3.15 Provisions and Contingencies

Provisions are recognised when the Company has a
present obligation as a result of past events, and it is
probable that an outflow of resources will be required
to settle the obligation and a reliable estimate of the
amount of the obligation can be made.

If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as
a finance cost.

Contingent liabilities are disclosed when there is
a possible obligation arising from past events,

the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises
from past events where it is either not probable that
an outflow of resources will be required to settle or a
reliable estimate of the amount cannot be made.

3.16 Government Grants

Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over the
periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to
an asset, it is recognised as income in equal amounts
over the expected useful life of the related asset.
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.

3.17 Borrowing Costs

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.

3.18 Impairment of Non-Financial Assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an
asset’s or Cash-Generating Unit’s (CGU) fair value less
costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless
the asset does not generate cash inflows that are

largely independent of those from other assets or
Company’s assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to
its recoverable amount. In assessing value in use,
the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that
reflects current market assessments of the time
value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent
market transactions are taken into account. If no
such transactions can be identified, an appropriate
valuation model is used. These calculations are
corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available
fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company’s CGUs
to which the individual assets are allocated. These
budgets and forecast calculations generally cover a
period of five years. For longer periods, a long-term
growth rate is calculated and applied to projected
future cash flows after the fifth year. To estimate cash
flow projections beyond periods covered by the most
recent budgets / forecasts, the Company extrapolates
cash flow projections in the budget using a steady or
declining growth rate for subsequent years, unless
an increasing rate can be justified. In any case, this
growth rate does not exceed the long-term average
growth rate for the products, industries, or country
or countries in which the entity operates, or for the
market in which the asset is used.

Reconciliation of tax expense and accounting profit multiplied by India's domestic tax rate for March 31, 2025

During the financial year 2024-25, the Company opted to exercise the provision under Section 115BAA of the Income Tax
Act, 1961, effective from 2023-24. Consequently, the Deferred Tax Liability (net) as of March 31,2024, along with the tax
expense for 2024-25, was remeasured at a lower tax rate. Furthermore, following the amendment in tax rates affecting
certain assets with long-term capital gains, as introduced in the Finance Act, 2024, the Company reassessed its deferred
tax liabilities related to the revaluation of land. The cumulative impact of these adjustments resulted in the reversal of
deferred tax liability, which is recognised in the statement of profit and loss and other comprehensive income, amounting
to ' 18.41 Crores and ' 135.09 Crores, respectively.

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the standard rate of
corporation tax in India (25.168%) as follows:

| 13 Earnings Per Share [EPS]:

Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted
average number of equity shares outstanding during the year.

Diluted EPS is calculated by dividing the profit attributable to equity holders of the Company (after adjusting for interest
on the convertible preference shares, if any) by the weighted average number of equity shares outstanding during the year
plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity
shares into equity shares.

Significant Observable and Unobservable Valuation Inputs:

The value of freehold land was determined based on condition, location, demand, supply, plant-layout and other
infrastructure facility available at and around the said plot of land.

Right-of-use of leasehold land which was based on government promoted industrial estates, was measured on the
present fair market value depending on the condition of the said estates, its location and availability of such plots in the
said industrial estate.

The valuation of buildings and plant and equipment was based on its present fair market value after allowing for the
depreciation of the particular assets, as well as the present condition of the assets (Depreciated Replacement Cost
method). The replacement value of the said assets as well as its maintenance up-keep is considered while working out
its present fair value.

A) Summary of borrowing arrangements
Term loan from bank

a) Term loan from bank amounting to ' 133.75 Crores (March 31,2024: ' 138.66 Crores) is secured by first pari
passu charge over entire moveable property, plant and equipment of the Company.

b) Term loan from bank amounting to ' 225.48 Crores (March 31,2024: ' 233.49 Crores) is secured by first pari
passu charge over entire moveable property, plant and equipment of the Company.

c) Term loan from bank amounting to ' 93.41 Crores (March 31,2024: ' 95.23 Crores) is secured by first pari passu
charge over entire moveable property, plant and equipment of the Company.

d) Term loan from bank amounting to ' 170.10 Crores (March 31, 2024: ' 74.89 Crores) is secured by first pari
passu charge over entire moveable property, plant and equipment of the Company.

e) Vehicle loan from bank amounting to ' 0.30 Crores (March 31,2024: ' 0.36 Crores) is secured by hypothecation
of the vehicle purchased out of the loan financed.

f) Term loan from bank amounting to ' 19.31 Crores (March 31,2024: Nil) is secured by exclusive charge on ship.

g) Term loan from bank amounting to ' 14.86 Crores (March 31,2024: Nil) is secured by first pari passu charge on
entire Movable fixed assets of the Company.

Repayment of loans

(a) Repayment of term loan amounting to ' 133.75 Crores in 25 structured quarterly installments, commencing
from March 2024.

Note: Current interest rate of the above term loan is 8.05% (March 31,2024: 8.61%).

(b) Repayment of term loan amounting to ' 225.48 Crores in 25 structured quarterly installments, commencing
from September 2024.

Note: Current interest rate of the above term loan is 9.50% (March 31,2024: 9.15%).

(c) Repayment of term loan amounting to ' 93.40 Crores in 25 structured quarterly installments, commencing from
October 2024.

Note: Current interest rate of the above term loan is 8.94% (March 31,2024: 9.44%).

(d) Repayment of term loan amounting to ' 170.12 Crores in 25 structured quarterly installments, commencing
from September 2025.

Note: Current interest rate of the above term loan is 9.65% (March 31,2024: 9.30%).

(e) Repayment of Vehicle loan amounting to ' 0.30 Crores in 60 structured quarterly installments, commencing
from January 2024.

Note: Current interest rate of the above term loan is 8.85% (March 31,2024: 8.85%).

| 36 Financial instruments

36.1 Capital management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return
to shareholders through the optimisation of the debt and equity balance.

The capital structure of the Company consists of debt, which includes the borrowings (Note 26 and 30), cash and cash
equivalents (Note 20) and equity attributable to equity holders of the Company, comprising issued capital, securities
premium and retained earnings.

Gearing ratio

The Company manages its capital structure and makes adjustments in light of changes in economic conditions. The
gearing ratios at March 31,2025 and March 31,2024 were as follows:

36.3 Financial risk management objectives

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal
financial assets trade and other receivables, cash and cash equivalents and other bank balances that derive directly from
its operations.

The Company’s activities expose it primarily to fluctuations in foreign currency exchange rates, interest rates, liquidity and
credit risk.

The Company has a risk management policy which not only covers the foreign exchange risks but also other risks
associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy
is approved by the board of directors. The risk management framework aims to:

• Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on
the Company’s business plan.

• Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.
There has been no change to the Company’s exposure to market risk or the manner in which these risks are managed
and measured.

36.4 Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from
a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in
the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future
specific market movements cannot be normally predicted with reasonable accuracy.

36.5 Foreign currency risk management

The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. The currencies, in which these transactions primarily are denominated in American Dollars (USD) and
EURO. The Company may use forward exchange contract towards hedging risk resulting from changes and fluctuations
in foreign currency exchange rate. These foreign exchange contracts, carried at fair value, may have varying maturities
depending upon the primary host contract requirement and risk management strategy of the Company. Exchange rate
exposures are managed with in approved policy parameters.

36.6 Interest rate risk management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily
to the Company’s long-term debt obligations with floating interest rates. It also uses sensitive financial instruments to
manage the liquidity and fund requirements for its day to day operations like short-term loans.

The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments
at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability
outstanding at the end of the reporting year was outstanding for the whole year. A 100 basis point increase or decrease is
used when reporting interest rate risk internally to key management personnel and represents management’s assessment
of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company’s profit
/ (loss) would increase or decrease as below:

36.7 Credit risk management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
Risk control assesses the credit quality of the customer, taking into account its financial position, past experience,
other publicly available financial information, its own trading records and other factors, where appropriate, as means of
mitigating the risk of financial loss from defaults. The Company’s exposure is continuously monitored and the aggregate
value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across various industries and geographical areas.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents
the Company’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

None of the Company’s cash and cash equivalents, including time deposits with banks, trade receivables and other
receivables, and other loans or receivables have an expected credit loss as at March 31,2025.

36.7.1 Trade receivables

Customer credit risk is managed by the Company’s established policy, procedures and controls relating to customer
credit risk management. Trade receivables are non-interest bearing and are generally on credit term in line with respective
industry norms. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit
risk as the customer base is widely distributed economically.

36.7.2 Financial instruments and cash deposits

Credit risk from balances with banks is managed by Company’s treasury in accordance with the Board approved policy.
Investments of surplus funds, temporarily, are made only with approved counterparties who meet the minimum threshold
requirements under the counterparty risk assessment process.

36.8 Liquidity risk management

The Company has built an appropriate liquidity risk management framework for the management of the Company’s
short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets and liabilities.

The following table details the Company’s remaining contractual maturity for their financial liabilities. The contractual
maturities of the financial instruments have been determined on the basis of earliest date on which the Company can be
required to pay.

36.9 Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair

value, compiled into Level 1 to Level 3, as described below:

- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities.

- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).

i. The management assessed that cash and cash equivalents, short-term investments, trade receivables, trade
payables, other current financial liabilities approximate their carrying amounts largely due to their short-term
nature.

ii. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

iii. Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the
anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining
maturities.

(II) Guarantees provided

The Company has provided corporate guarantee to State Industries Promotion Council of Tamil Nadu for ' 331.86
Crores towards the outstanding soft loan of ' 100.26 Crores (March 31, 2024: ' 156.48 Crores) availed by the
Subsidiary Company, Chemplast Cuddalore Vinyls Limited.

| 40 Segment reporting

The Company’s operations predominantly relate to manufacture and sales of Speciality Chemicals. The Board of Directors
of the Company who have been identified as the Chief Operating Decision Maker (CODM), evaluates the Company’s
performance, allocate resources based on the analysis of the various performance indicators of the Company as a single
unit. Therefore, there is no separate reportable segment for the Company as per the requirement of Ind AS 108 "Operating
Segments". The Company’s operations are predominantly conducted in India and accordingly, there are no separate
reportable geographic segment.

The Company’s revenue from one customer contributing to more than 10% amounts to ' 263.25 Crores (Previous year
two customers contributing to more than 10% amounted to ' 411.78 Crores).

| 45 Other Statutory Information

(i) The Company does not have any Benami property. No proceeding has been initiated or pending against the Company
for holding any Benami property.

(ii) The Company has not advanced to or loaned to or invested funds (either borrowed funds or share premium or any
other sources or kind of funds) in any other person(s) or entity(ies), including foreign entities (Intermediaries) with the
understanding whether recorded in writing or otherwise, that such Intermediary shall:

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

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

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

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

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

(iv) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961.

(v) The Company has not been declared as a wilful defaulter as prescribed by Reserve Bank of India.

| 46 Employee benefit cost
Defined benefit plans

Gratuity:

This is a defined benefit plan and the Company’s Scheme is administered by Life Insurance Corporation of India (LIC).
The liability is determined based on the actuarial valuation using projected unit credit method as at Balance Sheet date.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out
at March 31,2025 by an independent actuary.

a. Judgements

In the process of applying the Company’s accounting policies, management has not made any judgements, which
have significant effect on the amounts recognised in the financial statements.

b. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year, are described below. The Company based its assumptions and estimates on parameters available
when the financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising that are beyond the control of the Company.
Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets
or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based
on a Discounted Cash Flow (DCF) model.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable
profits together with future tax planning strategies.

Defined benefit plans

The cost of the defined benefit gratuity plan is determined using actuarial valuation. An actuarial valuation involves
making various assumptions that may differ from actual developments in the future. These include the determination
of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and
its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions
are reviewed at each reporting date.

Further details about defined benefit obligations are given in Note 46.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF
model. The inputs to these models are taken from observable markets where possible, but where this is not feasible,
a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value
of financial instruments. See Note 36 for further disclosures.

Fair value measurement of property, plant and equipments

The Company measures land, buildings, plant and machinery classified as property, plant and equipment at revalued
amounts with increase in fair value being recognised in OCI. The Company had engaged independent valuation
specialists to assess fair value for revaluation of land, buildings, plant and equipment as at November 30, 2024. Fair
value of land was determined by using the market approach, hypothetical layout method and building and plant and
equipment was determined by using Depreciated Replacement Cost (DRC) method. The key assumptions used to
determine fair value of the property, plant and equipment are provided in Note 14.4.

Revenue from contract with customers

The Company estimates variable considerations to be included in the transaction price for the sale of goods and
volume rebates. The Company’s expected rebates and discounts are analysed on a per customer basis for contracts
that are subject to the applicable thresholds. Determining whether a customer will be likely entitled to rebate and
discounts will depend on the customer’s rebates entitlement and total purchases to date.

Leases - Estimating the incremental borrowing rate

The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its Incremental
Borrowing Rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay
to for its borrowings.

Useful life of PPE

Estimated useful life of certain items of PPE are based on economic life of these assets as estimated by the
management basis a technical assessment and usage and replacement policy of such assets. The residual values,
useful lives and methods of depreciation of PPE are reviewed at each financial year end and adjusted prospectively,
if appropriate.

| 52 Employees' benefits obligations

a. Defined contribution plan

Employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and the
Company make monthly contributions to the Regional Provident Fund equal to a specified percentage of the covered
employees’ salary. The Company recognises contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. The Company has no further obligations under the plan beyond its
monthly contributions.

b. Defined benefit plan
Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed
five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of
service and salary at retirement age. The scheme is funded with Life Insurance Corporation of India in the form of a
qualifying insurance policy. Fund is maintained with Life Insurance Corporation of India.

As per our report of even date attached

for B S R & Co. LLP For and on behalf of the Board of Directors of

Chartered Accountants Chemplast Sanmar Limited

Firm Registration Number: 101248W/W-
100022

S Sethuraman Vijay Sankar Ramkumar Shankar Sanjay Vijay Bhandarkar

Partner Chairman Managing Director Chairman - Audit Committee

Membership No. 203491 DIN: 00007875 DIN: 00018391 DIN: 01260274

Place: Chennai Place: Chennai Place: Chennai Place: Mumbai

Date: May 13, 2025

N Muralidharan M Raman

Chief Financial Officer Company Secretary

Place: Chennai Membership No ACS 06248

Date: May 13, 2025 Place: Chennai