F Explanations:

a In "Face Value [*]", figures in Indian Rupees unless stated otherwise.

b In "Nos. [**]" figures of previous year are same unless stated in [ ].

[$] The net worth of these subsidiaries as on March 31, 2024 is eroded. However, in view of the strategic nature of the investment in these companies and also considering the future business and cash flow projections of these companies, the same are valued at Cost and no impairment allowance is required to be provided for.

[“] The Company has invested in equity shares of Zydus Pharmaceuticals UK Limited, United Kingdom [Zydus UK].

Further, Zydus UK entered into Sale and Purchase Agreement [SPA] on October 31, 2023, for acquisition of 100% stake of LiqMeds Worldwide Limited, LiqMeds Limited, Medsolutions (Europe) Limited, LiqMeds Lifecare Limited and LM Manufacturing Limited [collectively referred as "LiqMeds Group"]. The said transaction of acquisition of shares of LiqMeds Group was consummated on November 6, 2023. The cost of acquisition is GBP 68 Million [equivalent to ' 7,201 Million] as upfront consideration. Over and above upfront consideration, additional amounts will be paid, in tranches, over next three calendar years, depending on achievement of certain agreed milestones.

[~] Pursuant to merger of HDFC Limited with HDFC Bank Limited, shareholders of HDFC Limited got shares of HDFC Bank Limited. In view of the same, the Company got 368,760 shares of HDFC Bank Limited against the holding of 219,000 shares of HDFC Limited.

For details of inventories pledged as security, refer Note-22.

[*] Net of one time provision for inventory of products related to covid treatment and inventory of Covid vaccine of ' Nil for the year ended March 31, 2024 [for the year ended March 31, 2023: 2,002 Million].

In respect of goods where provision had been made for expected returns within the expiry period, the Company recognises an asset, i.e., right to the returned saleable goods [included in inventories] for the products expected to be returned in saleable condition. The Company initially measures this asset at the original carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of returned goods. The Company updates the measurement of the asset recorded for any revision to its expected level of returns, as well as any further decrease in value of the returned products. The value of such goods is ' 45 [as at March 31, 2023: ' 37] Million.

B The Company has only one class of equity shares having a par value of ' 1/- per share. Each holder of equity share is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting, except in the case of interim dividend. In the event of liquidation of the Company, the equity shareholders shall be entitled to proportionate share of their holding in the assets remaining after distribution of all preferential amounts.

[S] The Board of Directors, at its meeting held on February 9, 2024 approved a proposal to buyback 5,970,149 fully paid-up equity shares amounting to ' 6,000 Million [Buyback Size, excluding transaction costs and applicable taxes] at a price of ' 1,005 per share from the eligible equity shareholders. The buyback was offered to all eligible equity shareholders including the promoters and promoter group of the Company on proportionate basis through the "Tender offer” route in accordance with Securities and Exchange Board of India [Buyback of Securities] Regulations, 2018, as amended and other applicable laws. The Buyback period was from February 9, 2024 to March 14, 2024. The Company had bought back and extinguished 5,970,149 equity shares, comprising of 0.59% of pre-buyback paid up equity share capital of the Company on March 15, 2024. The buyback resulted in a cash outflow of ' 7,250 Million [including applicable taxes and transaction costs]. The Company has utilized its General Reserve and Retained Earnings for Buyback of shares. In accordance with Section 69 of the Companies Act, 2013, the Company has credited "Capital Redemption Reserve” with an amount of ' 6 Million, being amount equivalent to the face value of the Equity Shares bought back as an appropriation from General Reserve.

The Board of Directors, at its meeting held on May 20, 2022 had approved a proposal to buyback 11,538,461 fully paid-up equity shares amounting to ' 7,500 Million [Buyback Size, excluding transaction costs and applicable taxes] at a price of ' 650 per share from the eligible equity shareholders. The buyback was offered to all eligible equity shareholders including the promoters and promoter group of the Company on proportionate basis through the "Tender offer” route in accordance with Securities and Exchange Board of India [Buyback of Securities] Regulations, 2018, as amended and other applicable laws. The Buyback period was from May 20, 2022 to July 15, 2022. The Company had bought back and extinguished 11,538,461 equity shares, comprising of 1.13% of pre-buyback paid up equity share capital of the Company on July 19, 2022. The buyback resulted in a cash outflow of ' 8,632 Million [including applicable taxes and transaction costs]. The Company had utilized its General Reserve for Buyback of shares. In accordance with Section 69 of the Companies Act, 2013, the Company had credited "Capital Redemption Reserve” with an amount of ' 12 Million, being amount equivalent to the face value of the Equity Shares bought back as an appropriation from General Reserve.

[*] I nternational Business Development Reserve was created pursuant to Composite Scheme of Arrangement approved by the Hon'ble High Court of Gujarat and its utilization shall be as provided in the scheme.

[**] General Reserve can be used for the purposes and as per guidelines prescribed in the Companies Act, 2013.

[#] The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVTOCI reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

A Terms of Repayment for Unsecured Borrowings: a Loans from Related Parties:

i Loan of ' 30,279 Million from one of the subsidiary companies will be repaid within 3 years and ' 2,555 Million will be repaid within 5 years from the date of first disbursement. Interest on loan is payable on half yearly basis. The outstanding amount as at March 31, 2024 is ' 32,834 Million [as at March 31, 2023: 14,130].

ii Loan of ' 1,000 Million from one of the subsidiary companies will be repaid within 3 years from the date of first disbursement Interest on loan is payable on half yearly basis. The outstanding amount as at March 31, 2024 is ' 1,000 Million [as at March 31, 2023: 800].

iii Loan of ' 21,720 Million from one of the subsidiary companies will be repaid within 3 years from the date of first disbursement.

Interest on loan is payable on half yearly basis. The outstanding amount as at March 31, 2024 is ' 21,720 Million [as at March 31, 2023: 22,780].

The interest rates on the above loans are in the range of 1 Month Treasury Bill/ 3 year G Sec plus 35 to 150 bps.

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 company are entitled to leave as per the leave policy of the company. 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 Company has a defined 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 plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity 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 reporting period on government bonds.

Interest risk:

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

Longevity risk:

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

Salary risk:

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

Note: 21-Deferred Tax: (Continued)

C The Company offsets tax assets and Liabilities if and only if it has a Legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

D The Company has computed the provision for income tax assuming that the option permitted under section 115BAA of the Income Tax Act, 1961 will be exercised while filing the income tax return for the year ended March 31, 2024. Accordingly, the Company has recognised provision for income tax for the year ended March 31, 2024 and re-measured its deferred tax assets and liabilities basis the rate prescribed in the said section. Hence, the tax expense for the year ended March 31, 2024 is not comparable with the amounts of the previous year. The final decision with respect to the election of the said option under section 115BAA of the Income Tax Act, 1961 is required to be taken by the Company at the time of filing the income tax return for the year ended March 31, 2024. ^{1 2}

[*] represents contingent liabilities taken over by the Company under the Scheme of Arrangement and Amalgamation of Cadila Laboratories Limited and erstwhile Cadila Chemicals Limited, Cadila Antibiotics Limited, Cadila Exports Limited and Cadila Veterinary Private Limited with the Company w.e.f. June 1, 1995.

B Legal proceedings:

The Company and/or its subsidiaries are involved in various Legal proceedings including product liabilities, employment claims, contracts and other legal and regulatory matters relating to the conduct of its business. The Company believes it has meritorious defences to these lawsuits.

Note: 29-Dividend proposed to be distributed:

The Board of Directors, at its meeting held on May 17, 2024, recommended the final dividend of ' 3/- per equity share of ' 1/- each. The recommended dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting.

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees, as specified under the law. The contributions are paid to the Provident Fund Trust set up by the Company or to the respective Regional Provident Fund Commissioner under the Pension Scheme. The Company is generally liable for annual contribution and any shortfall in the trust fund assets based on the government specified minimum rate of return and recognises such contribution and shortfall, if any, as an expense in the year it is incurred.

Note: 40-Segment Information:

Segment Information has been given in the Consolidated Financial Statements of the Company. Hence, as per Ind AS-108 "Operating Segments" issued by the Institute of Chartered Accountants of India, no separate disclosure on segment information is given in these financial statements.

Note: 42-Details of Loans given, Investments made and Guarantees given covered u/s 186(4) of the Companies Act,

2013:

A Details of Loans and investments are given under the respective heads.

B There are no corporate guarantees, which are outstanding at the end of the financial year, provided to subsidiaries.

Note: 43-Financial Instruments:

A 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 : Inputs other than quoted prices included within Level 1 which are observable for the assets or liabilities, either directly or indirectly.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Financial Assets:

The carrying amounts of trade receivables, Loans and advances to related parties and other financial assets [other than referred above], cash and cash equivalents are considered to be the approximately equal 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.

Fair values of investment in preference shares were calculated based on cash flows discounted using the applicable adjusted market interest rates.

Fair values of investment in compulsorily convertible debentures were calculated based on cash flows discounted using the applicable adjusted market interest rates.

D Valuation process and technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

a The use of quoted market prices for similar instruments.

b Fair value of Forward Contract value related to investment in a Joint Venture has been determined considering the estimated exercise price and value of the underlying entity. The valuation has been derived using the Present Value technique under Income Approach. As the forward contract has been exercised as on May 02, 2024, the valuation as on March 31, 2024 does not include significant unobservable inputs.

B Risk Management:

The Company's activities expose 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 Company's risk management is done in close co-ordination with the board of directors and focuses on actively securing the Company's short, medium and long-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns. The Company 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 Company is exposed are described below:

a Credit risk:

Credit risk arises from the possibility that counter party may not be able to settle its obligations as agreed. The Company is exposed to credit risk from investment in preference shares measured at amortised cost, loans and advances to related parties, trade receivables, bank deposits and other financial assets. The Company 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.

i I nvestments at Amortised Cost : They are strategic investments in the normal course of business of the company.

ii Bank deposits : The Company maintains its Cash and cash equivalents and Bank deposits with reputed and highly rated banks.

Hence, there is no significant credit risk on such deposits.

iii Loans to related parties : They are given for business purposes. The Company reassesses the recoverability of loans periodically.

Interest recoveries from these loans are regular and there is no event of defaults.

iv The counter party to the forward contract value related to the Investment in a Joint Venture is the associate entity of co-venturer of one of Joint Ventures. The contract is governed by a shareholders' agreement which has the needful representations by the counter party. The Company is exposed to insignificant credit risk in relation to the same.

v Trade Receivables: The Company trades with recognized and credit worthy third parties. It is the Company'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 Company's exposure to credit losses is not significant.

vi There are no significant credit risks with related parties of the Company. The Company 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 Company's large customer base. Adequate expected credit losses are recognized as per the assessments. No single third party customer contributes to more than 10% of outstanding accounts receivable [excluding outstanding from subsidiaries] as at March 31, 2024 and March 31, 2023.

The Company has used lifetime expected credit loss [ECL] model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.

Expected credit Losses are measured at an amount equal to the 12 months expected credit Losses or at an amount equal to the Life time expected credit Losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix considers historical credit loss experience and is adjusted for forward looking information.

The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables.

Set out below is the information about the credit risk exposure of the Company's trade receivables as on March 31, 2024 using provision matrix:

Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.

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 Company maintains flexibility in funding by maintaining availability under committed facilities.

b Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which it operates. In addition, the Company's 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 tables below analyses the Company's 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.

Foreign exchange risk arises from recognised assets and Liabilities denominated in a currency that is not the Company's functional currency. The Company's operations in foreign currency creates natural foreign currency hedge. This results in insignificant net open foreign currency exposures considering the volumes and operations of the Company.

d Interest rate risk:

The Company's policy is to minimize interest rate cash flow risk exposures on Long-term financing. As at March 31, 2024, the Company is exposed to changes in market interest rates through borrowings at variable interest rates. The Company's investments in Fixed Deposits are at fixed interest rates.

e Price risk:

Exposure:

The Company's exposure to price risk arises from investments in equity and mutual funds held by the Company and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectively. To manage its price risk arising from investments in equity securities and mutual funds, the Company diversifies its portfolio.

Diversification of the portfolio is done in accordance with the limits set by the Company.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Company uses the dollar offset method to assess effectiveness. There was no hedge ineffectiveness in any of the periods presented above.

Note: 45-Capital Management:

The Company' s capital management objectives are: a To ensure the Company's ability to continue as a going concern b To provide an adequate return to shareholders c To maintain an optimal capital structure to reduce the cost of capital.

Management assesses the Company'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 Company's various classes of debt. The Company 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.

Loan covenants:

As on March 31, 2024, no long term borrowings is outstanding, hence no financial covenants are applicable to the Company.

For the borrowings facilities outstanding during the year, the Company was required to comply with the following financial

covenant:

- Gross Debt to Equity must be less than 2:1

This was in line with the Company's covenants as agreed with external Lenders.

Note: 46-Exceptional Items:

A The Company had made provision for impairment of ' 2,038 Million in the value of investment in the equity shares of Sentynl Therapeutics Inc. [STI], a wholly owned subsidiary of the Company in USA, due to change in the business plans of STI during the year, which resulted into fair value of net assets of STI being lower than their carrying value during the previous year. Consequently, there has been a diminution in the value of Company's investment in the equity shares of STI. The provision for impairment has been disclosed as an exceptional item for previous year.

B Pursuant to closure of business operations by Zydus Noveltech Inc., a wholly owned subsidiary of the Company in the USA, the Company has recognised a loss of ' 86 Million during the year in addition to provision for impairment recognised upto previous year of ' 3,193 Million in the value of investment in the common stock of Zydus Noveltech Inc. The same has been disclosed as an exceptional item for current year.

Note: 47-Leases:

Lessee:

A Relating to statement of financial position:

1 Under Ind AS 116, the Company recognises right to use assets and lease liabilities for most leases.

Right of use assets are part of financial statement captions "Property plant and equipment'. Depreciation and impairment are similar to measurement of owned assets. Lease liabilities are part of financial statement captions "non-current financial liabilities" and "current financial liabilities". Interest is part of financial statement captions "Finance costs".

Description of lease activities:

Real estate lease:

The Company Leases buildings for it's offices and warehouse space. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3- 10 years and may include extension options which provide operational flexibility. Majority of the leases are cancellable by either parties by serving notice period.

The Company advances Loans and investments to fund the operations of its subsidiaries within consolidated group of the Company which have further utilised these funds for their business purpose in the ordinary course of business, as a part of its treasury operations. These transactions are done on an arms' length basis after complying with the due approval process.

b The Company has not received any funds from any persons or entities, including foreign entities [Funding Party] with the understanding [whether recorded in writing or otherwise], that the Company shall, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

The Company has complied with relevant provisions of the Foreign Exchange Management Act, 1999 [42 of 1999] and Companies Act, 2013 and the transactions are not violative of the Prevention of Money-Laundering act, 2002 [15 of 2003].

c The Company has used accounting software for maintaining its books of accounts for the year ended on March 31, 2024 which has a feature of recording audit trail [edit log] facility and the same has been operational throughout the year for all relevant transactions recorded in the software except that no audit trail has been enabled at the database level for accounting software to log any direct data changes.

The Company is in process of implementing the audit trail at the database level.

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

e No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions [Prohibition] Act, 1988 (45 of 1988) and the rules made thereunder.

f The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

g The Company does not have any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.

h The Company has complied with the number of layers prescribed under clause [87] of section 2 of the Act read with Companies [Restriction on number of Layers] Rules, 2017.

i No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.

j 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].

Note: 50-Disclosure of transactions with Struck off Companies:

The Company did not have any material transaction with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the current and previous financial year.

Note: 51:

Pursuant to the Business Transfer Agreement [BTA] entered into by the Company with Watson Pharma Private Limited [Watson] on November 29, 2022, the transaction of acquisition of one of the business undertakings of Watson on a going concern basis by way of slump sale, at a lump-sum cash consideration of ' 468 Million by the Company has been completed on August 8, 2023.

Business undertaking of Watson is engaged in the business of developing, manufacturing, marketing and sale of APIs. This acquisition will help the Company to expand its presence in the APIs space through increase in product pipeline and manufacturing capacity.

The excess of the fair value of assets acquired over the acquisition cost paid has been attributed to Capital Reserve.

The financial statement for the year ended March 31, 2024 include the operations of the acquired business undertaking of Watson for the period from August 8, 2023 with purchase price allocation [PPA] figures.

From the date of acquisition, Watson has contributed revenue of ' Nil and loss after tax of ' 217 Million to the Company.

If the business combination had taken place at the beginning of the year, revenue would have been ' Nil and loss after tax would have been ' 325 Million.

Subsequent to year end, the Board of Directors of the Company, at its meeting held on May 2, 2024, approved to enter into a Share Purchase Agreement [SPA] amongst the Company, Bayer Zydus Pharma Private Limited [BZPPL] and Bayer Pharmaceuticals Private Limited [BPPL] to sell its entire holding of 12,499,999 equity shares [representing 24.99998% of the total paid-up share capital] of BZPPL to BPPL. The said transaction of transfer of shares was completed on May 6, 2024. Post completion of the said transaction, the Company does not hold any shares of BZPPL.

In accordance with Ind AS 105 “Non-Current Assets held for Sale and Discontinued Operations”, investment in BZPPL is classified as "Assets held for sale" from Investments and disclosed separately at the lower of its carrying value and fair value less costs to sell.

Note: 53:

Figures of previous reporting year have been regrouped/ reclassified to conform to current year's classification.

1

Working Capital Loans which are repayable on demand, are secured by hypothecation of inventories of all types, save and except stores and spares relating to plant and machineries [consumable stores and spares], including goods in transit, bills receivables and book debts. The value of such current assets is ' 64,274 [as at March 31, 2023 ' 52,877] Million. Quarterly statements, including revised statements, of current assets filed by the Company with bank are in agreement with the books of accounts.

2

PCFC and Packing Credit loans in ' [PCRE] loans are payable during April, 2024 to May, 2024. The outstanding amount of loans as at March 31, 2024 is ' 6,181 [as at March 31, 2023: ' 9,693] Million.

The interest rates on the above loans are in the range of 1 Month Treasury Bill/ 1 Month SOFR plus 25 to 35 bps.