Risks Relating to India

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A downgrade in ratings of India may affect the trading price of the Equity Shares.

India’s sovereign debt rating could be downgraded due to several factors, including changes in tax or fiscal policy or a
decline in India’s foreign exchange reserves, all which are outside our control. India’s sovereign rating by DBRS decreased
from BBB to BBB “low” on May 20, 2021, and its rating by S&P was past issues BBB- with a “stable” outlook as of July
13, 2021. Any adverse changes to India’s credit ratings by international rating agencies may adversely affect our ratings or
terms on which we are able to raise additional finances or refinance any existing indebtedness. This may have an adverse
impact on our business and financial performance, shareholders equity and the price of the Equity Shares.

 

Non-compliance with and changes in drug and dispensary laws and other applicable regulation may adversely
impact our business, financial condition, results of operations and cash flows.

Our operations are subject to extensive regulation governing the drug and dispensary markets. We are required to comply
with the regulatory requirements of various local, state, provincial and national regulatory authorities, such as, the
state-level food and drug administrations, such as the Drugs Controller General of India and the Central Drugs Standard
Control Organization of India. See “-We conduct our business in a highly-regulated industry and environment. Our
business is dependent on approvals from relevant regulatory and health authorities. Any delay or failure to obtain or renew
such required regulatory approvals, registrations or any change in the regulatory environment in relation to marketing
our products in regulated markets may significantly impact our business and strategy affecting our overall profitability,
and may impose significant compliance burdens on us” and “Key Regulations and Policies” on pages 39 and 161,
respectively.

Our outlets may be subject to inspections, during which regulatory non-compliance may be discovered or alleged. In the
past, we have received notices from various state drugs controllers in respect of certain non-compliances under, amongst
others, the provisions of the Drugs and Cosmetics Act, 1940. For example, certain regulatory authorities have filed various
complaints against Optival for alleged sales without the presence of a pharmacist, sales without prescriptions from any
registered medical practitioner, sale of incorrect drugs, stock of certain products without valid purchase invoices, and
discrepancies in the prescription register. While we have responded to such show-cause notices, we cannot assure you that
we will be able to comply with the applicable regulations, or that no regulatory action will be taken against us. If such non-
compliance on our part is found, the drug inspectors may issue a show-cause notice. These matters are currently pending
at different stages of adjudication. For details of the show-cause notices received by us, see “Outstanding Litigation and
Material Developments” on page 304. If the relevant authorities deem our reply to their show-cause notice unsatisfactory
or inadequate, they may require us to suspend the operations of the relevant outlet for around two to five days, which would
reduce our sales or prevent us from fulfilling our obligations to customers. For instance, in the past, we have had to suspend
the operations of certain of our outlets for around two to five days due to non-compliance of certain provisions of the Drugs
and Cosmetics Act, 1940. Alternatively, the relevant authorities may also file a complaint case against us. If we are found
liable, we may be subject to fines, sanctions, termination of licenses or approval and reputational damage. We may continue
to incur costs in complying with regulations, appealing any decision to suspend our outlets’ operations, while having to
continue incurring some or all of the operating costs during that period. We do not carry any insurance to cover such losses
and expenses.

Further, pursuant to the Scheme of Amalgamation, the liabilities, obligations and legal proceedings, including notices
received from various state drugs controller, pending as on April 1, 2016, were transferred to Optival on that date. For
details, see “Outstanding Litigation and Material Developments — Litigation involving our Subsidiaries — Litigation against
our Subsidiaries — Actions Taken by Regulatory and Statutory Authorities” on page 305. Any of our regulatory non-
compliance may therefore adversely affect our business, financial condition, and results of operation.

Our business is affected by economic, political and other prevailing conditions in India and the markets we
currently serve.

The Indian economy and the financing industry are influenced by economic, political and market conditions in India and
globally. The Issuer is incorporated in India, and all of our assets and employees are located in India. As a result, we are
dependent on prevailing economic conditions in India and our results of operations are affected by factors influencing the
Indian economy. Factors that may adversely affect the Indian economy, and hence our results of operations, include, among
others:

° any increase in Indian interest rates or inflation;
. any exchange rate fluctuations;
. any scarcity of credit or other financing in India, or change in India’s credit rating, resulting in an adverse effect

on economic conditions in India and scarcity of financing of our developments and expansions;

. volatility in, and actual or perceived trends in trading activity on, India’s principal stock exchanges;
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