2.15 Provisions and contingent liabilities
Provision

Provisions are recognised when the company has a present legal or constructive obligation as a result of a past event and it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and amount of the
obligation can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the management’s best estimate of the expenditure required to settle the present obligation at the
Balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.

Contingent liabilities

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.

Contingent Assets

A contingent asset is disclosed, where an inflow of economic benefits is probable.

2.16 Earnings per share

Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average
number of equity shares outstanding during the financial year. The weighted average number of equity shares outstanding during the
period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares
that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share, adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average
number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

2.17 Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of
Schedule III, unless otherwise stated.

2(B) Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates. Management also needs to exercise judgement in
applying the Company’s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement
or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be
different than those originally assessed. The areas involving critical estimates or judgements are:

a) Estimation of Provisions & Contingent Liabilities

The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related
to pending litigation or other outstanding claims. If a loss arising from these litigations and/or claims is probable and can be
reasonably estimated, the management record the amount of the estimated loss. If a loss is reasonably possible, but not probable,
the management discloses the nature of the significant contingency and, if quantifiable, the possible loss that could result from the
resolution of the matter. As additional information becomes available, the management reassess any potential liability related to these
litigations and claims and may need to revise the estimates. Such revisions or ultimate resolution of these matters could materially
impact the results of operations, cash flows or financial statements of the company. (Refer Note 25)

iii) Impairment of financial assets

The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair
valued through statement of profit or loss. Loss allowance for trade receivables with no significant financing component is measured
at an amount equal to lifetime ECL. For all other financial assets,credit risk is considered to be low.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be recognized from initial recognition of the receivables. As a practical expedient, the company
uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss
allowance (or reversal) during the year is recognized in the statement of profit and loss.

iv) De-recognition of financial assets

A financial asset is derecognised only when:

- the Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash
flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of
ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially
all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial
asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains
control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

v) T rade Receivable

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.

Financial Liabilities

i) Classification

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definition of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

ii) Measurement

Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value
through statement of profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial
liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts
estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of
the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial
recognition, there is no financial liability irrevocably designated as measured at fair value through statement of profit or loss.

iii) Derecognition:

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 substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

iv) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
statement of profit or loss over the period of the borrowings using the effective interest method.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in statement of profit or loss.

The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity Plan provides a lump sum
payments to vested employees at retirement, death, incapacitation or termination of employment, as per the company’s policy. Vesting
occurs on completion of 5 continuous years of service as per Indian law. However, no vesting condition applies in case of death. The
gratuity payable to employees is based on the employee’s service and last drawn salary at the time of leaving the services of the Company.
The gratuity plan is an unfunded plan.

iv) Risk Exposure

The Gratuity scheme is a final salary Defined Benefit Plan that provides for a lump sum payment made on exit either by way of retirement,
death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum
at exit. The risks commonly affecting the defined benefit plan are expected to be:

Demographic Risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal,
disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the
combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial
analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

Salary Inflation Risk : Higher than expected increases in salary will increase the defined benefit obligation

Interest-Rate Risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the

defined benefit obligation will tend to increase.

(ii) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are
disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting
standard. An explanation of each level is as follows.

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of Investments, deposits with banks and interest there on, trade receivables, cash and cash equivalents, loans to employees, borrowings, trade payables and other current financial liabilities are considered to be
the same as their fair values due to their short-term nature.

The fair values of security deposits and other advances are based on discounted cash flows. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. Fair
value of the security deposit and other advances are considered to be the same as their carring value.

37 FINANCIAL RISK MANAGEMENT

The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its
financial performance. The market risk to the Company is foreign exchange risk and interest rate. The Company's exposure to credit risk is influenced mainly by the individual characteristic of each customer end.

37ACREDIT RISK

Credit risk comprises of direct risk of default, the risk of deterioration of creditworthiness as well as concentration risks. It mainly arises from trade receivables, cash and cash equivalents (excluding cash on hand) and bank deposits.

(i) Credit risk management

a) Trade receivables

The carrying amount of trade receivables represent the maximum credit exposure net of provision for impairment. The maximum exposure to credit risk was Rs. 4,401.39 lakhs as of March 31, 2024 ( March 31, 2023 : Rs. 4,159.56
lakhs).

Trade receivables are derived from revenue earned from customers. Credit risk for trade receivable is managed by the company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its
customers to which the company grants credit terms in the normal course of business. The Company’s credit period generally ranges from 90-120 days.

The company does not have a high concentration of credit risk to a single customer. Single largest customer have the total exposure in receivables Rs. 321.88 lakhs as of March 31, 2024 (March 31, 2023 : Rs. 307.42 lakhs).

As per simplified approach, the company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of company's customers’
financial condition; aging of trade accounts receivable and the company's historical loss experience. The company defines default as an event when there is no reasonable expectation of recovery. The company has not made any
provision for loss allowance in any of the years presented.

Trade receivables are written off when there is no reasonable expectation of recovery.

b) Cash & cash equivalent and bank deposits

Credit risk on cash and cash equivalents and bank deposits is generally low as the said deposits have been made with banks having good reputation, good past track record and high quality credit rating and company also reviews
their credit-worthiness on an on-going basis.

c) Other financial assets

Credit risk on other financial assets is generrally considered to be low

37B MARKET RISK

(i) Foreign currency risk

Foreign exchange risk arises on financial instruments being denominated in a currency that is not the functional currency of the entity and that are monetary in nature. The Company is exposed to foreign exchange risk mainly arising
from Trade Payables denominated in United States Dollar (‘USD’) and European Union Currency (‘EURO’) and Trade receivables in United States Dollar (‘USD’).

37C LIQUIDITY RISK

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities
(comprising the undrawn borrowing facilities below), by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The liquidity risk is managed by means of the ultimate parent company's Liquidity and Financial Indebtedness Management Policy, which aims to ensure the availability of sufficient net funds to meet the Company’s financial
commitments with minimal additional cost. One of the main liquidity monitoring measurement instruments is the cash flow projection, using a minimum projection period of 12 months from the benchmark date.

|i| Financing arrangements

The Company has undrawn borrowing facilities of Rs. 137.24 lakhs as at March 31, 2025 (Rs. 49.63 lakhs as at March 31, 2024) which is renewable on yearly basis by mutual consent. Undrawn credit facilities comprises of fund
based and non-fund based.
pi) Maturities of financial liabilities

39 CAPITAL MANAGEMENT

The company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide
returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital
structure of the Company, management can make, or may propose to the stockholders when their approval is required, adjustments to the
amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce, for example, debt.

The Company considers total equity reported in the financial statements to be managed as part of capital.

The Company does not have any borrowing which is subject to the capital requirements.

Transition to New Standards

The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or
equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with
these leases as an expense in statement of profit and loss over the lease term. The related cash flows are classified as operating activities.

42 EXPENDITURE TOWARDS CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net
profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are
eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment
sustainability, disaster relief, COVID-19 relief and rural development projects. A CSR committee has been formed by the Company as per the
Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the
Companies Act, 2013:

Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, the Company intends to transfer its unspend
CSR fund to a designated bank account opened with Yes Bank Limited during previous year.

Figures for the corresponding previous years have been regrouped/ rearranged, wherever necessary, to conform to the classification of the
current year.

For Panchsheel Organics Limited

For Jayesh R Shah & Co Mahendra Turakhia Kishore T urakhia

Chartered Accountants Chairman & Director

Firm Registration No. : 104182W DIN: 00006222 DIN: 00006236

Jayesh Shah Rajesh Turakhia Deepak Shah

Proprietor Director Chief Financial Officer

Membership No.: 033864 DIN: 00006246

Sonia Verma

Company Secretary

Place: Mumbai Place: Mumbai

Date: May 30, 2025 Date: May 30, 2025