759 273 81 21,348 Additions 66 320 40 13 23 462 Disposals - (1) - (1)

As at March 31, 2019 4,337 1,607 9,461 18,296 617 338 253 34,909 Reclassrncation on adoption of Ind AS 116 (1607) - - - (16D7) As at April 1, 2019 4,337 - 9,461 18,296 617 338 253 33,302

Additions - 35 1,983 40 18 2.1 2,097

Disposals - - - (40) (5) (9) - {54) As at March 31, 2020 4 337 - 9 496 20 239 652 347 27'1 35 345

Depreciation and Impairment: As at March 31, 2018 - 49 515 4,033 137 104 172 s,010

Acquired Subsidiaries - 37 1,059 6,633 173 26 7,928

Depreciation for the year - 6 160 972 37 32 22 1,229 As at March 31, 2019 - 92 1,734 11,638 347 162 194 14,167

Reclassification on adoption of Ind AS 116 - (92) - - - {92)

As at April 1, 2019 - - 1,734 11,638 347 162 19'1 14,075

Depreciation for tne year 441 1,854 76 43 1B 2,432

Disposals - - (32) (3) (4) - (39)

As at March 31, 2020 2 175 13 460 420 201 212 16 468

Net Block: As at March 31, 2019 4,337 1,515 7,727 6,658 270 176 59 20,742

As at March 31, 2020 4 337 7 321 6779 232 146 62 18 877

Note: 4 • Right-of-use assets:

tin Lakh Particulal"S Land Buildinas Total Gross Block:

As at April 1, 2019 (Refer Note 3) 1,607 1,607

Additions 16 84 100 As at March 31, 2020 1623 84 1 707

Depreciation and Impairment: As at April 1, 2019 (Refer Note l) 92 92

Depreciation for the year 18 7 25

As at March 31, 2020 110 7 117 Net Block:

As at March 31, 2020 1,513 77 1,590

Note: 5 - Goodwill and Other intangible assets: l In Lakh

Other intangible assets Particulars Goodwill Brand/ Softwares Commercial Technical

Trade Mari< Rights Know-how Total Gross Block:

As at March 31, 2018 2,282 5 4] 10 2 60 Acquired Subsidiaries - 53,060 355 - 54,223

Additions 379,692 8 8 As at March 31, 2019 381,974 53,873 406 10 2 54,291

Additions 1,040 - 1,040

Additions pursuant to Ind AS 103 - measurement period 10,028 - - -As at March 31, 2020 392 002 53 873 I 446 10 2 55 331

Amortisation and Impairment: As at March 31, 2018 - 5 28 10 1 44

Acquired Subsidiaries - - 199 - 199

Amortisation for the year . - 22 22

As at March 31, 2019 - 5 250 10 1 265

Amortisa~on for the year - 181 1 182

As at March 31, 2020 - 5 '131 10 2 447

Net Block: As at March 31, 2019 381,974 53,868 156 - 1 54,026 As at March 31, 2020 392 002 53 868 l 015 54 883

222

Goodwill: 1 Goodwill acquired In business combination is allocated, at acqulsilloo, to the cash generating units [CGUs] those are expected to get benefit from that business

combination. The Cilrrylng amount of goodwill has been allocated to Consumer Health &. Wellness. 2 The recoverable amount of a CGU Is the higher of Its fair value less cost to sell and its value-in-use. The value-in-use is determined based on specific calculaUons. These

calculations use pre-tax caSh now projections for a CGU/ groups of CGU over a period of five years. An average of the range of key assumptions used is mentioned below. As of March 31, 2020 the estimated recoverable amount of the CGU exceeded Its carrying amount. The carrying amount of the CGU was computed by affocatlng the net assets to operating segments for the purpose of Impairment testing. The key assumptions used lor the calculations are as follows :

Particulars As at March 31 2020

Long Tenn Growth Rate 6.50% Discount Rate 10.000/o The above discounted rate is based on the Weighted Average Cost of Capital (WACC]. These estimates are likely to differ from ful\Jre actual results of operations and

cash nows. 3 For details or assets pledge as security Refer Note 18.

Note: 6 • Other financial assets: , In Lakh

As at March 31

2020 2019

[Unsecured, Considered Good unless otherwise stated)

Security Deposits 580 603 Fixed Deposits 397 64

977 667

No~: 7 • Other non-current asseu: , in Lakh

As at March 31

2020 2019

(Unsecured, Considered Good unless otherwise stated]

Capital Advances 304 315

Balances with Statutory Authorities 161 3,739

465 4 054

Note: 8 • Deferred tax:

A. Break up of deferred tax liabilities and assets into major components or u,e respective balances are as under: , In Lakh

AS at Olarge for As at Charoe for As at

March 31 Acquired

the previous March 31 the current March 31 Subsidiaries

2018 year 2019 year 2020

Defen-ed till< llabitltles

Depreciation 399 2,76'1 ( 1,916) 1,248 (404) 844

Others 3 (3) . . 399 2,767 ( 1 919) 1,2◄8 (4041 844

De ferred ta• auets Employee benefits/ Payable to statutory authorities 17 270 69 416 215 1531

Unabsorbed business loss and depreciation . . 1,315 1,315

Provision for Expiry and Breakaoes 24 (2) 22 303 325

Dlsallowance under section 35DD of Income tax Act . 40 40

Disallowance under section 40(a)(ia) of Income tax Act 439 (46) 393 (393) . Others 208 (3) 205 (104) 101

101 917 18 1,036 l ,376 2,412

Minimum alternative tax credit entitlement 7,678 1,600 l,233 10,511 10,511

Net Deferred Ta• Assets/(Liabilities) 7 380 12501 3170 10 299 1 780 12 079

B. The net deferred tax assets of, 1,780 lakh [March 31, 2019: , 3,170 lakh) for the year has been credited In the consolidated Statement of Pront and Loss.

C. The Group offsets tax assets and liabilities if and only if It has a legally enforceable right to set off current tax asset5 and current tax liabilities and the deferred tax assets and deferred tax llabtr.ties relate to income taxes levied by the same tax authority.

D. The major components of income tax expense for the year ended Marcil 31 , 2020 and March 31, 2019 are: , in Lakh

Year ended March 31

Profit or loss section: 2020 2019

Current income tax:

Current lnc.ome tax charge 3,098 Adiustments In respect of current income tax of oreviollS year (2651 11

(265) 3,109 DeferTed tax: Deferred tax relating to origination and reversal of temporary differences (1,780) (3,170)

Total expenses reported in the statement of profit or loss (2,045) (61)

223

E. Reconciliation of tax expense and accounting profit multiplied by India's domestic tax rate:

'( in Lakh

As At March 31

2020 2019

Profit before tax: 12,127 17,063

Enacted Tax Rate In India (%) 26.000/o 34.94% Expected Tax Expl!nses 3,153 5,962 Adjustments for:

Adjustments In respect of current Income tax of previous years (265) 11 Effect of Non-taxable Income (65) -Effect of Special tax deductions - 11 Effect ol Special tax deductions section 80IE of the Company - (230)

Adjustments In respect of Income exempt from tax (includes Share of profit from partnership firm} - (2,627) Effect of MAT Credit not accounted for - 893 Effect of differences in tax rate (2,760} Effect or unrecognised deferred tax assets/ liabilities (2,652} (3,517}

Effect of other n0<1·deductible expenses 492 28

OU,ers 52 (S92

Total (2045, (61 Total expenses reported in the statement of profit or loss (2 045] (61

MAT credit of, 5,414 lakh and l 5,805 lakh for March 31, 2020 and March 31, 2019, respectively, that are available for set off against future tax liabilities have not been recognised and the same will be eligible for set off up to fifteen years from the year In which the same arises.

Note: g - Assets for tax [net] and tax liabilities [net]:

, in lakh

As at March 31

2020 2019

Advance payment of tax (Net of provision for taxation) 163 3,013

163 3 013

Out of above: Disdosed as Assets for tax [ net] 163 3,289 Disclosed as Tax liabilities [ net] - 276

Note: 10 - Inventories:

Inventories consist or the following valued at lower of cost or net realisable value

{ in lakh

As At March 31

2020 2019 Raw Materials 3,138 3,179 Work-in-progress 9,199 6,796

Finished Goods 13,763 10,003 Stocl<-in-Trade 693 1,102

Store and Spares 751 770 Other.;:

Packing Materials 1690 1457 29 234 23.307

The above includes Goods in transit as under:

Finished Goods 1,118 1,741

Note: 11 - Investments: { in Lakh

Nos.[*] As At March 31

2020 2019 Investment in Mutual Funds [Quoted) [Valued at fair value through profit or loss]

ICICI prudential overnight fund direct plan growth 1,02,47,307 [OJ 11,041 -l(olak liquid direct plan growth O [ 1,21,805] 4,610

11 041 4 610 [•] In ·Nos.· figures of previous year are stated in [ ).

Note: 12 -Trade receivables:

{ In Lakh

As At March 31

2020 2019

Unsecured - Considered good 11,820 9,604

11820 9 604

224

Note: 13 - Cash and casll equivalents: '{ In Lakh

As At March 31

2020 2019

Balances with Banks - Current accounts 5,442 13,811

cash on hand 6 4

5 448 13 815

Note: 14 • Bank balance other than cash and cash equivalents:

" In Lakh As At March 31

2020 2019

Earmarked balances with bank for Unpaid dividend 80 71

fixed Deposit with banks [ ~1 2,714 2,543

2 794 2 614

[*] For details of lien on Fixed Deposits refer Note 23.

Note: 15 - Other current assets: fin lakh

As At March 31

2020 2019

[Unsecured, Considered Good unless otherwise stated] Balances with statutory authorities 12,444 14,363 Advances to suppliers 1,384 320 Prepaid e,cpenses 133 266

Other receivables 3 281 871 17 242 15 820

Note: 16 • Equity share capital: As At March 31

2020 2019

Authorised: 10,00,00,000 [as at March 31, 2019: 10,00,00,000] equity shares of ( JO each ~ in Laich 10,000 10,000

10,000 10 000

Issued, Subscr-ibed and fully Paid-up;

5,76,64,144 [as at March 31, 2019: 5,76,64,144) equity share of f 10 each f In lakh 5,766 5,766

5 766 5 766

A. The reconciliation in number of equity share is as under:

Number of shares at the beginning of the year 57,664,144 39,072,089

Add: Shares issued during the year - 18,592,055

Number of shares at the end of the year 57 664144 57 66'1 WI

B, The Parent has only one class of equity shares having a par value of l 10 each per share . Each holder of equity share ls entitled to one vote per share. The dividend proposed by the Board or Directors is subject to the approval of the shareholders in the Annual General Meeting, el(cept in the case of Interim dividend. In the event of liquidation of the Parent CrJmpany, the equity shareholders shall be entitled to proportionate share of their holding in the assets remaining after distribution of all preferential amounts and all

liabilities.

C. Details of Shareholder holding more than 5% of total equity shares of the Company

cadlla Healthcare Limited

Number of Shares 36,647,509 36,647,509

o/o to total share holding 63,SS'Yo 63.55%

Threpsl Care LLP (True North)

Number of Shares 7,220,216 7,220,216

% to total share holding 12.52% 12.52%

0 . Number of Shares held by Holding Company

Cadila Healthcare Limited 36,647,509 36,647,509

225

Note: 17 - Other equity: 1{ in Lakh

As At March 31

2020 2019 General reser,,e: [*]

Balance as per last Balance Sheet 4,500 4,S00 4,500 4,500

Foreign Currency transaction Reser,,e

Balance as per last Balance Sheet

Add: Credited during the year 17

17 Fair 'llc111ue through other comprehensi\le Income [FVTOCI] Reserve:

Balance as per last balance sheet 1 (1)

Add: Credited during the year 201 2

202 1

Debentures Redemption Reser,,es: [**] Balance as per last Balance Sheet 37,500

Add: Transfer from Retained Earnings - 37,500

37,500 37,500

Securities Premium[•••]

Balance as per last Balance Sheet 255,641

Add: Addition pursuant to issue of shares - 255,641

255,641 255,641

Retained Earnings:

Balance as per last balance sheet 35,220 60,713

Add; Profit for the year 14,172 16,914

Less: Profit elimination of acquired business - (1,139)

49,392 76,488

Less:

Dividends (5,767) (3,126)

Corporate Dividend Tax on Dividend fNet of CDT CreditJ (1,185) (642)

Transfer to Debentures Redemption Reserve ~ (37,500)

(6,952) (41,268)

42,440 35,220

340 300 332. 862

[*] General Reserve can be used for the purposes and as per guidelines prescribed in the Companies Act, 2013.

[**] The Group has created Debenture Redemption Reserve as per the provisions of Companies Act, 2013 and the captioned reserve has

been created out of profits of the company available for payment of dividend. ["'**] Securities premium is created due to premium on issue of shares. This reserve can be utilised in accordance with the provisions of

the Companies Act, 2013.

Note: 18 - Borrowings:

l ln lakh As At Match 31

2020 2019 Non-Convertible Debentures (NCDs), Secured{*] 150,000 150,000

150,000 150 000

[•] Securities and Terms of Repayment for Secured Borrowings (i) 9.14% Secured Redeemable Nan-Convertible Debentures (with semi-annually interest pay-out] issued by creating a charge on

specific brands of the subsidiary company.

(ii) The NCDs are repayable in three equal yearly instalments starting from January 16, 2022 along with accrued interest for the

period. (iii)The outstanding amount of NCDs as at March 31, 2020 is~ 1,50,000 Lalc;h fas at March 31, 2019 : l 1,50,000 Lakh].

226

Note: 19 - Lease Liabilities: , in Lakh

Non-current Current

As At March 31 As At March 31 2020 I 2019 2020 2019

Lease liabilities 64 I 14

64 I 14

~ In Lakh As At March 31

2020 2019

A. Movement in lease liabilities are as below:

Lease liability recognised as on April 1 ,2019 - -Additions 84 -Finance cost accrued during the year 3 -Payment/ Payable of lease liabilities (9) -Lease liability as at March 31, 2020 78

B. The table provide details regarding the contractual maturities of lease liabilities as of March 31, 2020 on an undiscounted basls:

Less than one year 22

One to five year 71

99

c. The Group does not face a significant liquidity risk with regards to Its lease ltabltitles as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Note: 20 - Other financial liabilities: { in Lakh

As At March 31

2020 2019

Trade deposits 5 21

Others 46 42

51 63

Note: 21 - Provisions: ~ in Lakh

As At March 31

2020 2019

Provision for employee benefits 1,103 949

Provision for VAT/ GST accrual 1,334 1,334

2,437 2 283

Defined benefit plan and long term employment benefit

A General description:

Leave wages [Long term employment benefit]: The leave encashment scheme is administered through Life Insurance Corporation of India's Employees' Group leave Encashment cum Life Assurance [cash

Accumulation) Scheme. The employees of the Group are entitled to leave as per the leave policy of the Group. The liability on account of accumulated leave as on

last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at present value of the defined obligation at the

balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]: The Group has a denned benefit gratuity plan, Every employee who has completed continuous services of five years or more gets a gratuity on death or resignation or retirement at 15 days salary (last drawn salary] for each completed year of service. The scheme Is funded with an Insurance company In the form of a qualifying insurance policy. The olans tvoically exoose the Company to actuarial risks such as: investment risk, interest rate risk, lonQevity risk and salary increment 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 reportinQ period on ciovemment bonds. Interest risk: A decrease in the bond Interest rate will increase ttie 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 emolovment. An increase in the life exoectancy of the plan particioants will increase the plan's liabilitv. 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 olan n::.rticioants will in,..n:>::.<:<> the nl,m's ti::.hi1itv

227

, in Lakh March 31, 2020 March 31, 2019

Medical Leave Leave Wages Gratuity Medical leave Leave Wages Gratuity

B Change in the present value of the defined benefit obligation: Opening defined benefit obligation 50 1,048 2,141 43 238 290 Transfer in/ (out) obligation 182 (182) (10) 5 767 1,797

Current service cost 44 176 235 3 40 61

Interest cost 17 75 151 2 18 25

l\ctuarial (gains)/ losses on obligation 123 243 {187) (53) (30)

Benefits paid (103) (122) {148) (3} 38 (2)

Closing defined benefit obligation 313 1 238 2.102 so l 048 2 141

C Change In the fair value of plan assets: Opening fair value of plan assets . 179 1,945 - 166 279

Transfer In/ (out) obligatlon . . (11) - 2 1,632

Interest income . 3 142 - . Return on planned assets . 10 14 11 24

Contributions by employer . . 257 44

Benefil! paid . (148) (30}

Actuarial (losses)/galn on plan assets . - . (4)

Closing fair "alue of plan assets . 192 2,199 179 1,945

Total actuarial (losses) / gains ta be recognised 123 233 (201\ 3 (38) (2)

D Actual return on plan assets:

Actual return on plan assets . 13 156 11 20

E Amount recognised in the balance sheet:

Liabilities/ [Assets] at the end of tile year 313 1,238 2,182 so 1,048 2,141

Fair value of plan assel! at the end or the year . (192) {2,199) (179) (1,945)

Liabilities/ [Assets] recognised in the Balance Sheet 313 1 046 (i.71 so 869 196

F E><penses / [Incomes) recognised in the Statement of Profit and Lass:

Current ;er,lce cost 44 176 235 3 40 61 Interest cost on benefit obligation 17 75 151 2 18 25 Expected return on plan assets . (3) (142) . (11) (24)

Net actuarial [gains] / losses in the year 123 233 - (3) 3B

Net upenses / [benefits] 184 481 244 2 85 62 Net actuarial (gains)/ losses in tile year . . (201) 2

Amounts recognized in ocr . - ,201, . . 2

G Movement in net liabilities recognised in Balance Sheet:

Opening net liabilities 50 869 196 43 72 11

Transrer in/(out) obligation 182 (182) 1 5 765 165

Expenses as above [P & L Charge] 184 481 244 2 85 62

Contribution ta Plan assets . . (201) 2

Amount recagniseo in OCI . . (257) (43)

Benefits Paid (103) (122) D (53) ( 1)

Liabilities/ [Assets] recognised in the Balance Sheet 313 1046 (171 50 869 196

H Principal actuilrial assumptions for defined benefit plan and long term employment benefit plan: Particulars March 31, 2020 March 3 l, 2019

Discount rate [•] 6.70% 7.20%

Annual increase In salary cost [ l] 12% p.a. for 1 years, 12% for next 2 years, 9% p.a. thereafter 9% thereafter

[•]The rate of discount is considered based on market yield on Government Bonds having currency and terms in consistence with the currency and terms of the post employment benefit obligations .

[~] The estimates of ruture salary increases are considered in actuarial valuation, taking into account innation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

I The categories of plan ,1ssets as a% of total plan asseu are:

Particulars Medical Leave Leave Wages Gratuity Medical Leave Leave Wages Gratuity

In su ran ce plan 0% 100% 100% 0% 100% 100%

228

J Amount recognised ln current and previous four years:

"In Lakh

Gratuity: As at March 31

2020 2019 2018 2017 2016

Defined benefit obligatfon 2;182 2,1'11 290 257 231

Fair value of Plan Assets 2,199 1,9'15 279 242 216

Deficit/ [Surplus] in the plan (17) 196 12 15 15 Actuarial Loss/ [Gain] on Plan Obligation (187) (2) (15) (24) 15

Actuarial Loss/ [Gain] on Plan Assets - (4) (1) (1) The expected contributions for Defined Benefit Plan for the ne>i:t financial year will be in line with FY 2019-20 The average duration of future service of defined benefit plan obligation at the end of the year is 23.34 [as at March 31, 2019 : 23.99 years].

Sensitivity analysis;

A quantitative sensitivity analysis for significant assumption as is as shown below :

A Medical Leave:

~ in Lakh

As at March 31, 2020 As at March 31, 2019

Assumption Discount rate

Sensitivity Level - Discount Rate 0.5% O.S% 0.5%

0.5% decrease increase decrease increase

Impact on defined benefit obligation ['·lakhs] (9) 9 (3) 1

Assumption Annual Increase in salary cost

Sensitivity Level- Salary Growth 0.5% 0.5% 0.5%

0 .5% decrease increase decrease Increase

Impact on defined benefit obligation [l-Lakhs} 9 (9) 1 (3)

B Leave Wages :

~ in Lakh

As at March 31, 2020 As at March 31, 2019

Assumption Discount rate

Sensitivity Level - Discount Rate 0.5% 0.5% 0.5%

0.5% decrease increase decrease increase

Impact on defined benefit obliaation r, in Lakhs] (35) 34 (10) 8 Assumption Annual increase in salary cost

Sensitivity Level- Salary Growth 0.5% 0.5% 0.5%

0.5% decrease increase decrease increase

Impact on defined benefit obligation [' in Lak.hs] 34 (35) 7 10

C Gratuity:

'in Lakh As at March 31, 2020 As at March 31, 2019

Assumption Discount rate

Sensitivity Level - Discount Rate 0.5% 0.50/o 0.5%

0.5% decrease inaease decrease increase

Impact on defined benefit obligation [:( in Lakhs] (55) 60 (11) 13

Assumption Annual increase in salary c::ost

Sensitivity Level- Salary Growth 0.5% 0.5% 0.5%

0.5% decrease increase decrease increase

Impact on defined benefit obligation [~ In Lakhs] 60 (55) 12 (10)

The following payments are expected contributions to the defined benefit plan in future years:

"in Lakll

As at March 31

2,020 2,019

Within the next 12 months [ne>i:t annual reporting period] 677 356

Between 2. and 5 years 1,865 1,520

Between 5 and 10 years 1,373 1,533

Total expected payments 3 914 3 409

Note: 22 - Other non current liabilities:

~ In Lakh

As At March 31

2020 2019 Deferred revenue on Government grants 168 252

168 252

229

Note~ 23 - Borrowings: { in Lakh

As At March 31

2020 2019

loans repayable on demand:

Working capital Loan5 from Banks (Secured] [*] 1,630 2,150

Working capital loans from banks [Unsecured] [ 0 } - .q,soo loans from lntercorporate [Unsecured] [***] 275 275

1905 6 925

[•] Security and Terms of Repayment for Secured Borrowings:

Working capital Loans which are In the form of overdraft facility is secured by fixed deposits placed by the Group with the bank. The value of such Fixed deposits classified under current assets as at March 31, 2020 is" 2,707 Lakh [as at March 31, 2019: :t 2,360

Lakh]. The outstanding amount of k>an as at Marc.h 31, 2020 is t 1,630 Lakh [as at Marth 31, 2019: "° 2,150 Lakh].

[U] Terms of Repayment for Unsecured Borrowings:

Working Capital loans whic.h are repayable on demand, The outstanding amount of loans as at Match 31, 2020 is =l' Nil [as at March 31, 2019: ~ 4,500 Lakh].

(H*] Terms of Repayment for Unsecured Borrowings:

The Company has borrowed unsecured interest bearing loans frorn 2ydus Healthcare Limited of" 27S Lakh. The servicing of repayment of the loans will be made as per terms of loan agreernent.

Note: 24 -Trade payables:

~ in Lakh As At March 31

2020 2019

Due to Micro, Small and Medium Enterprises • 654 989

Due to other than Micro, Small and Medium Enterprises 48,458 38,240

49112 39 229 [~] Disclosure in respect of Micro, Small and Medium Enterprises:

A. Principal amount remaining unpaid to any supplrer as at year end 654 969 B. Interest due thereon

C. Amount of Interest paid by the Company in tenns of section 16 of the MSMED Act, along with the amount of the payment made -to the supplier beyond the appointed day during the year.

o. Amount of interest due and payable for the year of delay In making payme11t (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Act.

E, Amount of Interest accrued and remaining unpaid at the end of the accounting year.

F, Amount of further interest remaining due and payable in succeeding years. The above information has been compiled in respect of parties to the extent to which they could be identified as Micro, Small and Medium Enterprises on the basis of information available with the Company.

Note: 25 - Other financial liabilities-: f in Lakh

As At March 31

2020 2019

Interest accrued but not due on borrowings 2,822 2,a.qo Payable to employees 1,375 1,037 Unpaid dividends [*] 80 71

4.277 3 948

[•] There are no amounts due and outstanding to be credited to rnvestor Education and Protection Fund.

Note: 26 - Other current liiilbilities: ~ in Lakh

As At Miilrch 31

2020 2019

Payable to statutory authorities 2,221 2,337 Deferred revenue on Government grants 68 S4 Advances from cus.tome~ 1101 783

3 390 3 174

230

Note: 27 - Provisions: ~ in Lak.h

As At March 31

2020 2019

Provision for employee benefits(*] 239 166

Provision for claims for product expiry and return of goods [**] 1,245 908 1484 1074

[-] Refer nrite 21. [**) Provision for claims for product expiry and return of goods:

a. Provision for product e)(piry claims in respect of products sold during the year is made based on the management's estimates considering the estimated stock lying with retailer. The Group does not expect such claims to be reimbursed by any with retailer. The Group does not expect such claims to be reimbursed by any other party in future.

b. The movement in such provision is stated as under: Opening balance at the beginning of the financial year 908 70 Add: Acquired Subsidiaries - 732 Add: Provision created during the year 2,206 113 Less: Provision used during the year Cl 8691 m Closing balance at the end of the financial year 1245 908

Note: 28 - Continaent liabilities and commitments rto the extent not orovlded forl: ~ in lakh

As At March 31 2020 2019

A Contingent liabilities:

a Other money for which the Group is contingently liable: j rn respect of Sales Tax matters pending before appellate authorities 6,913 6,045

ii In respect of the demands raised by the Central Excise, State Excise &. Service Tax Authority 1,337 1,337

iii In respect of Income tax 16,571 13,452

iv In respect of Stamp Duty 4,363 1,863

The Company has signed tax indemnity with erstwhile seller shareholder of acquired Hein2 India Private Limited that purchasing buyer shall have the rights to make an tax indemnity claim to e~tent of ttie loss suffered by the Company for the period prior to acquisition. Of the above :t 24,467 lakh and ~ 20,527 lakh as at March 31, 2020 and March 31, 2019, respectively, is covered under agreed tax indemnity clause and reimbursable from erstwhile shareholder of the Hein2 India Private Limited on the amount being crystalized.

B Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for: 354 671

Note: 29 - Dividends: The Board of Directors, at its meeting held on March 13, 2020, dedared and paid the interim dividend of~ 5 per equity share of~ 10/· each.

Note: 30 - Revenue from operations: t In Lakh

Year ended March 31

2020 2019

Sale of products 173,419 80,821

Other operating revenues:

Net gain on foreign amency transactions and translation 53 44

Miscellaneous income 3,210 3,417 176 682 84 282

Note: 31 - Other income: ~ in Lakh

Yearenaea March 31

2020 2019 Finance Income:

Interest income on financial assets measured at amortised cost 535 2,039

Net gain on investments measured at Fair value through Prom and Loss 14 7 Net gain on sale of investments 522 1842

1 071 3 888

231

Note: 3 2 • Cost of material$ consumed: tin Lakh

Tear enoea M~- 31

2020 2019 Raw materials :

Stock at commencement 3,179 1,385

Add: Acquired subsidiaries 5,827

Add: Purchases 61,126 17,037

64,30S 24,249 Less: Stock at close (3,138) (3,179)

61,167 21,070 Packing materials consumed 14,215 B,193

75 382 29 263

Note: 33 - Purchases of stock-in-trade: ~ In Lakh

Tear enu,:u March 31

2020 2019 Purchases of stock-in-trade 8,249 3,002

8.249 3 002

Note: 34 - Changes in Inventories: tin Lakh

Year ended March 31

2020 2019 Stock at commencement:

Work-in-progress 6,796 47 Finished goods 10,003 1,475 Stock-in-trade 1,102 12

Add: Acquired subsidiaries

Work-in-progress 5,936

Finished goods . 6,718

Stock-in-trade . 1,285 17,901 15,473

Less: Stock at close:

Work-in-progress 9,199 6,796

Finished goods 13,763 10,003

Stock-in-trade 693 1,102

23,65.5 17,901

(5,754) (2,428)

(S 754) 12 428'

Note: 35 - Employee benefits expense: l In Lakh

Yearenoeo March 31

2020 2019 Salaries and wages 15,474 7,976 Contribution to provident and other funds [*] 1,355 380 Staff welfare expenses 640 204

17469 8 560 Of the above includes Whole-time Director's Rem~neration 372 331

[•] The Company's contribution towards the defined contribution plan 723 179

232

Note: 36 - Finance cost:

Interest e:itpense [•]

Bank commission and charges

(*] Interest expenses Includes:

On working capltal loans

On Non-convertible Debentures

On lease

Others

Note: 37 - Other expenses:

Consumption of stores and spare parts

Power and fuel

Labour charges

Rent

Repairs to buildrngs

Repairs to plant and machinery

Repairs to others

Insurance

Rates and raxes

Com mission to directors

TraYeliog expenses

Leg a I and professional fees ["']

Commission on sales

Freight and forwarding on sales

Advertisement and sales promotions

Representative allowances

Other marketing expenses

Directors' fees

Net Loss on disposal of fixed assets

Miscellaneous expenses [ 0]

[*] Legal and professional fees Include:

a Payment to the Statutory Auditors [excluding Taxes]:

As Auditor

For Other Services

b Cost Auditor's Remuneration including fees for other services

[**] Miscellaneous expenses include:

a Expenditure on Corporate Social Responsibility [CSR] Activities as required u/s 135 of the Companies Act, 2013.

Note: 38 • Exceptional Items:

Exceptional items[*]

[ "'] In the process of Integration and concluding the merger of the acquired entity, Company incurred various expenses towards transition service agreement (TSA), consultancy rees, stamp duties, legal and professional charges and other incidental charges. The Company would not have incurred these expenses in the normal course of business and hence these expenses are classified as

Exceptional Items.

Year ended March 31

2020 13,935

56

13 991

172 13,748

3

12

13 935

Year ended March 31

2020

935 2,162 1,899 1,200

202 1,091

793 393 654

-2,001

910

1,845

6,131 23,802

777 2,300

36

2

2,097 49 230

26 5

31 3

221

Year ended March 31

2020

(4,420) f4 420}

t In Lakh

2019

2,992 17

3 009

171

2,817

-4

2992

"'in Lakh

2019

182

960 97S

461

70 2.98

96

12.4

350

73

740

688

1,265

Z,470

15,176 5-13

J,227

so -

1,657

27 405

17

52

69

2

228

l in lakh

2019

(1,045)

(1 045)

233

Note: 39 • Earnings per equity share [EPSJ: Year ended March 31

2020 2019

The numerators and denominators used to calculate the basic and diluted EPS are as follows:

A. Profit attributable to Shareholder.; ~- In Lakh 14,172 16,91<1

B. Basic and weighted average number or Equity Shares outstanding during the year Numbers 57,664,144 <12,179,254

C. Nominal value of equity share ' 10 10

D. Basic Br. DIiuted EPS ' 24.SB 40.10

Note: 4D - Segment Information: The Chief Operating Decision Maker [CODM] revlews the Group as a single "Consumer" segment. The Group operates In one segment only, namely "Consumer Products." The Group also exports its products to other countries. However the value being below threshold limit as prescribed under Ind AS provisions or "Segment Reporting", the reporting is not reauired.

Note: 41 - Related Party Transactions: A Name of the Related Parties and Nature of the Related Party Relationship:

a Holding Company: Cadlla Healthcare Limited

b Fellow Subsidiaries/ Concerns: Zydus Noveltech Inc., USA

'liolio Healthcare Limited

German Remedies Pharmaceuticals Private Limited (formerly known as Acme Pharmaceuticals Private Limited)

Zydus Technologies limited*

Zydus Healthcare Limited

Dialforhealth India Limited•

Dialforhealth Unity Limited

Dialforhealth Greencross Limited

Liva Pharmaceuticals Limited•

Alidac Pharmaceuticals Limited*

Zydus Pharmaceuticals Limited (Formerly known as Alidac Healthcare Limited)

Zydus foundation

Windlas Healthcare Private Limited""

Zydus International Private Limited, Ireland

Zydus Netherlands B. 'I ., the Netherlands

Zydus Lanka (Private} Limited, Sri Lanka

Zydus Healthcare Philippines Inc., Phlllpplnes

Zydus Phamiaceuticals USA Inc., USA

Zydus Healthcare SA (PTY) Limited, South Africa

• Merged with Cadita Healthcare Limited w.e.f. April I, 2019.

*' ceased to be the subsidiary of holding Company w.e.f. April 30, 2020.

c Directors: Dr. Sharvil P. Patel

Mr. Ganesh Nayak

Mr. Kulin S. L.albhai

Mr. Savyasachi 5. Sengupta

Mr. Ashish Bhargava

Mr. Srivishnu Raju Nandyala

Ms. Dharmishtaben N. Raval

d Key Managerial Personnel:

Mr. Tarun G. Arora

Mr. Umesh V. Parikh

Mr. Dhanraj P. Dagar

Mr. Dhaval N. Soni

e Enterprises significantly influenced by Directors and/ or their relatiYes •

Mukesh M. Patel & Co.

f Post Employment Benefits Plan-Zydus Wellness Limited Employee Group Gratuity Scheme

Zydus Wellness Sikkim Employee Group Gratuity Scheme

Heinz India Private limited Provident Fund [ w.e.f January 30, 2019]

Heinz India Private limited Employee Provident Fund [ w.e.f.January 30, 2019]

Heinz India Prfvate Limited Gratuity fund

Heinz India Private Limited Pension fund

Hereon Pharmaceutical USA LLC, USA

Nesher Pharmaceuticals (USA) Inc,USA

Zydus Anlmal Health and Investments Limited (formerly known as Viollo Pharmaceuticals and Investments Limited)

Simayla PharmaceutJcals Pty Limited, South Africa

Scrfpt Management Services Pty Umited, South Africa

Etna Biotech SRL, Italy

Zydus France SAS, France

Laboratorios Combi,c S.L., Spain

Zydus Nikkho Farmaceutlca Ltda. ,Brazil

Zydus Pharmaceuticals Mexico SA de CV, Mexico

Zydus Pharmaceuticals Mexico Services SA de CV, Mexico

Zydus Worldwide DMCC, Dubai

Zydus Discovery DMCC, Dubai

Alldac Pharmaceuticals (Myanmar) Limited, Myanmar

Sentynl Therapeutics Inc., USA

Viona Pharmaceuticals Inc., USA

Biochem Pharmaceutical Private limited

Zydus Healthcare USA LLC, USA

Non -Executive Chairman

Non-Executive Director

Independent Director

Independent Director w.e.f November 2, 2018

Nominee Director w.e.f. January 30, 2019

Independent Director w.e.f. March, 11, 2019

Independent Director w.e.f. March, 11, 2019

Chief Executive Officer & Whole Time Director

Executive Officer (Chief Financial Officer)

Executive Officer [Company Secretary] w.e.f. February 6, 2019

Executive Officer [Company Secretary) up to February 6, 2019

Enterprises controlled by Key Managerial pe~onnel of holding Company

g M/s. Zydus Wellness - Sikkim, a partnership firm, was converted Into a company, namely Zydus Wellness Products Limited (formerly known as Zydus Nutritions

limited), with effect from February 28, 2019, pursuant to which, it became a subsidiary of the company. Pursuant to the Scheme of Amalgamation between two subsidiaries of the company i.e. Zydus wellness products Limited and Heinz India Private Limited (HIPL) which was sanctioned by the Hon'ble National Company Law Tribunal [NCLT] vide its order dated May 10, 2019 and effective date being May 24, 2019, HIPL has been merged with ZNL w.e.f. the appointed date of March 1, 2019.

234

6 Transactions with Related Parties: The following transactions were carried out with the related parties in the ordinary course of business:

a Details relating to parties referred to in Note 41 - A (a, b & r] , in lakh

Value of the Transactions Holding Company Fellow Subsidiaries Post Emplovment Benefits Plan

Nature of Transactions Year ended March 31

2020 2019 202D 2019 2020 2019

Sales of good5:

Zydus Healthcare Limited 70 42

Zydus Healthcare SA (PTY) limited 224

Cadila HealthCare Limited 45 - -Service Income:

Zydus Healthcare limited - 14 4

Cadila HealthCare limited - 6 - - -Cadlla HealthCare limited 2 - - -

Pun::hase of senices:

Cad Ila Hea Ith Care Limited 9 - - -Issue of Equity Shares

Cadila Healthcare Limited - 117,500 - -Borrowings:

Zydus Healthcare Limited - 275 . Interest Expenses:

Zydus Healthcare Limited 26 4

Reimbursement of Expenses:

cad Ila Healthcare Um ited 94 16 -Zydus Healthcare S.A. ( PTY) Ltd - - 117

CSR contributions

Zydus Foundation - 221 -Contributions during the year {includes Employee's share and contribution)

Zvdus Wellness Limited Emolovee Grouo Gratuitv Scheme ~ - - 30 44 Zvdus Wellness Sikkim Emoloyee Grouo Gratuity Scheme - - 28 27 Heinz India Privttte limited Provident fund [ w .e.f Ja"uary 30,

461 73 2019]

~ - -

Heinz India Private limited e mplovee Provident Fund [ w .e.f - - 341 54 Januarv 30, 20191 Heinz India Private Limited Gratuity fund - - 200 Heinz India Private Limited Pension fund - - 66 Dividend Paid

Cadila Healthcare Limited 3,665 2,253 - - . Outstanding Payab1e:

Zydus Healthcare Limited 280 27B -Zydus Healthcare S.A. {Pty) ltd - - 117

Outstanding Receivable:

Cadila Healthcare Limited 14 - -Zydus Healthcare S.A. (Pty) Ltd 173

Zydus Healthcare Limited - 37 5

t In lakh

b Details relating to persons referred to in Note 41-A [c], 40-A [d] and 40-A [e] above: Year Ended March 31 2020 2019

Remuneration: (i) Salaries and other employee benefits to Whole time directors and other executive officers 504 453

(ii) Commission and Sitting Fees: 36 123

Other entites where significant infuence exists:

(iii) Legal and professional fees 21

Outstanding payable to above (i) and {ii) 8 91

235

Note: 42 - Financial instruments: (i) Fair values hierarchy:

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2 : The fair value of financial Instruments that are not traded in an active mark.et is determined using valuation techniques which maximise the use ofobservable market data rely as little as possible on entity specific estimates.

Level J: If one or more of the significant inputs is not based on observable market data, the instrument Is Included in level 3.

(ii} Financial assets and liabilities measured at fair value - recurring fair value measurements:

~ in lakh Particulars As at March 31, 2020 As at March 31, 2019

Level 1 Level2 Level3 Total level 1 Level2 Level 3 Total

financial assets

Investments at FVTPL

Mutual funds 11,041 - - 11,041 4,610 '1,610

Total financial assets 11,041 - - 11,041 -4,610 4,610

Financial Liabilities - - - - -(iii) Fair value of instruments measured at amortised cost:

Financial assets and liabitlties measured at amortised cost for which fair values are disclosed. Flnanclal Assets: The canying amounts of trade receivables and other financial assets [other than derivatives], cash and cash equivalents are considered to be the aooroximatelv eoual to the fair values. Financial Liabilities: Fair values of loans from banks, other financial liabilities and trade payables are considered to be approximately equal to the carrying values.

Note: 43 - Flnandal risk management:

(I) Financial instruments by category:

1': in lakh

Particulars As at March 31, 2020 As at March 31, 2019

FVTPL FVOCI Amortised Total FVTPL FVOCI Amortised Total Cost Cost

Financial assets

Investments 11,041 - 11,041 4,610 4,610

Trade receivables - - 11,820 11,820 9,604 9,604

Cash and Cash equivalents - - 5,448 5,448 13,B15 13,815

Bank balance other than cash and cash - - 2,794 2,794 - 2,614 2,614

equivalents

other financial assets - - 977 977 - 667 667

11 041 - 21039 32,080 4 610 2.6 700 31 310

Financial liabilities

Borrowings - 151,905 151,905 156,925 156,925

Trade payables - - 49,112 49,112 39,229 39,229 Lease Liabilities - - 78 78 -other financial liabilities - - 4,328 4,328 4,011 4,011

- - 20S 423 205,423 200 165 2.00 165

(ii) Risk Management: The Group's activities e1<pose It to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Group's risk management is managed ln close co-ordination with the board of directrirs and focuses on actively securing the Group's short, medium and long-term cash nows by minimizing the exposure to volatile financial marke~. Long-term financial investments are managed to generate lasting returns.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is e1<posed are described below;

236

A. Credit risk: Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Group Is exposed to credit risk from trade receivables, bank deposits and other financial assets. The Group periodically assesses the financial reliability of the counter party taking Into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

Bank deposits : The Group maintains Its Cash and cash equivalents and Bank deposits with reputed and highly rated banks Hence, there is no significant credit risk on such

deoosits.

Loans to related parties : They are given for business purposes. The Company reassesses the recoverability of loans periodically. Interest recoveries from these loans are

reaular and there is no event of defaults.

Trade Rttelvable: The Group trades with recognized and credit worthy third parties. It Is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that the Group's exposure to bad debts Is not slgnlflcant. There are no signmcant credit risks with related parties of the Group. The Group Is exposed to credit risk in the event of non-payment by customers. Credit risk concentration with respect to trade receivables is mitigated by the Group's large customer base. Adequate expected credit losses are recognized as per the assessments.

The history of trade receivables shows an allowance for ood and doubtful debts of Nil [Nil as at March JI, 2019]. The Group has made allowance of Nil [Nil as at March 31, 2019], against trade receivables of, 11,820 lakh and , 9,60~ lakh as at March 31, 2020 and March 31, 2019, respectively.

B. Liquidity risk: a Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit

facilities to meet obligations when due. Due to the nature of the business, the Group maintains flexibility in funding by maintaining availability under committed facllltles.

b Management monitors rolling forecasts or the Group's liquidity position and cash and cash equivalents on the basis of expected cash fiows. The Group account the liquidity of the market In which the entity operates. In addition, the Group's liquidity management policy involves projecting cash nows In major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Maturitie< of financial liabilities : The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturiUes for all non-derivative financial liabilities. The amounts disclosed In the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the Impact of discounting is not

significant. l in lakh

As at March 31, 2020

Particulars Carrying value

< 1 year 1-2 years 2-3 years > 3 years Total

Non-derivatives financial liabilities Borrowings (including interest) 154,727 15,690 63,635 59,115 54,570 193,010 Trade payables 49,112 49,112 - - - 49,112

Lease Liabilities 78 22 22 22 33 99 Other financial liabilities (excluding interest accrued but not due) 1506 1455 - - 51 1506

Total 205 423 66 279 63 657 59137 54 654 243 727

, in lakh

As at March 31, 2019

Particulars Carrying value

< l year 1-2 years 2-3 years > 3 years Total

Non-derivatives financlal liabilities Bo-rrawinQs (includinq interest) 159,765 20,673 13,785 63,635 113,685 211,778

Trade payables 39,229 39,229 - - 39,229

Other financial liabilities (exdudinq interest accrued but not due) 1171 1108 63 1171

Total 200 165 61 010 13 785 63 635 113 748 252,178

C Foreign currency risk The Group is exposed to foreign exchange risk ar1slng from foreign currency transactions, primarily with respect to the US Dollar, Euro and GSP. foreign exchange risk arises from recognised assets and liabilities denominated In a currency that is not the Group's Functional currency. The Group's operations in foreign currency is insignificant and hence

there is no materia I risk.

237

a Foreign currency risk exposure:

The Groups exposure to foreign currency risk at the end of the reporting period expressed as follows:

Sensitivity The sensltlvity of profit or loss and equity to cha1>9i!s In the exchange rates arises mainly from foreign currency denominated financial Instruments.

, in lakh

Particulars As at March 31 2020 As at March 31 2019

Movement Impact on Movement in Impact on

in Rate PAT Rate PAT

USD 90/o 12 7% 7

USD -9't/o (12) -7% (7)

EUR 7% 9 7% 16

EUR -7% {9) -7¾ (16) Other; 50/o 2 5% (0)

Other; -50/o (2) -5% 0

b Interest rate risk: Liabilities: [•J The Group's policy Is to minimise interest rate cash now risk exposures on long-term financing. As at March 31, 2020, the Group is exposed to changes In market Interest rates through bank borrowings at variable interest rates. The Group's Investments in Fixed Deposits are at fixed Interest rates.

Below is the sen~livity of profit or loss and equity changes in interest rates:

, In lakh

Particulars Movement in As at March 31

Rate 2020 2019

Interest rates +D.50% {7) {23)

Interest rates (0.50%) 7 23

• Holding aU other variables constant

c Price Risk (a) Exposure

The Group's exposure to price risk arises from Investments in equity and mutual fund hekl by the group and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectlvely, to manage Its price risk arising from Investments In equity securities and mutual fund, the group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the group.

(b) Sensitivity- Mutual Fund [•] The table below summarises the impact of increases/decreases of the index on the Group's equity and profit and loss for the period. The analysis Is based on the assumption that the price of the Instrument has increased by 2% or decreased by 2% with all other vMables held constant.

( in lakh Particular Movement in As at March 31

Rate 2020 2019 Mutual Funds [Quoted]

[ncrease 2% +2% 221 92

Decrease 2% -2% {221) (92) [ * ] Holding all other variables constant.

Note 44: Capital management: The Group's capita l management objectives all!

- to ensure the Group's ability to continue as a going concern

- to provide an adequate retum to shareholders

- maintain an optimal capital structure to reduce the cost of capital.

Management assesses the Group's capital requirements In order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Group's various classes of debt. The Group manages the capital structure and makes adjustments to it In the light of changes In economic

conditions and the risk characteristics of the underlying assets.

Particulars As at March 31 2020 2019

Gross debts ~ in lakh 151,905 156,925 Total eouitv ~ in lakh 346,066 338,626 Gross debt to eauitv ratio rNo. of timesl 0.44 0.46

Lo~n coven ants The Company has taken loan for working capital requirement and long term borrowings and as at March 31, 2020, the ratio of nnancial lndebtness net of cash and cash equivalents to shareholder's fund is 0.39, Interest Service Coverage Ratio Is 2.37 and financial indebtness net of cash and cash equiValents to Earnings before interest, tax, deprecia tion and amortisation {EBITDA) is 1.10, based on consolidated financial Information as per Company's debenl1Jre trust deed.

238

Note: 45 - Group Information:

Consolidated Financial Statements as at March 31, 2020 comprise the Financial Statements [FS] of Zydus Wellness Limited and its subsidiaries, which are as under:

Name Principal activities Country of Status of FS at % Share of Interest As at Incorporation March 31, March 31, March 31, 2019

2020 2020 Liva Investment Limited Investment India Audited 100% 100%

Liva Nutritions limited Consumer Health & Wellness India Audited 100% 100%

Zydus Wellness Products Limited Consumer Health &. Wellness India Audited 100% (Formerly known as Zydus Nutritions Limited] [Refer Note 41 A (g)]

Zydus Wellness International DMCC Consumer Health &. Wellness Dubai Audited 100% -IrDate of incorporation: Mav 28 20191 Heinz India Private limited Consumer Health &. Wellness India Audited 100% (Merged with Zydus Nutritions Limited w.ef. May 24, 2019)

Zydus Wellness Sikkim Consumer Health & Wellness India Audited 100% I Refer Note 41 A (g)] Zydus Nutritions Limited Consumer Health & Wellness India Audited 100% (Erstwhile known as Zydus Wellness Sikkim - Partnership Firm)

Additional information as required by Paragraph 2 of the General Instructions for Preparation of Consolidated Financial Stab!ments to Schedule III to the Companies Act, 2013:

Net Assets i.e. totat assets Share in Profit / [Loss]

Share in other Share In total minus total liabilities Comprehensive income Comprehensive Income

Aso/oot As% of As% of Consolidated As% of total

Consolidated , in lakh Consotldated { in lakh other '!' in takh Comprehensive , In lakh

Net Assets Prolit / [Loss] Comprehensi Income VP ,.,,-,,,..,D

Parent: Zydus Wellness Limited 93% 321,470 -29% (4,073) -13% (29) -29% (4,102)

Su bsid ia ries:

Indian:

Zydus Wellness Products Limited 99% 341,614 ·89% (12,671) 106% 230 -86% (12,441) Uva Investment Limited D% 19 0% (1) 0% 0% (1) Liva Nutritions Limited 0% (44) 0% (26) 0% 0% (26) Foreign:

Zydus Wellness International DMCC 0% 255 1% 191 0% 1% 191 Tot.al Eliminations/ Consolidation Adjustments -92% (317 248) 217% 30 752 8% 17 214% 30769 Total 100% 346 066 100% 14,172 100% 218 100% 14,390

Note: 46: COVID-19 Impact: The ministry of Home Affairs vide order No.40-3/2020 dated March 24, 2020, notified first ever nationwide lockdown in India to contain the outbreak of Covid Pandemic. As a result, our operations were completely shut down during initial days of the Lockdown. However, subsequently we could quickly get the required approvals for re•srarUng our manufacturing plants and operating our warehouses. Majority of the distributors could also get pennisslons from local authorities to re-open their business places. With ensuring necessary safety precautions to be taken, our majority of last mile field force and front line staff have atso come forward and supported the business. Though initially the entire economy faced shortage of labour and transportation facilities, progressively the government's support for the movement of essential commodities helped resolve the transportation and labour Issues to some extent. We are faced with the same uncertainties as faced by our country in general and FMCG Industry in particular due to current COVID 19 pandemic. However as stated before, operations are gradually moving towards near normalcy now and are in relatively better shape compared to what they were during the last week of March 20 and major part of April :w.

As per our current assessment of the situation based on internal and external Information available up to the date of approval of these financlal results by the Board of Directors, there Is no Indication of any material impact on the carrying amounts of Inventories, goodwill, intangible assets, trade receivables, Investments and other financial assets. The eventual outcome of the Impact of the global health pandemic may be different from those estimated as on the date of approval of these financial results and the Company will closely monitor any material changes to the economic environment and their Impact on the business.

Note: 47: Fiaures of nrevious renortina oeriods have been renrouoed/ reclassified wherever necessarv to corresoond with the fioures of the current renortina neriod.

Signatures to Significant Accounting Policies and Notes 1 to 47 to the Financial Statements -A~ 12!::r i;iur re11oct Qf ev!rn tlil~ For and nnl ~ .. h:,lf of the Bn=-rrl

For Dhirubhai Shah & Co LLP

o,~ ~

Chartered Accountants w Firm Registration Number: 102S11W/Wl0029_8 __

~s\\~H & co Chairman

~* ~ \ ·tt,· ~ ~ ~ ;wr ,, .._

Harish B. Patel I ~ \~1~\\~li'-:1\t~ti> ".r.> ) Umesh v. Parikh Dhanraj P. Dagar n G. Arora

Partner ._ ~\\~~\,l)hi. ~ Chief Financial Officer Company Secretary e Time Director

Membership Number; 014427

~ ~ Place: Ahmedabad 1ERED ~t\i~ Date: June 2, 2020 -

239

I I

I

Independent Auditors' Report

To the Members of Zydus Wellness Limited

Report on the Consolidated Financial Statements

Opinion

Cl-' HH':ED ACC 'l'•;fi'.\NTS

,1 ri: Floor, /\, n h 1a Bu!kllnq Jr Sardc1 Seva St r

lliakhali ~,1x : ', ·, :,js, Ellisbt ,Jqc,

Ahnmrl 1t)c1d 38000(,.

We have audited the accompanying consolidated financial statements of Zydus Wellness Limited ("the Holding Company") and its subsidiaries {the Holding Company and its subsidiaries together referred to as 'the Group'), which comprises of the consolidated balance sheet as at 31st March 2019, and the consolidated statement of Profit and Loss (including other comprehensive income), and the consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31 March 2019, and its consolidated profit, total consolidated comprehensive income, its consolidated cash flows and the consolidated changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing {SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAl's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropria tp::::::::: .. ":-

provide a basis for our opinion on the consolidated financial statements. ~}~- 1!

Phone: (079) 2640 3325/26 I Website: www.dbsgroup.in I E-Mail : info@dbsg :====·-····"-·'-··· ··-· -·-• ===•-·-·

1st Floor Coma Chambers, 23 Nagindas Mosler Road,

Mumbai : 400023

204 Sakar Complex, Opp Abs I ower, Old Podra Road

Vcdodara: 3900i 5 240

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidatP.d financial st111tements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we. do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

--•--<-u• -•--•-- •• Key Audit Matter Description Response to Key Audit Matter

----------«--•·-···· ... ····--·· A. Business Combination and Goodwill Pr[oclpa/ Auglt procedures

owing to acquisition of Heinz India Pvt. Our procedures included, amongst others, Ltd. the following:

Pursuant to the definitive agreements (i) entered into by the Company on October 24, 2018 to acquire Heinz India Private Limited [HIPL], the Company along with its wholly-owned entity, M/s. Zydus Wellness - Sikkim [a partnership firm] have (ii) completed the acquisition of HIPL on January 30, 2019. In view of tlwse, the operations of HIPL have been consolidated with that of the Group's Consolidated

(iii) Financial Statements.

(iv)

Ensured that the accounting of business combination are in line with the Accounting Standard requirements;

Assessed the independent valuation expert's methods, competency and objectivity;

We obtained the signed agreements and contracts relating to the acquisition, and identified the pertinent terms relevant to the accounting for the transaction.

Ensured that accounting principles on Consolidation have been correctly applied including accounting of Goodwill.

Business Combinations are accounted for as per Ind AS 103. The cost of an acquisition is measured as the aggregate of the consideration transferred at acquisition date fair value. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition date fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable.

Based on the above procedures performed, we noted that the Management's assessment of accounting of value of Investments and Goodwill are in consonance with the Accounting Norms and are aligned with the Accounting Standard norms.

241

I I

~

I I

,-.---~·---·-··-•--·· ···~·· -- --··-·•-·--·· Goodwill amounting to INR 3, 79,692 Lakh arising on the acquisition of HIPL represents the excess of the cost of acquisition ovE.'r the Group's interest in the net fair value of the identifiable assets, liabilltlcs and contingent liabilities of the entity recognised at the date of acquisition.

We have reported this as a key audit matter because the accounting of business combination requires the exercise of significant management judgement and estimation, also the value of investment made by the Company is significant.

Information other than the Consolidated Financial Statements and Auditor's Report thereon

The Holding Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appe,us to he materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

The Holding Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application~:":.~t::apprQpriate

~>, ~:\\\>'&, -.,,, '/~~

242

..

implementation and maintenance of accounting policies; making Judgme,,ts and estimates that are reasonable and prudent; and design, in1plementatlon and maintenance of <1d<~quate internal financial controls1 that wc~re oper,1ting effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the cansolidated financial statement that giv~ a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, respective company's management ls responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters rel<Jted to going concern and using the going concern basis of accounting unless respective company's management either intends to llquldate the Group or to cease operations, or has no realistic alternative but to do so. Respective company's Board of Directors are also responsible for overseeing the Group's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that Includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exi::;l:i. Misstatements can arise from fraud or error and are considered material if, individually or In the aggresate, they could reasomihly be experted to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i} of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of Holding Company management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material

✓1f,~\ J

243

l ' I

..

uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a f{Oing concern. If we conclude that ct rrniterial uncertainty exists, we are required to draw ,ittention in our auditor's report to the related disclosures in the financial statements or) if such disclosures are Inadequate, to modify our opinion. our conclusions are based on the audit evid~nce obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the consolidated financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficier1cies in internal control that we Identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine Lhose matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion proper books of ;:iccount ns required by law have been kept hy,,:~~Group so far as it appears from our examination of those books;

244

c. The consolidated balance sheet, the consolidated statement ot profit and loss, tht' consolidated cash flow statement and consolldated statement of changes in equity dealt with by this Report are in agreement with the books of account maintained by the Group;

d. In our opinion, the aforesaid consolidated financial statements comply with th(• Indian Accounting Standards specified under Section 133 of the Act, read With Rule 7 of the Companies (Accounts) Rules, 2014;

e. On the basis of the written representations received from the directors of the Holding Company as on 31st March 2019 taken on record by the Board of Directors of the Holding Company, none of the directors of Holding Company and its subsidiary is disqualified as on 31st March 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Holding Company and Its subsidiaries, and the operating effectiveness of such controls, refer to our separate report In "Annexure A"; and

g. With respect to the other matters to be included in the Auditor's Report in accordance with Huie 11 of the Companies (Audit and Audilur s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group - Refer Note 29 to the consolidated financial statements;

ii. The Group has did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Group.

For, Dhirubhai Shah & Co LLP Chartered Accountants Firm's registration numb~r:~2511W/W100298

~ t. \½">

Harish B. Patel Partner Membership number: 014427

Place: Ahmedabad Date: 28th May 2019

245

Annexure - A to the Auditors' Report

Report on the Internal Flnanelal Controls under Clause (I) of Sub•section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Zydus Wellness Limited ("the Company") as of 31st March 2019 In conjunction with our audit of the consolidated financial statements of the Group for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The respective company's management ls responsible for establishing and maintaining Internal financial controls based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of Its business, including adherence to Group's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors' ResponsibUlty

Our responsibility is to express an opinion on the Group's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

246

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system ovN financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting Included obtaining an understanding of internal financial controls over financial reporting, assessing th<' risk that a rn<1terial weakness exists, and testing and evaluatinp, the design and operating eff<'ctiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, Including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Group's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

Group's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparution of financial statements for external purposes in accordance with generally accepted accounting principles. A company's Internal financial control over financial reporting includes those policies r1nd procedures that (1} pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

247

Opinion

In our opinion, the Holding Company and Its subsidiaries has, in all material respects, an adequate Internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 201'), based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Dhirubhai Shah & Co LLP Chartered Accountants Firm's registration numbo/-: 1cp511W/W100298

~/4.\~ .··. Harlsh B. Patel · >l'

Partner Membership number: 014427

Place: Ahmedabad Date: 28th May 2019

248

--,y~i;:;tw-~:llnt·_,., l muit~·-d'

Partl.::111111'11 . ·••--•-····~ ________ c_o_n_so_1_111,11,,d 8,)1,mu•.!iho,e~a~:~• .. M.um __ :3_1..,, _20_1_o ___ e-"' __ _

Non ... cu1-.-ent a&$el~: Pt1Jp1'1ly, pliltit tmd t'q1uptrn·nl

CJpltal work•ln•progreu tloodwlll Other lntanQlble IIIHtS f'lnancial auets:

Loans Other financial assets

Other non-current um Deferred tax affl!t.[net] A'INt for Current Tax

Current assets: !nventor,c,

Financial ay;d '.,.

[nvc~;lnH·nt._, rrad(• r('1.e1vahles c1,;h ;11KI rasll 1~quiv<1lcnt,, Bank t),1l,1nu: othor th1m (<d1 and cash equlvitlents LOcHl',

OU11,~r curn~nl ;-1st;('!,,

Total EQUITY ANO LIABILITIES: Equity:

Liabilities:

Equity share capital Other equity Non controlling Interests

Non-current liabilities: Financial liabilities:

Borrowings Other financi<:'ll li<1h11i1 ic~

Provisions Other non current l1<1h1liUns

Deferred lax lii11l1li1.ics I nctj

Current liabilities: Financial liabilities:

Borrowings I rode payables

Due to Micro, Small and Medium Enterprise Due to other than Micro, Small and Medium Enterprise

Other financial llabllltles other current llabllltles Provisions Current tax liabilities [net]

Total Significant accounting policies Notes to the Consolidated financial statements As per our report of even date For Dhirubhai Shah & Co LLP Chartered Accountants Firm Registration Number: 102511W/W100298

Harish B, Patel Partner Membership Number: 014427 Ahmedabad, Dated: May 28, 2019

Umesh V. Parikh Chief Financial Officer

Dhanraj P. Dagar Company Secretary

Note­No.

3

1tl

11 12 13 14 15 16

ll j[j

19 20 21 22 8

23

,4 24 25 26 27 28

2 lto48

JNR•~

::,;;..::::::••••t.

1,0J:, 1,&1,171:

M.Ol41

1,71b 3.12,ff'.I

8,090 24

:0)82 16

74 60

]33 J,410

---~--is:ia9

3,506

14,755 875

2,959 38,413

61 .◄ m

6'!?04

'l/107 fj~jtJ:12

--,..,,.,~-:-1----\,316 I ,t,ll:11 10,435

1,!IIUl!ki I I

Dr. Sharv1I P. Patel Chairman

l( 1 ·., ~

Ta ~ G. Arora Whole nme Director

57 77

125 30

289

2,500

133 7,7J2

564 922 130 188

12169 82 893

249

Zyrlu, Wellnliifil Umlt.1,1 Ccm11olld11ted Stl!tenumt of Profit and u,,s ff»r th<t ur •ndl!d March 31, 1.019 ·"_ .• ,,.,.-, , .,,.,,"_" Note

~,iv.:mue from operatinnc , H;Mr income T•rtlll Income

EXl'l:!NSllS: <.,mt of materials 1.011su1111.<.1 Pureho~es of stock•ln•trade Ch¥1<Jt>s in Inventories Of finillhe,1 q()(,cl,;, wn,k•ln•Progrus and ito,k ,n \1 ad<!! flxc,se uuly on sales employee benNilll exp~n11e 1 ,nance costs ! i11preciation, amorl1·,,1tirH1 ,-111d impairmoot exp~•1i•,t", Other expenses

Tol,ll expenRS

Profit IH,fore tllX Les,,: '1 ax expen!l!l:

Current tax Deferred tax

Profit for the year Other comprehensive Income

Mms that will not be n ·rlassif1,m to profit or lo•,•,: Re•measuremcnl gums u11 poi!t employm,;;nl ctol1111.a.l u~nefit p1An$jnet ul WxJ

other Comprehensive Jncotne for the year [net of ta1<] Total COmprehensive Income for the Y,:;ar[net of tax] Net profit attributable to:

Owners of the parent

Non•controlllng lnlC'rest,, Other comprehensive Income Attributable to:

Owners of the parent Non•controlling interests

Total <aomprehenslve Inwme Attributable to: Owners of the parent Non-controlling interests

Basic a diluted earning per equity share [EPS] [In Rupees] Signlflc:llnt accounting policies Notes to the Consolidated financial statements As per our report of evenJ;lotc For Dl11rubhal Shah & Co U P Ch,irlercd Accountants Firm Registration Number: 102511W/W100298

Harlsh B. Patel Partner Membership Number: 014427 Ahmedabad, Dated: May 28, 2019

Chief Financial Offlc:er

No,

11

i.l 34 35 36 37 HI _N

·111

8 8

1/

42 2

.l lo 48

Dr. Chairman

Whole Time Director

16,111 H 10 61

852 ~,664

1/0

{,071 1141! 1323

13,651

1~,390 J(jl

11

Ll,401 261

34,27

250

ZVDU5 WHLNESS 1.IMlTED

th(, yc,ff endNI M,mh .J:l, 1~-;L_li,... _______ ····•

Pa>rl.icullll'I

A i;;,tf111..tll!l!llll from ouratlng attivlties: Profit before Tax

Adjustments for:

Depreclatic>n, lrnp,1irn11•nf and AmortlS/ilti<ln expenses [Proflt]/'LO$S on ,,.,1r, "f ,.,,•,~ts [Net]

Profit on sale of Investments [Net]

Interest l11come

F·air value gain on financial IO$lrument at 1,111 value throuqh statement of proflt andlLoss

Interest expense$

Profit elimination of acquired business

Buel debts written off

Rc·mcasuramant of Fmploy@I!'! benefits (net) Other comprehensive incom<i

Provisions for proliable product expiry claims and return of goods

Total

Operating profit before working capital chdl19es

Adjustments for:

[Increase] in trade receivables

[Increase] in other assets

[Increase] In Inventories

Increase in trade payables

[Decrease]/ Increase In other liabilities

Change in Non-Controlling Interest

Total

Cash generated from operations

Direct taxes paid [Net of refunds]

Net cash from operating activities

ft cash flows from invest;lna activities: Purchase of property, plant and equipment

Purchase of non current investment In subsidiary[Nct of cash and cash 1iiQ11ivalents of acquired m 1hcirli:iry J

Proceeds from sale of Property, plant and equipment

Profit on 5ales of Mutual Fund· Fair Value

Profit from sale of current Investments

Proceeds from sale of Current Investments

Investment in Mutual Funds (net)

Investment in Fixed Deposit (net)

Interest received

dividend

Net cash used in investing activities

Cash flows from financing activities;

Current Borrowings [Net]

Long Term borrowing

Interest paid

Dividends paid

Proceeds from issued of Equity Share Capital

Proceeds from Share Premium

Tax on dividends paid

Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents of the acquired subsidiaries

Cash and cash equivalents at the end of the year

11,063

14,938

BBS

2

(J,(11,11)

(JIM)

J70

4

11

(2)

(479) (4619)

(32!)

1,0?9

(414)

(788)

11

104

(11,754)

3,456

3,059

(170)

(12)

14,lit'I

(2,091)

12,883

(4,805)

8,078

(1,172)

6,906

(5,912)

(182)

812

2,147

2,959

251

lYOOl!I WIILLNl!IS UMl1'1£D

---------~-C_11_11h_Fl_o_w_~~tlll~!.~~for the y11111r e~cl,~~l_f!i"rclt 31, 20:HI ~~~;.,;;i""···c"··" now 6tlllt11m1.mt

1 I he• above cash flow statement has been prep,u,•cl "'"h" m,:!111><1'' .,,:;,;~ out lo Ind A•,·:;

Al! 1,gure!I In brackets arc outflows •

.:I t'revlous year's figures have been rewouped wherever nlll'.c;;,;,iry,

4 Cllllh ,,nd cash equivalents comprise of:

J

b

Cash on Hand

Balances with Banks

Total

1w:w ot,r rn,tf)Jt of even date For Dhirubhai Shah & Co LLP

Chatl<"red Accountants

~1m1 Registration Number: 102511W/W100298

Harlsh fl. Patel

P11rtner

Mt:mbership Number: 014427

Ahmedabad, Dated: May 28, 2019

Um,._h V, Parikh

Cl11d Hn,H1cial Officer

n1 i~nroj P, D.ig~r

company SecrM,irv

fl.s at March 31 20.l.ll 201!1

4

13,Sn

13,81'.,

Dr. Patel

Chairman

Whole Tlrrn· Director

2

2,!151

.>,959

252

ZydUI W1IIM11 Umlt:ed ltatam1nt of Chan • In ConlOlklatacl I II for tho 11r ended March 31 2011

a II II IIIUINI CII ltlh

lqulty llh1ru oflNR 10/• •■ch, 111118d, S11blcrlbecl Incl Pully Palcl•UPI Al at March 31, 2017 All et March 31, 2018 Add: Shares Issued during the year Al at March 31, 2019

b Other I

Al at March 11, 2017 Add: Profit for the year Add [Less]: Other Comprehensive Income Total Comprahenslve Income · Q It March 31, 2018 Add: Profit for the year Less: Profit elimination of acquired business Add [Less]: Other Comprehensive Income Transfer from Retained Earnings Less]: Transfer to Debenture Redemption Reserve Add: Addition pursuant to Issue of shares Total Comprehensive Income Transactions with Owners In their capacity as owners:

Dividends . Corporate Dividend Tax on Dividend

Q et March 31 20111 Ni P1r our report of even date For Dhlrubhai Shah & Co LLP Chartered Accountants Firm Registration Number: 10251lW/W100298

lecul'ltlea Pr■mlllffl

55641 2,55,641

1114:1.

ntllru Redemption

37,SOO

37,500

371100

rlarish 13. Patel Partner Chief Financial Officer Membership Number: 014427 Ahmedabad, Dated: May 28, 2019

ReNrvuaildlu General Reaerve

4,500

4500 4,500

4,500

4100

Company secretary

No, of IIIUlru

47,323 13,390

60713 60,713 16,914 (1,1311)

(37,500)

38,!IBB

3,12~ 642

31220 for and oo lltbllf Pl' the Boaa:I

~.~::1 Chairman

Whole Time Director

253

d111 Wellnua Llmlf:1111

10lldated financial statements comprise flnanclal statements of Zydus Wellness Limited ("the Parent"] and Its Subskllarlu [collectlvely, "the Group"] for the year endld March 31, 2019, The Group operates as an Integrated consumer Group with buslnen 1111COmpasslng the en~re value chain In the development, produ~on, marketing and dlltrlbutlon of health and wellness products. The product portfolio of the Group Includes brands like Sugar free, Everyuth, Nutrallte, Comptan, Glucon D ,Nycll and S1mprltl Ghea • The Parent's shares ans listed on the Naijonal Stock Exchange of India Limited [NSE] and ase Llmltld, The nsglltafed office of the Parent 11 loc:atld at Hou&e no. 6 l ? , Sigma Commerce zone, Near !IICOn Temple, SarkheJ•Gandhlnagar Highway, Ahmedabad, Gujarat • 380015, Th- ftnanclal 111:atement& were authorlNd for Issue In accordance with a re110lution passed by Board of the Directors at Its meetlnQ held on May 28, 2019,

Notal :I• A

1

:a

untln Polld•1 note provides 11st of the significant accounting polleles adopted In the preparetlon of theN financial atatements. Th- polldes hive bean consllltently applied t.o

111 the years presented unless otherwise stated, 1111118 of preparation: A The flnanclal statements have been prepared In accordance with Indian Accounting Standards [Ind AS] notlfted under the 'Companlu [lndlan Accounting Stllnd1rd1]

Rules, 2015, as amended and other relevant provisions of the Companlu Act., 2013, I For all periods up to and Including the year ended March 31, 2016, the Group had prepared Its flnanclal lltlllternents In accordance with the accounting lltllndards notified

under the IIC!Ctlon 133 of the Companies Act. 2013, reed t.ogether with paragraph 7 of the Companies [Accounts] Rules, 2014 [Indian GAAP], Efl'ectlve from April 1, 2016, the Group has adopted Ind AS as per companies [Indian Accounting Standards] [Ind AS] Rules, 2015 as notified under IIC!Ctlon 133 of the Compenlu Act., 2013, The adoption was carried out In accordance with Ind AS 101, Plrst•tlme Adoption of Indian Accounting Standards,

C The financial statements have been prepared on historical cost balls, llllcept: for the following asset& and llabllltles which have been measured at fair value or revalued amount: ,

I Derivative flnanclal Instruments II Certain financial assets and llabllltles measured at fair value [rater accounting policy regarding financial Instruments] ill Defined benefit plans

lul8 of consolidation: A The consolidated financial statements comprise the financial statements of the Parent and Its sub8idlarles u at March 31, 2019. Control Is achieved when the Group Is

exposed, or has rights, to variable returns from It& Involvement with the Investee and has the ability t.o a!Teet thON returns through It& power over the Investee. Specifically, the Group controls an Investee If and only If the Group has: a Power over the Investee [I.e. existing rights that give It the current ability to direct the relevant activities of the Investee] b Exposure, or rights, to variable returns from It& Involvement with the Investee and c The ablllty to use Its power over the Investee t.o afTeet Its returns and Generally, there Is a presumptlOn that a majority of voting rights result In control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances In assessing whether It has power over an Investee, Including:

a The contractual arrangement with the other vote holders of the Investee. b Rights arising from other contractual arrangements. c The Group's voting right& and potential voting rights. d The size of the group's holding of voting rights relative to the llze and dispersion of the holdings of the other voting rights holders,

I Consolidated flnanc!al statements are prepared using uniform accounting polldes for Ilka transactions and other events In Similar circumstances. If a member of the group uses accounting policies other than those adopted In the consolidated nnandal statements for Ilka transactions and events In llmllar circumstances, appropriate adjustments are made to that group member's financial statements In preparing the consolidated flnanclal statements to ensure conformity with the group's accounting polldes.

C The financial statements of all entitles used for the purpose of consolidation are drawn up to same reporting date as that of the Group, I.e., year ended on March 31. When the end of the reporting period of the parent Is different from that of a sub&ldlary, the subsidiary prepares, for consolidation purposes, additional flnanclal information as of the same date as the financial statements of the parent t.o enable the parent to consolidate the financial Information of the subsidiary,

3 Un of E$tlmates: The preparation of the consolidated financial statements In conformity with Ind AS requires management to make estimates, Judgments and assumptlOns, These estimates, Judgments and assumptions affect the application of accounting policies and the reported amounts of assets and llablllttes, the dlsdosures of contingent assets and liabilities at the date of the financial statements and reported amounts of Income and expenses during the period. Application of accounting policies that require critical accounting estimates Involving complex and subjective Judgments are provided below. Accounting estimates could change from period to period, Actual results could differ from those estimates. Appropriate changes In estimates are made as management becomes aware of changes In circumstances surrounding the estimates. Changc9 in estimates arc reflected in the consolideted flnencial statements In the period In which changes ere m1de and, if meterlal, their effeets ere dlllCIOled In the notes to the consolidated financial statements. Critical estimates and judgments

e Income Taxes: Significant judgments are involved in determining the provision for income taxes, Including amount expected to be paid/ recovered for uncertain tax positions.

b Property, plant and equipment: Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of periodic 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. Management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognised prospectively in current and future periods. The lives are based on historical experience with similar assets as well as anticipation of future events, which may jmpact their life, such as changes in technology. ,

c Employee Benefits: Significant judgments are involved in making estimates about the life expectancy, discounting rate, salary increase, etc. which significantly affect the working of the present value of future liabilities on account of employee benefits by way of defined benefit plans.

d Product warranty and expiry claims: Significant judgments are involved in determining the estimated stock lying in the market with product shelf life and estimates of likely claims on account of expiry of such unsold goods lying with stockist.

e Impairment of assets and investments: Significant judgment is involved in determining the estimated future cash flows from the investments, Property, Plant and Equipment and Goodwill to determine its value in use to assess whether there is any impairment in its carrying amount as reflected in the financials.

4 Foreign Currency Transad:ions: The Group's consolidated financial statements are presented in Indian Rupees [INR], which is the functional currency of the Parent Company. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

A The transactions in foreign currencies are translated into functional currency by the Groups' entities at their respective functional currency rates of 'exchange prevailing on the dates of transactions.

B Foreign Exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the year end exchange rates are recognised in the Statement of Profit and Loss.

C Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of Profit and Loss within finance costs. All the other foreign exchange gains and losses are presented in the statement of Profit and Loss on a net basis.

IIAN ' .. , : ~~

"II';

•} ,,,/ ;;

--··

254

•· co,1tlnue1h Re<.:O!Jnit um:

A llu_· Ci1nup h,_1'·, ilpj_ilicd Ind/\', 11s • RlttV~nue from Contracts with r:w.1nn1,·1. vvl111 !1 1', 1•lft't!1v,· 1o,r .in a:noual period beginning on or «llf:r /\11111 1, ·111H 11w fr11low1nq is

the •,1<J111llt,mt d( r rn111t11111 J!( iii( y idatru-j to nwenue recognition undvr 11111 11..,·, 1 I 1,

Sale of Good-..;

Kcvcnuc fruni u,c wlc ol yMtis 1s mr()(Jnlzed ,s revPnit@ ,,11 U1 .. 1i • .i, or ,u.l.v111;;1 w11U,i,tq ~nd th@ p@rfnrmanee oblll!~tl.(JJ1. w11l.l111ci.l Llic:1c111. Rcvcuui.;;J I• recognised at a point In timt whc11 ltil' (ootn)I of goods 111 •,ervlces Is transrarrlld to a cust:om,·r cnr,tml lie, w1tJ, !:Me cw;twllc,r If the customer rin lndependeritly determine the use of and consi .. ,w I.he i,,;nent denveo 11,1111 a product or serviet, l\evenue l'm111 p,ocl11<J t11'11veries ~1e rmTu)nlllld at a point In time bllllld on ,m overall assenment of thij exls1,,, ,w 01 " lliJl'll to pctyrn;,111, 111,, allocation of ownen1hlp rlghtli, th~ t, ,m,.t<-, ol r i•;k, and r1:w1u·ds, ,,nd acceptance by the culll:Omtr. ilrc: goods are often IIO!d with volurn,, distounl•:J pndnr1 ""·•·nliVilG tnd cw1tomm have a right to ,ijlur11 iliim,,,,.,<i ,;,, ,,x~lr~d product!II, Revenue from 1111tes iii bllsed on the price in the ules contraric./ MRI', Mt of r11,.rnunh. 11n;tor1c~I .ixperlence, speclffc contractual tt•m,•; a,111 future <:xp<ltt<Jt11w11 of !llllllil ire UNd to utimate 1nd provide for damage or expiry claims. No elrrn""I 01111v111<ing is dfflt!med present u the 111111!1 tw 11,;,1JQ wil:h tM rnJ1111iJI rred,t t:erms ~, per Pfll\llltnt tradl! practice and credit policy followed by ltw• C1rnup.

b Service In;:(!mt1 Service income Is recognised "" pc, IN, k1nh or contn,ct, with the cultOmer~ wh~n the relat,,d ,,,,,vtcfl are p,,rforn,cd a,:. pnr the stage of compltltian or on 1hr: achievement of agreed mileston""; ,u,,1 ""·' ,,et ot indirect 1ox1JS, wherever applicable, For the \It"" ,,rnforl March 31, 1018, the G3roup was recognli!lng revenue as pc, !Ill' rrikti.i'.. l)HlVlik·d in Tnd AS 18 '1Revenue, Rec0gnltio11'i, Noli· }(r;) f/.SkpilGc,1111 ,i((ot,llltin9 pohcit~ for Revtnue Recognislnq'1 (,111 lit' l('r(•rn:•d in 0-.(• flli'v'i1)U$

year's /\r11H1,il H·po1\ o! th1? Group. 8 Goods ;md ~){'!VI((' f ,I)( f(~()T] t, 11ot rE!'C<!!iVOO by the Group 011 its OW/l ('l(cmmt l{,1!l1!'1, !l !', 1:1x lOll~dffld on value added to the gornb by llw C11rn1p Oil lwh,111 or th<:

government. An or ilu 1qly, ii 1', vx1 luded from r~venuie,

C: The spcu!1{ n'roqnit,on t nh'.rtd 11t,scrlbed below must also be met b('ftl!i; rc•w~nu,· 1:., re( rnJiw.,,cJ:

.1 Interest Im::ome: For r11l rid)! 11)~;trn1111'nt:. nH'<l!iured at amortized cost lntt1mit' Hl((1n11• i·, 1c(o1dc•d us:ln~-l Uw 1·11fective interte.~l rabs: [EIR], EIR it, Ilic 1,1tt· Hi,il r·x;1dly dhtU~mf:~ the e~;t1mr1t(·d f11ltH1 · ( ,1:.11 J)•-1ymnnt~ or receipts over the expected h1t' nl tlH' f 1n,11H-1dl in);tru111f'11t ,w a shorter pariOd, where approprtdlt\ t<.1 l!H' (JI{)'-'; t ,)1 rymg <':1n1ount of

Lile fin.JncJ.il ,y,,,r,1 rn to thn amortl~ed cost-of a finan<:ial lit1bihly. Wlwn c,.iluil;il!nq llH-' 1,tfcci:ive lnb!test rate1 the Group e$lini.it«", !lw 1•xp1,f!r·d rtl!iih flow'., by consid121 inq ,.ill t!1t · ( 01111,a tuJI t:e:rms of the financial instnHrienl b1il· u,11•', 1101 u)n•;ul1'1 tlu•, ·x11<1Ct~I crndlt losses.

b Dividend: Dividend Income Is recognised when th,:- Group's ,•ighl 10 remve the p~yment Is established, which Is generally when sh<11eliolders approve the dividend.

c Other Income: Other Income is recognised when no siqnificant uncert,11n1y as to Its determinatlon or realisation ,,,isl<;,

6 Government Grants: A Government grants are r<!(()Qnised 01 awml1111u· with th" ,.,rm, of the respective grant on ~ecrual bilsl'' co11sr<l<',r111!J tM st,tu$ of (0111pllance of prescribed conditions ~nd

ascertainment that the grant will be received. B Government grants related to revenue are recr)gfll•,cci on a syr,;t~mauc and gross basis In the Statement of l'rofit and Loss ovm the period during which the related costs

Intended to be compensated are Incurred, C Government grants related to asset,, are mCO[Jl1i9'd as income rn equal amounts over tht expected U'«eful life Of th@ related asseL D When loans or ~lmil~r a~~l!rt'ance arc provided by governments or rl'lal'M ln'ltltutlons, with ~n ln~ro.t rate below the current appl1rahlt' mark@t rate, the efl'i'ct of this

favourable int.t!rc'.,t i:; n'.~Jdrdcd JS a governme11t grant, The loan or ,.1','il'il dncc 1s 1111l1c11ly rt)Coqni':.it)cl and measured at fair value and the qov(:rnmenl grant is mt:i.lsurl~d as the difference between the tnitiol carrying value of the loe1n and thr• prrn:r~eds rr~cc1vl'd. 7'1lt-: Jn,in is subsequently measured as per- ttw d{(01m1tn~1 polity i!pplw,1blt! to financial llab1l1t11,•,. I lowcvcr, in accordance with the exemption as pc, J11il A", Io I, lor ,,,,, Ii lo,,ns tt\Jt exi~ted on April 1, 2015 the Group "'""• Iii<! p!C•v,ou•, t,MI' Cdirying amount of the 10,,11 di tile date or transition as the carrying amount ot loan,

7 Talre$ on lnco,n.,, Tax expenses compnse of current. and deferred tax.

A Current Tax: a Current lax is rnei:.lsurc:d tJl. I.he amount expected to be paid on the h,:1s1s of rr:l1rfs and dC'tluc11ons available in accordance with the prov1~_,1ons of tht: Income Tax Act,

l'.Jul. 1 he tax raLes 21i1a tc1x iaws usect to compute the ali1ount dn: those tt1dt ;;re ~nactt•rl or c-,ubstantlvety enacted, at the reporbn~J (ldl<'..

b Current lax ilcms are recoqnised in correlation to the underlvinq tr'-m';,-icilon (~ith(;r m SL-1temcnt of Profit and Loss, OCI or directly in equity. B Deferred Tax:

a Deferred tax is provided uSing the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

b Deferred tax liabilities are recognised for all taxable temporary differences, c Deferred tax assets are recognised for all deductible temporary differences Including the carry forward of unused tax credits and any unused tax losses. Deferred tax

assets are recognised to the extent that it Is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilized.

d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred rax asset to be utilized. Unrecognised deferred tax assers are re~assessed at each reporting date and are recognised to the extent that It has become rrnbahle thar future taxable profits will allow the deferred tax asset to be recovered.

e Deferred tax assets and liabllrtles are measured at the tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date and are expected to apply in the year when the asset is realised or the liability is settled. Deferred tax items arc recognised In correlation to the underlying transaction either in OC! or directly in equity.

g Deferred lax assets and deferred tax liabilities are offset If a legcllly enforceable right exists lo set off current tax assets against current tax liabilities. C MAT Crgdit Entitlement:

a Minimum Alternate Tax [MAT] paid in a year Is charged to the Statement of Profit and Loss as current tax. b The Group recognizes MAT credit available as an asset based on historical experience of actual utilisation of such credit and only when and to the extent there Is a

convincing evidence that the Group will pay normal income tax during the specified period i.e., the period for which MAT credit is allowed to be carried forward. Such asset, if any recognised, is reviewed at each balance sheet date and the carrying amounl is written down to the extent there is no longer a convincing evidence that the Group will be liable to pay normal tax during the specified period.

8 Property, Plant and Equipment: A Freehold land is carried at historical cost. All other Items of Property, Plant and Equipment are stated at historical cost of acquiSition/constructlon less accumulated

depreciation and Impairment loss. Historical cost [Net of Input tax credit received/ receivable] Includes related expenditure and pre-operative & project expenses for the period up to completion of construction/ assets are ready for its intended use, If the recognition criteria are met and the present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. The carrying amount of any component accounted for as a separate asset Is derecognised when replaced. All other repairs and maintenance costs charged to the statement of profit and loss during the reporting period In which they are incurred, unless they meet the recognition criteria for capitalisation under Property, Plant and Equipment. On transition to Ind AS, the Group has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plan and equipment.

B Where components of an asset are significant in value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognised separately as independent items and are depreciated over their estimated economic useful lives.

C Depreciation on tangible assets is provided on "straight line method" based on the useful lives as prescribed under Schedule II of the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognised prospectively in current and future periods.

D Depreciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life. E Depreciation on additions/ disposals of the Property, Plant and Equipment dunng the year is provided on pro-rata basis according to the period dunng which assets are

used.

F Where the actual cost of purchase of an asset is below INR 10,000/·, the depreciation is provided l!l> 100%.

G Capital work in progress is stated at cost impairment loss, 1f any. H An item of property, plant and e initially recognised is derecognlsed upon disposal or when no future economic benefits are expected

from its use or disposal. Any f the asset [calculated as the difference between the net disposal proceeds and the carrying amount of

the asset is included in the i :;;d::::er:,::e:::cog=n:::ise=d:... ---------------------------------------'

255

• -_,dft~'.--1nt Au.:ount1_ng_"f:'-,~J!~fi(• .. ~~ co __ n __ tl_n __ u __ ed __ : __________ _ I lnt~tlu•hle A.-.~et<.:

A l11!_,111q1l,I(• .i•,,,!'I•-, ,1cqt1111 ·rl ·.qi.J1.i!f1ly ~re mtiltttured on lnitl.t1I recogrut11m .it { 11·.t 11w !.(,·,L c:if 111t',,1!'11111Jla in business I nn1t1111.-1l1(111 1•, thdi f,1ir v,_1hs11c ,J!. the d,-1!1· or dl(jlll'.",lllllri. fnll11vv1(1q 1nH1<1I i"t?CognltiOfi, int.angible urn ('.,)lfl1'1.1 ,1t I {I',\ h•'.,', ,·111y di r utrnitated an1,mti1mlcion IJ'IOd ICCUIYlUl/lb'.d 1rni1,11J!ll ◄ 'lll l<r.'.◄"

I Inl ◄ 'nMlly qerwr;Jlryj llll,l1lfjl[lh" not t.:flpltali!'™d and the rnlt'!kd t'Xpi'lHlit1111· I', tdl,·1 !1·d Ill •,1.-1ternonl or profit and IOS8 in th~ p,mo(l Ill vvlw 11 \Ill' t_>X.pPnrhl11n~ Is ir1( lffft'(L

(: (;,(!{ldWlll ,:irJ:·;Jnq on ,I( !jUhlllt1n tl l)U§fOf;'\;~$ itJ HHW!<JOO at t'."~ch txdari, I' ·.tw!'l 11.tb:l: h:11 .111y 11:q1,11111:,·1il lots, o rechnlcal Know-how Fees and oth,,, ,,,n111,11 rn,1ht,; .;mortised over their estimatll(J 11COnomlc llfll, ~ C!lpltallsed cost Incurred towardt µqoil,,·,,.•J d!,v,,lopm~~t ,,,11w.1re Is amortlsoo umng 1tr11gnt lln.i 11,c11ir,,.1 ovr,, ,ts u~eful hf~ ,'lltlmated by the m~nagement at t!1c

time of capll:llllsatlon, I' lnt,mglble assets with Indefinite "'"·'Ii" liv,,•; nut ;J1Mrl"o<J, but are ti!tted for Impairment 1mnu,1lly, ,·1!1101 1r1thv1dually or ~I tile cash•g-atlng unit level, iM

us11essment of Indefinite life Is rl!ll,,,wt;,l ,,nnq,llly 1<, ,1<;1rn111111•· wMth;,r the lndoftnlte life con~null!I to hr• ·.11ppo11<1t•h•. 1f not, t.hr· !l1ange In ulll!ful life from lndefinltij to finite Is made on a prospective bllr,b.

G An Item of intangible asset Initially rle11·r 09,,,,,.,1 ,,non dlSJ)Olllll or when no future ecot1111111t benefits are expc,ct,·d trom ll:li U$ll or dlSl)ONII Any gain or lo~s arising on de-recognition of the 11;-;,1\ ~•, the drfh,t,/<1U' between tile net dl9Pot111I proceet1•, m,c1 the ,anying ;m,nun1 of tNI a•tl 11 included In the lltil'.tlmt:nt of profit and loss when the HNt 11, ,1<,,,•n'kJ11becl.

111 Research and Development COtt1 A l:'xpnndltur0 nn rccr•.,rth :1n11 d,,v0lopm~nt is charged t-0 U1~ Staeem,0 nt nr rmr.t ;,nrf I me nf 11',c y,,.,r In whteh It 1• incurred. I C,;1p1tal expl'nd1lu11 • on H",<'i-ut h ttnd d1;1vtlopment Is given the samt! tn·.1!1w~n1 ,v·. P1(1JJ1 ·ity, 1-'l,mt ,1nd E:quipment.

11 Borrowing costs: A 8oi1owimJ co~,,,, 1.rn1,;1•-,1 01 m!(•t(,.,1- and oth@f' borrowing costs that lllt' 1ncurr<~t111111l[u11·1 !11)11 w1ll1 tl1C borrowing of funds, Other borrnw1r1q c_(1:~l::, m(l!H11· .11H 1ll.11y ( l1,1rgC$

at tile linlC\ or dC(Jlllf;!tl()f) n( d f111<111Cial liability, whit:1'1 is recognised. per f;"Il{ nidho(L

IJ 8011ow>11q w,1•. 11\at diw<lly llltrlbUtllbl~ to tht i!CQYISltlon/ C<>n<,1111111011 111 n q11,1lrfy111\1 .y.,,..r .ire capll:allsed part of the C<ISI ol •,11<:h ,,,:,.,,1•:, "I' Ir, II»· rid,.• tile a~,:;1.'ls circ 1c,1dy for their inlt-•1alcil use.

12 Expenditure during the Conslrncb<1n Period, 'The (~xpcnrlil.un,, 111nd1•nL---1l lo !lw expantion/ new projecb:: 1,1r~ ~llott'1tcd lo !'1opl·tty, Plr1111 ,111d 1-qu1pmo11t 1n the year of commenc@rtlttllt or llw 1 0111111\'H 1sil prnduchon,

13 Impairment of Assets: Tli~ Property, Pl,mL •ml L~111µ111~nt and Intangible M,et!< M~ te$1:~d lor 1mµ .. 11111<.11L wli~11"v"1 "v~11Ls or changes In rlrc11n,,t,mces in.:Jl!.:lllc u,.;L u,~ w11y111y wrnuunt ,nay not be recoverable. An Impairment loss is rnco911iscd for the, """"·",t by which the a•t's carrying amount ®<C1~ecb its recover;Jhle amount. The recoverable amount Is the higher of an asset's fair value less rnsts of clispoiwl ~nd value 111 us,1, For the purpOHs of assessing lrr1pi111me11t, the asset, at<: g,ouped at the lowest levels for which there are separately Identifiable cash ftows which are largely indepmclr:nt of the Cl!Sh inflows from other asseb or qroups of assets [cash qeneratlng units]. Non•ftnandal IS!;els other than goodwill tllat suffered ,m ,n,pc,irm,,nt loss are rew.·wed for possible reversal of impairment ot the• end of each reporting p,1riod, An Impairment loss Is chllf!Jcd to the Statement of Proflt and Loss i11 the y,,:.11 111 which "" ,,ssct IS Identified as Impaired. 1'he impwrment lo·,s recognised in prror accounting period Is reversed If tn<:rc has been a change In the estimate of recoverable an111unl.

14 Business c:omblnatlo11s and Goodwill, A Business combinations are accounted for using the acqu1sit1on method, B At the acquisition date, the Identifiable assets acquired and the llabllltles assumed are recognl&ecJ at their acquisition date fair values.For this purpose, the liabilities

assun,ed include contingent llablll11cs representing present obligation and they are measured at their acquisition date fair values irrespective of the fact tllat outflow of resources embody11)(J ecrn1on11c benefits is not probable.

C Wh(m the Group dCquirPs a businns!'i, it assesses the financial cl$$et~, dnd lk1bd1t1c:; as:,um(..'CI for .:ipproptlate classification and designation m&cordeinw with the contractual t.cn11',, 1.•c.nrl(J111ic circumstances and pertinent conditiom, <.1', ,,t tt1c ,H:(1u1',1t1011 c1,11e, fhls includes the separation of embedc!ttl ck'nv,1tivr-:;, 111 IHd c,ont.r,Jcl:; by the acquiree.

D When the Group dn1uires d hu~;iness, it assesses the financial ;;i,;sel:5 and habrl1tic:, d">'-,urncd for appropriate classification and dcs1gn.Jlion m dccrnd,-inrc w1t.h the contract:ual terms, CLonon-iic u1curnstanCel) and pertinl:mt conditions ,;11 Um ;;icq1w,1t1on datl',

I Goodwill is initially meJsurccl ,11 111e excess of the aggregate of the Jcquist1on cost Z·rncl the ;_umiunl n~cognised for non~controlling interests, ~md .1ny prcv1rn1'; mtert•st held,

ovf'r th1-' hr011p's m:.t: id<:.>nUfi,:-1!.'ir.' c1ss:ets acquirud and llabiliti@s lti£t1m(1d. Tl tho foir v:Jiluf) of th(' n(it asseats acquired Im in 0xc0es of tho ;1q1J111f_pt.u of ~1cqui:,il.ion cm.t, thta Group re-assesses whether it has correct1y identified all of the asseb, acciuin.'d ~ind c1II of lhi? !i,:1lnhtics assumed ;,nd reviews the procedures used t.o rncasur<: the amounts

to be recognised at the acquis1tron date. F A cash generating unit to which Goodwill hds been allocated Is tested fOr Impairment annually, or more frequently when there rs an lnd1cat10n tnat the unit may be

impaired. If the recoverable amount of the cash generating unit is less than Its carrying amount, the impairment loss is allocated first to reduce the carrying amount of dMY Got>dwlll allocated to the unit aM then to the other assets of the unit pro ratil based on tM carrying amount ot eacn asset II\ the unit, Any impairment IMS for Goodwill ls recognised In Statement of Profit and Loss.

G If the fair value of the net assets acquired is in excess of the agrwegate consideration transferred, thP r;rn"n m-asses'ifes whf<ther it h~s correctly Identified all of the asset.s acquired and all of the liabilities ossumed and reviews the procedures used to measure the amounts to be recognised at the acqulSition date, If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised In OCI and accumulated In equity as capital Reserve. However, if there is no clear evidence of bargain purchase, tne entity recognises the gain directly in equity as Capital Reserve, without routing the same throuqh OCI.

H If the initial accounting for a business combination 1s incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. ihose provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities arc recognised, to reflect new information obwrncd about facts and circumstances that existed at tile acquisition date that, if known, would have affected the amounts recognrzed at that date. These adjustments arc called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.

I Wherever any business cornbludlion is governed by the Scheme approved by the Hon'ble li1gh court/ National Company Law Tribunal ll,CL rJ, the business comb1na11un Is actounlccJ for ;i·; rrr thr ;1:r:r.011nting tn~c1trnent sanctioned in the Scheme. tloodw1ll Jris1ng on such businesi combination is amolti$¢d over the period, J,; prnv1drd in the Scheme, as approved by the Hon'ble High Court or NCLT.

15 Inventories: Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition arc accounted for as follows:

A Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods, Stock-in-1'rade and Works-in-Progress are valued at lower of cost and net realisable value.

B Cost [Net of Input tax credit availed] of Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods & Stock-in-Trade is determined on Moving Average Method.

C Costs of Finished Goods and Works-in-Progress are determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads based on the normal operating capacity, but excluding borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Write down of inventories to net realisable value 1s recognised as an expenses and Included on "Changes in Inventories of Finished goods, Work-in-progress and Stock-in-Trade" and "Cost of Material Consumed" in the relevant note in the Statement of Profit and Loss.

16 Cash and· Cash Equivalents; Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less.

17 Leases: As a lessee: The determination of whether an arrangement is [or contains] a lease is based on the substance of the arrangement at the inception of the lease. Lease under which the Group assumes potentially all the risk and rewards of ownership are classified as finance lease. When acquired, such assets are capitalised at fair value or present value of the minimum lease payment at the inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expenses on straight line basis in Net Profit in the statement of profit and loss over the lease term, unless the payments are structured to increase in line with expected general inflation to compensate lessor's expected inflationary cost increases.

As a lessor:

Lease income from operating leases where the Group is lessor .is recognised in income on a straight line basis over the lease term unless the receipts are structured to

increase in line with expected general compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

256

No ; i II !!!!!~·mt Accounting Pollcli;!.~ > COl'!!'!!!<odl ,~,-, ii Pf<lvi;.ions, Contingent U11bmt11111 1111<1 cont1111111nt Aoi;:t,,

A r>rovi~lons dre recognled vvh,:11 th,, umup hH a presen1 11bliq,11tm a result or pa,,1 ,Msrlb """ ,t Is probable that th,., ou111,,w of resources will t,,1 rll{!ui,ed to settle the nhllgatlon dnd in resP«t Of Whl< ,, o>!labl~ esumatl!s Cllt1 '"' ma,iv A dliCIO~Ul'I! l'Or cnr,Un~i,nt h,if,,llty iii made wh,•n lhi;f(! IS posslblll obll9at.11m, that trwy, but probably will not require an outllow of 1 ,,,u,.11,,c,,, Whan th!!re Is pei$~lbl~ 11l<l!Qatlon or a Pi'lte<J ,t 61,1,~;;tion In rupect elf whi\11 the llktlil\Ood of outflow of '""""'"'~ it rtmobl, no Pi'(.JVision/ di•,(lry_,\I!<_' I', made, Prnvliiilor1•, ,·111d rC1(tlH11~0nt!IJ!t ;;lrEl; f~Vk;w1·1I .Jl t::dCh badance 1l,1!1• i)f11l ,!dj1J%t~ to rtt!kcl 1111- (()![t!(t mun~geme11t (·;,l1111d\l'')

C.ontlngent d':,d•, ,wo w11 recognl§:t;tci but ,11(· r1,,,\ 1,p,(•rl ieparately in fln,)1111.i1 ·.1,11t;t11l"!IOO,

I) If the effect ol t!1c 111rn·• v,,duc of money in.1k11. ii, prt1viS¾lons mre di~(n1111nJ u',11H1 ,l current prn~tJl1..: 1._ifp 111,:it 1dled!t when apprnpi 1,111 ·, th<-· dsks specific to U11 · !t,-1h1!1tv

19 P1'0Vl$IOn for Product I·, pny Cl11im11 Provisions For product ex1,11v ri'luttd c<lSII are tGCOgn1•.,cd when ll1i11 product la !IDld v, 11,,, cotlOl!lllr, !nltlal rct•>\llillli•II ,,, l)illed on hlstorie,~I ~'l<pc,11:r,<:e, The 1niua1 estimate 01 product expiry rlw,11 ,c,lat~d ,:ollts Is revised annwilly.

20 l!mployee llen11flts1 A Sllort term obllgatlon,:

Lii!bililie, f<Jr wMges ~nri "!Jlori,,s, it11;ludln~ l••v- ~ncA,hmw,l:. U1dt: al'~ ,.~,wt...-! tn be $6lltcd wtiolly within 1? month~ .,1t~1 lll~ """ of th• f"'nuci In which lM mmploy­render the 1ddt1•d ',!-'!Vlt,.t:' ~re recognisttd Ill l(",jlt'( t ol (}mplnyc.~1 SeJl'\IHJ'.:& tlp In 11)1' end of tht'l rtp1.._lll1nq ,Jl](I measur&:1 ay ttw ,lfll0lJ1lt', l'X'peci:ed to b~ p,,wJ wli ◄ •n 1he liabilities an.: '.->1'tlh '(I. I l1P liablHtie, ara Pft";t•nl(:<) .1·,, t11 rent ~rnployee !u-n,-'ftt. cJ!Jlu_J,1!Jon11- In the- bl1!llH i • ·.!1(•10:t.

$ Long term employee h .. n,flw obllg111,ons: II Leave Wage" an,1 !lid< Ulillllll

The liablll~es for tlllrned lv;,v,, ,ind sick leave are not to be Nl:tled wholly will"" 12 months p!l!l,o<l ar1.vr l11e end of the per,od 111 whirl, 1ne employees render the relatl!d !Milrvl~e. Tlwy Ml! therefore, at 1 l1e pl'IIHnt value 91 expc,:t,,;<J futul'II paym,ml:!l 10 1111, 1n11d~ in respect of Ml'\lt,"5 pr,wi(lecl by llfflployeu upto the end of the ,,,porting pc,lod using the rHnjc,cted unit credit meth!l(I, ct,,1.,,rn111111d by actuarial valuulion, purformed by an independent tc:l:uary, The benefits are dlscounh'd u1,in9 the market yields at tt111 '""1 ,,1 rl!!portlng perlOd thill h,M1 the terms approximating tu I hP term$ of the related obligation, Gains aml losses through re•mt,asu1crne11ts ,we rl!CO!lnled In staten""'' of proflt and loss,

b Defined Benefit Plan,: Gratuity: The Group opi:~1r1tP~\ a defiof!d be111'!1t qt.JllJHy plan with contritHJt1w1•, ln h!_' made to a .-ttJrnm1stared fund th1oufJtl Lile' tnqJrtmte Corport1t1nn ol India through I 111ploye0, Group Gratuity ,,1,11,. 11,,. 11,illility ~r asset r<-<n<111ic.i;il 111 Ille ~alanee '" r,,spe,1 nf defined bene1,1 qri1l111ly plc1n Is the presen1 v,1h1,, nl the defined benefit plan obligation al the md of the report,nq peflod less the fair v,1lur• ,,r the pktn assets, The Liabilili0s with rngard to the Gratuity Plan are determinoo by actuarial valuatlon, perform,,cl by an Independent ,Klua1y, at tlllch balance i,t>o(')t d:itc uw1g the projected unit n,,<1it method,

The present value of thv rlel111NJ beneflt obligation c1,,nom1na\ed tn INR Is detc,rmlned by db,counting the er,t•irnatvd Mw,1 cash outflowi 1,y reli!rence to the market yields at the reporting pc,notl on government bonrb that have IHrms approxll!llltih9 to the te,ms of the relah:d oliligallon. The net Interest cost 111 ,;;ilculated l>y 8pplyinq thu ct1scou11t1ng r~tt> to the net balall(;c of thi;i dMflnM henAf1L ol1li9iltlon and the fair value o/ plan <lSStts, Such costs are indudnl in employee ben~flt e>q wn:>r":, in the statement of Prof11 ,ind I Re~mt\1'.;urcmcnb q,Uns or losses ansmq 11rn11 c•xperience adjustn1t1nb 11nd < 11.Jngtis in actuai1dl <1£;surnpt1rn1s ar~ recogniSPd 1111rncthdli'lY in the period 1n wh1d1 t11ey occur tlircctly in "other compreh0n,;iv<: 1n<.ornc," and are incllKkd in rctd111ed earnings iri UH-· ,,t/1k'.11!l:11t of changes: 111 cqu1t:y anCl in the balance ~heel. l{c~

measurement~, ..ire not n;classified 1o profit: Of l(v;'i in subsequent pcl!Ofk

The Gr.oup recognise,; lhc, following cnanges 1n the net defined benefit obligation"",,., expenR In the !lt'llten,ent of pront and loss: i Service costs comprising cummt service costs, past-service com, gains and losses on n1rtallm~nts and 110,1 routine settlements; ii Net interest expense 01 income.

c Defined Contribution Plans • Provident Funt! Contribution: Eligible emp1oye$ of the Group rPc,,lvP benefits from a provident ftmd, which Is a defined Nlntrlbutirm plan. Both th@ l'ilgible Pmnloyoe anti the Group make monthly conlnlJ,,lions to the provid<'nl fund pl;,n equal to a speul1ed percentage of the coverr'!I cmployc"'s salary. Amounts coll"ctc,J lll1der the providcnl lund plan are deposilcrl in a rJovernment adn11111stered provident fund, The ,;ro11p have no further obliqdl1on lo the nlan beyond its monthly contributions, Such con111bulions are accounted for ac, defined contrihu!Jon plan~ ,ir1d are recognised d'.; crnplnyees benefit expPw,cs wh('n th<ey are due in the .:;ldlnrn_,nt· of profit and los~ ..

C Employee Separation Costs: The compensation paid to the employees under Voluntary Retirement Scheme is expc,nsed In the year of payment.

21 Dividends : Th~ final rllvidend on sharc·s ;, r~cordc,d iii a liability on t,he elate, of approval by the nharcholdcrs and Interim dividend is recorded as liability on the date of deelmration by the Parent's Board of Directors.

22 l!xcise Duty: Excise duty is accounlccl at a concessional ,ate as per Notification No. J/1011-CE without availing CENV/\T credit in Zydus Wellness um,lcrl, whereas In the Partnership Firm same is accounted net of recredit benefits and CLNVAT availed on mputs, Cdpit.al goods and eligible ~crvkc:;;,

23 Financial Instruments: A financial l11sl.ro111eol" dny contract that gives rise lo a financial assel of one entity and a financial l1ab1l1ty or equity instrument of ,mother entity,

A Financial assets: 11 Initial recognition 1md •rnias11rement;

All financial assets are recognised Initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attnbUt~Ole to the acqu1s1tion ot the financial a5liet. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place [regular way trades] are recognised on the settlement date, Le., the date that the Group settle to purchase or sell the asset.

b Subsequent measurement: For purposes of subsequent measurement, financial assets are classified as follows:

Investment in mutual funds instruments at fa11 value through profit or loss [FVTPL]; FVTPL ,s for investment in mutual funds instruments. Any such instruments, which does not meet the criteria for categorization as al amortized cost or as FVTOCI, is classified as at FVTPL.Such instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

c Derecognition: A financial asset [or,'where applicable, a part of a financial asset] is primarily derecognised [Le. removed from the Group's balance sheet] when;

i The rights to receive cash flows from the asset have expired, or ii The Group has transferred Its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay' to

a third party under a 'pass,through' arrangement; and either [a] the Group has transferred substantially all the risks and rewards of the asset, or [bl the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, 1t evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group's continuing Involvement In that case, the Group also recognises an associated liability, The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained, When the Group has transferred the risk and rewards of ownership of the financial asset, the same is derecoqnised.

d Impairment of financial assets: In accordance with Ind AS 109, the Group applies expected credit loss rECL] model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a Financial assets that are debt instruments, and are measured at amortised cost b Trade receivables or any contractual right to receive cash or another financial asset c Financial assets that are debt instruments and are measured as at FVTOCI

The Group follows 'simplified approach' for recognition of impairment toss allowance on Point c provided above. The application of simplified approach does not require the Group to track changes in credit risk. Rather, it requires the Group to recognise the Impairment loss allowance based on lifetime ECls at each reporting date, right from its initial recognition. For recognition of Impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant increase In the credit risk since initial recognition, If credit risk significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has Increased significantly, lifetime ECL is used. I redit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the enti ,-,.-"---.'---.::~ _..,n.-t_lo_s_s_a_ll_ow_an_c_e_b_a_se_d_on_1_2,_m_o_n_th_E_CL_. ___________________________ ~

257

~nJl'llfla.nt Aoo,;,:~1m9 rolidlMl • Contlnu.,,1, lifetime ECL are the expoc\1•1l Cl<:dil ln?l!!S re~ultlng from ow" Ille Ofl 0!1011< r,JI lnshument. The l:!:month CCI Is a portion ot 1tld1rnu ECI_ which results lrnrn d~l11u11 ,·vents that are po:;sibh, wrtt,in 12 months aft,:r II"' r;;portnig date eCL Is l.h~ dilh·r,·nrn !Jetween all conln>rtu;1I v1sh Mow, that are du" to tile Group In accortJ,.,,1,, wilh r11,, contract and all lh•' 1<1•,h nows that the entity 1,, r11Celv1 [I.e., all ',ho,trc1lbJ, discounted at th" original Im~.

rn. lmp,mment loss allowmKf, 101 mv<1r&al] presentation for v~rln11, n11uncl•I ,n,ttumcnts

dum,9 th,· period Is re<:oq11i;;<;(J

b~low: Financial ci$',(:h JIICd'.,lHt'd at /;!Jl!Ortlt,cd ( (J',,! ,111rl ( (lntractu61 reVE"Hl!l" H '! 1 'IV,ii:Jlt"1$; ECL ii prer:#t'nti·d ,1'1 ,•ill .Jli<)W-Cmt~ I

those asset,,; Ill llH• btilnll(:¢ sheet, which l<'ri1J11", !!11• net u&rrylng ilrYi(Jlllll, llr111I H11; ,,~t moo~ Vc'l!II' off (!111'11,'lr the (itoup the gross c:t111y1111 1 ,1111rn111L

t,·. an 11111•(_11.11 pt1tt of th@ rne.1•,rn1 111w:01 pl

111i1 n·dtKi· lmpairrn~nt t1l11lw,1(11t fron1

For assesslny 1t1t.1t:.i·,( · 111 1:redll risk and i11qJ,111ni1 ·nt 1o- .. ;, the Gu1up C(J11ii)111( ,, 1111,,mr lal fn$\:rqm0nbr un Ow 11,1',J', of :,:;hared credit 1P,k ( I ,~ir,1< 11-11itiCZ,

II Financial llablllti11111 a Initial recognition and mi;,111or<1111111nti

Financial liabilities arr, dao»l11'<i, at Initial recognition, ,,,, fin,lllclal llabllltles 11 '"" v~lue lf1fough profit or loan', and borrowlngi, p'1y'1ill<"<, as derivatives designated a@ hedgl111, h,®lru11K•nl1 In an el'l'eci:lvc, l1N1<1c, appropriate. All li11,,.,dai 111,L11lltles are recogniiei1 11111,"IIY ~t fair valoo and, 111 tr10 rn,,c of lilllnl and borrowlnn;, ,md p.,y:ible!I, 1111t of dirrrtty :;ttrihut,Jbl~ lT•nsact1011 m,t,,

b Subsequent measurement: Subsequently ,111 !111.tncial liabilities .iw rnt1tN11 ( ·d as !l!trl(irtised co•A 1'x< t!pl lot t ... oans aod borrow1n(r., :--Vi tlt,".(rlbed below: Loans and borrowings: After in1U~1l rw:OiJniUon, ihtijr~t..,btku'!n\J k.1,-1":., und borrowlng1 at\.; :.,uli'.A.:LjucnLIY me@sured at i1rnmu:,i<_:U uJ:;:t u%.ifl9 the EIR t11t-.'.t!V1"'l- Gdi!IS and 10$$@$ at(· 1i,u.1j)ni½t'tl 111 profit or loss when tile lidh!ht,e, are derecognb,,,.1 well as through thf, c!R amc"t,saHon process. A111or1.1sc-d cost Is c:alculated by taking Info account any discount or premium 011 <ltqui;.,1,nr1 and ms 0t e<>•;l•, Uiilt ~r,, ,.in ln~ral part ot 11w, i'.JK, Thi!! E!R amortisation ,,, included as flnance C:O$l$ In lite, ,,tatemant of profit and loss.

c Derecognitlon: A finanrI~I llablllly I•, dernu:i1i111seci whl'll thr nhligation und~• th~ llablllly I~ t:lis,I1.,rg<ld w r"ncPlll'<'i nr r~µue,, Wh~n ,in f'l<l'!lin~ Rn~netJI liability " N'f!lnrl'd hy another from l!w '"1mc l©nder on !;11h•,J;1rit1,.1lly different t~nr,st 111 t!w term·.• ilf an exiatlng h;1luhty ,n(: ",UIJ!Jtimtlally mod1f1cd, ,,uch ill\ exchange or n1od1fkdl1011 1•; treated as t.ht'. d1,·1t:<:ogn1t1on of tht· ()fl!J11i,1! lhltHlity and th&l: re((11 1111t1u11 ilf •. 1 new liabllily. T1·,,/ 11111('ri.'11n·j In the respect1vr: c,1ny111q ,1moun~ is recor1nH1Pd in 1h(' statement or pror,t or loss,

d Embedded derivi'ltives: An embedded derivative Is a component of a hybnd [co111bmed] instrument thdt "1,;o indU(lt·s a non-derivative ho,,t contract - with the effed that <;()trJe of the cash ftows of the combln1.,n l11!itrun1cnl vary In a way s,nul,ir to a standalone derlvnuve, 1>erlv<1t rves embedded In ~II 01111,r host contracts are ac:countecl ltlr as separate derivatives and recordM "' fail value If their econorrnc ch,:ir,ictnrlstlcs and risks arm not <.10,!lly related to those: ot the 110,;t contracts and tho ho$\ contracts are not held for trading or de$iynatcd nt fair value th0Ugl1 profit or IMI!, These embt,dcled d,,rivat,ves are maasurocJ at fair value with changes in l,llr value recognised In profit or loss, unless dos,u11atet1 effective hedqlnw !nstrurn1,nts,

C Reclassification of financial asset:11: The Group dcte, rrnnes elasslficatlon of fli 1<.11H 1,.11 a~sets and li~b11it it:<; on imt 1, 11 recognltJon. Afl r•r irut1,d r r '(X!gnition, no rf:c l;-r;~;ificat1()n is madt~ for tl11,H1{ 1<.11 d";•;cts

which arc equity mstrument:; and nrwnci,.d l!<Jb1hties. For nnan{ kd w~;st1b which are debt lw;ITIHll!~llt';, rl reclassiflt::eition 1c; m,Klt: only if there is ! thdnrJc Hl the business model for managing thOSE' d'c.'-ids. Chr111qes to the bush 1c~,~; 1nrn1t~1 mti expected to bl' m111 ·quvnl".The Group's senior rndnaijt'n1nnt determines change 1n the business model as a result of external or internal chanyes which are s1gn1ficant to the Croup's operations. Such ehan9cs are evident t:o cxt!!rnal p,11tics. A change in the business model occurs wh,m the Group either begins or ceases to perform an acUvlty that Is significant to its operations. If the Group reclassifies financial assets, it applies the redass,lica\ion p,osped:lvely from the rcdassrflcatlon date which is the first day of the lmmc,liatcly next reporting period tollowlng the change In business model as per Ind AS 109.

D Offsetting of financial instruments: Financial assets and financial llabihtil:,; ""' ofh<'.1 arld the net ,irnount ,,, "'P<>rted in the bal;111"' sheet ,r there Is a currently cnforcr'Jble legal right to nlf•;d the recognised amounts and there is an 1nlentirn1 to ',ettle on a net ba,.,;, to wait'"' the assets an,I ,,,•\II<'""' hc1l)ilities simultaneously.

24 Fair Value Measurement: Fair value is the price that would be received lo s<'il an asset or pail'.! to tr,ms!c,r" 11,ibllity In an otCh'1iy 11,11i,,,1111on between mark,'I pNUc1panl:!; at the nieas,""ment dcrte, The fair value measurement is based on the presumption that the transaction t:o sell lhe asset or transter the ltabllity takes place either:

a In the principal market for the asset or liability, or , b In the absence of a principal market, In the most advantageous market for the asset: or ilablltty

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act ln their economic best interest:. A fair value measurerncnl of a non-financial asset takes mt.a c1ccount a market parlrcipant's ability to generate econornic benefits by using the asset in its highest ,mrl best use or by selling It to another market participant that would ,,se the asset in ,ts highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which suffioent data are available t:o rnca,;ure fair value, maximisin9 the use of relevant. observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in U1e financial statements are categurio€d within the fair value h1crnrchy, described as follows, ba!ied on the lowest level input that is significant to the fair value measurement as a whole:

a Level 1 - Quoted [unadjusted] market prices In active markets for identical assets or liabilities b Level 2 - Valuation techniques foe which the lowest level input that is significant to the fair value measurement Is directly or Indirectly observable c Level 3 - Valuation techniques for which the lowest level input that Is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on cl recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re~assessmg categorisation [based on the lowest level input that is significant to the fan value measurement as a whole] at the end of each repo,ting period,

25 Segment Reporting: Operating segments are reported in a manner consistent with the Internal reporting provided to the Chief Operating Decision Maker (CODM) of the Group.

26 Earnings per Share: Basic earnings per share ace calculated by dividing the net profit or loss [excluding other comprehensive income] for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year, The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element In a right Issue, shares split and reserve share splits [consolidation of shares] that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss [excluding other comprehensive Income] for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares,

B Standards issued but not yet effective: The Ministry of Corporate Affairs has is.sued Companies [Indian Accounting Standards] Amendment Rules, 2019 and Companies [Indian Accounting Standards] Second Amendment Rules on March 30, 2019, which notified the following standards and amendments to Ind AS applicable effective from April 1, 2019:

Ind AS 116 - Leases:

Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The standard introduces a single lessee accounting model, requ1n11g lessees to recognize right-of-use assets for granted rights of use and corresponding lease liabilities. However, Ind AS 116 contains the option of exercising exemptions for the recognition of short-term leases and those pertaining to low-value assets. The Group will adopt Ind AS 116 effective from April 1, 2019, the Group will apply the standard to its leases, retcospectively, without restating the comparative figures, On the date of transition, the Group will be using the practical expedient provided by the standard and therefore, will not reassess whether a contract, is or contains a lease, at the date of initial application. On the date of initial application, the Group will recognise a lease liability measured at the present value of the remaining lease payments , using the incremental borrowing rate as of that date and right-of-use asset will be measured at the amount equal to lease liability adjusted for accrual anr1 prepayment Initial direct oost, will not be taken into account in the measurement of the right of·u,c JilliCt il~ of the date of first time ilPPlii;ation, In accordance with the standard, the Group will elect not to apply the requirements of Ind AS 116 to short-term leases and leases for which the underlying asset is of low value, The Group is in the process of evaluating the impact of Ind AS 116.

258

G~Blo!:k: A~ at Mare 1, : 1,1017 Ad1liti1m~,

Ui:;prx,t1h

M at: M~rch 31, 2018 Acqui""d Sub$ldlaries

Addlllons D1\pr,l·rl'.)l,;;

Aft, MiHCh 31, 2019 O¢preciat1(", and Impairment:

Mal Man:1131,2017 D11p1ct1auon for the year Impairment for the• Y""' Dl9POsals As at Marrh 31, ,Olll

Acquired Subsl(liam•s Dl!pr111dlltlrm for lhe yew Impairment lor the yc~11

DlspO!ll,lfS As at March 31, 2019

Net lllock: As at Morch ·ll, 2018

As at March Sl, 2019

Note: 4- Intan Ible assets:

Pa1ti<:Ulars

Gross Block: As at March 31,2017 Additions Disposals As at March 31, 2018

Acquired Subsidiaries Additions Disposals As at March 31, 2019

Amortisation and Impairment: As at March 31,2017

Amortisation for the year Impairment for the year Disposals As at March 31, 2018

Au4ui1 t.:!U SulJSidldries Amortisation for the year Impairment for the year Disposals As at March 31, 2019

Net Block:

I IJ:1'!111ld Li?Qfif"hOld

1 •. 11,,.1 .IJW!

2,282

2,282

3,79,692

As at March 31, 2018 2,?82 As at March 31, 2019 3,81, 974

Note: For details of assets pledged as security refer Note 19.

Notes to

Pl.int .1rn!

l"<tlllf}tU!--'IJt

Brands/ :CCll!lllm!m

l,.l,86H

5

53,868

f'-11111/l!!r,· .-ind

I 1,,II_IH",

112 25

UI

I /J ll

atlllll:.!n!an~11)J<: /\;i:,t:lli

$0 )H

Computer comnwrdal ~ /',Jgll\,

43

•H

J!/J

8

I/

II

28 199

22

15 156

10

10

10

10

10

10

01fo('

l;,!Ulf!!ll</111

259

,·~zyd~; w~~tlne~,S Lu1\i{J_~;rd ,,_ _____ ,

--------"-'N .. 11;.tc;ti .... " l() Uh: Co11:'l.Olid~1tcd ht _ _h1flt'.j.11~ -------~---~~

r1Jm,1,<;urtld, Considered Good unless otherwis.' I 1xed o,epOfilits 'fot,11

[lJn$!)l;U[l•(I, ,:onsldered Good unless 0thl!!Wlst:

Capil:.ll /\dvances

Balllncei with :;tatutory Au(t1011t"''•

Totlll

Notl11 II • Deferred tax:

Particular,

Deferred Tax Liabilities:

Depreciation

othera Total

Deferred Tax Assets:

Employee benefits

Provision for Expiry and Breakages Provision for Bad and Doubtful Debts Provision for GST

f\.,, d!

/\p11! 1

(\Ill

541

84 24

(h.1r[]C rnr \l H' pr f'VH)U~i

y~

(142)

(?)

A!; ii March 31 A(;(fuired Suusrclr""' "·

2l!1ll

77

24

2,764 3

2 767

14

205 222

Provision for Vat Liability .H

Drsallowancc under sec 40(a)(ia) •B\l Rent Equalisation 3

Total 108 (7 101 917

MAT Credit Entitlement 6,065 J,613 7 678 l,G00 Net Deferred Tax Liabilities 5 631 1 7'18 7 380 , 0

8 The Net Deferred Tax Expenses of INR (3,170) [Previous Year: lNR (1,7~8)1 Lakh for the year has been clebited / [Credited) in the Statement or Profit and Loss,

C The ~roup offsets tax assets and liabrlities if and only If it has a legally errlurccable riqht to set off current tax assets and current tax llabllitres and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authorrly.

The maior components of rncome tax expense for the years ended March 31, 7019 ,.md M;HTh J l, ?0 J8 ;we :

Statement of rofit and loss:

Profit and loss section: current Income tax: Current Income tax charge

Deferred tax: Relating to origination and reversal of temporary differences Income tax expense reported in the statement of rofit and loss

Reconciliation of tax expense and accountin rofit multi lied b India's domestic tax rate :

Profit before tax

At India's statutory income tax rate AdJustments in respect of current income tax of previous years Utilisation of previously unrecognised tax losses Effect of Non taxable Income

Effect of Special tax deductions

Effect of Special tax deductions (BOIE)

Effect of MAT Credit not accounted for

Effect of Unrecognised DTA/DTL

Non-deductible expenses for tax purposes: other non-deductible expenses othera

60 GO

14,974

5,183

(62) (83)

(39)

(36)

(4,531)

1,089 (224)

16 10

At the effective income tax rate of [-0.35%] (March 31, 2018: 8.84%) 1,323 Income tax ex nse re orted in the statement of profit and loss 1,323

MAT credit of INR 4,991 Lakh that are available for set off against future tax liabilities have not been recognised and the same will be eligible for set off upto fifteen years from the year in which the same anses.

Note: 9 - Asset for Current Tax : [Unsecured, Considered Good unless otherwise stated]

Advance payment of Tax [Net of provision for taxation]

Total

260

Notti 111 • [The tnvt,111<wy l"l~ult'le•Umi or lnvcntorle,:

Haw Materials w0rk•ln•r,rogrns:: I 11\IShed Goods ',IO(;k•ln•Trade Oth~rn:

Store 11nd Spam 1\11k1ng Materials

Total

Note: 11 - current financ;,al assct,_•JnVffilbn1111t,,1 ..

lnvcstmont In Mutual Funds LQuot~iJJ [Valuoo at f,1l1 valu~ LluQ~Qh pmftt or lnssJ: Kl:1tak liquid Dn!let Plan Growth Rthancc, Liquidity Fund • Dlmc:t i'l~n Growth DSP Sl11ckrock I iquldlty Fund • 1)11 (•cf [>tan Growth

Total /\ /\qgregate amount ol quotvd 1t1v1%1tnents 8 Fxplanatlons:

In 11Nos. [*)" fiqur(':; ol pre'vlous year are ',\,ill ,{i lfl r ].

Not.a: U • Trade recelvablu: Unsecured • Considered good: Total

Note: 13 • Clish and Cil$h e ulval11nti11 H.-il,HK('S with Banks in Current A< counts

Cash on Hand Total

earmarked balances with bank for Unpaid dividend Fixed Deposit with banks (*] Total *] ror details of lien on rixcd De os,ts reter Note n

Note: 15 • Loans: [Unsecured, Considered Good] Advances recoverable in cash or 1n kind or for value t.o lw rc•ce1ved Total

Note: 16 • Other current assets: [Unsecured, Considered Good] Balances with Statutory Authorities Advances to Suppliers Other Receivables Export Incentive Receivables Prepaid Expenses Total

zy,h,;, W<dh111u Llmiuid .. Sl.-:tt.ementl -----

!,21,805[0] 012,15,132,11] o (3,!!7,105,158]

61 61

3,679 373

30

261

Nate1

I n,00,00,000 [a!,"' M,1(cl\ 1 I, 20111: 4,50,00,111111 I I 'I' "'Y

Issued, Sublltll"lbl!d llnd p;,id-up:

s,1(;,61,144 i"'· at M1rch 31, 2orn· -,,:m,n,oa9J e(Jlllty Share, of INR 10/· each lully 1Mid up

Th~ Reconrtlal 111n in number of L'qUlty Shill\: is as und1r: Number of' ch:ir,,,. nt tho bfiijtnning ,,t ,110 yc.,r Add: Shari••, ,,,,,,,,,,i ,1,,,1119 the y<lllr Number of ,-11,,,,.,, "' 11 ,,, end of the YM•

of lNR 10/

111e Parent has only "'"' ,1,,.,. of sho" ., t,,,virHJ ,, 1li!r v~lue or 11111, 11,1 ,·;,rh shar;:. ~,u,

C

l1older of equity ,,1,,,,,, ,.,,1,11,-d onf. vol:(I ·,1,,,,,. 1 he dividend ptapn,,u1 1,y 1tv• of Dlrtlcto,•, Is •:ut>j,1.ct to the approval of the sh111t•t101d1@·s In the Annual (,<111e,,11 Mlllltlng, ®!CIPI 111 th;; •\"'' of lntMm drvidcnd, ln the event of liqu1ddl1on of tM P1m1nt tile 11qulty ilh1re11,,,1,1,,r1 sh~II btl entitled to prop<1rtlonal:l! share of 11101r hold mg In the amits all11r dlstrtbutlO!'I of all p, ..r,,,riantlal amounts and all lillblllties, Det;.uls of Shareholder h<>ldinq more tlwn ~% c,f aqq""!•bo E~ulty SIM1Ca of INR 10/· ;,~ch

[as at March l 1, !O Ill: I Nf( 10f l!aCh), f11tly p:,«J'

Cadila llealtt1c.11 I' I 11T1il:OO

Number of Shares % to tol:lll mare h111<1" 10

Thrnpsl care LLP (Trur, North) Numller ef Sh,llUS

% to total share holding D Number of Shares held by HoldinCJ CnmpMy

cadila Hcalt11c~,,., I irn,t:ed

· ,te: 18 • Other equity: General reserve: [*]

Balance as per last Bala1K~ 5IHJel'

Fair value through other comprehensive income [MOCI] R-rve: Balance as per last balance sheet [Less]/ Add: [Debited]/ Credited during the year

Debentures Redemption Reserves: [**] Balance as per lasl Balance Sh,,et Add: Transfer from Retained Farnings Balance as at the end of the year

Securities Premium[***] Balance as per last Balance Sheet Add: Addition pursuant to Issue of shares Balance as at the end of the year

Retained Earnings: Balance as per last bal,mcc sheet Add: Profit for the yea, Less: Profit elimination of acquired business

Less: Dividends Corporate Dividend Tax on Dividend Transfer to Debentures Redemption Reserve

Balance as at the end of the year Total

[*] General Reserve can be used for the purposes and as per guidelines prescribed in the Companies Act, 2013, [**] The Group has created Debenture Redemption Reserve as per the provisions of Companies Act, 2013 and the captioned reserve has been created

out of profits of the company available for payment of dividend. '

[***] Securities premium is created due to premium on issue of shares, This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Note: 19 • Borrowin s:

Non Convertible Debl!ntures:[NCDs] Secured[*] TOTAL

[*] Securities and Terms of Repayment for Secured Borrowings: (i) 9.14% Secured Redeemable Non Convertible Debentures [ with semi-annually interest payout] issued by creating a charge on specific brands of the subsidiary company,

(ii)The NCDs are repayable in three equal yearly installments starting from January 16, 2022 along with accrued interest for the period.

(iii)The outstanding amount of NCD as at March 31, 2019 is INR 1,50,000 [as at March 31, 2018 : INR NIL] Lakh.

Note: 20 · Other financial liabilities: Trade deposits Others Total

Nate: 21 • Provisions: Provision for employee benefits Provision for Vat accural Total

4,1:il:!!I

(1) 2

;u,:.oo

2551!41 2,!;!ii.641

28l,6),755 ?~.08%

is11li1,7SS

~500 4,500

(12) 11 (l)

41,m 13,390

60,713

60,713 65 712

March 31, 2018

21 36 57

949 1------~7~7-l 1334

77

262

zYd-tl~ Wdhu-.v, Louited

_________ N_o'-t_e_t 10 I.ht:, Con~ol1di1tf;(.I 1--11u111d,_,1_1l_tll_· _te_m_e_n_t!! ______ _ ·,. -PrOlft~ions - C~nt.inuf!d;:

i----=-=""em•· ~.fl=n~cl h~no,flt pl.in ;;,,;I·,;,,;;, ;:,.,m A General description:

Le;,ve Wdgc, I Lmu1 lrnln <1mploym111rtt benefit], r h(! lt.."tlVt· ! 'I!( ,1':fu111 ·11! •.1 !t(%f1l~ lldmlnl1ter<0ci through Llf;·, f n)-,111,inu_· ( {_11 pl 11,111,111 , ,1 Group Leave Efne:,1~.1111w·n1· 1 u111 1 1k l\•,;_M1t'1ni 1' I Cttsh {\( rnrnul;_1\t(lt\ l '_,;t_lw1i'11. 1 ht' emplovoo, of tlie Gt'OUP !lire enbl h •d If! l1;,1V(! pi'! I I I'. I,', 111 1 1Hl(i(y Q( The li&blllty on ,11 f_OIJlll ot ,'JI_/ urnul,-J(t'.ll jc',]'j!' 'l', on

last day of the accounting y,,om ;,, ,1,rnrp,i300 of tlw 1 .. ,r value of pl~n ,~1111ts as at tt111 i,,,1,.n.:e r.h,,1•1. d,ilf:I ilt pre31m1. value of the defln!ld obllgatlOII 1t 1tit, balance sheet date blilled on 1IH: ,xl11,1111J1 c11n,od rn1t by an Independent actuary uiln•1 1.>101,·,r.•11111111 c.•edlt m<1U1<Jd

Gratuity [Defined benefit ,,1~11): pl~" t:v,,,y ,.:inploy®'! who has completed continuous ;;,,,v,u", of nv,· m· !li(lle •1•ltli a gratuity on duth or l'l!llgn,tlon The Group fl!IS a dlliined Dlll !di(

or retirement at 15 days Ml1.11y insurance policy,

dmwn 0..,1,.11yl lor ,•ac.r, completed year of !lllflllce, The schm,,: "' hmdM w,111 ,111 ,n,,urmKe comp1ny in the form or I qYllflfying

I Change in the I"'"""' val111, Of the defined benefit obliy•1t1011:

C)pcrnnq dcfme(I lwn!'/11 ot1ilq:1t11JI)

lr&1sfcr m/(out) obh9.:-1t1on 1111.l '.rr'~;t uJ:-;t

Current scrv1{ l' co<;t

Benefits p<.11cl

Act.uaridl !.9dlflSI / lo•, ,C', on nhh(Jdtlon Closing defined h,'n(•f1l 1>hlirJ,ll1on

C Change in the fair value of pl11n •-ti;: Opening fair value of plan assets Transfer ln/(out) plan llmll:S Expected return on plan asm Adjustment of Opening fund Expenses deducted from the fund contributions by employer Benefits paid Actuarial [losses]/ gains Closing fair value of plan assets Total actuarial [losscsl / g;,ln, to be

recognised

I) Actual return on plan assets: Expected return on pl1m afisets

Actuarial [losscsj I qains 011 plan ,issets Actual return on plan assets

E Amount recognised in the balance sheet: I 1;:ih1ht11:•c: / L.AssP!·sJ ,::it_ ltw t:nd

of the year Fair value of plan r1c;s0tc; rit I hr ~nd

ofthe year Liabilities / [Assets] recognised

in the Balance Sheet

F Expenses / [Incomes] recognised in the Statement of Profit and Loss:

current service cost T nterest cost on benefit obligation Expected return on plan assets Net actuarial [gains] / losses In the year Net expenses / [bcnclib I

Net actuarial [gains]/ losses in the year Arriounts recognized 1n ULl

G Movement in net liabilities recognised in Balance Sheet:

Opening net liabilities Transfer in/(out) obligation Expenses as above [P & L Charge] Contribution to Plan assets Amount recognised In OCI Benefits Paid Liabilities / [Assets] recognised in the

Balance Sheet

!4

"-..,;~.=

41

4

3 40 5 2 18 3

(U) :u 38

2-.~~--·- 9

33

43

2W Le:woW01'illJ!

108

13

155

j l

166

37

11

11

238

(166)

72

42 13

(11) 37

l!L

53

81

(62)

72

257

17

242

J8

48 (28)

279

14

18

18

290

(279)

11

60 17

(18)

59

14 (14)

15

58 (48)

(14)

11

263

Noto1l:l• "p,;,v,sioM • Continued: ~---ti -Princi 111 ao::tu11rial-ai.s11m

Particulars Discount rat:e I. *1 Annu"I increase In ~•l~ry cost [Ill

[·!I IM rate of d11;count 1·; cofl~('d umpluyment bPm;l!l ul.i!lyatlons­

/l,111ency and 1t'1111•. 01 th~ poit

[#J Th,, estimates of future ,.,1mv 1ncreae1 .;1c rn,Nd!!flld In actu,:11k1I v1luatlon, lili<1119 inlXI aci:ounl ,nm1110111 Nnlorlty, p1,J11vJlli,n 1nd o~"'' r~lev,,nt faci:ofll •:iJCh supply and demand In the crnploynient mark!,t

l :::e::::tell of plan assetli a!l 11 % of wtal platt Insurance plan

J Amount recognised in current and pn:vmut four ye,u~;

Gn,tuity: D~fined benefil ohll~-~tlon l·'·;,111 value of Plan AS½CIS

Lld1cit / [Surplus I in llw pla11 Actuarial Loss/ l<:iamJ on Pl,,n /Jblig11t1on Actuarial Loss / [Gain] on Plan As,,nts The expected contributions for r1e11nl!d Beneflt Pl,111 for the nlXI: fo,anc1al yur will lit, in lin,i wll:II FY 21:liR ,~l-lhe average duration of defined be11,-i'11 pl,,111 Obll~atlon .,, llw ,.-,,d of the yi,.i, ,,, ; '1.99 _[al at M,11,h <I, 2018 : 23-'111 Y"""'·],

Sensitivity analysis: A quantitative sen!·;1t.ivify analysis for s19111IH .1nt aSiump11rn·1 i•; as shown IH ·low·

A Medical Leave:

Assumption Sensitivity Level Im ,act on defined benefit: obligation l NR-1,,il<h Assumption Sensitivity Level

Impact on defined benefit obli atlon_[TNR•l,~k .. h"------------------B leave Wa es:

Assumption Sensitivity Level Impact on defined benent obli ation [!NR-Lakh Assumption Sensitivity Level Im act on defined benefit obli ation INR·LakhJ

C Gratui :

Ac;c;umption Sensitivity Level Im act on defined benefit obi, ation INR·Lakh Assumption Sensitivity Level Impact on defined benefit obli ation f]NR-1-<lkh

Within the next 12 months [next annual reporting period I

Ian in future ears:

15 (18) 2

264

I

,...._ ··-------- ----- -------------------- -----~--,l'"y"'d-11-1"'W""1•11n•~ U111111111

_N._01•1 to':!!! Curl-.uhif•tllCI Pin••!('•" SI~

----····· _,_ --- ---. __________ ., --Noi.: n-Otll•r non current liabllllf•1 ______ ,, ___________ ;,.c.....,.;,.;__ _ _,.,;;.,;.,_. --••.- --·---- "" "' ---------

Dtf •1 n!il l"lra"t Total

r------- -----'~- . . . . ----- ----~L!~ • C11rr,nt ftnanc!!!_~.!2!''!1.~ L<w,nt; n~r,1yabl• Oil d101u11c'J:

Total

Working Cllp1tal I oans from Blink·, l\,O(UflldJ [•] W\ll killlj c,1pital IOl)i)$, f101n h.111kt [tJnse:c1 IH'I !1 [ i 4 J lo,11 i:" !I nrn Intercorpot .itc p Jn:;€ftured] [' 1- 1 I

( • J s111curlty and T "rmt of l\epaym,mt I or !lllcuNld llorrowlng11 Working Cap,t<1I Loons which 1ir~ 111 the• rorm of 0Vt:1<Jr4ft 1actl1ty is 111·•-""'<111y fixed aeposi1·. pl~ced by thlll Group w,th tlw bank, The value u1· ~,ich Pixed cl!•p<)st\-;; dallllifftd und~-, , umllnt a&Ntll af. ~t Mm'Ch 31, 20 I~ I', I NI{ 2,380 Lakl, r .. -. al March 11, .'ll I II IN!< NIL] :1 h<-> "',i,,tandlng ~n 11 '""' nl lo@n 11$ It M. '" 1, 31 /{ll'J IS INR 2,150 I ,1kh l,1•. lit March II. )Olli_ lNR NIL1

[**] Terms of Repaymenl fo1 u111NC11Nld a,m-uwingsi Working <.aplt.ll loM,, wh1c:h are rcp,,yatlle an dem,w,a. 'fli11 oul:stllncllnq arno,1nt or 1011n ,, .• ,Jt M~.-m )11

2019 ls INR 4,500 fas at March 11, 201B: INR 2,500] l.okh. [*' • J Terms of Repayment for Unse~ured lol'l'Owlngs:

lntcrcorporate interetl lo;m hdvi_ng tenur,J oi :i!11: year. _ -·-----__ . "··•"-Not<11 24 •Trade payables: - _·_··-'"------------ ··- ______ , ... _

Due to Morn,, ~111,JII and Med""" I nt,·rpri,a [•] IJw• 10 other than Mocro, small and Mtrliurn 1·n1erpri!lll

Total

Note: 211 • Other financial liabilities: Interest ~ccrucd but not due on IH>nowings Payable to employees Unp<lid dividends Total I

••• 133

t,-----••h';,;_''•'-''.C'-'-'-~----l.:ill.. !:<(; _,;,,; 7 e6S

l'lote, 26 • Other current liabilities: F"---'P'"a .. y .. a.,,.bl'"e'""t_o_s_ta_t_ut_o_ry .. a""u""th""o ... r"'11'-;,,-,-------~-------------- ------ -------------------,,-, __ ------ ---2 ... ,) .. J-,-.------4-1"'6--1

Deferred revenue t•- !14 28 Advances from customers '1'10..1 219 others k '.;'Jl 259 Total :; .. !,ii" 922

Note: 27 • Provisions: Provision for employee benefits Provision for claims for product expiry and return of goods l'] Total

f*l Provision for claims for product expiry and return of goods: a Provision for product expiry claims In , cspcct of products sold during the y, '<Jr is

made based on lhc; management's tsl:in1citcs conslderinq the estimated stock ly,nq with mtailer. The Group does not expcc:l such claims to be re1rnburse::d by .,my other party in future.

b The movement in such provisiun is st.fled as under: i Carryinq amount at the beginning of the year Ii Additional provision made durinq the vear iii Amount used i'-' Cii!rrying arnmmt· .1t ~ho end of the vc,Jr

Note: 28 • Cun-ent tax liabilities rnet1: current tax provision [Net of advance tix payment] Total

Note: 29 • Continaent liabilities and commitments rto the extent not orovided forl; ll!IIIJt. Contingent liabllltles: "lflllll' a 0ther money f0r which the Group is contingently linblc:

i In respect of Sales Tax matters pending before appellate authorities ii In respect of the demands raised by the Central Excise, State Excise & Serv,ce Tax Authority iii In respect of Income tax Iv Stamp Duty

B Commitments: Estimated amount of contracts remaining to be executed on capital account and not provided for

Note: 30 • Dividends proposed to be distributed:

'

I r I

'!f! (I)

f,,(I,<~

1,331 13,452

1,863

671

The Board of Directors, at its meeting held on May 28, 20191 recommended the final dividend of INR 5/· per equity share of INR 10/· each. The recommended dividend Is subject to the approval of the shareholders at the ensuing Annual General Meeting.

60

70 130

70

/U

188 188

742

43

118

265

·zv~h;;-w~~f-1;~(••,._ I mut:~·;.1 ----~---------N_ottlls to._,,.~ <-;nn-..olJ_d~•••?! r IIMl)('l_.,,_sta_te_m_e_n_m_. ______ _

Nob!! 31 • llll\ltlnue from operations: Sale of produ, l•,I 'I Other operath HJ I r_'v(·'11or~~;;:

Nd q,1tn on foreign currency trammct101.,; an<I lr<1n:,1c111011

Ml:,;:,,ltaneous Income [••] Total

r• l rlH, Government of India has introduce,, the <,oodb ,,,,d :.,e1viu: r,,x (GST) with effect from July 01,2\ll? wh1d1 it•pl,.ii.:es

duty and various other indirect taxes, A'ii ptr Ind /\'; !fl, ~cv«ou~ from operations for the ptil'lOd fro,n luly :m1.1 1 o M,mh 2018 is reported net of GST, Revernu,; rrom op,irn11n11·, of 1><:n•XI~ upto Junll 30, 2017 are l'!IPO!'tetl 11,r1uwc of duly which Is now subsumed In GST, Mi,,,,1,!laneous Income includes, (1) Govermnent grnnt,; wlio'"' o, ott,erwlse acquire non-current assets; ai" 1 ern9n11r,fl '"'~ "111 ·et and transferred to the Statement or pront ,1m1 loss on rel~t..cl ~s~nts.

1.onditfon Is th~t the Group mould c1;n~truct Dnl'Nld Gl'lnt H OQ!l-CUITl!nt llllliillY in l)~l~nt(:

!'!\'S1111natlc and raUon1I bHl5 over the u,,e1u1 live:; nf tlli.,

(2) credit ol exus,c 11111y of INR 1,799 Lakh received by Zydu~ W~lln$;i:t, ,.,1kk1111, Ill(' p,11111,·1·,!11p 111111, pul'lluant to the order p61$$ed by the 01l!U' o1 the C0IT)l))jss1oner of Customs, Cantral fZXC1$1! and J'ivl-V!(l;! --1 d.X ()Tl 1111' l1x;illon or ~•ptl;d~I rt1l'e of excise duty under Nolif1cal1on m ;11;2001-u dated April 2512001 arr111nded by No1JtlCliil:i1111 N<, ;11//IIIJH ,1.1h)il March ~7,2008 l!t NotlftCil\inn No.3fl/21JOH Cf dated J11ne 10,2008,

Note: 32. • Othet income: Finin<:e lncome:

Intt!re~;t income on tindn( id! c1sscls rr1easure1d at amortised coot Net gain on lnveslments rncastirc(l ,11 FVTPl

Gain on sale, of 1nvestment.s

Total

Note: 33 , cost of materials consumed: Rnw materials :

Stock at commencement /\dd: Acquired substdlaries Add: Purchases

Less: Stock at close

Packing materials consumed Total

Note: 34 • Purchases of stock-in-trade: Purchases of stock-in-trade

Total

Note: 35 • than es m Inventories: Stock at commencement:

Work-in-progress Finished goods Stock-In-trade

Add: Acquired subSldlaries Work-in,progress

Finished goods Stock-in·trade

Less: Stock at close: Work·ln-progress Finished goods Stock-in-trade

Differential excise duty/ gsl on opening and closing stock of finished goods Total

Note: 36 • Excise duty Excise duty Total

Note: 37 - Em Salaries and wages Contribution to provident and other funds Staff welfare expenses Whole·tlme Director's Remuneration Total IIS!i!!

779

11,831

12.,610

10

33 l,877

16

1,926

47

1,475

12

1534

392

331 61

852 852

4,981

236

144

303

5 664

266

Sink COtfinH',".1n11 {'{ charge, T1:11:iil I 'l Th" lirn~k ur of int@r<;;.L ""µ"'"~~s lr>tn ma)v1 l1m1iJ~

011 working rapit,11 lo~n11 o,, Non Conwrlibl¢ l)ebentur\lli Oth~r-, ToL,I

an1<irtlsatlon Tot11l

Note:. 4Q • Other ex enses: consumption of store, am1 ,pare Pow~r & fuel Lilbnnr <'harges Rent ['J Repairs to buHil,r,ys Repairs trJ plJnl and machln<:;1 y Repairs to others ln~ura1"1C(! Rates and taxes Commission to ,11roctors Traveling expenses Lcg,11 and protessional fees Net Lo,1s on foreign currency transactlc:ms anti tran!lla~on Commission on sales Freight and forwarding on sales Advertisement: ond sales promotion:, Representat,vo allowances Seminar and conference Other marketing expenses Provision for doubtful debts Directors' fees Net Loss on disposal Of fixed assets Donations Miscellaneous expenses [**)

Total

(*] The Group has taken various residential/ office premises/ godowns under ope,atmq lcdse or leave c111d

license agreement with no restrictions and are renewable/ canrellJble at the opt,on of either of U1e parties. There are no sub-leases. The lease payments recogr11scu u11ucr "Rent Expense," are:

[**] Miscellaneous expenses include: a Expenditure on Corporate Social Responsibility [CSR] Acbvltics as required u/s 135 of the

Companies Act, 2013, b Payment to the Statutory Auditors [excluding Taxes]:

As Auditor For Other Services Total

Cost Auditor's Remuneration Including fees for other services

Note: 41 • Com onents of Other Comprehensive Income OCI : Re-measurement gains [losses] on defined benefit plans[Net of Tax I Total

The numerators and denominators used to calculate the basic and diluted EPS are as follows: A Profit attributable to Shareholders B Basic and weighted average number of Equity Shares outstanding during the year C Nominal value of equity share D Basic & Diluted EPS

Note: 43 • Segment Information:

INR· in Lakh Numbers

INR INR

The Chief Operating Decision Maker [CODM] reviews the Group as a single "Consumer" segment. The Group operates in one segment only, namely "Consumer Products." The Group also exports its products to other countries. However the value being below threshold limit as prescribed under Ind AS provisions of "Segment Reporting", the reporting 1s not r uired.

958 306 40 90 36 89

212 18

524 403

988 1,184 8,983

524

836

4

30 2

73 965

Hi983

161

214

12

12 2

11 11

13,390

390,72,089 10

34,27

267

;tyd;" w\di«- um1u,1i' Notes oo th.« .. to11s,111d11ted Pl!!!,~•• "'dl';;!!l'.'."'•--·-· __

Notw44~ R~J!!~ Pa!1;yTran1Bct1omu ___ -· ..... .....,,.,,.,_,,,..,.._ ·~~·•'~·•· ·~--,--,.,......-A Nlllllll of the l\alated !'artier; iifl!I Ni!hlf!t of the Rllklmtl P,,r!y 1teiat10111htp1

• Holding company! Cldild He,,lllicani Umltecl t, Subsidiaries Companlut

Liva !nv11~m~nt Umltlil:i LiV(f N1itn1H)i1', !J1Y1t!,td Zydus N"'"''""' t 11,iltl!d [Form~rly ., p_,,,,,,.,·.lup t'lrm: M/ij. Zya,i•; \N<'ll,i,•,,. 'Sikkim]• [flefe, Hein? J,nd,.i p,,v,,h• l.lr11itild *[fllllfl!r Nol<' 11 l<ill

c Pellow Subsidiarn.::./ C1>ncem11 7y<i•.h Nov!lll:ill:h !nc., 1 l'iA

ViOIIO Healthcare wm,h!d Acme ?harmaeeutlcat; l'nv~te I i1rn1:«1 Zydus T11ctmologlel L 1mlt~n Zydus I lt:,11\liC,m: l united Dlalfoth1,;1II I I Ir 1d1,1 lhY!llild Dialforhcallh Unity t imltlld Dlalfo!11calU1 \jr,,,,,,, lt!l!\l Limited Liva Pharmaceuticati l..lmitf'd Alida,: Pharmaceutk:lll$ UmII, •rl Zydus Foundation Wlndlas Healthc:Mf!I p,iv,1I,, Umlt~(I Zydus International l'rrvatG Limited, Ireland Zydus Nelhcrl;mcl•, 11, V, 1 the Netht:r liind:, Zydus Lanka (l111v .. t<1) Limltlld, Sri l,,,,k,, Zydus Hcalthcme Philippines Int:., Ph1hpp111<". ZAHL B. v., the Ni!lh<!rl&nds

Zycius Pharmac:eutleals USA lnc., tlSA Zydus Healthcare USA U.C, USA Windlas, lnc., USA

d Directors: Dr. Sharvll P. P:itcl Mr. Gcmcsh Nayok Prof. lndrraben.1.Parikh Mr. Kulin s. Lalbh<11

Mr. Humayun R, DhJnraJglr Mr. savyasachi S. Sengupta Mr. Ashlsh Bhargava Mr. Srivishnu Raju Nandyala Ms. Dharmishtaben N. Raval

e Key Managerial Personneh Mr. Tarun G. Arora Mr. Umesh V. Parikh Mr. Dhaval.N.Sonl Mr. DhanraJ P. Dagar

f PO$t Employment Benefits Plan· Zydus Wellness Limited Employee Group Gratuity Scheme lydus Wellne!ll1 ilkklm Employee Group Gratuity Sch~mc Heinz India Private Limited Provident Fund r w.e.f Jan1.1ary 30, 20191 Heinz India Privalc Limited Employee Provident Fund [ w.e.f.Janu,11y 30, 20!9]

Hereon Pharm,K~UtiCill tt;A LI.C, USA Nllllhlilf Phmrn 1,1c~uijc1;1h: ( USA) LLC,USA Zydus HUll:h<:iitP SA Ply l.lmltecl, south Afril" Simayla Ph&rml!(.t)IJI It.di(; Pty Limited, South Afrlcii <;,npt Mdndgement oe!Vli:c·, l'ly Llll1itcd, South Afrlt:a I t 11,, IJtotcil l S~L, lll!ly 1y<1w; I,.111<:!l SAS, France L,:ilior,1!1H H1\i Cornblx S,L., t11x11n

l?ydus N1kkhi1 PhWfi~Cl!Ut!ca l.lmltilda, l>rasll Zydua Ph1rn1,11 eulit~I§ MQldco SA di! Cl, Mqx110 Zydus Pham1:K<11!1'1t:,1I, M(•XICO Services SA de CV, Mexir.o Zydu& Woridwld~ DMCC, Dubai Zydus Olscovc1y DMC<:.:1 Dubai L/\HI I \ll(lpt't It v., the Nethr•r!,111d';

111111.11 1·1i.,rmlle$uticllls (My.Jnm,11) I11111I,•d, Myanmar 1,i,11ty11I l lwrap<11utJ($ lnc., I JS/I

/yVf•l Anin 1,11 Hlll!ll:h !11c,1 USA Vlollo Pharma<:i!utir.;1, umttlld Viana Pharma,~1,ti<,ds lnc,, USA us Pharma WindlJS LLC, USA

Nnn . !'li,0 rnt;ive Chairman Nun-Lx1'1-ut1ve Director rnclq><1tl(.ic11t Direct:Or up to 11.1u.,019 lnd<'P<'lldent Director !ndcpcndmt Director up to 3L03.ZQ11 Independent Ditect(lr w.c.f 02,11,2018 Nominee Dltc<:tor w.d. 30.01.2019 Independent Director w.e.f, 11,03,2019 Independent Direci.or w.d. 11.03.2019

Chrd fxen,tlve Officer & Whole T1111c Director rxccut,vc Officer [Chief Financial Olf1cer]

cxcculivc Officer [Company Sccret.aryJ up to 06,02.2019 Executive Officer (company Secretary] w,e.f. 06.02.2019

g [*]:• M/s. Zydus Wellness· Sikkim, a p,11lncrship fl,in, was converted into company, namely Zydus Nutnl1ons Limited (ZNLJ, with elfoct from February 28, 2019, pursuant to which, it became a subsidiary ol the company. Pursuant to the Scheme of Amalgamation bet.ween two subsidiaries of the company i.e. ZNL and ll!PL which was sanctioned by the Hon'able National Company Law Tribunal [NCLTI vlde its order dated May 10, 2019 and effective date being May 24, 2019, HIPL has been merged with ZNL w,e.f, the appointed date of M~rch l, 2019.

268

Not@l~.:1~,1,,c1Party Transactions (:ontlnu;:,,: 8 Tr.atwa<;tiuns with R,daled Partl!;I!;:

Nottitothtl <:on,ohdated l'ir1anwt1 Stawrmmt•.

11111 following t,ansactions wen· ,arnr,d ,iut with the rel,1tcrl partier in !11e ,wdln~ry coum of 1i,,•,111<11111: a Details rel,il,n(J to parties rr,fcrn•d to in Note 41 A b & cl

Purchases: Fixed Assets:

Cadlla Hea1111< ""' um,l:ed :.ates:

Zydus Healthcare Llrn1te,1 Zyuus Healthcare S.A. (Ply) Ltd [South /\Inca]

Service Income: Zydus HealllH "' c I ,rnil:ed Cadila HealthCare I ,mit<!d

JAue of Squity Shares Cadila Healthcare Umited

Borrowings: Zydus Heall.t>can · 1 imit~A

lntcrest Expenses: Zydus Heallhc&e Limited

Reimbursement of Expenses: Cacilia Healthcare Umitccl Zydus Healthcare S.A. (Pty) U:d [South Africa]

Services Availed: Cadila Healll1cdrc Limited

Contributions during the year ( indud• emp1oyt111'1 share and contribution)

Zydus Wellness Limited Employl!I!! Group Gratuity Scheme Zydus Wellness Sikkim Employee G1 oup Gratuity Scheme Heinz India Private Limited Provident Fum1 [ w,e.r January 30, 2019] HeinL India Private Limited Employ!¥ Provident Fund [ w.~.f.January 30, 2019]

Dividend Paid Cadila Healthcare Limited

Outstanding Payable: Zydus Healthcare Umited Zydus Healthcare S.A. (Pty) Ltd [South Africa]

Outstanding Receivable: Zydus Healthcare Limited

Details relating to persons refened to in Not.e 44-A rel above:

Remuneration: (i) Solari~~ and other employee benefit:; to Whole time d1rcctors and other cxcculive officer, (11) Commission and Sitting Fees:

Outstanding payable to above (I) and (ii)

Note: 45 • Financial instruments: Financial Instruments Fair values hierarchy: Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy, The three Levels are defined based on the observability of significant inputs to the measurement, as follows: Level 1: Quoted prices (unadjusted) in active markets for financial instruments, Level 2 : The fair value of financial instruments that are not traded in an active market is dderrnined usi11~ valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs Is not based on observable market data, the instrument is included in level 3. (ii) Financial assets and liabilities measured at fair value - recurrin fair value measurements:

Financial assets Investments at FVTPL

Mutual funds Total financial assets Financial Liabilities

Financial assets Investments at FVTPL

Mutual funds Total financial assets Financial Liabilities

Level 1

4,610 4,610

Level 1

14,755 14,755

INR·Lakh As at March 31, 2019

Level 2 Level 3

INR•Lakh As at March 31, 2018

Level 2 Level 3 Total

31

17

14,755 14,755

269

Note1.411 • f'loii111dal instrument:9 • Continued: .... -------'--=-------------='-------- -··-- "'""'""4 -----"·'""'~' -·-----(ill) Pair v1IW1 tlf instruments measured at arnorti!IIIII coal:1

1 (I)

l"lnarn:111 and liabllltles measured al mno, t,soo cost t'or which foir v"'""' l'ln11ne111o1 M$1,ts,

'ftm c,ury1119 amount'! of trnde tl!l;Qivabl"" ,mn flthrr ffMn,.,al 1, ,1r values,

Fi1Mnc1al Li11blliti<l!l:

Finandal IIHl!ts Mutual funds l'r!ld<il receivables L<x1ns & advana" ~l<'.urlty deposit f'l:xed (IAposlt Cllsh and Cash equivalents Total

Financial liabilities Borrowings tntere,;t accrued but. not due on borrowings l'<Wable to Employees r ,·ade payable security deposit Unpaid dividend Total

P11rticul0rs

Financial assets

Mutual funds r rade receivables Loans & advances Security deposit Flxc>d deposit cash and Cash equivalents Total

Financial liabilities Barrowings

Total

Interest accrued but not due on borrowings Payable to Employees Trade payable Security deposit Unpaid dividend

dll!CIO!led,

MPL

4,610

MPL

14,755

14 755

270

. -~,-"-~~-~·---•· :z'.y5lµ~ _Wt:lhwv •. L!•~1it.~~.d.,,. ___ ,_ _____ _ -..,,-.------------"'N"'o"l:e"'ll'" to i-i\(~ t:o-n•~o-1l!f:;,·~••"'-1 •·· i!_l~~~!~_:,,~1 ltatemal"lts

Pllumn.il mstrnmcnts - Continued: ==="'------(ii) lll!lik Mt1na9.,mcnt:

Th@Cimµp'i,; t'1divl11t", cxp(l)',e ii' lo 11u1kvl 11:,k, li(JLJidity l'iik and credit rhik, 'fhit, noh· 1·:xpl,HII', t!i1: '.-.C_I\HLI", fir 1hl{ which the ~ntity It exposed t:(:, t11n,i how llw 1·1il1ly llklll(Jq(;;~ thr: rl!$k and th@ t813tt·d unpd(t m lt)e (1rk1nn,1J ,,1.-it<-'1w•nW,

Thi GrouJtS 11·.k 111.'Hli:igCtttlent I'.·, llldlld{j('(i lll d◊SIJ 1'.:0"'0rdtnatlon with the Wini 01' ilu1:drn•, iJP~1 lrn ll',!", !Ill ,1(!11/ely ~tcurtng tht Group1; short; f11('(1ul/)l ,Hid l!l!I(] l(•tJn (d',ll llow', by mirilmiitng th,· 1'xposur~ t() vok1!1k> 1111cllltl,1I niarket,. Loog .. term fifliltriCitd 1nvffl111('!J1:. ,1f(' fnirlf!QQ(·(l !1, ';J''li•'l,ill' l,[d.d:ln.g r€tU!fUi.

Th<:! GrNrp <1011S not ai:tlvely engage In the tr.,rlrri•J 1,r '""""1a1 #SlllltJ for """cullltlve purp- nor d0111 it writ,· qphon;. ,rr,, n10,;t .,ignitu.c1nt ffn,nclal risk, ro whleh the Group ,,, ,,,p,y;<•it ar"' d!ISCl'lbed balow:

A (;r,idll rhik: Credit iit,k ari$ll!S from the ponlblllty that COUflh'I patty rn,;y 11,;[ t1,, ilble lo !Sr?ttl$ their obllgatlw IS agl'ftd, 'l11il! Grmµ ,,, r,xpm(c(I [(; Cr<ldlt rlr.rk tram trade rtce1vabl111, bink depO!iltii "'"' olhfr flnanclal amts, The Group perlodlc:1Jlly ~•sttr1e11 tM 11111111";,1 ,drohility of the counter 111rtv l:llklng lnoo ~,,011111. th,, nn,1r11Jal con1.11t1111,, eurftl!lt liCOIIOmle trlndl, anal)'lllt of 111,torir.;11 brid debts iind ageing of accounts l'ef:<,tV3t\l~. lndlvidudl nr,,lillllt:1 li!\'litll 11'$ !1111: aecordlngly, i>dllk d1.,po,;,ri : The Group maintains Its Cllsh lmd c;:mh equiv~lent•, dri<I lliillk d~tll with mpyt«id and hlghly r111,t1 biillKS Hli)nell, lhicl<' ,, '"' •;i!Jflifl!:llnt cFlll'llt risk on such d(lf)O!lltfl, Tradli Retf!ivable: Thi! Group trades with fffl:O!illlllld ~i'id i:r<:di! VVll!lhy thlid parties, !t Ii th@ Group111 policy that ;ill t11stom!ll'! who vv,,.11 l.1\ \l(J(h: on el'l!Cllt tel'f!'IB 11'1'1 subjllc:t l:o en,ctit vertnc.it1p11 procedures, In addition, recelvablt, 1,,,1,mr:e, 1Jre 1111,11itor1!d on a,1 OlliJolng i:INls with l:ne mult thlit tile Grcl!.lp'(; 11x110~1110 to D;id dtlbl:8 Is not 11ignlfl1:1nt, Tlliffll It'll 110 s19mllaint <rrldlt risks with related parties of tti1! Gmup. 11,,, <;roup Is i!ixpoll<!,d to CNldlt risk In tho @V@llt of non•pay,nc:11\ hy tu5lon11'ls, Crt.ldit 1'i§K concentration with mpeet to tnide receiv~bli!li i$ n,lt1gntcd hy tl1r l':roup's l:irq,, customer base, Adli(lU•te expw::t:,,d tiMlt '""'r••; ar,' 1•r,rnqn1,,0 ct ,,,·. n~r the 11-m11nb!, The hllll:Ory Of trnde reu,1v.1ille,. ,,11ow,, ,,n @IIOW311Cil! for bmd and doubtful debb nl INII Nrl [Nil I ,1ld1 ;,• •. ,1 M,,r(.11 31, 2018), The Group "81 ma~,, .. 1111w,111, ,. ol lNll N,I fA,. "' MMch 311 2018, !NR Nil], il/Jdlll',i 11,1(11• r1·mvdtlles of INR 9160◄ l.Skh (Ali at March 31, 10.lU · !Nii HI', 1.rhl, I.

B Liquidity risk: a ~rud,mt llquidily tJ•,k ll)dl\d9l'l\l(Of\L implies llii!lntalnlng sufflclent Cll&h ana mlrrk,,lc1hl•· S<'<urilll", .Jll(I tire ilV.Jilabllity or 1\mdlng !hmygh an ad1•qu,1le a!\'IOU!ll ol 101111111ll('d credit

fa~ilitii!!i! to med 01Jliu,1t1ons when due. Duc 111 the nature Of th~ bUiln8$&, t11@ (i;r(Jlip 111.r111t,IIII'• l1r:xih1hly Ill 11111<11119 by mainralnlllQ ,wallabillty uf1<11·1 I OIY\111ltt,,1 f,,1111!1,,•,,.

b Management rnonilor,, rolling forerasts of th" Group's llquld1ly pesltlon and ~•,h '""I ,,1•,11 ,•q111vc1le11\$ 0111111• basil of il!XP~d Cll$h flows. Th" (irnup '"'"""' tlw l11p11d1ty nr th!ll mmi<<1t in wh1<1, th" '"'"'Y operates. In cidditi,in, the Group'i liquidity fi'l(ln~gllmr:111 1•01,, v 11,volws pmj<hrt.11111 ,,,m nows In major currencl0t1 tnd, ,11is111<·111111 1111• l,•vd of hq111d ,!';•lilt$

oete$$1A1y to meet: these, monflonnu lk1l<:11Ke \,heet liquidity ratios fl{Jtlin~t !libttr1<1l ,uHI t!Xl!'/11.1! 1v(Hil,1ln1y *'°'qLuti-1ments and malntlihlng debt flrianun1_1 pl.in•.

M11turitles of financial liabilities : The tables bfllow ,malyse Lhe Group·. financial liabilities into rtlevant rrmturity 111w~11li1• bd...J 011 Uitrltt wi11.tc1,tu3I m<1turitles for ~II non·derlv•iM, 1111.i,,.,.,1 IJ.ilirlil.l...,, lllij ,11nounts disclosed in the table are the contractual undlscounted c,r,;h flows. l1,i/(111cc•s d,111 wfthln12 months equal their Cllrrylng balances ns I.hr, rrnpc1rt of discounting It not slgnlMCllnt.

Particulars lNR• Lllkh

Non-derivatives / l'inandal Liabilities Borrowings [Including Interest] Trade payable Security deposit Payable to Employee Unpaid dividend Total

Non-derivatives Borrowings [inclnding interestJ Trade paydW, Security ,1cpos1t Payable to Employee Unpaid dividend Total

<:I.year

9,765 39,809

/.l

506l4,

497

66 10929

1-2 years

lb at March 31 2011

As at March 31, 2018

> 3 years

150 0

271

N.°'1~ cow.<•li<l!_~~"' '·'' :>tatementt.. Not@: 4!!1 • l'lnanc,;ll instrum@ntl! , Continued• , c Pofefgf\ '-"llttn"v risk · •----·-·-·-~·

Is expo,;t:d 111 f11relgn exeh;inge ""' arising fr,,m fm"ign currency 11 snsa,tlons, prlm~rlly w,1.h r11sptet tn 111,, !J:'.i Dollar, eu", ,,M C,lll'. Foreign exch;inqe rllk arlw, .... frnni a•t:s ,nd h~b,lilles aenom1rh1t~ii 111 a currency 111:,1 ,,ot the Group'$ f11111ijonal curr,)r,t;y. 1 h~ Group', c11)(:1,1timv, In foreign cun,,n,y IG lnagnifir;,r,t a,1,:1 hlll\tll thtm, ,, '"'

mi!tli:n,ilrls!< a Por«1lgn ,,une11ry risk 11xpos<1rc:

b

iht! GrcnJp•i cxpo';ttre to fo11t1qn runt ·1 icy rlik at lt11_' ( 'H<i qf the r0fX)f\111q 1w1 iod ex:prtU-:,1,d l1_1uow1:

Se11slthlity 'I h<: ,;r,n,itlvtty of prolit or 111'11 and equity 1 <l thijngu In the c:,ct,angt ratu a, is~• rn;,1nly from fo1r•1qn cuneru:y denon1,n, 11 •>cl ilnanclal ln,t• u, n,:nt:t,

U!iO EtJfl. ELlll Otlw,•,

Liabilitiu: [*J

»f00'!/u li.()1)%

"!J,(JU1:'w

1•1 (14)

II ()

(l) i

Th~ Grour,'• policy i, to m111lml!le' lnt~re•lt r.il~ c~sh 1!,,w ri,k ~xp1""11r~• on lung•tijHn fln~nrlng, A, ,t M~~h ,1, l019, tit" Gro11r Is expo:;,•ci to rhangG» In rn@rl<M lnh>t'lli,i: r<1tcs through bi..lnk borrowings at w1n◄ 1IJ1t, interest' rot«",. rlu: C:iroupft;• itW1 ·:AHF'1111, in Fixed (Jfi:Pn'.;1!•, dTt at fixed 111turL:::.,t 1 (ttes.

Below is ttwi scnsitivit of ro111 or lq_~> and equity { h,nHIJ'-5 in intere•;l rc11c,;:

Interest rates (R)

• Holding all other vanables con•,1,1111

C Price Risk (a) Exposure The Group's exposure to price 11,k ,moos from lrtvblmc11ts In equity ,.int.I n,utual fund hl'lcl !Jy the group amt ,1a,,,,1f1ed 1n the 11c11a11cc sheet as fan v<1lun t11rough OCI ""'' "' fair value through profit or loss respect,vdy, 10 manage ,h pnu, risk arlslnu 111,11, ,nvestments "' cq111ly wcurltie,, and mutual fund, 111c 9rnup divernlfK'S ,h portfolio. Oivclf,1l1cauon or the portfolio Is done in aeeordanu· with the limits set IJy 1111· group, (b) Sensitivity• Mutual Fund[*] The table below summarises the Impact ot lncroases/decreases of the Index on the Group's equity and proflt for the period. The analysis is baooc! on the assumption that the price of the instrnment has Increased b 2% or clccreaSild b 2% with all other variables held conmnt. Pertli:ulars

Mutual l'unds [Quoted] Increase 2% Decf@i!iSI! L%

[*] Holcling all other varlalJlc,s constant. 2 Capital management:

The Group' s capital management objectives are - to ensure the Group's ability to continue as a going concern - to provide an adequate return to shareholders - maintain an optimal capital structure to reduce the cost of capital, Management assesses the Group's capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage, This takes Into account the subordlnabon levels of the Group's various classes of debt, The Group manages the capital structure and makes adJustments lo it in the light of changes 111 economic conditions and the risk characteristics of the underlying assets. Loan covena11ts The Group has taken loan for working capital requirement and Long Term borrowings and as at 31 March 2019, the ratio of financial indebtness net of cash and cash equivalents to the Shareholder's Fund is 0.40 [ March 31, 2018 (,0.78)] and Interest Service Coverage Rat,o is 6.67 [March 31, 2018: 89.31]

272

w,11111e5lll Llou1.-,1 NOIUJo':h! Consohdi!l:lld J'ln·""''~' St 11t111m11nb.

Nott.!411 • &_y1,111~Comh!natw11andGoodwi11; , ~"·--·--········----- -·~·· .. ..· ······•-··•~···-···~· . ·•~"· Pul'!;uant to th& der1111nve agreem1111t ,·nWcd i11to by ttll· c:,11,1µ"',y on Octc,I"" ;,4, ?018 to 1Cqwn., 1 t,,nz India Priv;111, L1111ited [H!PLL rt\c u:,mpany a1on<1 with It's wholly owned mntily, M/s. Zydus Wf'ilnc,,,, ·• Sikkim [u rarrncr,tilp flrmJ hiJvc: ,.,,rr,pl«ed th& ;,cqu"l\«lfl of 100'¥« 1)f H!PL on l,111,1,1ry 10, 2019, Th!l ~,4ui•tttoo f'll'iJVides 1m1'1'11n"" nppmturnty m t,l'l'!l'l,i:n tl\c """'fl'~ pnrlfallo Jnd Inv,... In l)1011cti ~11rl prnrlur,Ls lhoL lhffl i'.',n,up b~li~vc;; vl'!II mn!lt relevant Li> hulll\""l)fli;i.«<U'.' eot11£llrl!f¾f• .. 1v {p1irt'd brands Z!.fl<l llltl!hJtts will si(111ifird111 ly t3rthenc~ tt1(, , 1111•f't:'itthi9 ~ak· ,,11111 whldtn th.E©: fY1.1rk0t11111 !'lttwork, 1 Iv: ( !noi:1wm recogrw.(•1J 11111 !tr thei but11rw'-,'. ! ,iinblnttion

tht",1' bGncfits 8IOtiri with li1'1w111,. r-ttimated by ltw ,.,mup. entirt: ~urtJ1,.1s~ C011$!dtfftArc_in !': by W/JJy 1}1 (_c-tih. Th~ h!Lt! (_JJ;;t 1_if uc:qulil!tiu11 un11__1unlh~ to INP-, L.3kh,

lab1hties , , ·uxmlzed as ;, ,.,•,ult ,i Thi; ;1~',{:tl and I f the acqru:,1\1(!11 111<! 8!1 follOW$'

Partleut111'!1 INR ~akh

l nventorlei. 19,880

1'ra(k 8,320 Rcrnvabi<'S, ___ ,,,s,.,.,.,.,.

C21sh m1cl cash 6,')30 cqulvatenl'.!,

Property, l•l«r1l 13,250 and Equipment

Capital work In no progress

Other 54,020 11,tangible l•s:slc

Other Assets 21,5,0

Total Assets 1,2416!10

Current (30,900) Liabilities

Non-Current (2,260) Liabilities

Total (33,160) Liabllitles Net ldenunable 91,530 assets acquired

Goodwill 3,79,692

Total 4,71,222 Acquistion ,~~.+

The fair value of trade and other receivables acquired as part of the business combination amounted to !NR 8320 Ll,khs. The above value of trade and other receivahles is the same as the contractual amount of such recc:lvables,The exce;;,; of the acquisition cost paid over the fair value, of asset:11 acquired has been aLtributed to Goodwill and ,tis not expected to be deductible tor Lc1x purpose at the Consolidated tcvd. From the ddtc of acquisition, llll'L has contributed revenue of INR 2/,819 Ldkh and pro11t dllcr tox of !NR 6J Ill Lakh to the Group. II the busin,,ss rnmbinatlon had taken niace at the beginning of the year, revenue would have been INR 115,178 Lakh and profit after tax would have been tNR 11,764 Lakh. Initial recognition and measurement of the assets and liabilities on the acquisition date are determined on the baSls of available facts and information, Considering that the acquisition was completed shortly before the end of the reporting period, such provisional amounts are subject lo change within the measurement period as provided by Ind ftS 103. In view of this acquisition, the figures of year ended March 31, 2019 arc not compara_ble with lhefl~Llre5C)f previous eerlods,

Note: 47 • Group Information : fonsolidate~.Financi_al Statement§ as at March 31 :2019 compri,P theJin. ~-· I.Stat~ni<mt~ [FSJ of Zvdus Wdlnes:; Wmiieo

Narr,., Principe! Country or Status of ,-:; c1t r.:---:~-:---:--:-,-::-,,_--=~----------1---}ctivities ioc~:~2(a:.::;ti,:;;on~.._,:_M:.:a:.:rc:::.h:.:3:.:1;:.,.;;2;;;0,:;;19;...~M:.:a;:;r:::ch-'""'3C.J1:.:2::.:0 .. 1,.9_,,_4 =====----; Liva !nvestment Limited India Audited 100.00

& Welh,oss

Heinz India Private Limited (* Merged with Zydus Nutritions Consumer Health India Audited 100.00 NA Limited w.ef. May 24, 2019) & Wellness

Zydus Wellness Sikkim [ Refer Note 44 A (g)] Consumer Health India Audited 100,00 NA & Wellness

Zydus Nutritions Limited ( Earstwhile known as "Zydus Wellness Consumer Health India Audited 100.00 98,00 Sikkim • Partnership Firm") & Wellness

273

I '!,

e

M·•~z_y(lu•. Wiitn• um1b:;1 -----______ _!!"._I~~<! the Conaolld}•le(l_~illli~J•I Statement:s __ ,_ -· - ·-------

Note148 The, <insolidat,·d ftnancial lbltl,nwnt~ fo1 tt1d y•r Widld Mo,:.:i~-ii:' 1019 lndud1 the 01,;:raUOr;,: ;;ti11Ps ft-om January 30, iOl~ , 1111101, thl ftgu,,,,. ,~ year ~mlld Mirth '1, 201'1 ,,rt not ,-omparablt with tho:,i, or µrev10u1 year, Flgu,,,,, ot ;1r1•v1olJS r(!!lQrtlng pi-,100~ h,1vv lw@n l'lltlf'OUped/ ,,,, 1.,-.,ifled wherever n1i!C1191-"Y 1o c1;.,,,,,lQltt1 with Int

_ ~~tl'llp<lltln~Jl:b:IL_ ____ ___ ____ ----- ---

As J)i.:1 1A~..tn 1;.h;tV' For Ohlru!,h@I Shah & Co LLP Chal'tnf:I Aeco, ,nwnts Firm Rllgl$1H11!011 Number: 102511W/W!0029t<

Harish ll. Patel Partner

Membership Number: 014'1U Ahmedabad, Dated: May 28, 2019

Umuli v. f\1111<11

Chief f·11V-i11!.1<1! ()l!1(1J:r

Dh.i111<1J ii, i:,agar ( ompm1y ~;(>eretarv

274

Statement containing the salient features of the financial statements of Sut '•aries/ Associates/ Joint Ventures [Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of the Co /es (Accounts) Rules, 2014]

Part: "A" - Subdidiaries· INR • Lakh

Investments Turnover& Profit/

Sr. Reporting year Reporting Exchange otherthan Prov!:Sion Profit/(1.msl Name of the Subsidiary Share iota! Other income !toss] Pmposed "Gf No. ended Currency Rate Reserves Tc,ta I Assets investments for after Capital liabilities

in from before

Taxation taxation Dividend shareholding ·

subsidiaries Operations * Taxation•

1 Zydus Nutritions Limited March 31, 2019 INR 1.00 12,723 3,57,573 5,29,874 1,59,579 4,610 22,207 1,142 {2,035) 3,176 - !!ll.15%;

2 Liva Nutritions Limited March 31, 2019 INR 1.00 5 (23} 260 278 - (17) (23) j (231 - 100.00\II;, 3 Liva Investment Limited March 31, 2019 INR 1.00 25 (s: 20 - - lS} ! (5) - 100.00~,i

4 Heinz India Private United February 28, 2019 INR 1.00 1:.?t:2 2,029 656 :. ,-, :.:,J.00%

The Group has acquired Heinz India Private Limited as a wholly owned subsidiary in India on J3nuary 30, 2019 and the samE ha,, been ' (') merged with Zydus Nutritions Limited with an appointed date of March 01, 2019 persuant to crder of NCLT dated May 10,. IDB with

effective date of May 24, 2019 .

For and on.behalf of t1e Board

~ tJ}, ~ ,,, ... ,.-· / - ,

~ ;::,:;_-' (' "4 .,

Umesh V. Parikh DhanrajP.Dagar tTarJr: G. Arora Dr, Sr.a,

Chief Financial Officer Company Secretary \N hole Tlme- Otectur (t:.-,!rm•~

Ahmedabad, Dated: May 28, 2019

275

Auditor's Report on Quarterly Consolidated Financial Rei&ults & Consolidated Year Ended Results of Zydus Wellness limited Pursuant to the Regulation 33 of the SHI (U&tin1; Obligeitions & Disclosure Requirements) Regulations, 2015

To Board of Directnrs of Zydus Wellness limited

We have audited the accompanying statement of consolldatf,\d financial rt!sults of Zydus Wellness Limited ("the Company")

which includes the results of M/s. Zydus Wellness ~lkklm, a Partnimhip Firm {toF{ether, 'the Group'), for thf' quarter i:iml

year ended on March 31, 2018 ('the Statement'), alt,u:hed her1,,with, being subrnit:ted by the Company pursuant to the

requirement of Regulation 33 of the Sl:61 (Listing Obligations and Disclosure Requirement~) Regul;;tion,1 2015 ('the

Regulation'), read with SEBI Circular No. CIR/CFD/FAC/62/20lG dated July S, 2016 ('the Circular').

The consolidated financial results for the quarter and year ended on March 31, :w1s have bf'1•11 preparNI or1 the basis of the consolidated financial results for the nine-month period ended December 31, 2017, the audited annu.:il consolidated financial statements as at and for the year ended March 31, 2018, and the relevant requirements of thP Regulation and the Circular, which are the responsibility of the Company's management and have been approved by the Ooard of Directors of the Company. Our responsibility is to express an opinion on these consolidated financial results based on our rnview of tlw consolidated financial results for the nine-month period ended D0:cember 311 2017 which wcis prepared In ~ccordance with the recognition and measurement principles laid down In Indian Accounting Standard specified under Section 133 of the Comµanle~ Act 2013 read with relevant rules issued thereunder and other accounting principles generally accepted In India; our audit of the annual consolidated financial statements c1s at and for the year ended on March 31, 2018; and relevant requirements of the Regulation and the Circular.

We conducted our audit In accordance with the auditing standards generally accepted In India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial results are free of material rnisstatement(s). An audit includes examining, on a test basis, evidence supporting the amounts disclosed as financial results. An ;iudlt also includes assessing the accounting principles used and significant esli1nc1Les made !Jy management. We believe that our audit provides a reasonable basis for our opinion.

In our opinion and to the best of our Information and according to the explanations given to us, these quarterly consolidated financial results as well as the consolidated year ended financial results:

(i) include the financial results of the entity M/s. Zydus Wellness Sikkim, a partnership firm;

(ii) are presented in accordance with the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 read with SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016, in this

regard; and

(iii) gives a true and fair view in conformity with the Ind-AS and other accounting principles generally accepted in India of the profit including other comprehensive income and other financial information of the Group for the quarter and year ended March 31, 2018.

Ahmedabad May 24, 2018

Phcno. /079) === ======= :::===

For, Dhirubhal Shah & Co Chartered Accountants Firm Registration No.

~ b--Harish B. Patel Partner

.:.:Jbc:mou,:.;J!:fi·1Nt9J,11r infc@dbc:riro ===

Vadodur, ,Road

276

Independent Auditors' Report

To the Members of Zydus Wellness Limited

Report on the Consolidated Flnancial Statements

We have audited the accompanying Consolidated Financial Statements of Zydus Wellness Limited ("ttw Company") and Zydus Wellness-Sikkim, a partnership firm (the Company & firm are collectively referred to as "tht' Group"), comprising of the Consolidated Balance Sheet as at 31 March 2018, the Consolidated Statement of Profit and Loss (Including other comprehensive Income), the Consolidated Statement of cash flows and the Consolidated Statement of Changes in Equity for the year ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the Consolidated Financial Statements").

Managemt!nl's Responsibility for the C:onsolldated Financial Statements

The Company's Board of Directors is responsible for the preparation of these Consolidated Financial Statements in terms of the requirertH\'!htS of the Companies Act, 2013 ("the Act") that give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive Income, consolidated cash flows, and consolidated changes in equity of the Company in accordance with the accounting principles 1:;enerally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. The Board of Directors of the Company are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Company, as aforesaid.

Auditors' Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

277

An audit involves performing procedures to obtain audit evid<!nce about the arnolmts and the di:;d<Jsures In tlw consolidated financl,1I staternents. The procedures selrcted dPpend on the ,1uditor's judgment, including the assessment of the risks of niaterlal mlsstatermmt of the consollrfated financial f;tatements, whether clue to fraud or error. In mc1king those risk assc•,w1ents1 the auditor considers lntcn1.il fin,inclal control rt:~levant to thP Co111p,:1ny1s preparation of thP consolldaterl financial statemE'nh 111,il give a trw· ,11HI fair view In order to dE.!Sign audit p, ornd11res that are appropriate in the cltcun1stances. An audil ;ilso Includes 1?Valu.1ting the appropri,.lleness of thr· ,1cco1rnting policies used and the reasonableness of the accounting estimate~ made by thl' Company's Board of Dlrcc:tors, as well as evaluating the overall presentation ot the consolidated financial statements.

We believe that the audit evid1mce obtained by us is ,;ufflcient mid ;1ppropriate to provide a basis for our ,1udit opinion on the consolidated fin,mcial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the /\ct in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted In India including the Ind /\5, of the consolidated state of affairs of the group, as at 31 March 2018, .ind their consolidated profit including other comprehensive Income, their consolidated cash flows and the consolidated changes in equity for the year ended on that date.

Report on Other legal and Regulatory Requirements

1. As required by sub-section 3 of Section 143 of the Act, we report, to the extent applicable, that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b. In our opinion, proper books of account as required by law relating to prPparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books;

c. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, the Consolidated Statement of Cash flows and Consolidated Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. On the basis of written representations received from the directors as on 31st March 2018, and taken

on record by the Board of Directors, none of the directors is disqualified as on 31st March 2018, from being appointed as a director in terms of Section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the group and the operating effectiveness of such controls, refer to our separate report in "Annexure A"; and

g. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and

according to the explanations given to us:

i. The group has disclosed the impact of pending litigations on its consolidated financial position in its financial statements - Refer Note 28 to the consolidated financial statements;

ii. The group did not have any long-term contracts including derivatives contracts for were any material foreseeable losses.

278

Ill. There hns baen no delay in transferrlni amounts, require?d to b(' transferred to the Investor Education rind Prot<>ttion Fu1'1d by the Company.

For Dhirubhai Shah & Co Chartered Accountants Firm's Registration Number: 10251~

~)>.t~ Harish B. Patel Partner Membership number: 014427

Ahmedabad 24th May 2018

279

Annexure - A to the Auditors' Report

Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies ,Act, 2013 ("the Act")

In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended 31 March 2018, we have audited the Internal financial controls over financial reporting of Zydus Wellness Limited ("the Company") and of the entity M/s. Zydus Wellness Sikkim, a Partnership Firm, as of that date (the Company & firm are collectively referred to as "the Group").

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company Is responsible for establishing and maintaining Internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated In the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ("ICAI'). These responslbllitles Include the design, Implementation and maintenance of adequate Internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, Including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit In accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") Issued by ICAI and the Standards on Auditing, issued by ICAI and deemed to be pres_cribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material rnspec:ts.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of Internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.

280

Meaning of Internal Financial Controls over Ftnanc:lal Reportlna

A company's internal financial control over fin,lnc:lal reporting Is a procfiss designed to provide reasonable assur,1m<,' regarding the reliability of financial reporting and the preparation of fir1ancial statermmts for e><ternal purpose, in accordance with generally accepted accountlnF, prlnclpl~ll. A company's internal flnar,c:111 control over fll'\ancial reporting includes those policies and procedures th;1t ( l) pert;iin to the maintenance of rcrnr ti•; th;it, in nw,onable detail, accurately and fairly reflect the transilctions ;ind dispositions of the assets of ttw conip,my; (}) provide reasonable assurance that transactions are recorded <1s rwc<'ssary to permit prepuatloti of firianci,il '.l,1temcmts In accordance with generally accepted accounting principles, and th.it receipts and expenditures of the company are being made only in accordance with authorizati<ms of m,magenwnt and directors of thr comp.my; and (3) provide reasonable assurance regarding prevention or timely ch'tection of unauthorl:ed acquisition, ll'.,<', or cli-,position of the company's assets that could have a material effect on the fin,mcici! statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal flnanclal controls over financial reporting, Including the posslbllity of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the ll'lternal flnanclal controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reportirig may become Inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the group has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively ;is at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAL

For Dhirubhai Shah & Co Chartered Accountants

Firm's Reg. istration Num~r:~511W

~h~\~ Harish B. Patel Partner Membership number: 014427

Ahmedabad 24th May 2018

281

Partlculani-

iissm.: --Non-tllffilllt IIIINll:III

Property, pl.mt and equipment Ca11i1;·1I work,-111 [>1ogress

Qondw1II Otl1e1 111t.J11011Jlli d5Sets

Pln,;1nGl~I as:,.;!;.;

Loans Other financial asset,;

Other non-current ass..ts 1:10ferred tax asset[ net] Curnc<nl tc1x asset [net]

Current assets: Inventones Flna11c1ul assets.

Investments Trade receivables Clish and cash equ,valents Bank balance ot11er than CciSh and cash equ1v~l~nt-. IMns

Other current .J'.,'.'.iGts

Total EQUITY ANO LIABILITIES: Equity:

Equity share capital Other equity Non controlling Interests

Liabilities: Non .. current liabilities:

F[ndrK1a! liabi11t!es:

Other financial liabilities Provisions Other non current liablities Deferred t.ax liabilities [netJ

Current llabilitles1 Financial liabilities:

Borrowings

Trade payables Other financial liabilities

Other curr':'nt liabilities Provisions current t.ax llablllties f net]

Total Significant accounting policies Notes to the Consolidated financial statements

AS per our report oleY~n~ For Dhlrubhal Shall & Co Chartered Accountants Firm Registration Number: 102511 W

Harish B. Patel Partner Membership Number: 014427 Ahmedabad, Dated: May 24, 2018

Dhaval N. Soni Company Secretary

-I ·+

t, ij

11 '~

10

1 I 12 13 1,1 15 tG

17 1B

1-9 io 21 8

23 24 :'.5 2r, 27

2 I to47

~' A j Dr.SE Chairman

~. cl..,-,.,

Tarun G. Arora Whole Ti e Director

1,tJ/t4

11

?I

10 57

!!03 5,700

qq

:l,H!B

3,001 404

2,147 41,8119

111,

:)5

71

0 68

197

:.',500 6,650

554 1,510

132

282

:t;(i~~~ w,~llm!~;·/,rtllted ______________ eo ... _,n.;110 .. ·_11 .. 11._11bld l:u•.'."'."''.nl ol Prnfll jJn!tt~~.~ for the xur •~d!!! M1m::b :U 211111

PtH11n1l;1r-,: Nott~

1,, •vr)l"ll.Jt? from operations ( )!·I 11 ~r income

Total incom11 1:)(PIINSIISI

Cost of matarlals consumed Purdlllsu of stock-in-trade Changes In Inventories of finished go6ds, work i1H'roqw,, ,,,,,i rtoci,,in-tradll E!xc!N duty on sales Employee benl!fits expense FlnlnCIICO!l!S Oeprec:llltlon, amortisation and lmpa,nnent ex1,crl',;1s

Other expenses Totlllfflt'll@n!IM

Prollt before tax L~S(,: T°dX expcr1:.;e:

Curi·ent tax Deferred tax

Profit for the year Other Comprehensive Income

Items tliat will not be reclassified to profit or loss: Re•measurement gains on post employment dllflniid ~n~flt pla11,,I 11,•1 ol 1,« I

Other Compr11h11115iv11 lnwme for the y1111r [nl!I: of ffilt] Total Comprehensive Income for the Year[ net of taxJ Net profit llttrlbutable to,

owners of the parent Non-controlling Interests

Other Comprehensive Income Attributable to: owners of the parent Non-controlling Interests

Tot:al Comprehensive Income Attributable to, owners of the parent NOn-eontrolling Interests

Basic & diluted earning per equity share (EPS] [in Rupee;;} Significant accounting policies Notes to the Consolidated financial statements ~.llur seRQi:tm=o~ For Dh1rubhai Shah & Co Chartered Accountants

Firrn Registration Number:

•

Harlsh B, Patel Partner

j, .

Membership Number: 014427 Ahmedabad, Dated: May 24, 2018

Dhaval N. Soni Company Secretary

No.

lO

ll

32 33 34 35 ,& 37 38 39

,j{j

t t,0,11

Dr. Sha1vil P. Patel Chairman

,!9;!-~l~)

13,SOS !iil

(392) 3,198 4,llt<

,t,r,

'llG

LS,lVi ·711~

12,400

21 21

1.1,149

l0,898 230

21 0

10,919

730

27.89

283

--- ~-""-"•'--·--lydu~ w .. ~um~.:. .. I unih•d

~--- COl!ill!lidllblld Cash l'low !lta~!!'""l Im the YC•'I t!lld<,d M_il!Ch 31, 20111 INR- l1ld1t

-~-• "'

Particulars Year end911 l!Cf1,i', - -- -:llltl ~Ql/

.-..,-.~•-'-·-•,w, ••--~-----· """·", ~---~ .. ~ . .- ---~ ·-. y«.........,.• .. ,.,

A .Co$b flow!I tmm PP1mt1oa m:;t1,1,1i:~; Profit before Tax H,9N 12,400 Adjustments for:

Oepredati()f\ Amort!Sh()!l ,llld l111t;alrfllfnt :};?.C 716 [Profit] / I oss on sale <Jf a,•;el s I. N,•1 I .l 18 Interest II womc, {J,O&Oj (3,139) Fair value !Jilin on finm111111 inttrumeni ilt l'lllr value through s1<1tement or proil! and IOl!S 1;1n,.:.n (3) 11,, moosurnment of Employ<!es l10n11flts (111 •1) 11 \()

Interest expenses no \ll

Bild cf!'l1ts written off 4 I

Provisions for probllblt product l\!Xplry c1 .. 1m•;

and return of goods m Ii) r-------------

Total (2,0111) (J,)01)

Operatmq profit betor<! working capital cha!l9e, u,11, 10,IJ')/

/\djt1~,hlH'11ts for:

Increase In trade r(•telvaliles (4/'~) (bo)

[Increase l / Decrease In inventor ier, {1112; (788) [Increase] / Decrease in other torrent assets Ii f'Hh,,') (75)

Increase in Current F/IJ~rtcial A$9;ls Loan _ 1-; (52)

Increase in Non Current Financial MS<\lt.-Loan I' , L,tJ.: .. 7. (1,438)

Increase In Non Currant Uctbllties u:; 0 [Increase] / Decr<\li\se in Non Current Fit1ane1a1 Allliit!i-Others (3) (39)

Increase in other non current assets t (6) (93)

Increase In trade payables 1,0U l !J;

Increase In other current llablllt!es (541) H \'J

Increase In other Non Current Financial u,1lllilies 2 II

Change in Non-controlling Interest (0) (.l8)

Total (4,801) _____ (l,'AO Cash generated from operations 8,011 8,l/)(}

Direct taxes paid [Net of rnfUnds] (1,172) (tl!>S)

Net cash from operating activities 1,1106 J,695

.Q cash flows from lmq!ftlng activities; Purchase of fixed assets ,••<dr>, ,, ... ~ .. -; (3,084) Proceeds from sale of fixed assets 17 Proceeds on sale of Mutual Funds ,;_,,~,. (3)

Investment In Fixed Deposit (net) ,,.z~f, (13,694) Investment in Mutual Funds (net) {]t,: ~-~'f) 6,418 Interest received V 3,.-.asn 3,141 Net cash used In investing activities }. { ~;, ); '; (7,205)

c Cash flows trom financing activities; Pruct::ed~ nuni Sl1vrl Tenn Borrowings 2500 L,Suu

Repayment of Short rerm Borrowings (25!!0) 0

Tnt1="rt=>st paid (170) (~'..;)

Dividends paid (12) (2,549)

Tax on dividends paid 0 (517)

Net cash used in financing activities (182) (621)

Net (Decrease) / Increase in cash and cash equivalents 812 (131)

Cash and cash equivalents at the beginning of the year i

2.,147 2,278 Cash and cash equivalents at the end of the year -- ;J,959 2,147

284

All figures in llracl«m RI'!! nutftow$.

) Previous yeaf.=; t1qun;1:, huvit ~n t(-1;}t'OUp(·d wl1!,-11l'.0 v1·1 1l(!C'tlPf'Y,

Cash and cas1, .:q11,v;,1,,11r, comprist of:

a Cllsh on Hand b Bal11ne1111 wltn 11m1,,,

C Tot.Ill

~mJ2Qrt vi even dim! For Ohirubhal s11,,11 & ( o Chartered Ac, 01111t;mt1;

Finn Registration Number: 1lll$ t J w

Harish B. Patel

Partner

Membership Number· 011127

Ahmedabad, Dilled: May )1, 2018

Dhllval N. Sc,111

285

INR 10/• ei!~h, J~•11<1d, !li!lllcrlllld 1ti111'j,i;:i1y 31, 2017

i-,------------·•·"-----As at March 31, 2016 Add: Profit for II": y,:ar Add [Less]: Other Co111pr,•J1~n~lvt lrn::Qm;} Total Comprehensive lncotru1 Trimuctions wi!h Ow11nt::, 111 thtlr ca~city a,i; (1w1w:r,;·

Divldencls Corr,or"tll OMdllnd nix on 01v1d1:n1i

As at March 11, 20:&7 . Add: Profit for the year Add [Less]: OtherC0mpreher::,1vc, inoom~ Total Comprellenslve Income Transactions w,th owner,. 111 thl.!lr Cllpi!City 11:. own,,:•,

Divldencls Corporate Div1Clend rax on Dlvld~nd

All at March 31, 2018

11.ux:r.Jl~r report of eo dp For Dhlrubhai Shah & Co CMrtered Accountants Finn Registration Number: 10,s 1 l w

Harlsh B. Patel Partner Membership Number: 014427 Ahmedabad, Dated: May 24, 2018

Chief Ftn:1ncfJI Otf1rt 'f

. -~ lMR~li'iis 1=:sc:;~;:;::,,· .. ·:,¥"""---···-~~•·•···l ··"''•n•""

()

0

soo

I lh@val N, Soni , :Oflif)//lny Secretary

0 0

60 714

\,¥~ Or, Sh<uvil P. l\1tol ct,11rman

Tai 1Hl O~ Arord

Who!e Ti inc Director

286

.. ~~~iL~"•w:" ~::--- ·--~~·•·· -----"-,-- . -·- --~,~"'Ill ~~ll11~Mlll~~---~-----·~•----------t f lit: t'l)l1~,olld1tecl nr1,Hlt l,ll ·,t, ,t1m1ntt (:1 Jllllifi:,\' nnanctad ~ 11, 'J)ll'I II 'I~, zvdulw;it11r ',', .l frnitlld c•tM1 .·;-,,')f{fl 11" I ,nd ltt pt11 l11t•1 '.hl[J firm (eel!~:'( l1v1 ·ly·;··,.,:he Grou~i I h_U' 11 u·· ,-r 1ndt◄'1. M.11ch l I! 2018, Th,-i (,rt >IJII qPfl!ftlt@[l lj '111 II 1!<'()1.§00{:j COftSUmt;·I ( ,1111_/f) With but.1w··,· ()ltlPolll•lng l!w J'll!111: v1,1lu1 (!1•111 Ill 11 Ii' devctk.'t()mt211L, pmd11,Xion, m,r~.dl!l'.) dnd dlttri0ut1011 of hllalth ,111ct w1,llneu ptlldurt:, r11e 1ll'Oduct pc,rtttilli• ur the Group ""lud~, brands llk11 :,11•l'" frlll, !veryul:h ,u,d fJUtrlllltl!, ;i,.. 1>~fe1"'8 llham 11>\· 11,t,•d on the Nll!i""'' ',tr.J<:k Exchnng@of tn,1,a Umltl!d [N!-1'·1 ~nu 11•;e Liml!:11!d. n,,.- •t11J1i!lllnld oft!,,. ot u,,. Pir!ll\t Is l001bi'!1 .. 11 lcu• no,(,,,, !, 5i91na CClfTtmt,11,,· """''• N1111r IKtlri ·1<:>111pl•!, Sllrld1l!J-G' .. ,11dh1n,,1q4r Highway, AhlOOOdl•ad, Gujar11 :m(ml!i, Then fln,111u.11 ,11tnments wn1'!: ~IIIIHmlli!d for 1,,,,,,,, ,n ijl.1:ordlntli with,., 10•,oluttan oftt,~ dlh•>turson Mlty ),J, i0.1.8.

Note: 2 · SigniflcantA« o,;otm!! Pl!lllci•:. . ___ ... _ "---·•· --- , - ·•·---

A Tht ro11ow1n1J· l\ot'II Pf'0\''d~,; 1,,1. of the 11gn11,, ,mt !!,,.ountlng pc,llci•"· ·" loi:,t.i In ttti'on ,1101 ,111on of th!ls;:;:;~"' 1,,I ltli:im,ni;"ii;;::;; pc,llcl•~::an11•n1:1~ a:i "· all the v,:,.11·, 1ir11Mnted 111111";•, oij11rwl• •1r.,J.

1 llllsis of 11111pal'lltl11n1

2

A The f\flfj11 ◄ ·i.:ii q;il, ·rntnba h@:Vt~ i11 '('11 piepared iii (.U_UH 1bru 1ft With Ind!,J(l /\i ! I lllfitit)Q Stt1trt(L111I·, n.niJ AS] !lt)ttfi,·1 j ll!l!l('l l:i'i~ 1C.ompant1)•., n11,Ji;:111 Aee0Unil1111 :;t,1111 la1tb.:] Rule,;, 201-S, i'!J!t .irnuHh>d and other 1t ,11 •v,_mt orovtsions 1 11 t;hl" 1 1 1rnp0ni11 Arr, -'O 1_1

a For a!l p.\t·1u1I•, IJj) t;o ilid in(;!11(1!11~ 1!1,· year ~nd~d M,lli ll .n, 2016, th· ( ,I\H)t) illd PftPll'l·d jl\, 1111,u\Ci~! $M~11\111", Ill ,:1@rd£1nc:e wd!1 l!H' .~1untlng ::ilt'i!\{i.ll\l:; n:ottflt!Ki u11de,· tlWI Sllci:1on .l Il of W· uimpenie, /\ti ,ou, r1!lld t.og,:ther w1tt1 p!lragrapl'i 1 ol tht Ull'llPl!m<!S rMmuntsJ Kulfi, ]014 f!ndlan WW-J, f:!f~ctiv8 trgm Aprtl 1, ,om, tho Group haudon1.e,1 \1111 AS as per Comp,;, ,,,,1 [lncll~n A11 ,.,ur1bn., StllndardsJ f.11,11 A$] Rulu, 20l', o~ ,,,,1,nlld 1Jnder •,M.ltM l.13 of the C:0111p,m1e, Act, 2013, r hu a<lopum was carrk!!ct r,111 "' ,1c:cordana· w,11, lnd AS 101, Fl11;i,c,,,1,,, Adl)fltlon a! Jndlan Arcounting St,,11,JariJ•,.

C n1~ f111,;nrlal 'ffi'l1'<1111~11l!l htlll' ™""" ~1el)lln:id un hl..,.,l'l<~I 00,1 llil&I~, '""f'el'/I' fu1 lJ1~ rull!'lWln~ M~\illtt, ,1110 11~blll"""' whicl1 ho\/<! M!!M m"U,iJi'lll<J ,Jl fillr vain~ ur ,~v~lut'd amount:

i Oen\/dl!VC l111(U)(ilal in$1iu111,··11l;,

11 Ce1w111 l111011el~t as'll;t!; .111.111"u1l1tl~~ rn""su11.:d al IJ1/ vah,,. [re1u1 .icwunl•in0 f1(>1icy l"ll<Jtli111;1 finanrial ,n,uum~11t;;·I 11i n~flned bl!rn!fll pion,,

llllsls of mollCllid11t1011: A Tile (;/)t1/!nllrll!M1 f1na11c1al ~tlll't'm~nl'<I COlllrlrili<¾ Hi,> flnanrl,il iitlltlillll~ "'the P@<lllt ~nrl '"" f)l'lrtrla1thip 111 I" A•~· MM,ch JJ., ,:(111! l'Mtrr,1 ,, .ichlevM whffl Ui~ G1oup ,.

lt<PONd, 01 11,1•, rights, to v.111.1blt:t 1©turns froHi 1t:. i11v1JIVt1:ment with 1t11: 111vt~ iul(1 ha<, ll1E1 ablllty t(_) ,-it11•tt tt1ose rtt:um•, 11urn1qh itl pow1"r ovl''! u,e Investec. Spe:11'cally, lht• ti1'0UP control•, sin 111vf:tilt~ If amJ rn 1ly 11 the: Ci:roup h,1•, a f"(lvv,:, vv•:• Lhe tnvest;;,c [t.L cmtlno rlQhtl, l11JL ~1w ltthl! curru1L alJ1h\y \Q dlrt!ci!the 1clcvo11Uet1Vitlas u! U1t ,11v-l lJ Fxposure, or 11qht,,, to varlabl., re1.111rn, f""n 1111 involv~me111 with tl1ll lnve,,t<', anct c 1 he ability to u•,1· ,1, power over 11,e ,nve,,1>111 to afl'lll:1 ,rs 11 ·um11 and GenBrdilY, then!! Is v p1\o/;u111Pt1on that" 111aJut1ty ot'votin~ nut,ts ,~:wit In eontrol, lo support this pt1suinut1on and wt,cn the G,·oup hll1l It$$ U1c111 ~ majority of tile votinct or simlla1 11ql1t~, (11 an lrwesb•t', 1111 • t J1(RJP oonslcJr1r·, ,111 rf•l1f.l1nt l'ectt ,:1nrl 111i·t1msta:nceil in ,1',',, •~;sing whi!tt1er 11 !1t1'., 11,)WlfJJ over an lnv1",l(1tt, il'ltlut11n{1

a The ront1 ,Htual arrnng,•1n1•nt w11h the otht!!:1 volf' tiold<ers of the inv1",t(:1'

b Ri1Jhts arlsln11 fiom other oontraetual a1ra11gements. c The Gmup's voting 119111:s and p01:,,nt1,;I voting rights, d rhe size of the grow', holding Of voth ,g ri!.)hts relativ~ tl'J 11w ,ize and dlsper'.lon or' the holdings 1,f the other voting riyht,; holders.

B Consolidated 1111anc1al stabermmtr, ;111, prepared lt•inq uniform ac:co1Jnt111q policies for Hki!l' tra11:,,Jr!1Qflti and ot.het t>vent:l in simila1 1.11ulf11~tJJ)Ctia, If a n1t'lllh1_'r of the gro11p uses account1rnJ 1::iolicies: otll1:11 tt1d11 thooo odoptc'tl i11 the conwl1tk1t\XJ 11nancial st;atwf11:·.nt\, f'br like trl111:,,1ct10l"b and event:1 m ,,11ni!ar cu·cvn1•,tJ11u-•'.;, approp1iatt-' adjustm<·r11:, r11rti 111ade to th.JI qrni1p member's. l1nr1ncir-11 ·itatements 1n ptt•:Jknlng th@ con'.,oliddt~i financial \;tJtenwnts tt) ensu1t' r':nr1fmrr!lty with tlH' qro11p''.l accounting_ policies,

C The financial statements of all entitles used for the purpose of consclldatlon 111,1 dr.wl\ up ta sanw reporting date as tl1at of the Group, I.e., ycdr ended 011 March 31. When tl1e end of the r,,portlng period of the parent Is diff~rent from that of a ,,ubsidlary, the s11b,ldiary prepare,, for wns0Udatlon puqXlS!lS, addlUOndl tlnanclal inf0rm~t1on <1s of the same elate as U1e financial sLdl.ern.enLS of the parent to 1 ·nable the p-.1n~nt. to n)nsolfdate tlH: fin;inclal Information n! the subsidiary,

3 Use of Estimates: The preparation of the cons()ildated flnanclal statements In 1xmform1ty With Ind AS wqwres management to make estimates, judgments and ~ssumptlons. These es~mates, Judgments ~nd assumpt,ons affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of conijngent assets and liabilltles at the date of' t11e financial statements and reported amounts of Income 1md expenses during the period. Application of ac:counung pclic1es that require crltic:al accouhtlrit'J eslirnates involvhKJ complex and subjeclive judgments ar0 1,rovick·d below. AC:co1uHinn estimates t.()11!d tha11ge from p(:r!orl to period, Actual rl'.:Sults could diff~1 from tho:~e estur1otes, ·Approprintr ct1anges in estimates are made ;:is mcrn;'11Jement becom( ", r,1ware of chan9e:, nt urcumtitancci.; surrounding the e'.;t11rn·1t~s. Changes in estimates are rel'lected In the consolidated financit1I statements In the P<'rind in which r:11,inges ;m: made and, if rnrlterial, their Pffccts are disdosed 1n tl1c notes to the consolidated fmanclal 'itlttements,

Critical estimates and Judgments a lnc:tlme Taxes:

Significant Judgments are Involved ,n determining the provision for Income taxes, 1nrludlnn nmount expected ro be paid/ recovered fur uncertllin rnx posltlons. b Property, plant and equipment:

Propctty, plant and equipment represent a significant proportion of tlH? asset base of the Group. The charge in respect. of pl!riodlc deprec:iat:ion is derived after dete, mining an estimate of an asset's expected useful life and tile expected residua I value at the end or its life. Management reviews the residual v<1lues, useful lives and methods of depreciation of property, plant and equipment at each reporting µerlcd end and any revision to these is recognised prospectively In current and future periods. The lives are based on historical experience with similar assets as well as anticipation of future events, whicl1 may Impact their life, such as changes In technology.

c Employee Benefits: Significant Judgments are involved in making estimates about the life expectancy, discour1t1ng rate, salary increase, etc. wl1ic!1 significantly affect the working of the present value of future llabllit1es on account of employee benefits by way of defined benefit plans,

d Product warranty and expiry claims: Significant judgments are Involved in determining the estimated stock lying in tt1e market with product shelf life and estimates of likely claims on account of expiry of such unsold goods lying with stockist.

e Impairment of assets and investments: Significant judgment is involved in determining the estimated future cash flows from the investments, Property, Plant and Equipment and Goodwill to determine its value in use to assess whether there is any impairment in its carrying amount as reflected in the financials.

4 Foreign Currency Transactions: The Group's consolidated financial statements are presented in Indian Rupees [INR], which Is the functional currency of the Parent Company. For each entity, the Group determines the functional currency and items included In the financial statements of each entity are measured using that functional currency,

A The transactions in foreign currencies are translated into functional currency by the Groups' entities at their respective functional currency rates of 'exc;hange prevailing on the dates of transactions.

B Foreign Exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the year end exchange rates are recognised in the Statement of Profit and Loss.

C Foreign exchange differences regarded as an adJustment to borrowing costs are presented in the statement of Profit and Loss within finance costs. All the other foreign exchange gains and losses are presented in the statement of Profit and Loss on a net basis.

5 Revenue Recognition: A Revenue Is recognised to the extent that ,t is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the

payment Is being made. Revenue is measured at the fair value of the consideration received or receivable, taking Into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government and is shown net of returns, trade allowances, rebates, value added taxes and volume discounts.

B Excise duty is a liability of the Group as a manufacturer, which forms part of the cost of production, irrespective of whether the goods are sold or not. Therefore, the recovery of excise duty flows to the Group on its own account and hence revenue includes excise duty.

C Sales tax/ Value Added Tax [VAll / Goods and Service Tax [GSll is not received by the Group on its own account. Rather, it is tax collected on behalf of the government on value add<:Q \Q 11,e Goud, by ttle Group. l\ccordlngly, It Is exrl,,~<'rl frnm re11cn11c

287

Note: 2 ·

D The,spei::i'ht 11'1

a lilllc of Ciood11 Revenue froin !hf1 :;di(! cf good& n;r < ~llllillld wh@n rim :;iQnlflCIIMt rlllk& ~nd r cw,rrdS Qf own~r<fHµ oi 1:he goods I r,;!V<' Pfl·,,:«! to the f?Uyr•r, IJSlJIIIV on of tilt! noods, RevllllJ~ fnnil the Nie of Q(H)il!) maaured ,]I; tf'I,·, j·.-nr V@lue of th¢ WflGJ(JntiOn ret.:eived Of r'alvabha, flit (11 tk~LJrns and ~ltuw;,1.(!(t'I, trade .irld volume tebau1-'~, n1e Qoodl are: oft,211 with volurrin tii(tr.tiu1a/ortctn~ 11K1,nHves and cuato1n~rt t1,wt.1 a right to ~t:L,1111 t1(1maaed or r.u'Clducts. Rtvttnw frf)tn salt:1h 1•, 11,t',('O on tht p1 l!.1 • 111111,- sale,& 1:t'int,. u 1·./rvlRP1 net or· t~i'-:,, ,11111·,, 1 Hsb?rlr,al e;,:11t:r11:111,. is u~ to f".!1111,1tt-: ,_·11'\d prtiv1dv 11 ,1 1'i.1111,1g~ or (!!)(p11y \ 1.11111·. No rA:lttrnt11t of f111;11UJ{lf1 IS d~mff-0 I 11("·,i'llt <_1i tht ~ll®'i ;11 I' with thi!i tl• •! Jli{ll ,_1, !d!t tenntl it', jl••f jit r:valer1t trAd\' 111, I( tut' Qrtd credit 110!1cy f, 1IIOW~J.1 by ti 11' 1·;1 iJljfJ

b Sorv1c:e l!!®!lli;' s1,1rvia. 1nco111f' i·-.

achilMlmant or c lnt,;m,;t Yncom01

ill! pW !'/iP! tiJrn"l/A of C(_)fi:t-f'tl(J:;, With tht CUr,r·nn1ttt$. viJN/in th@ rt!lci.h:'d \J.JfVieet Ir@ 1)$1'fult1t('t1 IS i,@F tf'U· mll1stone1 e,tJ(J (Ht' net of Nl'Vll.'.t-~ t,;tX1 wherever eo1p!i!c,.s'1t"'ih·

Poi .-ii! 1k•IJ! lniffrumgm'-, 1111 'i!',tlll'td ~t ff'h(11 rhit;'d ! 11•a:, intc!re~ 1n1 n1111 • rteo-rd@d il',111(J ihf-! eff~\'$ II lli;!{(' (11 1 l~) l11t} rat~ that '';><.,;]( 1!v di~unts thf'I efil-1mdt"('d tutor0 cash p,1YHH,'.lll', Of t'Qlpt!, !)V!'I \J11_-' ®{P«f;t._"\d Ilk Ii! !"1""1{• flnau,ctil hr-;!H_JilWI 1! Q! IA 1hortt-'! pi•(IQ{J, to~ 9rtr11& ( ifrtOUnt nl

th1;; lill•11.:,.1 or 1.u Lil,; ;,1110!1'1•"1 1.11 " i,n~ntiJI liau1h(y, Wlrtn tt," ~lf1!cti\l!l lnit;,,.ol. ,,w, the <,«,up y.1J111a!'f;;~ tl1e ~.,._;l.!ri<J flows l;y considering OIi li'lf' contractual term, of t Ir,; flnaneial Jr ,,,rr,!nit'.frt but does no! ru111,idl!I' 1:1\ellll(t)fi{ llmJ ,, ,,ct1t 1-.

d D1vld1111d1 l)Jyj~$nd iin,m~ IS rllf.'.lll!nl!lll<l Wlil.lll tilt vmup'~ rt~ht ti) l('\:l;rVI' th;; D~V~rellt IS QSL~hll~h""1, Whrcll ,. g~n-f'IIIIIV wh~ll sl1aret1t>lrl~r,1 Afl!J!OVe tile ;!Mt1mrl

e other rncot11Q: Otl1er !ll((Jllle /$ i'tCQgt1i'-,~•1l wln::ll no slgrtlfli ,!!It l__j(I( rrtlint;y 15 if) !I-':, <11 ,1,,r,r11nat1011 ill 11 •,1l1wnt1on ext~,

6 Government Grilntli: A Gov~rnment grants Me rnrngnised In 1rcr<:m:l<1nce with thffl t;;;r nb or i:h111 Nl$Jlll!cirv~ g, ""t on aCCl'UII cQnSlde~ng tt,e ,;J:atus ,)f c:ompllanc® of pn,scrlbed 001•1<1itnns a11d

ascer1ai~ment that tlwi grnnt will be l'e(;~iw,r fl Governrnent ar&nti rdil!r~1 to revenue r~s.,.,,nllll!d on <J S\l'~'trn,ltle and qros, 11,1,iS In the Statc,ntj11\ ,,r PrnMt and l)v~r the llE!rtoo <1ur111g which the relato:I m,a

lntendecl to I)(, 1 nirlp@nSltt«i .-11 i • 1nuJ1 red. c Govemnw·1·11 q1 .. ints relatl3d t(1 <11"@ ~nil,t.!>J;l <1', 1111.l.:Jrrtill In ~\1,d ,1rnrn111t$ Ovl)f tht: vx1)1•1 l('J.-l u-~I life of 1111• related asset

D When lo,ui'., or s11nil1Ar as:s1st,1nu• i11t' Dt'OVided by ~uvcir,menw or it•l,1kd 111'/ltttutton~, w111i ,u1 111te~ !'8tl· hdow tllta curf'l!nt t.1pp!1{;1tJk~ maMt r,:1\1.\ the qff«t of th1~~ favorable lnl:l!lrut rnt1rn·11f!d as a gover n,n,:nt grant, The l<lufl or .,,,sl!rtllnr::e Is inlttally fi,cognll<l!d 1mrl mei!lsurld at fair v~lu<: .tiid the governrnnnt [Jr ant I& mlll!aJJ1!ct as the difference betwetn Ill() rnitlal Cllrrylng ViJIUe ul the IOl!n and thr- pr(<Celldi r!!a,rvr,rl, Tht loon IS SUIJS(l(lllf!lltly m11111urlld µ;cr 11'41 accountrr1rl poliry applle11blei t,) llrrancial liabilities. However, 1" ,1rrordance with \he m«:mptlon H Ind AS 101, for st,rh l0<u1s that existed on Apnl 11 2015 the c;,oup usu the p1cv1011r, <iAAP carrying "mount of' the loan at tlie d,1t;e of trcu11111(J11 ,1•, tl1,2 carrying r11n1n111t

7 Taxes on Income: Tax expt.1ns<':, 1.-nmprlse of Ct1t I t'!lt .:mrJ deftirrt.'!(:i t,1x.

A CurrentTax, a Current ll!lx Is me,%uff'!d at the a1noll11t expected to I),; p11ld ,,,, the basis of r,>1rers and deductions available In ac:rnrctance with the provrs,ions of the Inoo,ne Tax A~,

1961, The tax rntes dfld tax laws 11sed to compute the amount ar11 th-that ore er11tcted or $ubsta,;tM!ly enacted, lit th(; reporting d~tr-, b Curre11t tax items are r1.~i:.Ji11111:;,,,1 In correlation tt} !!11; underlyln(J tr,in:,KKtlon eltt1er i11 '..1ti'lii":1ntmt of Profit n11d I O!;S, OCl or d11,~(.tiv 111 (~Uity.

B Deferred Tax: a e>e:reneo t,.1x ii! µrovldtd ll',IJH_J t.li~ liablHty fnt'\ll(l(i nri tempot(uy tiJt!{'l<'noos b«rt.w1..;c11 1"t1t") t.·1X" Da• of d'.,:--i!ll, ,uld liabUltle::. <llid llldr carrying ,Hnuunb for finane1.il

rep0rttng purpos0s at the reporting date, b Deferred ll!lx liabrllties are recognrsed for ail taxable temporary differem:es. c Deferred tax a,,sets are recognised for all deductible te,npor,,ry dll'ferentc1s, the carry forward of unusfld ll!IX credrts and any unused tax losses, Oeflllrl'l!(I tax ass!ltl

are recognised to the extent tt,:,t it is p1ob@hlc thattaxable proMt will he available Ma Inst which the t1ed11rt161e tcrnpcrary diffc.rcnrcs, the carry foiw::irrl nt unused t<1X credits and unused tax !o'.,ses v,n be otill,md.

d The ca1 rying amount of de1e1 rt'd tax asset!; reviewed at each 1('portlnq dab! and reduo~d to the extent that it i•; no longer prohablu that suffk:ie11t 1,-1x<.Jble profit will

be available to allow ail or part of the defen.,.; ldx asset to be utrlr,,,.,l, Unnlit'Ol.)nlsed deftlr1tid tax asset."'" re-assessed At .,.,11 ,.,portlnq date ancl are 1ecognlsed w the extent thdt it has become prolJ1Jille t:Mt future taxable protlts will allow the, deferred tax asset to be recovered,

e Deferred tax assets and liabilities are measured at the tax rates [and tclx lawsl that have 1ieen e11acted or substantively enacted at the n!portlng date and are expected to apply in the vear when the ,i,Sf!t Is "'1tlised or tl1e li~hlllty I• settlf\d. Deferred tax items are 1ccogr1i~ed in correlntio11 to the underlyir1q tf<ms,il:tlon either 111 tX.l or directly In equity.

Q Deferi ed tax assets amJ dd~rtcd tax HahUltir:'; ,1rf? of-fset if tJ legally ('111"nrceable right t:X!'.;t.s to SElt off CU! ll'nt tax dsset& agai11'.J UI! rent tax littbilitlc'.;. C MAT / AMT Credit; Elltltlement;

a Minimum Alternate Tax [MAT] / Alternate Minimum Tax LAMT] paid In a year 1s cl1arged to the Statement of Profit and LOss es current tax, b The Group recognizes MAT/ AMT credit available as an asset ll!!sed on historical experience of actual utlllsatlon of wch <:redit and only when and to the eJ<tent there

is a convincing evidence that the Group will pay normal income tax during the speclfted period 1.e., the period for wh1cl1 MAT / AMT credit iS allowed to Ile carried forward. Such asset, if any r·(~coqnfsed, is reviewed ot each balance sheet date and Uie cai I ying amount is written down to th~ extent there IS no !ornJ(:r a convincing evidence that the Group wrll Ile liable to pay normal tax during the sprcrtred period.

8 Property, Plant and l:quipment: A Freehold land Is carried at historical cost. All other Items of Property, Plant and Equipment are stated at historical cost of acquisition/construction less accumulated

depreciation and impairment loss. Hlstoncal cost [Net of Input tax credit received/ receivable] Includes related expenditure and pre-operative & project expenses for the period up to completion of construction/ assets are ready fur its intended use, if the recognltlon criteria are met and the present value ot the expected cost for the decommissioning of an asset after its use Is includt:d ln the cost or the respective asset if the recognition criteria for a provision arc met. The carrying amount of any component accounted for as a separate asset ls derecognlsed when replaced, All other repairs and maintenance costs charged to the statement of profit and loss during the reporting period in which they are incurred, unless they meet the recognition criteria for ci1p1talisatlon lmder Property, Plant and Equipment. On transition to Ind AS, the Group has elected to continue with the carrying value of all Its property, plant and equipment recognised as at April 1, 2015 measured as per the previous GMP and use that carrying value as the deemed cost of the property, plan and equipment.

fl Where components of an asset are Significant In value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognised separately as independent ltt:rns and are depreciated over their estimated economic useful lives,

C Depreciation on tangible assets is provided on "straight line method" based on the useful lives as prescribed under Schedule II of the Companies Act, 2013, The management believes that these estimated useful llves are realistic and reflect fair approximation of the penod over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognised prospectively in current and future periods.

D Depreciation on impaired assets Is calculated on Its residual value, if any, on a systematic basis over its remaining useful life. E Depreclatron on additions/ disposals of the Property, Plant and Equrpment during the year is provided on pro-rata basis according to the period during which assets are

used. F Where the actual cost of purchase of an asset is below INR 10,000/·, the depreciation is provided@ 100%, G Capital work in progress is stated at cost less accumulated impairment loss, if any, H An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from

its use or drsposaL Any gain or loss arising on de-recognition of the asset [calculated as the difference between tl1e net disposal proceeds and the carrying amount of the asset] is included in the income statement when the asset is derecognised,

288

No••= 2 "'. signlfit~-•nt An·;om~i_ing Pollt!•~,£<?_••!111t_•~;~ii-­ll lntan9ible-1

A !ntllnglble assets mqulffitl :J<<fl<11C\Ully ir,; mo111u,,,,1 "" ir11ti~I r«ognltlon at c:os1 da1- ot acquisition. 1 n11owi!11, ,n,ual rec:ognltloo, lntc111q1b1<., -~~ ere c:11rrled at

(if lntlnglbht anotit ;1,x-1u11 (•d m bUBlnm combtnt1t1n11 o,t1n· fair value at ttv: ¥iv •-JCCumulated amt;rtt\11-":1Lic1n ,111d accumulated lmµ,·111 m<tnt kif,<_;1:·•·5,

ll Internally generat<'-0 111l;mn1t.1les am not t:11f)ltllll1r,,<1 ,,r11 .. ! tlw ,'Qllm!d W<Jl(lndl'l11i;; incurred.

rnth·, 11:(1 In iltltlll'lllnt uf pwtit tllld !OR In tht period "' wh1t1, 111e 41.l(l)llndlture

C Goodwill , 111•,11 l(J i 10 a~Ui!JiitiOO of D Traidc Mdl b, 11'1 I mltal KfifJW<wht:rvv I <111d (Jlfojr

E Qip1!,1l1'..,cd (t"l:,t· 111curr@d t:e,watd"u, !1tir"d1,r,1-/ d!·W:k;pmetnt tlrti•-' r,11,Jpi1,111.-,,1t1on,

P Int~H1g1bl1: "-''-"'_,L'l:.o with lndeflnlm u:.,,_Jul d!'I riot ari10rtist,J1 !JL!t tw.:: tc;,...'t«J fer itttp&lrt110nL :.!!!!!1Ja!ly1 rlth@w lfldlViduu!ly 1.:_i1 at. U1(_' e11<,M•11@n,er~rJnu qriit 1,_,v1_•1 !IJ!t ctsc1essment of lnd1f1111tc 11¥;, is ril\llewed annuallv tu ,1<,t~r,r,,,,., whether 1h11 ir1deii111v.• 1,k ,,mtlnuu to be 1ur,111;rw,,1,,. 11 ,,et:, trnl chllngt in W!llful lilt lnd@finltl! w nrn1:e Is made on m p11,,,1.1,·1tive b.tsls,

G An Item of lnt.angil,1<.1 lilltill!ly ntcll!lnlHd IS a,,,,ic,,,,mi,,cd upon dlSpoRI (ll wl,t,11110 f;11,1re economic bcneli\•i ,,xp~ from It;; IJ™' rn (h'.,r,Q!llli. Any gain or lo,.,; eri,lng on de•recoonition of lh,• ;1Blll: [Clllculatlllc! "'• ti,,, ctlff'l!tYll'IOII ~ thl· 1111, dlCTfl\)"11! p!'QClll!ds and th~ (;ll, 1v111<1 "rnount of 1h11 auetl 1,, 1i1cl11<J,,J ,n ttlt ~ont of µroflt And Ins~ when the Oa,;ij! IS dA""""'lhi""<l,

10 8-rch and DevelO{llllllltt Coill:1 A Ex~11di!.l111; Oil f('~tch and di\ldt_!J)lflt!tl! !', 1 I 1,1t'Q~i tQ the Sta1,:nti·t1l nt 1111.1r-1t and U;)S~ tJf th1' y1 ',l1 111 Wll!t !1 it h& lnt.Un-00, I Capital t~XJK~llChlure on ~March ilhl d(•\.#-!IPI )!\i!_'I 1t Ii givtffl: tt\0 \Ji ',1!fll(Jnt ill Pt'OPiftY1 Plt1!!l ,\lid r-:il\!ll-lfilf#l"lts

11 llom,wing costs: A Borrowing costs oonsist uf 111\!,1"!!!1: and other bom,w11,9 that are lnCUrrtttl 111 C()t1nec.t101i With th~ borfowili\1 nl 1und~. Other borrowln<.i 1nduilc ancllltry Chargl!l!

at the ume ot aequ1i1t1on 01 a f1narn:lal liability, WIJirh rl!C119n1Nd 11 perm~ rn<•thnd. B Borrowing costs that "''' d<i'il!Ctly .tttrlbutal:llt! to tll,· i11,1uiiitii.111/ oon!ltl'UC:tlcm of ij qu,My,ng ~s• are Cllpitilli!l('(J a,; p,11t of HIil com: of such a,,_, up to ttie dllltil the assets

am ready for their 11itl'nded us~ 12 Expenditure during the Construction Perlocl1

The expcnd1tu1c~ 1,,c1d~ntal to the ,~xf'.i.H"l',,1u11/ n1_:w pro~ are all( 1( ,1tt}d to !'1 r11,erty1 Plant and I qt11pn11 •r1t 111 the year of t:'OtnnH:11< 1 •n1e11t of the (',ommen:tal procluct1n11

13 Impairment of Asseu11 Tht-: Prope1ty, Pl,::int and Equ1pmt!!11l <111d 111V1tl(J1Ule assets ar& t:t;•Jcd frn i111p.iii'ffli!H'1t whenever (•vi:~11\'. 01 1n c1rcum•.1,.1nce$ md1c,1te that the carry1nq ,1rnrn_1nt may not be irmv~~iahlt!."· An lrnpairrni!nt In•,•, 1,,u11111ised for the aniuunt l>Y wlw.;I1 the auet's can yuHJ ;1,n91u1t ltij r0CO\t(•r.1!)h-: ,11H0tmt. The recoverabk• ,u11{H1f1t ts t.t\$

high~• ol "" d.....t'Halr value I,;;<,; Wii~Hll llto,W$111 ann VAiue In UW, I or tilij pl.trl)O'll!!S of dS~ll\j Ullp.llfllll/nt the M'l<"tS ~,~ ~•wiiw ot the lowest l@Vll!hi rv, wl11<;h u,~re are separately ldentitiablu Cds!1 l!ows Which are 1,11ndy mdl!!P'llndent ofth@ CHh mllow,, from other allHl:I or groups of c1<.s~ts (cash genmtinQ ,rn,tsJ. Non•flnaru:lal auets other than gOOdwlll lhat suitt,re<:i an Impairment los;, drc >l'!Vlewed fer posslbiti mve1'li/1I of 11np!!irm1111t et tht "'1d or Bl!t!1 r<IPC)rtlng period. Ali lmlJllinnent IO!IS ts charged to the. Statement of P, om ,ind Loss In the year In w! nch dn ,%:,et IS ld<lfltlftllCI a1; ltn!lllirt<L f11<.' Impairment loss rc,oqnl!IOO in prior accountlnq pe, !Od it ,eversed If there has been a change In the ,.,,urnat,• of mcovmble amount.

14 Inventories: lnve11tones a1e v.:ilued at the lowt·t uf ny,t ,nu1 n~ realisable v~luc:. C():,t . mc11rred in brfnging <.·ach pniduc.l 10 its present loc:.:1tio11 a11d condition are acoount(•d 101

follows: A Raw Materials, Stores & Spare Patts, i-\1ck111q Mr1U!r1alsi Finl~hed c;ond1,, Strn k in .. Trade and Woik. 111 r11(><;Jrt;::r~ are veil.JOO at lowt·i of rm,t and net realisable v<1!uc

B Cost (Net of CENVAT and Input tax credit avall~.dJ or Raw Materials, Stores & Sr,1m Pait:,, Pecking Materials, Finl,hed Goods & Stod<•ln·Trade is determined on Movln9 Average Method.

C Costs of Finished Goods and works•in•Progress are detem1intld by taking ma1e1111! cost [N,11: of Ci!NVAT and lnr,111 t~x credit availed], 1abot1r imd rel<!Vant appropriate overheads based on the normal operating capaclt:y, but excluding borrowing co:,ts, Net mallsable value is the estimated Mllln~ prl<>! 10 the ordinary course of busln!l$$, less esU!l1ffild c:o!ll!I of romplet1on and t'he MtlmatM co,t:s necessary Ill make the !!ale. Write down of inventories to net r("'d!I:,dlJk vdltM rs rocognlsed ,-]'; ijFl exp1•n:;1.~'.l and rncluded on "t ·111mgcts In 1nver1torie.'1 of I 11n:J1e<1 qoo1J;; Work .. in~progres~, r111rl '.--itock-in~ Tradt>:" nnd "Cnc;t of Materiel Cons;i 1rn1-xJl1 m th(-' 1 elevant note In t!1e Stnterni:-"!1 it of Profit and LO;,•,

1S cash and cash Equivalents: cash and Cash equivalents for the puqJo',e of Cash Flow Staten1t-~11L comp11:_,e cash and cheQuefi in ti,md, bank balances, Clt'rnc1nd depo~~its with banks WIK:rt:~ the onginal matunty is three months or less.

16 Leases: As a lessee: The determlna~on of whether dn arrangement !s [or contains] a lease Is based on the subsl:dnce of the arr~ngernent at the Inception of the !ease. Lease under which the Group assumes porentia!!y al! the 1isK and rewards or ownership are classlfled as finance ie,sse. When acquired, such assets are c:aplt:aliSt!d at fair value or present value of the minimum lease payment at the inception of the lease, whlch(:ver Is lowi:.::r. Lease payment~; ur1dcr orx?rating leases are recognised .:is an expe'nses on straight linP basis in Net Profit in the statement of profit <md loss over the lease term, unless the payments are structured to increase in line with expect.eel general inflation to comµcnsate lessor's expected inflationary cost 111C1 edses.

Asa lessor: Lease income from operating lea~es where the Group ls lessor is ret:0\;;jnis~d in income on a '.;>lr~1i~lit l1ni: l1~$!$ over the 1~$i;; t~!ll\ L.m!~ss the recelptS dre :;tn..1ctured to increase in line with expected 9eneral Inflation to compensate for the i!Xpected infintinnary C01!t incmases. ihe respective leased assets are included ,n the balance sheet based on their nature.

17 Provisions, Contingent Liabilities and Contingent Assets: A Provisions are recognised when the Group has a present obligation as a result ot past events and It Is probable that the outflow of resources w,11 be required to settle the

obligation and in respect of which reliable estimates can be made. A disclosure for contingent liability Is made when there is a possible obligation, that may, but probably will not require an outflow Of resources. w1,en there IS a possible obligation or a present obligation ,n respect of which the likelihood of outflow of resources ,s remote, no provision/ ciisi:loliiure is made, Provii::;ioni: ,"Jnd contingiencief:i are n~vir-wcd ::it r•,:1ch balance sheet date: ond adjusted to reflect tl1c correct mar,ege.mtnt estimates. C:,ntIny~nt assets are not recognised but are disclosed separately in flnanci?il statements.

B If the effect of the time-value of money ,s material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. 18 Provision for Product Expiry Claims:

Provisions for product expiry related costs are recognised when the product is sold to the customer. Initial recognition Is based on historical e.xperlence. The Initial estimate of product expiry claim related costs Is revised annually.

19 Employee Benefits: A Short term obligations:

Liabillt1es for wages and salaries, including leave encashments that are expected to be settled wl1o!ly w1thm 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting and are measured ay the amounts expected to be paid when the liabilities are settled. The liabilities ;;ire prc:::;cntcd as current employee benefit obligations in the balance sheet.

289

No11112." S>lgnlfleantAccountiog Policies, Co•!'"''~~d~- ____ _ II Lo1111 I.Gnu @mployoo benefits 11L!llyali11111,;

" Leave Wages and Siek U111ve1 The liabilitle~ for earm~1 I"'9ve and slci< lf!ilw• ""' 11r1t ~),llf!Cl!ld to~ 11<:t11<»:1 w111,11y "ilthln 12 monthu il<!rl1,1 ,1t1N thllf lltl1d or the ,,.,,,r;,:1 111 wliith the imployer,,, render the related service, They are ther;iton•, m,,,,:r1nl<i at the pfUflflt v,1iu~ or ,:xp,,,t!ld Mure paym,,r11;, 1u 11,,,<1, In ruQl!JCt of upto the end of ''"' 1,,r,orting period using u,e ,inlt erlldlt millht 1<.:1, ,1e1 ,:m111111d by mc:tu1rlal vdli 1,,1i,1n, l)llrlormed by on 10,1,,,.,,,,,,1,Mt ~n:' 111::rounttd using the m<1rk0t yi1;!111: ,7t tho rw';rit,11 ti11;1t httwi !:h0 ttfiiiF'. .117jirtrxtm:ating to U'w term~ r;f thf" ~ru"t !f)f.l;~fk

Uii-n11qh rneasurerner1tz ('lll' ft•("(lt'jfli'_"ril 1n .11111

b Defi11<ld Benefit Plan$! Gr·atuity:

!11v l,1rn1p operates a defitH:tl bcndil ~_Jta1tutty With I !JlltnhHl1(m•; be f'nffldt tt::I t\ ·,1'p;i1,1ldy gjfjft!!niste~ ftmd tl11nr1qh ! Ill·' lniWt'drtet: Ct'!f'pOf,3tK1!l ul !1wtli:t

through employees Group Gratuity Plan, Tlk; "' ,Hllffl: fllCCQMiN!l if1 th,· hul~fle,! shm In fMP<:d tJI ci~ti,wd ilemlflt gmtulty ,,1~11 lire pr,.'"'1t VIIUI or tl11> defined benefit pt,111 obligation mt the end or t11~ repn,11r1i, p!lrtod !tu tht Vi1!ll~ 01 Hie plan 8!111111:S, i11r1 Ll~b1hr1,.,., with rfllll/llrd 1:!l tire• t'.ir,,t111ty Pl&n ere dlll:llrmlnf!d by actuarial w,luation, pe1form!!d by an lndii!OOhtir•nt ,;,111my, et Heh blllt11<'.e, ullng the projt,:1"1 r,nil q,s'!J1t mlllhOl:I, The present v,1lue of the cl'1flned ll!!nllflt Ohliq~t,or, d~nornlnmt!ld In !NI\,,, ,1,,1,,m,in,,r1 lly dlflCOunUng th~ m,tm,,,1;,tl Mure ,:a5h outl1ow,, l)y 11'1,,ii·riee te thll m1r1<,11 yields at the reporting p,mod on qovlill'MmQnt l!01 rd$ that hav• tlill'mi approximat111Q to ti 111! t,!lffl• of tl'ul f!llatta<l ubllQiltion, l'hr~ /lf:t: mterest cost In calculdlt_'d liy nrii,lv!ng tr,~ dlte0un11nq rt1!1' 11) 1111' net b½'/an~ of 111(• I k;h!H'tl tin1ieflt obllUitl<m 111uJ ti I!~ f111r V,lhJ~ of plan$!~:,. 1.;IJ{ !1 (f1:,1i.:; dn! ir1d1Hl(:<l in 0rnployee benet7t i~xperu;("., 111 1he stettrr11ant of 1•ruflf' ,11111 t

Ht1 1n1'<1':auirrnents gains or a1T_,11u1 1h,m occur ducdly in "other COrnprchr'.1l',iV1-: lftd ;,,rt• Ill( li1ilr•{I 1(1

ill<iiloutemeots are not reclas,1r,..i 1.u IJIOftt or lnss tn 5U~u•Hl IJIIIIWll,

in j1! l11,)1'1.1l d'>',Untf:,ti()fi!i are f'(iCOq!!!',Wd

tarhifllJ', Ill lilt' ',(dlefl;lfilfit of chatl(Jt,:'; Ill 1't'jlll(-Y

The Group recognises the following chang!'s ill u..i net tlc"ned bl#nllllt obliq,,flon a', ,111 i;XpenN In tl'tfl 11;,,1,:1,11,lll of profltand la: I Service costs comprising current 111rvk" <lllitl!, r,:i:,1 •'.181'\11'11 costs, 911n,, ,,ml I1'.l!l!l,!li on eurt.llllm<llfll:I; '"'" nnll rouMe 11111:tfements; II Net Interest expense or Income.

c Defined Cotttribution Plans• Provident Fund Contxibutiont

!rt tha ptbt'l(irl H1 wlli(.'.11 tlit;y in the bitLu1(i' sht"PL l(@"

L11q1lJle lc>rnployees of the Group 1e(.t·1vr· !Jl:'Jneflts from a oi r1vi(11-•11t fuiul, which ill a defh1, ,, 1 { nn111lHJt11i11 plan, Both the t•hi11111,, tht Gren111 111.1!1,(• n101111dy contnhutions t-o the provident fund plan i~ual to a 1"J('.f(('r-it,_1qe ofth0 c:ovttrl·d r•1111iliiy1-:r:'s Amount.•_, {(llh·t!.i:d the provldt11t f11n1J rit,in "re deposited in a government adrnm1'.;t(•1·~(1 provident fund. (i1(1qp I 1;1ve no further obliCft-1l1rn1 \{) t!H~ plan ill, n1onth!y f ,H1lributiOt1$. Suell 1:ont11butio11s df'tt accounted for as defined cont11bt1tirn1 11!,111:; and art tee0g!1i·:~1tJ ,1•,, •111111try~§ OOneflt ilJXtl,·r1',1"''' wl11,~r1 'Jdt,_.111t-~nt (lf profit and IO!iiS,

C Employee Separation Costs: The compensation paid to the employees under Voluntary Retirement Sch8mt 1,, exp,,need in l:he yur or paym~nt.

20 Olvidertdl : The final dividend on shares is recorded as a liability on th,, ,1atm of appl'OVII t1y the sl liH,:lmlders and lntef'ltll dividend r,ICO!'ded a/i liability Oil th~ !ldti:: of declera~on ~Y the Parent's Board of Directors.

21 excise Duty: Exc:1c_;e duty is accounte,rat a concess1011c1I r;.1te as per Notlficatiol! Nn J/2011..CE wlthout ( rNV/\l credit in Zydu,, Wdlm_•;,,, 1.1rr11ood, wh~reas in tilt~ P211tnerst1ip Firm sdrne is accounted net of recredit l)er1d 1b and CENVAT avru1,,c1 011 1np111, ,, capiteil goods a11<1 ',1 •rvices.

22 Financial Instruments: A financial mstrument is any contract tli~1t glvc'~ rise to a financl,-11 d'.,<PJ- n! (.Jnt• ~ntlty and a fine1110,1I l1,1!Jil1ty or eq:1,1.ity lnstrurrwnt of ~motl1i'r' ~ntitv,

A Financial assets: a Initial recognition and measurementl

All financial assets are recognised lnltlally dt fai, value µIIJS, In the caM 01 financial asS<Jts not recorded at fai, value through profit or loss, trnnsactlon costs thmt are attributable to the acquisition of the financial asset. Purchases or Ales Of flno11u,,I iJc,ti<ll:S that require dcllvecy of as,,et& within a ijme frctme established by regulation oroonveM0/1 m the market plaee [~Ulijr way trades] am ~nl!i!IM on the .ett1~111c,·,t d1t~1 l.@. 1 thediiw U1"t the G1·nu~ Mt'!I~ !fl ~ui,ha!it or :.cll lhessllt'lt,

b Subsequent measurement: For purposes of subsequent measurement, tindrlCial assets are dd'./,,i!11.xl d0 follows:

Investment in mutual funds instruments at fair value throt1(.1!1 p1 ur1t. 01· loss [FVTPL]: fVTPL is for investment in mutual funds instruments, Any sucll 1nst1urnuntz, which doo, not meet the criteria for cateqon1dt1on ,-it arnortl:t:~d cost. or JS FVTOCJF is ClasSlnea as a! fV I Pl. Such instruments included within the FVTPL. cat11g0,y are measured at flllr value with ali changes recognll!E!d in the P&L.

c oe~111t1om · A financial asset [or, wi1er~ applicable, a part of a f1nancIa1 asset] Is prlmartly der~cogn,sed (1.e, removed frOtn t11e Group"s tlalance sheet] when:

i The rights to rece111e cash flows from the asset have expired, or 11 The Group has transferred its rights to receive cash tlows from the asset o, has assumed an obllgatlon to pay the received cash flows In full without material delay to

a third party under a 'pass-through' arrangement; and elth,,, [al tl1c Graup has transferred substantially all the nsks and rewards of the asset, or [bl the Grnup has neither transferred nor retained substantially all the riskS t1rKI I ewa1 ct, ot' the asset, but hat;; tra11:,forrecJ control of the a'>Sd:,

When the Group has transferred its 1ights to receive cash flows from d" ,,cset or has entered into a pass through arrang,,ment, it ew,luates if and to whc1t extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and I ewar ds of the asset, nor transterred control of the asset, the Group continues to recognise the transferred a:s:;ct to the W<tent of the Group's continuing involvement. In that case, the Group also recognises an associated liability, The transferred asset and the associated liablllty are meas~red Oil a hasis that reflects the rights alld obligations that the Group has ratalned, When the Grovp ha6 tran$ferred the ris~, and reward& of ownership of the flnanclil 1111111:, the S/lmP is rlc,""'1Qnlvri,

d Impairment of financial assets: In accordance with Ind AS 109, the Group applies expected credit loss [tCLJ rnodel for measurement and recognition of Impairment loss on the following financial assets and credit risk exposure,

a Financial assets that are debt instruments, and are measured at amortised cost b Trade receivables or any contractual right to receive cash or another financial asset c FinJnciJJ ;:i::;:;ets that are debt instruments and are measurecl ;;is at FVTOCI

The Group follows 'simplified approach' for recognition of impairment loss allowance on Point c provided above. The appllcation of sirnpl,fied approach does not require the Group to track changes In credit nsk. Rather, It requires the Group to recognise the impairment loss allowance based on lifetime ECLs at each reporting date, nght from Its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant lncreasP. In the credit risk since initial recognition. If credit risk has not increased signiftcantly, 12•month ECL 1s used to provide for Impairment loss. However, if credit risk has Increased significantly, lifetime ECL Is used. If, In a subsequent period credit quality of the Instrument Improves such that there is no longer a significant Increase in credit risk since Initial recognition, then the entity reverts to recognising impairment loss allowance based on 12·-month ECL.

290

l\l!_)le~ 2 .. _s1911ifieant Ae~:ou,_;i~t~<:~}t· Llktime I CL are U1e M<Pectlld l)Ql'IIOl';;r;,1;; llfeti1ile kCL which 1c,:.11il-& from d\1foUil IM!lll:S t1,11 ,1'1!! w11111n 12 m,,,1ttw .. 1fmr tilt! l•T"''ting dllf:I; , .• the dl~,,,,.n,,, blltwe;;n ,,11 ,:11ntraet:u"1 flowt t1i..t

ftuWll !Nit thu c11tlty '""l'f!U; m ,,.,,.lvt!! lie., ~II Cll~h •tH)rtfu!IS1, dlil<:Oullt<itci <ltlhfil tlliQ!!l81 Li!R, i!\lli I\N,-Jt ]I ( C l or fif)v1 'I ·-,,111

,,,.,,.,,,,,tatil•I> hJ! 1/tlflOUfil 1111,,Jtii""iiil lnst.rur11t•Jil ',

in the': ~f.~rru·11t iii tJr-Ofit ,11itl l(•·li, Th~ f1,t1.1nr,i im•

Flnancit'd assets l'l'lt"'id0UI rld SI at (Hilf;ntiMd ~I ,jJ'1f1 i:ontrac:tulll j f.\Vet\UI ~Cf;ivdt11u: !CL h [,lff''1CMl:ld 11,; q1n 11How1nt;t: '

thcxJ!il (1'-:,,;1!tS In tf'u~ L1dla11ce sh~, which mc:hJt ,:12a 1J11,1 Mt carrvin9 ijmount. llnt11 the auet wrttta..-nft' < 1 it~ria, the C.ioup U1l! gross 1;.,111 vlntJ eimout1t

Pl!rt 01 t/1e 11,11111ureme111 (lf iml)lllmir,11 llilOWfflntc, fr1,t11

l"C11' 35$M(,11 IIJ ilH in (_!!'d!L fi!ilk and IHljk)II rn~nt lo,',, tilt.' Group i.t11lil111 Iii,\$ firtaflr HI !I li,tf'"!.Jfl)f;fit', ')1·1 th1~ l;)aijj~ (":,J' ·,I I, 11t¥,l credl·! I hk. rllir~cti!fl:Ji( ',

B fu111ncli1I li.ill11itlll'!lt • Initilll r«<>onitlnn end me1isun1ment1

l·inaodal llat>llitil,:: &re cla1:Sifl1,.1. at tn1t1111 1111,,ndal li~ti,111,Qli at fair through pr0fit 1l!' loW!, if,,,,,s ~nd b,:m,,w111y1, p,11yab1i•~, ur as darlv,c1Wc;J1 desltH1c'11c:i1 as h~sw1!) u·i:'itrumenr•. in ,1f'I lwdgtf i-\p11H1pt-1ate, All 1ln.J111:11i liabi!1t11", ,1(\1! r~1r11•.1·d 111ltially .ir nw valut i11d, u1 the ni 111,11'1$ amJ borrow1111J\, flFld ~y.1hlt:.',, 11@1: of d111•1 tly \ilttMbUtflhli· !.r,:1nstetl0!1

b Subuq11enl t1l<l4Sll-111: <;111J9Elquen~y 1111 t inanclsl t1;itlilitt,,s are m,..,,.,,, ,,d as amM1•,tJiJ eost: @, ·nt fo.- Loans 1,nd 1,,,,·rowlng1:, de!lll:rlbed bd, 1w: loon~ llnd bom>wflHl~t A~r uut1,1I 1!1~9t~bt•,111r1fj loans 4!J1d \HI' 11J('i1$Ured t1! i1fihiltifiw.d 00\f 11',lll\j the l?JE lllt":\!lOQ, G~ill', f11ld ,~ dH'

in profil 1)1 th(• liabHltie!, dft' d(!fOCOQfW,i'd .-.lb 11& l!it(J\J()h !II{ ,1mu1tl~t!Oi'1 p!!H 1".;.S, Amt:.ifl1',t'.d l t)$'t i& ctili_ul:1t1::d by ta:kmq 1111.IJ tf~tll dllY

or premium on erqulsltlon and h',§ or 00>ts 111t1t are an i11\1liJr.il !)llrt Cf th,, mt 'The e1R an1ort!Aticn m l11<ludlld a, 111,,,r,,:t:, i:ostll In th,: illllt€!mt,,t Of r,mflt lrl<J lor;ri c DerecG11nltJm1,

A flna11ci,1! Habilltv i·. ,1~1•<:0gm:,e11 wh11.11 the ohli~J<1iirn1 undt'}! the lirtbillty 1, an.ot!w1 Hom tht1 S.1111\' Ofl ·,ul>:,!,Jntltll!y d1llr~rr-1)t tel't'fU~, i.H 1!1i 00:rmt of .-~n treat.ell as th~ cier<;:i;OIJ111\Jl)fl of tJ,~ un11inal ltab11ily 011d the 1ccug111t1on nf.., 11c:w statom1111t ot p, oflt or IOllS,

d Embeddllld dcrivatl,,.1

hf1;111ri'11 liability i•c ,,•pl;i,:;,d by ;ar1 su11rA~11111aiHy moi1111i:d, at1 1'x(h.-11'1gct or 111od1l1tl'UOn !t

in U1e ~.J;Pift.tivi.: 1..:urry1ng i.!nioun!J ifl rtc:OlJ!HS1"''<J In th~

An en1[)f!dd\KI de:r1Vi1\JV1' I<;; a oompnnni1! or i hyhnd ]uJrnbh1e("/l 11r.tnJm~11t tli.11 tth() lnduck:, d nnn,.deriv{1t1v1' 11(}$t oont1 ,\I"! with ttre f'lJ!'( 1 that !K'Jlllt' ut the i:asn flows or I h1J oornbh11 ·d i11•,trurnwn1 v,11y 1n a way .:~1111ilP1f to~ !,t,·1nrlnkme da1·Jv,;1t1vt:. Otai1vat1wf, i,;ntbedde<:J 111 di! otner Ii();..:.\ 1 rn1tf&et"$ tm· dV.:ounted 101 ,v, "~rate derlvotiV\!i and rl'Cordllld at fair valu" ,f the11' ~11c chc1r~<l1t!nlltl<Z and ti~lui ~"' not clo11111y l'l!l!~tlld to th""" c,I the h<>ot contmt:!$ and 1:htil ho~t cout:r11.ta am not 11111<1 for tra<l1nq or deslgn,1trx1 at !'air value though profit 01 IOU, Thes,, ernl:teddl!d ct~nv,,1lv<!! art· rnc<lr.Ured at ts,111 value wltl'i chanoes In t'!,,r w,lu>!I recogn,sed In p, ofit or IOll!,, u11I- deslQnau,1 ,,s effective li(J(lQlf1ll lnt\rnmmts.

c Reclauifi(atiort of ffn,mdal a$8«$~ The CiJUilP deterfflirn.", (l;1sfiifiCStin11 (J( financial ii'.i,(~1":3 and l/nl11l1t·1t.'.), on lnlt1,II fhognit-lon. /\llr·1 h![tlal rf·rm1rnt1on, FtO H'(_"lti•,'.:,jfiaJtion p_, l!ldde for f-lnr1nckll as~ which are equity uistrumt,nts and flnancml liabilltles, For financial 1:sscts which are ,tc,bt instrume11ts, ,, reclall!iilitat"m Is mMe 01,ty If then:, is chang1, 1n the business motliil for managlnq t11ose assets. Ch/lngl!i! to tM b11slness mOll•JI ,,re expected tn be lnfreque11t.The Grour's 1<1nl0r m~naqement dett:m1i11cs change In the bus1ne'l" model a, A res11lt of exl"t'n~I or lnt<Jrnal eh"n!J<!!li wl"lirh ~F!l s1yn10C<tnt tn the G,ou~·~ or,,'rnbon$. ~11th tltdnge$ "re ""-'ldent to ~xt;;mal pa<tlf!'I. /\ thange In the bu:,.1ness mOdel rn,c1u~, when the c-:iroup eltht'r hc<1111s or ~,-ic,1•1\ tn perforn1 ;,m ,H tlvity thnt 1:, sl(Jnificant tv it', l)f)erlttiOn'.,. ff t.he Gr0t.1p 1cd.-!lJSifies fin.mu.ii @soots, it ap1.1l11_'s t!ie reclas&lfKdtton prost>t ~ct1vely from UH· 1 t0Clansifh.,1t1or\ date whir I 1 is the first· dJy ,,f the lo1m('.diately next I L'IJtJrting l)E'11ud 1ullowlng ti 1r: d1ange ifl business mC)(fCI per Ind A~ l 09,

D Offsetting of flnancial lnstruments1 Flna:ndal assets and fin,-H1Cial Uabilitll;!..½ dre offs!'! ;111d the nert.. d!llntH1t is reprnh-3cl in the b<1idrut": sheet 1r U1t•.1c 1s a CL111t'.11tly enforc1~db!c !c~al right to offset the recognb •ti amount:·. ,md there ls c.111 1ntentlon to settle on a net 11.--i:;1s, to realise tll(• ,is§ets and ~,L'!llt'! the Ual11l1t1('S slmulta11(~mr,1v.

23 Fair Value Mea~uroment: .Fair value IS the price that would be received to sell dn asset or pa,d to tran,,rer a liability ,n an orderly transaction l)etw,,en market pmtlclpants at tl1e me,.;surement date. The fair value mt!ilsumment 19 b,,,it!d on the pmsun,µtlon thaL ll ,e transactlo,, tu sell the asset'" transter the 11,l"llity takes piact either:

a In the p1111clpal market loi the assc10111ablllty, 01

!) In the absence of a pi 111C1pal market, m the most ddv,1ntcigeous nkirket for thEi d'.,St:l or habmtv The prlncl pal or the most advontageou~ rrn,i ket must be oo:.esslble by the i.roup. The fair value of an asset or a liability Is meosured using the assumptions that rnarket p.i,Ucipants woultl use when pricing the a;;set or liability, assum,~g that market participants act In their !!i:Onom,c best lnb!rest. A fair value measurement or " m;,n-flnannal a<:set takes into account a marl<li!I: partlc11ll!nl's ability to 9eninte economic btmefit6 by udny thu Jot.ct- in its hlghe:-:it mid be::l.lt ll5t:. (11 bi selllng 1t. lv a11othe1 111&kd j)drUt::lp.;111t. lJ1dt would u:i; r!u~ asset 1n !rs HiQh9 anci tiet.t use. lt1e \:Jroup uses valuation techniques that are <.1ppropriate 1n the circumstr1nn~s and for whirh StJffi<;.lr->nt· rt~1t., a~ aw11!~1blq to meas.111t' !'air valuta; 111,-1:'.lrriiiing ttiP ur:i• of rf!!lmv._rnt 0Mervabl~ inputs and minimising the use of unohservable Inputs. /\II assets and liabilities for which fair value IS measured or disclosed In the financial statements are categorised within the fair value hiera,ct1y, described as follows, ilased on the low@st level input that Is significant to the fair value measurement as a whole,

a Level 1 Quoted [unadJusted] market prices in active markets for 1dentil:a1 as:;1:lo or llablliti<,s b Level 2 Valuation techniques for which the lowest level Input tliat 1•; signlfic.int to the fair value measurement ,s dlrectfy o, indirectly ob,,e, vable e Level 3 - Valuation techniques for which the lowest level Input that Is significant to the fa,, value measurement Is unobservable

For assets and liabilities that are recognised In the financial statements on a recurting basis, the Group determines whether transfers have occt1rred between levels in the hierarchy by re-assessing categorisation [based on the lowest level Input that IS signifku11t to the foir value measuremr>nt as a whole] at the end of each reportinn period.

24 Segment Reporting: Operating segments are reported In a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Group.

25 Earnings per Share: Boele cornlng1 per ,1101@ 8"' calculated by dlvii.liny LI 1u mt µruflt ur les, rexc1ud111g otM~1- COi11µ,'el1MSI~~ 111cun1e J tu, tli~ yedr alttfbul:dble to equliy shareNOlders by the weighted avnnge number of equity shares out$t;tn(Jinq during the yeqr, The we!ghtrrl ;ivnr~g~ nwnhr-r nf Pfl!lity (:har<>-~ outstein,11n1J durlng the yi::>a1" ii adj1.JSt';t{] for evenU. such as bonus issue, bonus element in a right Issue, shares spilt and reserve share spHts [consolidation of shares] that have d1anged the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss [excluding other comprehensive income] for the year attributable to equ,iy share holders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

B Standards issued but not yet effective: ln March 2018, the Ministry of Corporate Affairs [MCA] issued the Companies [Indian Accounting Standards] Amendment Rules, 2018 notifying Ind AS 115 "Revenue from Contract with Customers" and Appendix B to Ind AS 21 "Foreign currency transactions and advance consideration". Both these amendments are applicable to the Group from April 1, 2018. Ind AS 115: On March 28, 2018, the MCA notified the Ind AS 115. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers 1n an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The standard permits two possible methods of transition: a) Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting pe,iod presented inaccordance with Ind AS 8, Accounting Po11c,es, Changes ,n Accounting Estimates and Errors. b) Retrospectively with cumulative effect of initially applying the standard recognized at the date of Initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial period beginning on or after April 1, 2018. Toe Group will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly, comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant. Appendix B to Ind AS 21: Appendix B to Ind AS 21 "Foreign currency transactions and advance consideration" clarifies the date of transaction for the purpose of determining the exchange rate to use on Initial recognition of the related asset, expense or Income, when an entity has received or paid advance consideration In a foreign currency. This amendment will come into force from April 1, 2018. The Group has evaluated the effect of this on the financial statements and the impact is not material.

291

Grot,·, lllo(k' A', ,II Millf'f'l 3.t,/(ll(J

Additions !llsposals Other adjustments A~ lit March 31, 2017 Additions Disposals Other ad)uritments

! 1f•l'i'u)lfl

1.dm.1 bi!llQ

/1) ~70 0 0 11

0 Q

0 0

llJJildlrull

1,715 !,400

0

)O()

.l\r(fo~~ Wdhm~•,; Uoi'li.r-""''~ 10 the cv11:,.t!l,tl.,~_.,'.•_I_ ~ hhl_ftelil ~*""'-~·~·-· -··--

l'l,1111 i,1111'1

l 1JUl!Jl!\1;t1\

1,,','1-1

~

ilflHI'

LUUIJ)lll1Jll

~~~rch31,,,:zo~1s~e~:•...,,;11o.""~-~~~~,,~~~~-~,0 ~----J~---J~~--~~0 ~~~=·'•---.ai11 1 .. ~,nl'IICl11tion and ln

Im[Jdin11e11t Int t/11· y1•,11

Disposals As efit M<)i-th 31 1 )01/

Dept ecidllon f(w tile y1~~11

lmpd11-rnc11t: fnr t!H• yeilf

01:;po:;,il'.,

A'.; ;it M,11d1 Tl, 70Jfl

Nt!t Block:

As dt Ma1ch 31. 1 :?OJ/

As at March 31, )O!l-l

Note: 4· lntan Ible ill!Htlll

Gross Block: As at March 31,2016 Additions Disposals Other adjustments AS at March 31, 2017 Additions

Disposals Other adjustmer 1L

AS at March 31, 20Hl Amo1tisation and ImpdinnE!nt;

As at March 31,2016

Amortisation for the year

Impairment for the year

Disposals /v; ;it M;irrh '31, ;nn

Amortisation for the year Impairment fer the year Disposals Ps at March 31, 2018

Net Block: As at March 31, 2017 AS at March 31 2018

(,

0

IJ (I Q

,f.t} 527

Gooctv,,ill

2,282 0 0

0 0

0 0 0

0 0 ()

2,282

2,282

0

2,tSS •l,)/ I 144 <IQ

QlbtiJntanoilll!: Ai,celits Brands/ c:orn1J11te1 Commeri:1a1 ~ ~;;,ftwar,, aigj:ttl,

s 30 LO

0 l3 Q

0 0 Cl 0 Q

~ 43 10 () 0 0 Q 0 0

0

~~ .... 1

s 10 () 12 0 Cl 0 0 0

17 10 0 11 Q

0 0 0

0 0 ;la 10

0 /h 0 15 0

292

(Unsecured, Cons1de1<"'M Balance,, with Statuto1 v A1,11,oritll!ll Capital AdV,!1 !1~,!;$

rotal

Deferred rax Liabilities: Depreciation

Deferred Tax Ar,sc'b: E:mployee bene111s Provision for expiry and 8re111<ag11,; Total

AiterMte Minimum ta, Net Deferred Tax Liabilities

Out of above:

a Disclosed as Deferred Tax I .iabl1t1e1 b D1srlQ!llld ~R D~f;>rred Tax Asst>ls

As i'lt /\p1il l

ZilJ.!;i

496

l"hRn;JtlOI

1!1t' p1iNIOU!l

YB

4!S

llil.l:J.llllba A, ~l

M,:m.!1,ii

LQJ1.

541

68 5,700

B The r,et Deferred I dX !Expense,,, ui !NR (1,'74H) I I'11:vlou. Yetw u,1< (1,422) I LdklIs lot thi: yc,11 11~5 bl!e11 rldllil!!d / Cre,1,1,,J HI the St!it<Jfll<'l1t or Protit and LOSS,

C The Group offsets tax assets and habllitie£ If and only If it hH a l11<Jally '"nforc:ei,ble right to set off current tax assets and current tax hablllMs and the deferred tax a,.ets and deferred rax liabilltles relate to Income t,ixes levlfld by tll,, ,;ame tak authority,

1 he major components ot income tax expen~ ibr th~ yectrs Pnd"'1 Marci, ~1, 2018 and March ,t, 2017 ari•, Statement Of rofit and loss:

1--::----,---:-:-------------------·-·"''----Profit and lo.,, section: Current income tax: <.;urrent in,:ome tax charge Deferred taxi Relating to origination and r@V@rsal of temporary differences

Income tax expense reported in the statement of profit and loss

Reconciliation of tax ex ense and accountln

Profit before tax At India's statutory income tax rate Adjustments in respect of current income tax of previous years

Utilisation of previously unrecoanlsed tax 1osSP<; Effect of Non taxable Income

Effect of Special tax deductions Effect of Special tax deductions (S0IE)

Effect of MAT/ AMT Credit not accounted for

Effect of Unrecognised DTA/DTL

Non-deductible expenses for tax pur~:

12,400 4,307

5 0

0

(47) (4,079)

992 43

Other non-deductible expenses 7

Others 44 At the effective income tax rate of 8.84% (March 31, 2017: 10.26%) .,_..,.. ___ 1.,3 __ 2_$-t _____ 1 .... ,2 __ 7_2--1

Income tax expense reported in the statement of profit and loss 1,323 1,272

Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group eligible for set off upto 15 years from the year in which the same is arises,and there are no other tax planning opportunities or other evidence of recoverability in the near future, If the Group was able to recognise all unrecognised deferred tax assets,MATcredit not recognised as at March 31, 2018 is INR 115 Lakhs in Zydus Wellness Limited and AMT credit not recognised as at March 31,2018 is INR 4817 Lakhs in Zydus wellness Sikkim.

Note: 9 • Current tax asset net : [Unsecured, Considered Good unless otherwise stated] Advance payment of Tax [Net of provision for taxation]

Total 99 99

293

I The hwentory Is valued at lower of cost and net reall11111:1le Vah;,;J. Cl11c.slfir,1tlon of lnventortes:

R.giw Mab·~n:1ls Work~in~p1·orJre~,s P:iriished < ;oorls

Stock·ln· 1 rade Oth(,rs:

Packing Materials Total

lnv/!Stment In Mutual Fund,, [Quoted] [Valuetl ,;·r;;,;, v,,IIH'

Reli~nce Liquidity Fund • Direct Plan • Crowtl, DSP Blackror;k Uquidity Fund Direct Pl~n • \MOWth JCJC! • Liquid • Direct Pion • Grvwll1

Total A Aggregate amount of quoted inv'11litm"nts B Explanations:

In "Nos.[']" figurns of previous year arr, ,t,,t,><I ,n [ ],

Not<11 12 • Trade receivables: Unsecured· Considered good: Less: Impairment allowance~ Total

Note: 13 • Cash and cash ulvalents: Balances with Banks • In Current Accounts Cash on Hand Total

Nolel 14 • 11lank balance other than cash and cash uivalent,: earmarkoo bnlance. with bank for Unpaid dlvidiimJ Fixed Deposit with banks Total

Note: 15 • Other c:ummt financial assets: [Unsecured, Considered Good] Others Total

Note: 16 • Other current assets: [lln51,r11rPri, 6,nsldt~ GC<,d] Balances with Statutory Authorities Advances to Suppliers Other Receivable Export Incentive Receivable Prepaid Expenses Total

)t',ll) U [OJ Jt,111/i,.nR['O]

0 tU<IQ!<itJ,\>/I

162 162

563 186 55 12 35

851

294

4150,00,Q{Hl r,1•; dt M,Jft h 31, 2017: 4r5(J,IJ{l,!HJ(lj

l!i:iully ol !NI• JO/• !le!Ch

t,'ijll<tlf, Suhsenllill and l'lllm•uri, 3:.in,n,089 [11u1: Mnrch :>m7: 3,$i(J,?2,089l f'quitY cihlrell of !NR 1or ,wJ1 1'111iy pw,:I up

'tOtlll A fher(, ,., no chtnge In tlw mIm~r,, oi 11~ultv lhll'tlli il!t lh•e 1,,.·gInnIng 1Jncl end Of t:M )'c'4r

Nunilµ-•r t)j e,fl,lrt''.), 1t the bt}g!ttfiir!t) ,Hid 1'11d oft ht Yi'$al'

B hd'.-, ( 111ly 1"111e dastt of oqulw ~;11r1r1::, l 1dv11111 a v11u1 of 1NH 10; (:,11 ti e:ae:11 !111l1h:r of l>l'nt1U1;dl!)Qf'tt!VOte Tli,· ~ropci~bvlll\'l~o;)Jd IS:~1JiiJ1'1l l11H1f•

1pprowl n1 nw ~~!w1d11llder11 In t11 1111• ,.,1•:;(• c-if in~rlm dividt,n,t 111 lhl'

l!Mlnt ,:;f lt4wliatio11 ol ch~ Group, the ~~i.aw ,1,~r~t1oldl!l'II cnuU.cl w µ1(>flf)i1:Jtin~~ ~h~,~ or U1"11 lml<:tln11 ,n the ll!NtS rama1n1n11 <1ncr •llstrtbutlon of 1111 pn:,for<1nti<1I a111ountl!.

C tletd1i,, (JI Shll1111holder holtlilJ(J mor~ than 5% Of IQQl'C!J&c, !"qllity ,·,1·,~re11 of INR 10/· !IW(:li fullv tliliduo; Cldlll Hi!i!lthc,11" Limil:i!<l

Nyml;,,i,r QI Shijl'c'S % to totl!I shari• 1101<11, ,u

C) Numbi!r ()I Slime·., lldd l)Y Holding Comp, 11 IY

C\1<111.i I tc'.dltJKl!Jre Limitffld

Note: 18 , Other u 1

(lenerl'II -ent11 [*] Bellance as per last Balanoo Sheet

Pair value through other l!lllnpr<ahensive lt1C11m11 [l'VTOCl] Ruerve, Balance a:, 11t'1 rri~t b.ilarice sheet [U!ssJ/ A(lrl: I I J,;h1hcdl/ Credited dunng th<? yt:, 11

Rel:llined E11rntngs: Slllance a, Pllir lut: balance sileet Add: Profit ftt the year

Less: Dividends: rllvld~nds Crn 1Jor;-ite Dividend iax oo Oiv1Cle11d

Bal~nce a,, cl\ \he fil 1d of the ye;ir TC>tal

• General R.eNrve can be used for the NotAII 19 " Other financial liabilities:

Trade deposits Others Total

%;-S~<S,a,>;,cst:;s>•-~,"cn•

Note{ZO - Provllilons:

r . uidellnes prescribed In the Companies A<t 2013,

pr;ViSi'On"'futimployee benefits~·-----~~-~" ~--T'.Af!-'. ,\).,;:,~. Total

3,901

28,1$i,7~~ 7:1.0t1%

4,500

(JJ)

21 (12)

39,482 10898 'l0,380

,,s-10 5J!

l,057

74

74

295

Nob!, 20 Pro~<:o,.tmm•~-,-Oefinfld bonotu 1)li~n--~-~ftd 1Q~g t(\1111 ._~;;;1;loy"1Cmt ,-~,~~;;.1 A General delcrlpl:km:

tnave WIIII• I u,ng t- empk!yment llenefltJ1 ,h, leave trnJAM\f11,,nt Khllfflct ,~ ,,~1t11tw;iJ11r!ild thro,,g1, Uf\; !n11Yr1nc1 Cnq,orbli<lfl of lndldt, ~rnplnYi!l!I' Gr01,p Enc:a11hmtnl n,m life Asllurani:.: [C.,sh ACCl-l!lllll.1!11 )ll} iiC!1@mi, '111c !)Hlllli ,yut (}f t,t1i• { ,1, •lip d~ tntitlad 11) Ii ',1V1. ,1s ptlt' ~ j,.,;!VI?: fH ill! y or the (jf(l\lj l ·1 tiL; lit,bil!ty on iH l ()llfll r}f tco.Jmul,-1t:ti\d Ii ',\V11 b!S on lat!M

[fii½t. ,11 111,, ri;!lt vnlue ci1 11km ,1•,·~ mt 11w linl,_1111,,:et shkt dRJti';J .11 p11·se11t v1lue uf t!11· 11{;flfl® obliti,-111,111 dt Hit ~!anC<· t_i111_ by e111 ind, ·1nJ111, •111 Jctu1ry U$,f11J 111,JJ,-•1 t:ed wnlt t:rP h! n11_'ll 11 id,

Gratuity [Def11u.'<1 bwii!lflt plan): T1w Group ha~" d11f!i,,,d l:!illnflflt gr~hJliy p1~n, lvttY ;,n,pln~ who has con,plsfr,I i:onunuoui: or rt·!Httn'lvn1 It 1$ dl,yi; !,;Jl.Hy [Jt)Nt drtiWFI r,,·11,11 y I 1111' IMlt::h corr·111k>tvd y,·,tr of St?:rvie,1. I 1lt' htffl'ti lns1,11 d!1t 1' Puhi::y,

B Chang;; In the 1)1"-nt VIiii!" of the defined bmutflt obil{lllli<lh:

Op~r,Jng (f1•l11Vxl l)1'i'fflflt obflQf1l1r)ll Intere,,t cost Current service am Benefits paid Actuariel lgr11n'.,I / !t)S$8$ on ol)l11,1atJun

Closing dcflru,t 1.,ntfit obllga1 '"', c Change In the fair value of ,,1an ,,-,m:

Opening fair value c,f plan ,,,;sets Expected retum on pl.111 assets Adjustment of Opqnln9 funrt Expenses deducwd from the fu11d Contributions !Jy ,,inp1oy11r Benefits paid Actuarial [losses] / IJ,1111,, Closing fair value of plan ,s,,,tll Total actuarial [lossc,;] / gainij to be

reoognbcd

D Actual return on pllll! llilMl:s:

e

F

G

Expected llet11rn on plan asset,; Actuarial [losses]/ gains on plan assets Actual return on plan 11ss,;ts

Amount recognised in the b~lance sheet, Liabilities / fAsse,I'.. J at the ~M

of the y,_-'dt

Fair value of plan ai;sets at tht end of the year

Liabilities/ [Assets) recogni!ll!d in the Ral,ince Sheet

El!pen ... ~ / [Tommes] recogni•ed in the Statement of Profit and Loss:

Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial I gains! / losses In tile yea, Net expenses/ [benefits] Movement In net liabilities recognised

In llalanc:a Sheet: Opening nlll llitlllltlllo Expenses as above (P & L Charge] Contribution to Plan assets Amount recognised in OCI Benefits Paid Liabilities / [Assets] recognised In the

Balance Sheet

of Ave yu, ,, ,w 1M1 e gllltl a gr,tu,tv m dl!Uth or re,,.yrtut:io, 1 fw1d1-tl w!lh @rt IM$Uffllf"ii'(' I lllllp(lflY In th@ (Ol!r\ tJ! ,I Q!Jillifyin;

~ AIA!:J)!llu'!:hJ1

I)

0

0 0 0

33

0

33

0 2 7

:~G

7

0 0 0

33

~,,llll,/

1.avc.Wc1®ii

201 14

36

14'3 11 0

0 0 0

208

(155)

53

36

14 (11)

17

56

:;o 56 0 0

(61)

53

25() 19

.It> 0

(2) 46

(34)

(1 242

257

(2,fl)

1~

46 19

(16)

0 49

J4 49

(46)

(23)

15

296

Nm• 20 • Provitlons • u,nttnued: Ii Ptl~c:I I actuarlai ~iJ'J!'i~,;,~ fir Ml!fl ~:!,~~tj!I

Partlculars Discount rate [•] Annual lnCl'llllltl In

[*]Ttw 1 <1l(' of dt,1

empluy111~-'11t !~O(•f1! obllQltiOfUJ, (#] 111<· ,,,,11111 .. 1,,. ,,r Meli'!! alary ,«v cons1t1~1"i!d In supply d!nci d1-.:!110.1 iiJ ih thll .mplovmct !L rout f(t)t.

l Tbe c:al:llgOrl11$ of pl,111 .ts~ <It II ""of to!:111 pl11u Insurance plmn

l Amount recognlH<I in 1111nM1 dncl r,nwlwa l'<u.r yt>,J>rs:

Gratuity: 0$flr1t:d h• •r1r ·lit (JIJh!J,;lttort Fair VllllJt~ of Pldtl A'.;$U

Deflc,1 / I !:.u• pt 111, I 11, tt~ pliiin Actu,,11c1I lu:,t; / ll,diO] 00 ~ltn Obllu,1t1ur< Actudrlal l.osli / [Glllol un 1•1,11, ·n,e l!Xil(!Cted c:ontl'lbutic\11;; tor i:ieflMd l!enfl1lt Plan tor tht 11~:"1 li!lll!'ldal ~r Will 1111 ir1 lin,1 Tl1c ~Vfflge duration or rJ<'llln@d benefit plan obllgat,or, 1,t ttie ,;,11d Ol't:hll yeerJs 23,98f c1,, ,rt March 31, 2017: 2.l.Jli y1,1m,J.

Sensitivity analysls1 A Qur1r1titc1tivc sr,1-;fl1v1ty analysis fo1 lilt;111tn(.-ui! ;i•,s.umption au 1s i1, •J11'>wn bi •t< 1w:

A Medical Leave:

Assumption Sensitivity Level Imoac:t on doafined benefit 0111t9atJ011 [!Nlt-1.akhs] Assumption Sensitivity Level rmoact on defined henetit tlbh~a!Joc rrNB:t:.;kli,,l

B Leave wa es:

Assumptlon SensitlVlty Level

on defined bt,nefit obliqdtl011 !NIH.akhs ptton

tivlty I.el/ill on defined bent!lit Obii · adOii [!Nl'l I ::ikhs1

Assumption Sensitivity Level Impact on defined benefit obli at,on lNR·Lakhs Assumption Sensitivity Level Im ct on defined benefit obli ation f!NR l.::ikhe,J

The followin payments are expected contributions to the defined benefit Ian in future years:

Within the next 12 months rne.'<t ~nnu&l l'IPQll;lng penodl Between 2 and 5 years 8etween 5 and 10 years Total expected ayments

100,00%

201r. IH4 lll>f

lM,00%

(H)

(5)

0,5 % decrease

8

o.s % der:roaS@!

9)

83 207 189 479

297

N~;;: 21-other non curNlllt liablitiM: ----·· .... ···--···~-· ··:::::::~:--····~::::-_=_-: .... ··-· .• ··· ··1,..,..,red (.11ant · · -··

Total

~~: 22 • C:Un-ant flnandal llablllu,:;_ ·: !ffi!W1!9: ~ ..... ___ . ::.~·----· __ ·_··_· -_:., .~. ~- -·- ·-·--·•--- ···•-"f"---I 01ns l'ePl\'Oble on demand:

Total [" I

Working c.ip,t:al 108M !'mm benk:. llln'l?('ll,...,,j [' J

Working capttal !Odil which i$ ,...y.iblr un !l ◄ imt:H'id1I; (1v.1tl1•1I ,'11 r,h$ intflr~l 1,11,, 1J( i}M j,.,t)iil nitr l_.1:. d1

Jl.0J.2017 T·b1II r.il!.: plus S bps] il1c out.wndlnQ Amount ol lwn ij~ 11t fvlij1d1 ;,, .:uJA 1$ lNfl ~.~U0[.i;. Jt March 31, 2011: INR 2,5001 L~kt,•,.

t::N.,-Qte.,.-:-:2=3""'..fra:-d-:-e--a,.-bl:-U-I-----•---.:.:.:::·_·=--·· ----.. --.. -_-·-:----·•--·---... -.:_·_·-_ ·-~·-·"""'-..,.= T, dde lldYables 'total

'"'Note~--, 2""4-."'0th-.e_r_t1'"m_11_n_c.,.ia"'1"11"'"a""b"'ll1t1..,.·es-. -, _____ ,.,,----~-~-,~•·-'"' ___ .. ,.~--~---~·--"·" ----------~----·--•----·--·~----------,----::-.,-----~--,,-i Interest accrued but not due on IJo,ww,ngs Payable to empl0Ye<lS Unpaid dividends Total

Note: 25 • Other current liabllltles: Payable to statutory authorltles 1:ieterreci' revenue Advances from customers Others Total

Note: 26 • Provisions: Provision for employee benefits Provision for claims for product expiry and return , ,r goods [*] Total

r't'l PruviS:itJn fOI Ll<:li111~ fu1 pt-odut.t i!Xf)lfy dlld return of QtxJd~; a Provision for product expiry claims in no6P<'!ct of Product/! sold during the v,111r ,~

made based on the management's estimates considering the e,;tirnat<i!d stock iylnq with retailer.The Group does not l!Xpecl: such cldims to be relmhur,<~J bV any other party In future.

b The movement in such provision is star,1CI as uncle,, i Carrying amount at the beq« 11lin<1 of the Yi:lll ii Additional provision mad~ dunnq the ye.er iii Amount used Iv Carrying amount at the end of the year

ri rNet of advance ta,(1iavrnent t ,

A Contingent liabilities: a Claims against the Group not acknowledged as debts

In respect of guarantees given by Banks and / or counter guarantees given by ti1e company c Other money for which the Group Is contingently liable:

I In respect of sales Tax matters pending before appellate authorities Ii In respect of the demands raised by the Central Excise, State Excise & Service Tax Authority Ill Tn rps[)Pct of custom duty liablity under EPCG scheme

B Commitments: Estimated amount of contracts remaining to be executed on capital account and not provided for

Note: 29 • Dividends pro osed to be distributed:

1311

76 10 ;,L 7U

0 l!lt

Ft.J ◄,;l.

0

11!!

The 0oard of Directors, at lb <'<><Xlillg held u,, May 24, 20lS, reetnnmended me nnal dlVldend of INK 8 per equ,ty share ot INK 10/· each. The recommended dividend is subJect to the approval of the shareholders at the ensuing Annual General Meeting.

62 70

132

51 70 51 10

0 259

2,094 320

l!

423

298

011 wr np<'t c1tlng revenue'.,:

Total

N1·1· q1!1in on fort:1r111 ru11t•11cy transact1t'ir1•, ,111,1 tt1Jnsltl!t!on M1:.,o ·llane-ou$ lnnm1t' L n]

Not:Mto the

I•] The (';overnme11t of India hc1s 1ntrddueed tht Goods ,.>nd ~let ra, (Gi5f) with 1!ffciJ rrom July 01,2017 w111,h rtp/lC:U txd·Mi dutv and v¥ious other lnclire<..t tax<!ll, A$ per ln<l re, lG, Revenvt frvr11 om1retlonl for ttw, p,,,1,Jd from JUiy :'.-llJ.J t<:i Mardi 20W 11•po1ted net of CST. !?cvenue frorn n111'1:1t10n, of p@Jit,Jcl•, 11fJh, iune lOt 2fl 11 -111: 1 qport:@d lne111·.1v1• iioo;IM duty wti1111 1··• now t.o!t;11med in G!,!,

[*" I Mi·;r:ellaneous inrnnH' includes, Govc1111111.'111 gra:nbi who.,,f• p1H'i1~ry eondttlnn 1·. 1.11.11 this Comp.111y '-,h(.i11ld purehttt1•, 1 (111<.ttllet' or otherwise acq11ira non-current as'.,<.'1:11 are reoognm:,I imd dledoatd "" Ocl'11Nd Grant no11'1:Umlnt llib!l>ly in Ult! balance t,11!!$t and trnnsferrl!d IXl the St&~menl or profit and lo,,:; un IVffl!ITTllttt ,1nd r~i<tll'IIII balllt OVi,r Llio u;jlijfyl llllfl 01 tl'lil Hel,ffl illNtl.

N11te1 31 - Other im:ome, t11t1,1(",t' 1m--ome on -nn~1ncial ds::,ets measun'.~d dt dmortlsed cot,t

Gain on 111111, of investments Net gain on Investments measured at FVl'PL Tot.al

Note: 32 - cost of materials consumed: f<rJw rnate1 ials :

Stock at commencement Add: Purchases

Less: Stock at close

Pi:ltking rnaterlals consumed Tot:111

Notll: 33 • Purchases of stock•ln•trade: Purcl1ases of stock .. ln .. trade Total

Note: 34 • Chan es in Inventories: Stock at commencement:

Work-in-progress Finished goods Stock-In-trade

Less: Stock at close: Work-in-progress Finished goods Stock-in-trade

Differential excise duty/ gst on opening and closing stock of finished goods Tot.al

Nllte: 35 - Excise du Excise duty(*] Total [*] 'Excise duty expense of the April 2017 to June 2017 quarter include credit of excise duty of !NR 1799 Lakhs received by Zydus

Wellness- Sikkim, the partnership firm, pursuant to the order passed by the Office of the Commisstoner of Customs, Central Excise and Service Tax on the fixation of special rate of excise duty under Notification no 20/2007·CE dated April 25,2007 amended by Notifir;,tion Nn 70/2008-CI: dat•'d Mar,;h 27 ,200e & Notification No,38n0os - <:E dattld June 10.2008,

Salaries and wages Contribution to provident and other funds Staff welfare expenses Who!etime director remuneration Total

SI

45 1,278

35 1,358

33 1,871

16 1926 (568) 176 392

4,222

189 135 232

4778

299

ninkcommis!ilon t1, (J1,_11u1"

llltlll l*) The bre~k 111 111r 111h'11",I ~-xp12nse:ii into 1rt1Jf11 11, .1, 1- .. 11<1 9ivt1fl be-low:

On worklf'ltJ tr!flll,11 111,111·,

Otht'F;

lntnl

,,mortb;at,on r'Ol:al

~·Jwf:! HlfUt!I

LihboUr tllar (Jt:':.1

Rent ['l Rer"""' to bl.lildings rzepalrs to plt111t n11d 111;-1(1111u·ry

Hll!Pilitli to otheri. 1,1sura11ce !~and taxes O.,mmlsslori to diroK.iln Traveling expen'IU Legal and profe:JIIIOMI fees Commission on !llllllS l'relg11t and forwarding o~ sales Advertisement an{ 1 '.;i.lli-•:, µr(mH.Jtions Representative alltJWrl!lC13!'>

c)ther marketing cxii(~n'.,c",

Provsion ror doubtful dell!·. Oir&tors' f~s

Net Loss on diSPoSIII of fixed asscts Donations Miscellaneous expenSllS [ .. ] Total

[*] The Group h;.t; taken various residential/ offo,:e p1e1ni2,es/ godowns under oper&niu lease or leave tH1d

agreement wiU1 no 1·e~-_;t11ct!ons and are 11:nt~w1:1ble/ c:,1ncellable at the opt1rn1 nt e1the1· of the parties, r 11c1 e c1rc no sub~lea~,f~'.,. 1'11e lea:.,c payments recoun1sed u1ider "Rent Expenses'' .1tc:

[**l Mlscellaneou, expenses include: a Expenditure on Corporate ::;ociul ReSJ)OnSlblllty [CSR] Activiti~,, as reqult«I u/s US of the ComP11nl1111 Act,

701],

h IJayment to the Statutory Auditor,; [excluding Service T,,,1. I As Auditor

ror Other servtces rotal

ii Cost Auditor':; Remuner(;ltfon i11Cl11d1r1g fees For other service:t;

Note: 40 • COmponents of Other Comprehensive Income oa]: Re-measurement Qijins [losses] on defined benefit plans[Net ofTaxJ Total

Note: 41 - Calculation of Eaml s per e uity share EPS : The numerators anrl rlennmlnators used to calnilnte the bnsic and drlumd EPS ar,, as r011ows:

A Profit attributable to Shareholders B Basic tuu.J weiqlilt~d dveraqe number of Equity Shares OYtStar1dln9 (Ju1111!,J th~ wdr C Nominal value of equity share D Basic & Diluted EPS

Note: 42 - Segment Information:

INR· In Lakhs N11rnllllr,;

INR lNR

The Chief Operating Decision Maker [CODM] reviews the Group as a single "Consumer" segment. The Group operates In one segment only, namely "Consumer Products." The Group also exports its products to other countries. However the value being below threshold limit "segment Reporting", the reporting is not required.

1~/ "i02 714 324

47 !M

II,

1U

;y;3

20 #S 313

1,070 1,022 /,66'1

·180

768

J,!

18 5

967 11

1.11

201

11 0

11

21 21

10,898 39,07'),0~9

10

2/.89

300

_____ ,,,,,,, ____ ,_ Not:e1 43,, Relattld Party Tra111111eti<>0161_ , ,,___ , '"" ,

A NM1c of the Related P1>,o,11; ilti\l r,u,ture of tile Rlll1<t~<1 r.i,ty i,,elat101111hlp1 it Holding company, 111',llth.:llrl Limltad b Part!larship Firm, M/r,, /y<iU'", W~llna. Sikkim ' Flllll>W llllhllldl•l'loll!I/ Concerns;

/yd1b Nuv\11!, ·1:h Inc,( UM V1r1II!) l l11iJltl11 ,lr@ Liml~ J\i 1111: JJI 1,)1111,1i-futlc1li Privet~ UniJl1 ,i1

1vc1th 11-·1 11111 Jl1).1ltfl 1,,1m1ttct Zydus Hulthcare Urnit\l!d Olall'llfhelth lr1,1,,, 11rr1iloo Dlalforhnlth Urntv Lrrlllli'd Olall'orhl!alth Grc'1lnC1'1:>£,e; Un1rtlld I IVA Pharmlll'l'IJUt::i!I¼ Llrltlt~;;J /\llrlcH Pl l.)I flkl(~LJtfailt L!rtli~I Lyclu·, 111!1;111/1Hnn1l PrMtte Lh'1111,~d, 111·!"1111 I

7ydw:; N(·,th1'1i,10d!i 8, V,, tt\t N1·!l1t_t1kiri!J,

/ydu:i Lonk.i ( Pr/vaty.) Llrnltedt •_,ri' 1 .-1nk,1

Zydus Healthct1re Pi1rlrpprrw,s Inc., Phlllpplnes ZAHL !I, V., th!! Nethrn l,111d,, Zydus Pharmac:>,11li1c1lr, USA Inc., USA Zydus HealthCll11' u•:,A LLC, U',111

d Directol'II Ur, ~~lldtvi! f'_ Pt3~i

Mi. Ganc,,I, N,1y~k Prot. l11din1l)1.~r1,J,P&rlkh

Mr, l<uli11 Lalbhal Mr. Humayun Ft Dl1anrnj,iir

e Key Managilrial Personnel: Mr. Tarun G, Arora Mr, Amit B Jain Mr, Umesh v. Parikh Mr, DhilVi.:JLN.'.:ioni

f Enterprises significantly Influenced by Directom and/or their relatives, Cadrnach Machinery Company Pnv,JL1 · 111111t-r:d

Zydus Hu:,pildl$ /J!l)d Healtham~ !(l:'.;1-:dldl Private Limited Zydus Hospitals (Vatiodara) Prw11t11 ~1rnited Zydus Hospitals (l¼ljkot) Private Umlted MabS Blotech Private Umite<l Zydus lnfrastnitturi; Priv,,te umlted cadlla Laboratories Private limited Pr/pan Investment Private LJmi!/!tl

11 Transactions with Related Parties: The following transactions were Qljf"ried 011t with the n~lated parties 111 the oi n1nd1v crnJrse of business: a Detail,, relating to parties referred to 111 Note ·13 A [a, b & cJ

1 J; -1, :on Pl 1rmrtt1CttiJt ii ,,11 U' ;/\ 1 1 ( ,

1-1,·,.f'!rar Ph~rm£l'c~t11 . .-_i!·, (U':>.I\) tLt'.:1USA Heulthr:111~ l'lv r rrni\J?CI, 'liluth Afn;,i

'·,in-i,iylia PhitrtnL'lt..~ut11.·.11,, f'ty ! 111111j!K:1, !~uth AMc:1 Script M,:11tr1yt::11H•111. Servi* Ply U1nitmd, Sn11\l·1 Africa E!tne n,,,r;;ch Italy Zydlb Frllnat LabOr,;Jtnnu•, (t1rnb1x S,L,, Sr,t1in ,Vrl1,;G Nlkl,llu Fli~m11,,..,,w..., llmll.i~,;, tlra;il ,'.ydrJ'I Pl1@1"1Jr;l;!Uth , ,1,, ',I\ de CV, MflXioo "/y1l1JS Pharronctuth ,11', M(~.xk {) '-~(~rvl~ SA dG CV; f\kx1,11

/yi1lJ$ Worldwidtl DMCC, !')(1!1,11

OMr·c, Uul1,:i1 me NethtManch

arnrm:r pr,,,,rma (i1nbH, Germany Aiidli, Vi1cmnarc111,ai1s (Myanmar) Umlbrd, My;inmar !ientynl Ttierm:••ulrCS Inc,, USA

/\Jui1 ~ex:ocotlveCh~11111,111 N(_)/1,,{:J(OCutNe: Dir~ l1i1

f1Hl1?pend€!ht Dlrect(JJ J11rl1tpe:ndent [)!rect<H

Indep1.;nd1'r1t Oi,f;'<:tor

Whole- Titnr; D!n:tKtor exe<:111,vr, flfflcer l •::hlef Financial Officer I 11p l'O 07,02,2018 e)(!!(11t1ve r)illcer [Chief Flnancilll Offioorj w,1,J 07.02.2018 I X('CUtlVfJ Officer [C omp<Jr1y 'JJ'rH~tary]

western Ahmedabed 1 111111.,rrt Conveyance Coml)ll11y Prlvate Umited .:andr;, !nfrm;t, ucture LLP Zydus Hospital II P M/s, C M' C Machinery Zllnd1'a 11e11J:, c1nd Plantaijons LLP Blochem Pllclrmm:eu~c:al Pri\llQ Limited,

~of th,~ Tra,F\:ii.lctJoos (INR-t.akhs) 110J\li11/ll:,QlllJWll!

Nature of I@nsac;l:lgns

Purchases: Fixed Assets:

Cadrla Healthcare Limited Sales:

Zydus Healthwirc Limited Zydus Healthcare SA (Pty) Ltd [South Africa) Total

Reimburshment of Expenses: Cadila Healthcare Limited

Services: -Ladila 1 1ea1u1care urnrtea

Dividend Paid cadila Healthcare Limited

Details relating to persons referred to in Note 43·A rel above:

Remuneration: Salanes and other employee benefits to Whole time directors and other execu~ve officers

commission and Sitting Fees:

Outstanding remuneration payable:

Material Non·Controllin Interests

Name of Partnership Firm

z us Wellness Sikkim

Country of incorporation

Proportion of Interest held by Non-Controlling

Entities as at March 31, 2018

2%

Ylir ~nsllll:I, M;.,rct1 ,31

45

Proportion of interest held by Non-Controlling

Entities as at March 31, 2017

2%

0 0 0

6

1831

279

52

39

301

Curn!ntAilm Non•Current Asm Current Uabllltiu Non-Current Uablllijes Total llqulty Attributable to1 Equity Holden; of Perent

IL I

,__ _____ ·····----· -----------f'rufit aftti1 lilA

Other Compr0h•~11t;1vt'. Int,nrrn,

T(itdl (/ml]ll<J1nn:;ivt'! l11uin11'

/\llnhu1<1!Jk• lo non~cor'l ruH1rn

NOtut 45 Financial ios:truments; Plnai,cial instruments

( i J Fair values hierarchy1

IJ/HJH 'it,

11,5/.'{

rlll

Fmanclal assets and financial llabllitles 11:1e£isi ,red ,;t fJir value in tt,,, si,1!\:111ent of financial positlcn are Ql'OIJl:led 1,,to th1c,;, Levels of a fcl11 vali ,e hlnrchy, The thrllle Levels era delined based on the observability of stgnlftcimt input,, 10 1110 me<1~ure111!Jl1t, ,,., follows: Level 1: Quoted prices (unadjusl:!!d) In ecuvc 111;11i«.<ts for financi~I 111,;11 urnents. Level 2 : The fair value of financial lnstru,nenm th,,t /\re not traded 111 M ad:M! market Is del:l!rmlrllld u!llng valuat11111 1c,J1<i1t1U!l$ wl1ich 111n,11nlse the Uilll! of obilll!rvable market datd rely as little as possible on entity specific es1.1111at,x,.

Level 3: If one or more of the Significant. inputs 1@ no, lms,,cl on 011s~1vable market data, the Instrument Is lne1ur1,1,1 in level (ii) Financial ali&lll:s and llabllltf m-ur~ at filir value rocurrin fair valua malliuN1111111ts1

Plnancial assets Xnvestments at FVTPL

Mutual funcb total financial assets Financial Liabilities

Financial assets Investments at FVTPL

Mutual funds Total fln11ncl11I assets Financial Liabilities

Levell

l47$5 l471JS

0

t.evel 1

3,001 3,001

0

XNR•Lllkhs AM at March u, 20:1.1 .._.2 IAWIJ

0 0 0 0 ll 0

INR-Lakhs As at March 31, 2017

Level 2 Level 3

0 0 0 0 0 0

Total

3,001 3,001

0

302

/y,,~;Wl)lln• Ll»~1,,,,

N , 45 • Financial Instruments • Continued: .!'!~•t4 b) Jim (·011-it0Ud~!m.1,1I St4,•i11u,~'"'""'",,,"-",,..,-,.w., . .,....~------------------•----,

(Ill) Fair value of instruments measured at amortised ClO!ll:1 Plrnmdal assets ~nd liabllltles measured at arnortlsed COit fu1w1•1ill11,,11 v,i1t1t11 are dlseloHd. Financial Assets1

Tl1e c.11y!ng amo11n1<; oftrad;; r<;ll;e1vabl,.,, ~M at\'!t'l' financial values.

Financial Uabilities: Fair values 01 loans liorn banks, other fint1nn,11 l1c1l ul111p% ;;irtd tr~ pa:y1111h ·:. c11t: ,;_ur1·.11l1~ tt; bf§ ippi, iK1r!L1t,,,·!V, ·, 11 1,JI to the t~1'ry!rv1 ',/, 111 I/"

1 f'lnanclal risk n,anagement: (I) Financial Instruments category:

Particulars

lllnantial iil&<il!tll

Murual fumls Trade receivables i...oans & aclvance~, Security deposit Fixed deposit Cash am1 Cil!il1 equivalents Total

l'lnaneial liabilitiu

Borrowing$ Interest accrued but not due on borrowings

Payable to Employees Trade payable Security deposit Unpaid dividend Total

Particulars

Financial assets Mutual funds Trade receivables Loans & advances Security deposit Fixed deposit Cash and Cash equivalents Total

Financial liabilities

Borrowings

Total

lnt.erest accrued but not due on borrowings

Payable to Employees Trade paysble security deposit

Unpaid dividend

Q

0 0 0 0 0 0

FVTPL

3,001 0 0 0

30 -0 0 0 0 0 0 Q

0 0 0 0 0 [)

0 0 0 0 0

0 0 0 0 0 a [)

303

o,t,~1~11111 ilXjlOH It l<J l!WK,,: ri>K, llquldlfy risk mn~ U1'd1! 11sk, Tl111 note imcpilll1r, ti11; of risk which th~ ~,lt;iJv ,upONd 00 and hOw 1111: ~ntitv m,tnlgllli the risk 11111 tho impact In the ffni,n,i.11 ,,1,,11,•1n1mm, '!'ht G,oup'5 ti5k m~nll(IM!lll'lt Is mil11s1g"~ cl- eo,,qrdlMtivil witt1 tn,; uu11rt1 of di,,_ wild on 111!111111lV !l(!(;Uflny tile 1Jr1:111p''.l llhort, milcllum ~nd 1ri11w ll:1111 l;!lllh flows bv ininlmi:tng the ~Xfli"H>uit_· t(1v111.-1t1hi flnt}nr;:1@1 mt11 k, •h. LOrhJ 11_•1'm finimc!a111w1 ·Jn,.,111•. d!f''- nl&1rtag@d to g~11tt1.1t, 1.1•,.i'H1q rr'l1Jl'Olt

rhe Group dOM, 11(i1· ,1d1vt1ly 1·11gag3 in thi tn1d1J1q 1H JH1,1nd½'!I ,!ii.I~ f01' 111.111v,· InwJ.lQMS: nt>1' ,;p11,111·., ihti moet ,1g111hr.i11t il!1.11111.,1 rn~ks to which 111,, ,",(tltJl11•.

t•(IX)!ied an'HJ~ f ii h ·d hdo}w

A Credit risk: Vlldit risk art,,;,s IMli tilu pg1111ibll1tv !1'lal; cmn\ar JMrtv may nnt nr sttt1111 thfflr ,;bllglltions I h• 11na11p ®t[Jnr.rd ro trP;;J,t ,1,.. fr9lTI tn1dt:l end other finanrill allMtll, '11111 brn11p ■-the t1,;;;ilu,,1 r,llt"bll!ty of the CC!\Jf1tlir l~"W 1:,kil1Q lntll ai:c:oont tho 1ln&11r,,,1, ,tndltlon, current hlstr,rlriJI IJtld dollt:I and llgeihQ 01 lndlvldual cu,,wnm 11m1t11 al't Ht ili:ei)n1w,yly,

billlkulllf"'(lll> an&IYIIISof

lll'!nll deposit!!: 'fhtl Group malnt:,inft it,;! :.,,,,Ii dMd cli$M 11C1UIV11l1,nts 111,a !ldnh dlPOlltli with l'<c,r,utc(i ~lld hltillly l'lltild bilnkli H~!!(C, th,r,! 19 no Slgnl!ICl'lflt tfP(hl 11•;k l)f\ SIJCh dep()lltl, Tt$dt1 l<1&i;e1v;1bkli The Group trJ;,rl~S will, ,ew;;nlnd and i:rl!CIII w1;1thy third partlei, It II thn (;11:i11n'•: pull('/ thllt ill customer$ who wt1M to trllde on Crtd1t. '.iUbjeCI; Ill credit v,~fification proctd1111:1.•,. "fn c1ddit1on, rflvtAbl#!' !J.1!.1111 ,.,. ~wl:1 rftonltortld on 111 oH 111-,111\11 with lTie rc:~u!t tiv.11 1i1(' (~1uufif i1) Ii.id drhi•, i•; not 31Qnihcant. 71if•r1· Hrc 110

',1gnlfk:ant credit JJt;k:, w1H1 10!€ftud l,,11,H!!J, 1111• i'ifOtJP !li ~qd Jq ff1·tli! 1/'J, Ir! th€: ewnt of /]!Ill (li1Yll\1Jlll_ l)Y CH·il1t n(,i: f'Oll1 ;~ntr&tfQn With fc'_ipi•r ! lo l!df~

rt!telvables I$ rnlti[1.ikd liy Lt If' large Ct,hl1 ,11 rMf LH ,I ' /\diqUit~ e)(~t ,(! f /I 'rlil lo•_,, ,l !'.Hl"' ~nit~ , l', !}( '! 1! 1i\' 11',' ,ciJSISfnlf1Ui,

!he hl$l0ry of lr,111,• r,11rjv,1b1,,, snow, ~II ~11ow,,11u>l11t [,,,,, .,fld dtlul:ltf\JI dri;I,1,. «I lfjll Ml 10,57 Lllkhi ~Ut M,11<11 JI, .'11\7], th!!! Group rm,,'"·""' ,1li1,W~l1Q!! of lNR N,1 IA•; Jt M,11111 ll, 2017· INR NII I, ,\IJ,11nst 11,11!,1 t'ffl:liilVablll!I ,;,f IN!< I'/', I ,c,l;,h~ tAll at March }III/ /Nii ,!04 Uikh$J,

B Liquidity l'itk: . , 8 Prudent ltQUidtty rl@k man1111em@11t onpltr::, (fl~lntllinlng IIUfi'l(h'ltl( ,1111.l mal'ketilble H(;1Jt1l:h,, 1,11,; the IIVllllblllty of f11mli111} Ull'Ollgh an !ldl!QUl!tt Wll!J!Jlil 111 r:,,mmlttl!ICI CNC!it

fllclltties to rnC<1t obllgiltlOnG whtn ,ti,.,, D!Jl'.11,, the natufill of the 111,wntl!;s, tha Group melntain~ llex,llillt:y m funding by m11!1t1m11n9 ,1vail,1ll11ity under comn111ti!d fNil1t11·1,

b M;;nagement monlfflt'!! mllin~ i'fir(,l(;q:,l,i; uf Lile l',rour,'• ll~11lt'llty po~1t1on ~od rA•h Anl'I r~"11 market h1 which th:· c11t11 v ll/ u ·1 ~. In addition, ttit._, (;1 nup'", liqUldlty rrtl'ili~( •1111 ·11t poUi y necessary to mett tlli?,£t\ IJH)l ll(!)fl!ig OOl1nc11: lfll'('1 luplidity 1,'1tlOS a;alrttt lntt•1 f1dl ,J!l(I vXtt''.I !'Utt!

Maturities of financi.il liabilities I

011 i~ hl,~I, rif lllxjJl;lLtll:d Cil:ih 111'.lW•, 'fhp (,n,11p "'"ount the lillulrilty of tM ( 11\,ll flnw:~ ff\ majOr currtf)f:tt•', ,1/\(I I ()rl'-A1lfflt'irlQ th@ level nl l1qwd d',',1'h

requ11t·111o·11i'. t1nd maintaining d"i:111· !111<111111n1 plans,

Tile tables below aMlyse the Grn1,p'i flnnncf;,I li1bll1t111111n1X1 l!eli'!vant maturity groupings l)J;scrl on tl;elr contractulil mllt!Jritic,:, for oil 11(:l!'Hlllll'!Vattve !lnand;il li,ibilitres, lhe amounts dh,closed in the table are the c:ot1trnctual ,1111ti,,,xi1.mted i:a!lh flow,,. n.,1,1t1oos due Wlthln12 mc,11111~ ,,111~1 tht:lr (;llrrylng balllnoos ~,, u,,, 11nf)llct of dlscountlnn ,:, not s19nItlc:ant.

,---,------------------~------------------·"--"---'·'·'-----~---ParticulatS INR• l.l,kh6

Non-derivative-, / Financial L111bilitllls Borrowil:,gt; 1.1nc!u(lt11t1111turtmt] Trade payable Security deposit Payable to Employee Unpaid dividend Total

Non-derivatives Borrowing!> ! 111dudtny ir1t1::~rest:] Trade payable Security deposit Payable to employee Unpaid dividend Total

1

2/JOB

b,650 0

46$

78

1""!Yt'!31'$

------, .. Asai!::'fd~h 311 20111

Q

0 0

0 0 0

0 0 0

0

0

0

As at March 31

0

0

0 0

304

C florelgn currency rllk The Group 1s exposed bl foreign exchange risk 1r1a1ng from foreign currencv tranllld:IOnl, pnmarnv with reipiict to the us Doller,euro and GBP. Foreign exchange risk art• from recognised assets and ll1bllltl1S denominated In I curn11ncy that 11 net the Group'• functional currency.The C1roup'1 operations In foreign eurrency Is lnllgnlftesnt and hence there Is no mato,1al risk.

I florelgll Cllll'l'ellCIV rllk 11(11111111'11 The Groups exposure to foreign Cilrnllncy risk at the end of the reporiing periOd ~ iii l'cllowl:

llnlllvity '• ' The Nl(iltlVlty of proftt or Ian and IQUltV bl ehllngei In the illCChlnge rltlll arlNC 1111lrily from foreign curn11ncy denomlnllllld financial Instruments,

Ptlltkulllrs

USO USD l!UR

.,fa;,,:~, others

b hlelreltratarlllu .

4.00% -4,00% 7.00%

•7,00% 5.00%

•5,00%

4 (4) 0 0 0 0

-- 1; I

The Group's Mxed depoilts are ea,tld' ~ dllfOl\iNCl d •nd ft IIXld tate;l ... : ~ ere thareforl net ■ubjed: to lntnlt in risk as dlftned In Ind AS 107, since nalther the earrylng amount nor the future cut,'llows w11t11uctual:li,bau. of a change tri market ,,__ r1t11. .

• c PrlceRl1k . ,., r• f (I) Exposure

~ ~ held by the group and daSSlftlld IA b balance sheet as fair value through OCI and at:felr..value - II\V\lllffl-,.1111 equity secul'ltlell and muut flind, theQl'OUP diversifies Its portfolio. DMlralt'lr.ellon of the

The Grou~s eig)O&Yre to price rtlk artllllil .flilflt Jrweatm ~ profit or loss resp&tlvely,to ma~'I\I' priea, ~IR,. don, IQ ~~.c:e with thl llmlt'II MIW the ffolip, w.~.~••~.m The table below summarlHS the lmpaet of lnereaHS/deereaHS of the Index on the Group's equity and profit for the pertod, The analysis Is based on the assumption that the price of the Instrument has inereased 2% or deereaNd 2% With all other vertabla held conlltant, Pllrtlculars

Mutual Funds [Quoted] lnerease2% Decrease2% [*] Holding all other variables constant.

2 Qlpltlll managementl The Group' s eepltal management objaetlves are • to ensure the Group's ability ta c:ontlnue as a going concern • bl provide an adequate retum ta shareholders • maintain an optimal eepltal structure ta reduce the eost of eepltal. Management assesses the Group's eepltal requirements In order bl maintain an efficient overall ftnanclng structure while avoiding excessive leverage. This takes Into aceount the subordination levels of the Group's venous classes of debt. The Group manages the eapltal strueture and makes ~Justments to It In the light of changes In economic eondltlons and the risk characteristics of the underlying assats. The Group hes sufficient cash and Cash Equivalents and Short term l'lxed Deposit available against the debt and not exposed ta any long term debts.

Loan-nts The Grou has taken loan for workln c:a tlll utrement and as at 31 Mareh 201 the ratio of net ftn■Ace eost ta l!ili!TDA w111.06% 31 March 2017 0,42% ,

305

..

•

Notll 46 • Grou Information 1 Consolldllted l'tnandal Statements as It March 31 2018 com

Notll 47

Al RIC 9Yt ceow:t gf IYID dftl l'or Dhlrubhal Shah & Co Chartered Accountants Pim, Reglstra~on Number: 102511 w

~

Harlsh B. Patel ,Partner Membership Number: 01'1427 Ahmedabad, Dated: May 24, 2018

f~

Dhaval N. SOnl Company secretary

l}'j¥ 1Qd An bplf of !bl aparq

~ Dr, ShaNII P, Pafflll Chairman

~~ Arora

nme011'11C101'

306

307

DECLARATION

The Company certifies that all relevant provisions of Chapter VI read with Schedule VII of the SEBI ICDR

Regulations have been complied with and no statement made in this Preliminary Placement Document is contrary

to the provisions of Chapter VI and Schedule VII of the SEBI ICDR Regulations and that all material approvals and

permissions required to carry on the Company’s business have been obtained, are currently valid and have been

complied with. The Company further certifies that all the statements in this Preliminary Placement Document are

true and correct.

Signed by:

_______________

TARUN ARORA

Whole-time Director and CEO

Date: September 23, 2020

Place: Ahmedabad

308

DECLARATION

We, the Board of Directors of the Company certify that:

(i) the Company has complied with the provisions of the Companies Act, 2013 and the rules made thereunder;

(ii) the compliance with the Companies Act, 2013 and the rules thereunder, does not imply that payment of

dividend or interest or repayment of preference shares or debentures, if applicable, is guaranteed by the

Central Government; and

(iii) the monies received under the Issue shall be used only for the purposes and objects indicated in the

Preliminary Placement Document.

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS

Signed by:

___________

TARUN ARORA

Whole-time Director and CEO

Date: September 23, 2020

Place: Ahmedabad

I am authorized by the Finance and Administration Committee of the Board of Directors of the Company, vide

resolution dated August 27, 2020, to sign this form and declare that all the requirements of Companies Act, 2013

and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been

complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no

information material to the subject matter of this form has been suppressed or concealed and is as per the original

records maintained by the promoters subscribing to the Memorandum of Association and the Articles of

Association.

It is further declared and verified that all the required attachments have been completely, correctly and legibly

attached to this form.

Signed by:

______________

TARUN ARORA

Whole-time Director and CEO

Date: September 23, 2020

Place: Ahmedabad

309

ZYDUS WELLNESS LIMITED

Registered Office

Zydus Corporate Park, Scheme no. 63

Survey no. 536, Khoraj (Gandhinagar)

Near Vaishnodevi Circle, S.G. Highway

Ahmedabad - 382 481

Website: www.zyduswellness.in

CIN: L15201GJ1994PLC023490

Company Secretary and Compliance Officer: Dhanraj Dagar

Zydus Corporate Park, Scheme no. 63

Survey no. 536, Khoraj (Gandhinagar)

Near Vaishnodevi Circle, S.G. Highway

Ahmedabad - 382 481

Telephone: +91 70 48040336

E-mail: dhanraj.dagar@zyduswellness.com

BOOK RUNNING LEAD MANAGER

J.P. Morgan India Private Limited

J.P. Morgan Tower,

Off CST Road, Kalina, Santacruz East

Mumbai 400 098

Telephone: +91 22 6157 3000

E-mail: investorsmb.jpmipl@jpmorgan.com

STATUTORY AUDITORS OF OUR COMPANY

M/s. Mukesh M. Shah & Co., Chartered Accountants

7th Floor, Heritage Chambers,

B/h. Bikanerwala, Nehrunagar

Ahmedabad – 380 015

Telephone: +91 079 2647 2000

E-mail: suvrat@mmsco.in, contact@mmsco.in

LEGAL COUNSEL TO OUR COMPANY AS TO INDIAN LAW

Khaitan & Co

One World Center

10th and 13th Floor, Tower 1C

841 Senapati Bapat Marg

Mumbai 400 013

LEGAL COUNSEL TO THE BOOK RUNNING LEAD MANAGER

As to Indian Law As to U.S. federal securities law

Cyril Amarchand Mangaldas

5th Floor, Peninsula Chambers,

Peninsula Corporate Park,

Ganpatrao Kadam Marg,

Lower Parel, Mumbai 400 013

Linklaters Singapore Pte. Ltd.

One George Street

#17-01, Singapore 049 145

310

SAMPLE APPLICATION FORM

An indicative format of the Application Form is set forth below:

ZYDUS WELLNESS LIMITED

Originally incorporated as “Carnation Health Foods Limited” under the Companies Act, 1956 pursuant to a

certificate of incorporation dated November 1, 1994 issued by the Registrar of Companies, Gujarat, Dadra and Nagar

Haveli. Our Company commenced its business on November 25, 1994, pursuant to a certificate of commencement

of business issued the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Subsequently, the name of our

Company was changed to “Carnation Nutra-Analogue Foods Limited”, pursuant to a fresh certificate of

incorporation consequent upon change of name issued by the Registrar of Companies, Gujarat, Dadra and Nagar

Haveli dated December 6, 1995. Subsequently, the name of our Company was changed to “Zydus Wellness Limited”

pursuant to a fresh certificate of incorporation consequent upon change of name issued by the Registrar of

Companies, Gujarat at Ahmedabad (“RoC”) dated January 5, 2009.

APPLICATION FORM

Name of Bidder: [●]

Form No: [●]

Date: [●]

ZYDUS WELLNESS LIMITED

Registered Office: Zydus Corporate Park, Scheme No. 63, Survey No. 536, Khoraj (Gandhinagar), Nr.

Vaishnodevi Circle, Sarkhej–Gandhinagar Highway, Ahmedabad – 382 481, Gujarat, India

Telephone: +91 79 7180 0000 | E-mail: investor.greivance@zyduswellness.com;

Website: www.zyduswellness.in | CIN: L15201GJ1994PLC023490

QUALIFIED INSTITUTIONS PLACEMENT OF [●] EQUITY SHARES OF FACE VALUE `10 EACH (THE “EQUITY SHARES”) FOR CASH AT

A PRICE OF `[●] PER EQUITY SHARE (“ISSUE PRICE”) INCLUDING A PREMIUM OF `[●] PER EQUITY SHARE AGGREGATING TO

APPROXIMATELY `[●] LAKHS UNDER CHAPTER VI OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL

AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (THE “SEBI ICDR REGULATIONS”) AND SECTION 42 OF THE

COMPANIES ACT, 2013, AS AMENDED (THE “COMPANIES ACT”), READ WITH RULE 14 OF THE COMPANIES (PROSPECTUS AND

ALLOTMENT OF SECURITIES) RULES, 2014, AS AMENDED (THE “PAS RULES”), AND OTHER APPLICABLE PROVISIONS OF THE

COMPANIES ACT AND THE RULES MADE THEREUNDER BY ZYDUS WELLNESS LIMITED (THE “COMPANY”) (HEREINAFTER

REFERRED TO AS THE “ISSUE”). THE APPLICABLE FLOOR PRICE OF THE EQUITY SHARES IS `1,775.85 AND OUR COMPANY MAY

OFFER A DISCOUNT OF UP TO 5% ON THE FLOOR PRICE, AS APPROVED BY THE SHAREHOLDERS.

Only Qualified Institutional Buyers (“QIBs”) as defined under Regulation 2(1)(ss) of the SEBI ICDR Regulations and which (i) are not, (a) excluded

pursuant to Regulation 179(2)(b) of the SEBI ICDR Regulations; (b) restricted from participating in the Issue under the SEBI ICDR Regulations and

other applicable laws; (c) hold a valid and existing registration under the applicable laws in India (as applicable); and (d) are eligible to invest in the

Issue and submit this Application Form, and (ii) are residents in India or Eligible FPIs (as defined hereinbelow) participating through Schedule II of

the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (“FEMA Rules”), defined hereinafter or a multilateral or bilateral

development financial institution eligible to invest in India under applicable law including the FEMA Rules; can submit this Application Form. The

Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (“Securities Act”) or any other

applicable law of the United States, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction

not subject to, the registration requirements of the Securities Act and applicable U.S. state securities laws. You should note and observe the solicitation

and distribution restrictions contained in the sections titled “Selling Restrictions” in the accompanying preliminary placement document dated

September 23, 2020 (the “PPD”).

ELIGIBLE FPIS ARE PERMITTED TO PARTICIPATE IN THIS ISSUE, THROUGH SCHEDULE II OF THE FEMA RULES, SUBJECT TO

COMPLIANCE WITH ALL APPLICABLE LAWS AND SUCH THAT THE SHAREHOLDING OF ELIGIBLE FPIS DO NOT EXCEED

SPECIFIED LIMITS AS PRESCRIBED UNDER APPLICABLE LAWS IN THIS REGARD. PURSUANT TO PRESS NOTE NO. 3 (2020 SERIES),

DATED APRIL 17, 2020, ISSUED BY THE DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE, GOVERNMENT OF

INDIA, AND RULE 6 OF THE FEMA RULES, INVESTMENTS BY AN ENTITY OF A COUNTRY WHICH SHARES LAND BORDER WITH

INDIA OR WHERE THE BENEFICIAL OWNER OF SUCH INVESTMENT IS SITUATED IN OR IS A CITIZEN OF SUCH COUNTRY, MAY

ONLY BE MADE THROUGH THE GOVERNMENT APPROVAL ROUTE. ALLOTMENTS MADE TO AIFS AND VCFs IN THE ISSUE SHALL

REMAIN SUBJECT TO THE RULES AND REGULATIONS APPLICABLE TO EACH OF THEM RESPECTIVELY, INCLUDING THE FEMA

RULES. OTHER ELIGIBLE NON-RESIDENT QIBS SHALL PARTICIPATE IN THE ISSUE UNDER SCHEDULE I OF FEMA RULES. FVCIs

ARE NOT PERMITTED TO PARTICIPATE IN THE ISSUE.

STATUS (Please ✓)

FI

Scheduled

Commercial

Banks and

Financial

Institutions

AIF Alternative

Investment Fund

MF Mutual Funds IF Insurance Funds

FPI Foreign Portfolio

Investors* NIF

National Investment

Fund

VCF Venture Capital

Funds SI-NBFC

Systemically

Important Non-

311

To,

The Board of Directors

ZYDUS WELLNESS LIMITED

Zydus Corporate Park, Scheme No. 63, Survey No. 536,

Khoraj (Gandhinagar), Nr. Vaishnodevi Circle,

Sarkhej–Gandhinagar Highway,

Ahmedabad – 382 481, Gujarat, India

Dear Sirs,

On the basis of the serially numbered PPD of the Company and subject to the

terms and conditions contained therein, and in this Application Form, we hereby

submit our Application Form for the Allotment of the Equity Shares in the Issue, at the terms and price indicated below. We confirm that we are an Eligible

QIB in terms of Regulation 2(1)(ss) of the SEBI ICDR Regulations and are not: (a) excluded pursuant to Regulation 179(2)(b) of the SEBI ICDR Regulations;

and (b) restricted from participating in the Issue under the applicable laws, including SEBI ICDR Regulations. We are not a promoter of the Company (as

defined in the SEBI ICDR Regulations), or any person related to the promoters of the Company, directly or indirectly. Further, we confirm that we do not have

any right under a shareholders’ agreement or voting agreement entered into with promoters or persons related to promoters of the Company, veto rights or right

to appoint any nominee director on the board of directors of the Company. We confirm that we are either a QIB which is resident in India, or an Eligible FPI,

participating through Schedule II of the FEMA Rules. We specifically confirm that our Bid for the Allotment of the Equity Shares is not in violation to the

amendment made to Rule 6(a) of the FEMA Rules by the Central Government on April 22, 2020. We confirm that we are not an FVCI. We confirm that the Bid

size / aggregate number of the Equity Shares applied for by us, and which may be Allocated to us thereon will not exceed the relevant regulatory or approved

limits and further confirm that our Bid will not result in triggering an open offer under the Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeovers) Regulations, 2011, as amended (the “Takeover Regulations”).

We confirm, that we have a valid and existing registration under applicable laws and regulations of India, and undertake to acquire, hold, manage or dispose of

any Equity Shares that are Allotted to us in accordance with Chapter VI of the SEBI ICDR Regulations and undertake to comply with the SEBI ICDR

Regulations, and all other applicable laws, including any reporting obligations. We confirm that, in relation to our application, each foreign portfolio investor

(“FPI”) as defined under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, as amended (other than individuals,

corporate bodies and family offices), and including persons who have been registered under these regulations (such FPIs, “Eligible FPIs”), have submitted a

separate Application Form, and asset management companies of mutual funds have specified the details of each scheme for which the application is being made

along with the Bid Amount and number of shares to be Allotted under each scheme. We undertake that we will sign all such documents, provide such documents

and do all such acts, if any, necessary on our part to enable us to be registered as the holder(s) of the Equity Shares that may be Allotted to us. We confirm that

the signatory is authorized to apply on behalf of the Bidder and the Bidder has all the relevant authorisations. We note that the Company is entitled, in consultation

with J.P. Morgan India Private Limited (the “BRLM”), in their sole discretion, to accept or reject this Application Form without assigning any reason thereof.

We hereby agree to accept the Equity Shares applied for, or such lesser number of Equity Shares as may be Allocated to us, subject to the provisions of the

memorandum of association and articles of association of the Company, applicable laws and regulations, the terms of the PPD, Placement Document and the

CAN, when issued and the terms, conditions and agreements mentioned therein and request you to credit the same to our beneficiary account with the Depository

Participant as per the details given below, subject to receipt of Application Form and the Bid Amount towards the Equity Shares that may be allocated to us.

The amount payable by us as Bid Amount for the Equity Shares applied for has been/will be remitted to the designated bank account set out in this Application

Form through electronic mode, along with this Application Form prior to the Bid/Issue Closing Date and such Bid Amount has been /will be transferred from a

bank account maintained in our name. We acknowledge and agree that we shall not make any payment in cash or cheque. We are aware that (i) Allocation and

Allotment in the Issue shall be at the sole discretion of the Company, in consultation with the BRLM; and (ii) in the event that Equity Shares that we have

applied for are not Allotted to us in full or at all, and/or the Bid Amount is in excess of the amount equivalent to the product of the Equity Shares that will be

Allocated to us and the Issue Price, or the Company is unable to issue and Allot the Equity Shares offered in the Issue or if there is a cancellation of the Issue, or the listing of the Equity Shares does not occur in the manner described in the PPD, the Placement Document, the SEBI ICDR Regulations and other applicable

laws, the Bid Amount or a portion thereof, as applicable, will be refunded to the same bank account from which the Bid Amount was paid by us. Further, we

agree to comply with the rules and regulations that are applicable to us, including in relation to the lock-in and transferability requirements. In this regard, we

authorize the Company to issue instructions to the depositories for such lock-in and transferability requirements, as may be applicable to us.

We acknowledge and agree that (i) our names, address, contact details, PAN, bank account details and the number of Equity Shares Allotted, along with other

relevant information as may be required, will be recorded by the Company in the format prescribed in terms of the PAS Rules; (ii) in the event that any Equity

Shares are Allocated to us in the Issue, we are aware pursuant to the requirements under Form PAS-4 of the PAS Rules that our names (as proposed Allottees)

and the percentage of our post-Issue shareholding in the Company will be disclosed in the Placement Document, and we are further aware that disclosure of

such details in relation to us in the Placement Document will not guarantee Allotment to us, as Allotment in the Issue shall continue to be at the sole discretion

of the Company, in consultation with the BRLM; and; and (iii) in the event that Equity Shares are Allotted to us in the Issue, the Company will place our name

in the register of members of the Company as a holder of such Equity Shares that may be Allotted to us and in the Form PAS-3 filed by the Company with the

Registrar of Companies, Gujarat at Ahmedabad (the “RoC”) as required in terms of the PAS Rules. Further, we are aware and agree that if we, together with

any other QIBs belonging to the same group or under common control, are Allotted more than 5% of the Equity Shares in the Issue, the Company shall be

required to disclose our name, along with the names of such other Allottees and the number of Equity Shares Allotted to us and to such other Allottees, on the

websites of the National Stock Exchange of India Limited and BSE Limited (together, the “Stock Exchanges”), and we consent to such disclosures. In addition,

we confirm that we are eligible to invest in Equity Shares under the SEBI ICDR Regulations, circulars issued by the RBI and other applicable laws.

By signing and submitting this Application Form, we hereby confirm and agree that the representations, warranties, acknowledgements and agreements as

provided in the sections “Notice to Investors”, “Representations by Investors”, “Issue Procedure” and “Selling Restrictions” sections of the PPD and the terms,

conditions and agreements mentioned herein are true and correct and acknowledge and agree that these representations and warranties are given by us for the

benefit of the Company and the BRLM, each of whom is entitled to rely on, and is relying on, these representations and warranties in consummating the Issue.

By signing and submitting this Application Form, we hereby represent, warrant, acknowledge and agree as follows: (1) we have been provided with a serially

numbered copy of the PPD along with the Application Form, have read it in its entirety including in particular, the section “Risk Factors” therein and we have

relied only on the information contained in the PPD and not on any other information obtained by us either from the Company, the BRLM or from any other

source, including publicly available information; (2) we will abide by the PPD and the Placement Document, this Application Form, the confirmation of

allocation note (“CAN”), when issued, and the terms, conditions and agreements contained therein; (3) that if Equity Shares are Allotted to us pursuant to the

Issue, we shall not sell such Equity Shares otherwise than on the floor of a recognised stock exchange in India for a period of one year from the date of Allotment;

Banking Financial

Companies

IC Insurance

Companies OTH

Others

__________________

(Please specify)

Total shares currently held by QIB or QIBs belonging to the same group or those who

are under common control. For details of what constitutes “same group” or “common

control”, see “Application Form” under Issue Procedure section of the PPD.

*Foreign portfolio investors as defined under the Securities and Exchange Board of

India (Foreign Portfolio Investors) Regulations, 2019, as amended, other than

individuals, corporate bodies and family offices who are not allowed to participate in

the Issue

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(4) we will not have the right to withdraw our Bid or revise our Bid downwards after the Bid/Issue Closing Date; (5) we will not trade in the Equity Shares

credited to our beneficiary account maintained with the Depository Participant until such time that the final listing and trading approvals for the Equity Shares

are issued by the Stock Exchanges; (6) Equity Shares shall be Allocated and Allotted at the discretion of the Company, in consultation with the BRLM, and the

submission of this Application Form and payment of the corresponding Bid Amount by us does not guarantee any Allocation or Allotment of Equity Shares to

us in full or in part; (7) in terms of the requirements of the Companies Act, upon Allocation, the Company will be required to disclose names and percentage of

our post-Issue shareholding of the proposed Allottees in the Placement Document; however, disclosure of such details in relation to us in the Placement

Document will not guarantee Allotment to us, as Allotment in the Issue shall continue to be at the sole discretion of the Company, in consultation with the

BRLM; (8) the number of Equity Shares Allotted to us pursuant to the Issue, together with other Allottees that belong to the same group or are under common

control as us, shall not exceed 50% of the Issue and we shall provide all necessary information in this regard to the Company and the BRLM. For the purposes

of this representation: The expression ‘belong to the same group’ shall derive meaning from Regulation 180(2) of the SEBI ICDR Regulations, i.e., entities

where (i) any of them controls, directly or indirectly, through its subsidiary or holding company, not less than 15% of the voting rights in the other; (ii) any of

them, directly or indirectly, by itself, or in combination with other persons, exercise control over the others; or (iii) there is a common director, excluding

nominee and independent directors, among the Eligible QIBs, its subsidiary or holding company and any other QIB; and ‘control’ shall have the same meaning

as is assigned to it under Regulation 2(1)(e) of the Takeover Regulations; (9) We agree to accept the Equity Shares applied for, or such lesser number of Equity

Shares as may be Allocated to us, subject to the provisions of the memorandum of association and articles of association of the Company, applicable laws and

regulations, the terms of the PPD and the Placement Document, this Application Form, the CAN upon its issuance and the terms, conditions and agreements

mentioned therein and request you to credit the same to our beneficiary account with the Depository Participant as per the details given below.

By signing and submitting this Application Form, we hereby represent, warrant, acknowledge and agree that we are located outside the United States and are

acquiring the Equity Shares in an “offshore transaction” as defined in, and pursuant to, Regulation S under the Securities Act.

By signing and submitting this Application Form, we further represent, warrant and agree that we have such knowledge and experience in financial and business

matters that we are capable of evaluating the merits and risks of the prospective investment in the Equity Shares and we understand the risks involved in making

an investment in the Equity Shares. No action has been taken by us or any of our affiliates or representatives to permit a public offering of the Equity Shares in

any jurisdiction. We satisfy any and all relevant suitability standards for investors in Equity Shares, have the ability to bear the economic risk of our investment

in the Equity Shares, have adequate means of providing for our current and contingent needs, have no need for liquidity with respect to our investment in Equity

Shares and are able to sustain a complete loss of our investment in the Equity Shares. We acknowledge that once a duly filled Application Form is submitted by

an Eligible QIB, whether signed or not, and the Bid Amount has been transferred to the Escrow Account (as detailed below), such Application Form constitutes

an irrevocable offer and cannot be withdrawn or revised downwards after the Bid/Issue Closing Date. In case Bids are being made on behalf of the Eligible QIB

and this Application Form is unsigned, we confirm that we are authorized to submit this Application Form and provide necessary instructions for transfer of the

Bid Amount to the Escrow Account, on behalf of the Eligible QIB.

ESCROW ACCOUNT - BANK ACCOUNT DETAILS FOR PAYMENT OF AMOUNT THROUGH ELECTRONIC FUND TRANSFER

REMITTANCE BY WAY OF ELECTONIC FUND TRANSFER BY [●] [P.M.] (IST), [●], [●], 2020

Name of the Account Zydus Wellness Limited – Escrow Account – Equity Share Issue FY 2020-21

Name of the Bank ICICI Bank Limited Address of the Branch of the Bank ICICI Bank Limited, Capital Market Division, 122/1 Mistry Bhavan, Backbay Reclamation, Churchgate,

Mumbai - 400020

Account Type Escrow account Account Number 000405124085 IFSC ICIC0000004

The Bid Amount should be transferred pursuant to the Application Form. All payments must be made only by way of electronic funds transfer, in favour of

“[●]”. Payment of the entire Bid Amount should be made along with the Application Form on or before the closure of the Bid/Issue Period, i.e., prior to the

Bid/Issue Closing Date. The payment for subscription to the Equity Shares Allotted in the Issue shall be made only from the bank account of the

person subscribing to the Equity Shares and in case of joint holders, from the bank account of the person whose name appears first in the Application

Form.

BIDDER DETAILS (in Block Letters)

NAME OF

BIDDER*

NATIONALITY

REGISTERED

ADDRESS

CITY AND

CODE

COUNTRY

TELEPHONE

NO.

EMAIL

FOR FPIs Registration Number: For AIFs/MFs/VCFs/SI-

NBFCs/ICs/IFs Registration Number:

313

*Name should exactly match with the name in which the beneficiary account is held. Any discrepancy in the name as mentioned in this

Application Form with the depository records would render the Application invalid and liable to be rejected at the sole discretion of the Company

and the BRLM. Bid Amount payable on Equity Shares applied for by joint holders shall be paid from the bank account of the person whose

name appears first in the application. Mutual Fund bidders are requested to provide details of the bids made by each scheme of the Mutual Fund.

Each Eligible FPI is required to fill a separate Application Form.

In case you are an FPI holding a valid certificate of registration and eligible to invest in the Issue, please mention your SEBI FPI Registration

Number.

Allotments made to AIFs and VCFs in the Issue are subject to the rules and regulations that are applicable to each of them respectively, including

in relation to lock-in requirement. AIFs and VCFs should independently consult their own counsel and advisors as to investment in and related

matters concerning the Issue.

We are aware that the number of Equity Shares in the Company held by us, together with the number of Equity Shares, if any, Allocated to us in

the Issue will be aggregated to disclose the percentage of our post-Issue shareholding in the Company in the Placement Document in line with the

requirements under Form PAS-4 of the PAS Rules. For such information, the BRLM will rely on the information provided by the Registrar for

obtaining details of our shareholding and we consent and authorize such disclosure in the Placement Document.

DEPOSITORY ACCOUNT DETAILS

Depository Name(Please ✓) National Security Depository

Limited Central Depository Services (India) Limited

Depository Participant Name

DP – ID I N

Beneficiary Account Number (16 digit beneficiary account. No. to be mentioned above)

The Demographic details like address, bank account details etc., will be obtained from the Depositories as per the beneficiary account given

above. However, for the purpose of refund, if any, only the bank details as mentioned below, from which remittance towards subscription

has been made, will be considered.

The Bidders are responsible for the accuracy of the bank account details mentioned below and acknowledge that the successful processing of refunds

if, any, shall be dependent on the accuracy of the bank account details provided by them. The Company and the BRLM shall not be liable in any

manner for refunds that are not processed due to incorrect bank account details.

RUPEE BANK ACCOUNT DETAILS (FOR REMITTANCE)

Bank Account

Number IFSC Code

Bank Name

Bank Branch

Address

NO. OF EQUITY SHARES BID BID AMOUNT PER EQUITY SHARE (RUPEES)

(In figures) (In words) (In figures) (In words)

DETAILS OF CONTACT PERSON

NAME

ADDRESS

TEL. NO.

EMAIL

OTHER DETAILS ENCLOSURES ATTACHED

PAN** Attested/ certified true copy of the following:

Copy of PAN Card or PAN allotment letter

Copy of FPI Registration Certificate /MF

Registration certificate /SEBI certificate of

registration for AIFs/VCF/SI-NBFC/IC/IF

Copy of notification as a public financial institution

FIRC

Copy of IRDAI registration certificate

Intimation of being part of the same group

Certified true copy of Power of Attorney

Other, please specify

Date of Application

Signature of Authorised Signatory

(may be signed either physically or

digitally)

*The application form is liable to be rejected if any information provided is incomplete or inadequate at the discretion of the Company in consultation with

the BRLM.

314

**It is to be specifically noted that the Bidder should not submit the GIR Number or any other identification number instead of the PAN as the applications

are liable to be rejected on this ground, unless the Bidder is exempted from the requirement of obtaining a PAN number under the Income-tax Act, 1961.

Note: Capitalized terms used but not defined herein shall have the same meaning as ascribed to them in the PPD, unless specifically defined herein.

This Application Form, the PPD and the Placement Document sent to you/ be sent to you, either in physical form or both, are specific to you and you may not

distribute or forward the same and are subject to disclaimer and restrictions contained in or accompanying these documents.

(Note: The format of the Application Form included herein above is indicative and for the illustrative purposes

only and no Bids in this Issue can be made through the sample Application Form. Our Company, in

consultation with the BRLM, shall identify Eligible QIBs and circulate serially numbered copies of this

Preliminary Placement Document and the Application Form, specifically addressed to such Eligible QIBs. Any

application to be made in the Issue should be made only upon receipt of serially numbered copies of this

Preliminary Placement Document and the Application Form and not on the basis of the indicative format

above.)