Notes to Accounts of Automotive Axles Ltd.

Mar 31, 2025

(j) Provisions and contingent liability

A provision is recognised when the Company has
a present obligation as a result of past event, it is
probable that an outflow of resources embodying
economic benefits will be required to settle the
obligation and a reliable estimate can be made
of the amount of the obligation.

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.

A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond the
control of the Company or a present obligation
that is not recognised because it is not probable
that an outflow of resources will be required to
settle the obligation. A contingent liability also
arises in extremely rare cases where there is
a liability that cannot be recognised because it
cannot be measured reliably. The Company does
not recognize a contingent liability but discloses its
existence in the financial statements.

Provisions, contingent liabilities are reviewed at
each Balance Sheet date.

(k) Retirement and other employee benefits

Employees'' State Insurance Corporation (ESIC) are
defined contribution schemes whose contributions
are charged to the statement of profit and loss for
the pe riod when they are due to the respective
funds. There are no obligations other than the
contributions to the respective funds.

Retirement benefit in the form of provident fund
& Superannuation fund is a defined contribution
scheme. The Company has no obligation, other
than the contribution payable to the provident fund.
The Company recognizes contribution payable to
the provident fund scheme as an expense, when
an employee renders the related service. If the
contribution payable to the scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognised as a liability after deducting
the contribution already paid. If the contribution
already paid exceeds the contribution due for
services received before the balance sheet date,
then excess is recognised as an asset to the extent
that the pre-payment will lead to, for example, a
reduction in future payment or a cash refund.

The Company operates a defined benefit gratuity
plan. The Company contributes to a gratuity fund
maintained by an independent insurance company.
The cost of providing benefits under the defined
benefit plan is determined using the projected unit
credit method.

Remeasurements comprising of actuarial
gains and losses, the effect of the asset ceiling,
excluding amounts included in net interest on
the net defined benefit liability and the return on
plan assets (excluding amounts included in net
interest on the net defined benefit liability), are
recognised immediately in the balance sheet with a
corresponding debit or credit to retained earnings
through OCI in the period in which they occur.
Remeasurements are not reclassified to profit or
loss in subsequent periods.

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the
net defined benefit obligation as an expense in the
statement of profit and loss:

?? Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and

?? Net interest expense or income

Leave encashment / Compensated absences

Accumulated leave, which is expected to be utilised
within the next twelve months, is treated as short¬
term employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the
unused entitlement that has accumulated at the
reporting date.

The Company treats accumulated leave expected
to be carried forward beyond twelve months, as
long-term employee benefit for measurement
purposes. Such long-term compensated absences
are provided for based on the actuarial valuation
using the projected unit credit method at the
year-end. Actuarial gain/loss are immediately
taken to the statement of profit and loss and are
not deferred. The Company presents the entire
leave as a current liability in the balance sheet,
since it does not have an unconditional right to
defer its settlement for twelve months after the
reporting date.

(l) Financial instruments

Financial instruments are recognised when the
Company becomes a party to the contract that
gives rise to financial assets and financial liabilities.
All financial assets and liabilities are recognized
at fair value on initial recognition, except for
trade receivables which are initially measured at
transaction price. Transaction costs that are directly
attributable to the acquisition or issue of financial
assets and financial liabilities, which are not at fair
value through profit or loss, are added to the fair
value on initial recognition. Purchases or sales
of financial assets that require delivery of assets
within a time frame established by regulation or
convention in the marketplace (regular way trades)
are recognised on the trade date, i.e., the date that
the Company commits to purchase or sell the asset.

Subsequent measurement

Financial Assets

Financial assets at amortised cost

A ''financial asset'' is measured at the amortised
cost if both the following conditions are met:

a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.

This category is the most relevant to the Company.
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 that are
an integral part of the EIR. The EIR amortisation is
included in finance income in the profit or loss. The
losses arising from impairment are recognised in
the profit or loss. The Company''s financial assets
at amortised cost includes trade receivables, Cash
and cash equivalents, other bank balances and
Net investment in leases and Security deposits
included under other current and non-current
financial assets.

Financial assets at fair value through OCI
(FVTOCI)

A financial asset is subsequently measured at fair
value through other comprehensive income if it
is held within a business model whose objective
is achieved by both collecting contractual
cash flows and selling financial assets and the
contractual terms of the financial asset give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.

Financial assets at fair value through profit
or loss

Financial assets at fair value through profit or
loss are carried in the balance sheet at fair value
with net changes in fair value recognised in the
statement of profit and loss. This category includes
investment in mutual fund.

Impairment of financial assets:

For trade receivables, the Company applies a
simplified approach in calculating ECLs. Therefore,
the Company does not track changes in credit risk,
but instead recognises a loss allowance based on
lifetime ECLs at each reporting date.

The Company recognises an allowance for expected
credit losses (ECLs) for all debt instruments not
held at fair value through profit or loss. ECLs are

based on the difference between the contractual
cash flows due in accordance with the contract
and all the cash flows that the Company expects
to receive, discounted at an approximation of
the original effective interest rate. The expected
cash flows will include cash flows from the sale of
collateral held or other credit enhancements that
are integral to the contractual terms.

The amount of ECLs (or reversal) that is required
to adjust the loss allowance at the reporting date
to the amount that is required to be recorded
is recognized as an impairment loss or gain in
statement of profit and loss.

Financial liabilities

Financial liabilities at amortised cost

This is the category most relevant to the Company.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the
EIR amortisation process.

The Company enters into deferred payment
arrangements (acceptances) whereby overseas
lenders such as banks and other financial
institutions make payments to supplier''s banks for
purchase of raw materials and others. The banks
and financial institutions are subsequently repaid
by the Company at a later date providing working
capital benefits. These arrangements are in the
nature of credit extended in normal operating
cycle and these arrangements for raw materials are
recognised as Acceptances (under trade payables).

Derecognition of financial instruments

The Company derecognizes a financial asset when
the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset
and the transfer qualifies for derecognition under
Ind AS 109. 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 derecognition 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 and loss.

(m) Fair value measurement

The Company measures financial instruments, such
as, mutual funds at fair value at each balance sheet
date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at
the measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes
place either:

?? In th e principal market for the asset or
liability, or

?? 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 Company. 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 in their economic
best interest.

The Company 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 liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level input
that is significant to the fair value measurement as
a whole:

?? Level 1 —Quoted p

active market or Net Asset Value (NAV) for
identical assets or liabilities.

?? Level 2 — Val

the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable

?? Level 3 — Val uation 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 a recurring basis,
the Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.

(n) Cash and cash equivalents

Cash and cash equivalents for purpose of cash flow
statement comprise cash at bank and in hand and
short term investments with an original maturity
of three months or less, which are subject to an
insignificant risk of changes in value.

For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and
short-term deposits, as defined above.

(o) Other income
Interest income:

Interest is recognised using the effective interest
rate (EIR) method, as income for the period in
which it occurs. EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument 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
(for example, prepayment, extension, call and
similar options) but does not consider the expected
credit losses.

Dividend:

The Company recognises a liability to make cash
distributions to equity holders of the Company when
the distribution is authorised, and the distribution is
no longer at the discretion of the Company. Final
dividends on shares are recorded as a liability on
the date of approval by the shareholders.

(p) Borrowing costs

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.

(q) Earnings per share

Basic earnings per share are calculated by dividing
the net profit or loss for the period attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
period. Partly paid equity shares are treated as a
fraction of an equity share to the extent that they
are entitled to participate in dividends relative to a
fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings
per share, the net profit or loss for the period
attributable to equity shareholders and the
weighted average number of shares outstanding
during the period are adjusted for the effects of
all dilutive potential equity shares.

2.3.Standards notified but not yet effective

There are no standards that are notified and not yet
effective as on the date.

2.4.Climate - related matters

The Company considers climate-related matters in
estimates and assumptions, where appropriate. This
assessment includes a wide range of possible impacts
on the Company due to both physical and transition
risks. Even though the Company believes its business
model and products will still be viable after the transition
to a low-carbon economy, climate-related matters
increase the uncertainty in estimates and assumptions
underpinning several items in the Ind AS financial
statements. Even though climate-related risks might not
currently have a significant impact on measurement, the
Company is closely monitoring relevant changes and
developments, such as new climate-related legislation.
The items and considerations that are most directly
impacted by climate-related matters are:

?? Useful life of property, plant and equipment. When
reviewing the residual values and expected useful
lives of assets, the Company considers climate-
related matters, such as climate-related legislation
and regulations that may restrict the use of assets
or require significant capital expenditures. See
Note 2.2 e) for further information.

6.1 Pu rsuant to requirements of Electricity Act, the Company has subscribed 2,250,000 equity shares* of '' 10 each of
Parola Renewables Private Limited ("Parola") for a purchase consideration of '' 22.50 million ("Subscription Price").
Further, pursuant to Power Supply and Offtake Agreement, the Company has agreed to purchase total solar power to be
generated from solar plant having installed capacity i.e., 7.5 MWDC. As per the Share Subscription and Shareholders
Agreement ("SSSA") between the Company, Parola and Radiance Renewables Private Limited ("Majority Shareholder"),
the Company has an option to sell back the aforesaid equity shares at the Subscription Price and the Majority Shareholder
has an option to call for selling the share at the subscription price. Accordingly, these investments are carried at amortised
cost as financial assets. At the inception, these financial assets are recognised at fair value and the difference between
the fair value and the subscription price of '' 13.32 million is recorded as prepaid power expenses being amortised
over the term of the agreement. As at March 31, 2025, prepaid expenses is '' 10.21 million (March 31, 2024: '' 13.04
million).

6.2 Pu rsuant to requirements of Electricity Act, the Company has agreed to subscribe and pay for 4,146,559 equity
shares* of '' 10 each of Torrent Saurya Urja 3 Private Limited ("Torrent ") for a purchase consideration of '' 41.47
million ("Subscription Price"). Further, pursuant to Power Supply and Offtake Agreement, the Company has agreed to
purchase total solar power to be generated from solar plant having installed capacity i.e., 12 MWDC. As per the Share
Subscription and Shareholders Agreement ("SSSA") between the Company, Torrent and Torrent Power Limited ("Majority
Shareholder"), the Company has an option to sell back the aforesaid equity shares at the Subscription Price and the
Majority Shareholder has an option to call for selling the share at the subscription price. Accordingly, these investments
are being carried at amortised cost as financial assets. At the inception, these financial assets are recognised at fair
value and the difference between the fair value and the subscription price of '' 20.63 million is recorded as prepaid
power expenses being amortised over the term of the agreement. As at March 31, 2025, prepaid expenses is '' 20.63
million (March 31, 2024: nil).

14.1 Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes
in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) Retained earnings

Retained earnings are the profits/(loss) that the Company has earned till date, less any transfers to general reserve,
dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss / (gain) on defined
benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

14.1 Nature and purpose of reserves (contd.)

c) General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a
specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a
dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total
dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies
Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been
withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with
the specific requirements of Companies Act, 2013.

(a) Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days. During the year ended March
31, 2025, Nil (March 31, 2024: Nil) was recognised as provision for expected credit losses on trade receivables.

(b) Contract liabilities represents amounts received by the Company from customers prior to the delivery of goods and are
recorded as liabilities in these financial statements until the goods are delivered.

22.3 Performance obligation

(a) The performance obligation is satisfied upon shipment/ delivery of goods.

(b) During the year ended March 31, 2025, the Company recognised revenue of '' 144.26 million arising from contract
liabilities as at March 31, 2024. During the year ended March 31, 2024, the Company recognised revenue of '' 2.89
million arising from contract liabilities as at March 31, 2023.

22.4 There are no significant adjustment between the contracted price and revenue recognised

The preparation of the Company''s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result
in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Other disclosures relating to the Company''s exposure to risks and uncertainties includes:

i) Capital management (refer note 42)

ii) Financial risk management risk and policies (refer note 41)

iii) Sensitivity analyses disclosures (refer note 41)

32.1 Judgements:

I n the process of applying the Company''s accounting policies, management has made the following judgements, which
have the most significant effect on the amounts recognised in the financial statements:

a) Lease classification - Company as lessor:

The Company had entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial
Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct test lab
building (''Bu ilding'') and lease to MCVSIPL for R&D activities. The present value of the minimum lease payments
amounts to substantially all of the fair value of the property and accounted for the contracts as finance lease based on
the evaluation of the terms and conditions of the arrangements [refer note 34(b)].

b) Determination of significant influence over investee:

In accordance with the provisions of the Electricity Act applicable to a captive user, the Company invested '' 22.50 million
in exchange for a 26% equity shares in Parola Renewables Private Limited ("Parola"). The Company lacks significant
influence over the operations of Parola. Therefore, it is not classified as an associate under the guidelines of Ind AS 28,
Investments in Associates and Joint Ventures.

Furthermore, in accordance with the provisions of the Electricity Act applicable to a captive user, the Company invested
'' 41.47 million in exchange for a 26% equity shares of Torrent Saurya Urja 3 Private Limited ("Torrent"). The Company
lacks significant influence over the operations of Torrent. Therefore, it is not classified as an associate under the guidelines
of Ind AS 28, Investments in Associates and Joint Ventures.

32.2 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.

a) Defined benefit plans (gratuity benefits):

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial
valuations. 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.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans
operated in India, the management considers the interest rates of government bonds in currencies consistent with the
currencies of the post-employment benefit obligation.

The mortality rate Is based on publicly available mortality tables. These mortality tables tend to change only at interval
in response to demographic changes. Future salary increases and gratuity increases are based on expected future
inflation rates.

b) Provision for inventories:

Management reviews the aged inventory on a periodic basis. The purpose is to ascertain whether an allowance is required
to be made in the financial statements for any obsolete and slow-moving items. The management also evaluates on the
usability of existing inventories as a result of technological and regulatory changes in the automotive sector if any and
provides for the required allowances for slow moving/ non-moving and obsolete inventory. This review also involves
comparison of the carrying value of the aged inventory item with the respective net realisable value. Management
believes that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.

c) Impairment of financial assets:

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates.
The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation,
based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each
reporting period.

d) Provision for warranty:

Warranty estimates are established using historical information on the nature, frequency and average cost of warranty
claims and also management estimates regarding possible future outflow on servicing the customers for any corrective
action in respect of product failure.

e) 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 borrow over
a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use
asset in a similar economic environment.

f) Useful lives of property, plant and equipment:

Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent
upon an assessment of both the technical life of the assets and also their likely economic lives based on various
internal and external factors including relative efficiency and operating costs. This reassessment may result in change
in depreciation and amortisation expected in future periods.

33 Segment reporting

The Board of Directors is the Chief Operating Decision Maker (CODM) and monitors the operating results of its
business units separately for the purpose of making decisions about resource allocation and performance assessment.
The Company is predominantly engaged in the business of manufacturing and sale of automotive components, which
constitutes a single business segment and is governed by similar set of risks and returns. The operations of the Company
primarily cater to the market in India, which the Chief Operating Decision Maker (CODM) views as a single segment.
The CODM monitors the operating results of its single segment for the purpose of making decisions about resource
allocation and performance assessment.

Revenues from transactions with a single external customer amounting to 10 per cent or more of the Company''s revenues
is '' 16,686.22 million (March 31, 2024: '' 17,497.32 million).

The Company is domiciled in India. The Company''s revenue from operations from external customers primarily relate
to operations in India and all the non-current assets of the Company are located in India.

34 Leases

a) Company as a lessee

I) The Company has entered into leases contracts consisting of the Company''s manufacturing facilities which includes
buildings. These leases are for a period of ten years. The Company Is restricted from assigning and sub leasing
the lease assets. The Company''s obligations under Its leases are secured by the lessor''s title to the leased assets.
The Company also has certain leases with lease terms of 12 months or less. The Company applies the ''short-term
lease'' recognition exemption for these leases.

II) During the year ended March 31, 2025, the Company had entered Into an agreement with a buyer to sell Its
lease pertaining to the Pithampur land. The sale consideration of '' 127.50 million was received from the buyer
on June 12, 2024. Further, the Company has recorded a loss of '' 2.56 million In the statement of profit and loss
after adjusting the existing right-of-use asset and lease liability created for the aforesaid land, as a result of the
sale transaction.

b) Company as a lessor

The Company had entered into lease agreements dated July 01, 2018 with Meritor HVS India Limited (''MHVSIL'') and
Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to
construct test lab building (''Building''); and further lease out to MCVSIPL for research and development activities. The
lease term is 20 years. Since both the aforesaid lease agreements were entered with related parties on the same date
and negotiated as one lease, these leases are essentially treated as a single contract in substance, wherein, the Company
is the lessor of the Building and MCVSIPL is the lessee. The carrying amount of net investment in lease is '' 111.33
million (March 31, 2024: 112.93 million). Net finance income on lease receivables recognised by the Company during
the year is '' 8.91 million (March 31, 2024: '' 9.83 million).

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length
transactions. Amounts owed to and by related party are unsecured and interest free and settlement occurs in cash.
There have been no guarantees provided or received for any related party receivables or payables. For the year ended
March 31, 2025, the Company has recorded impairment of Nil towards receivables from related parties (March 31,
2024: Nil). This assessment is undertaken each financial year through examining the financial position of the related
party and the market in which the related party operates.

37 Employee benefits

Defined contribution plans

A. Provident fund and employee state insurance scheme

The Company makes contributions to provident fund and employee state insurance scheme ("Schemes"), which
are defined contribution plan for eligible employees and the contributions are charged to the statement of profit
and loss of the year when the contributions to the respective funds are due. Under the Schemes, the Company is
required to contribute a specified percentage of the salary to fund the benefits. The Company recorded an expense
of '' 50.43 million (March 31, 2024: 54.48 million) towards contribution of provident fund and '' 3.03 million
(March 31, 2024: '' 4.48 million) towards contribution of employee state insurance scheme in the statement of
profit and loss.

B. Superannuation fund

Retirement benefits in the form of superannuation fund (being administered by LIC) are funded defined contribution
schemes and the contributions are charged to the statement of profit and loss of the year when the contributions to
the respective funds are due. There are no other obligations other than the contribution payable. The contributions
for the year ended March 31, 2025 is '' 5.84 million (March 31, 2024: '' 7.03 million).

Defined benefit plans

The Company has a defined benefit gratuity plan for its employees. 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 Company makes
provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit
credit method.

The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss
and the funded status and defined benefit obligation recognized in the Balance Sheet.

Risk analysis

The Company Is exposed to the following risks in the defined benefits plans :

Investment Risk: The present value of the defined benefit obligation Is calculated using a discount rate which Is
determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan
assets Is below this rate, it will create a plan deficit.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset
by 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 growth risk: The present value of the defined benefit plan liability Is calculated by reference to the future
salaries of plan participants. An increase in the salary of the plan participants will increase the plan''s liability.

The Company''s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main
purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets
include loans, trade and other receivables, short term investments and cash and cash equivalents that derive directly from
its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the
management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are
summarised below:

i. 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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such
as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings.
The sensitivity analyses in the following sections relate to the position as at March 31, 2025 and March 31, 2024. The
sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest
rates of the debt.

The analyse exclude the impact of movement in market variables on the carrying values of gratuity and other post
retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is
based on the financial assets and financial liabilities held at March 31, 2025 and March 31, 2024.
a. Interest rate risk

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 following table demonstrates the sensitivity to a reasonably possible change
in interest rates on that portion of loans and borrowings affected. The Company manages its interest rate risk by
monitoring the movements in the market interest rates closely. With all other variables held constant, the Company''s
profit before tax and equity is affected through the impact on floating rate borrowings, as follows:

b. Foreign currency risk

Foreign currency risk Is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates
primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency).
The Company manages its foreign exchange fluctuation risk by monitoring the movements in the exchange rate
in the market closely. As on March 31, 2025, the Company has following foreign currency exposures:

C. Commodity price risk

Commodity price risk results from changes in market prices for raw materials, mainly steel, forgings and casting
which forms the largest portion of Company''s cost of sales.

The principal raw materials for the Company products are steel, forgings and casting which are purchased by the
Company from the approved list of suppliers. Most of the input materials are procured from domestic vendors.
Further, a significant portion of the Company''s volume is sold based on price adjustment mechanism which allows
for recovery of the changed raw material cost from its customers. The Company is affected by the price volatility
of certain commodities. However the Company is able to pass on price fluctuations to its customers resulting from
changes in commodity prices, thereby neutralizing the impact on profit due to commodity price risk.

ii. Credit risk

Credit risk Is the risk that counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables)
and from its investing activities, including deposits with banks and financial institutions, other receivables and deposits,
and other financial instruments.

a. Trade Receivable

The Company mainly sells to its related parties, OEMs and Tier I companies, having long standing relationship
with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2025,
receivable from Company''s top 3 customers accounted for approximately 99% (March 31, 2024: 99%) of all the
receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis for
major clients. Based on historical experience, the Company does not have any material bad debts. The Company
does not hold collateral as security. The maximum exposure to credit risk at the reporting date is the carrying value
of each class of financial assets. Further, for movement in provision for doubtful receivables during the year refer
note 10.

b. Bank Balance and other Financial Assets

Credit risk from balances with banks is managed by the Company in accordance with its policy. Investments of
surplus funds of '' 774.75 million (March 31, 2024: '' 209.93 million) are made only with approved counterparties
and within credit limits assigned to each counterparty. Further other financial assets include net investment of
lease of '' 111.33 million, (March 31, 2024: '' 112.93 million) receivables from related party. Based on historical
experience, the Company does not have any material bad debts.

iii. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure that the funds are available for use as per the 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 by matching the maturity profiles of financial assets and
liabilities. The Company consistently generates sufficient cash flows from operations to meet its financial obligations as
and when they fall due.

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all
other equity reserves. The primary objective of the Company''s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. The Company includes within net debt, interest bearing loans and borrowings,
lease liabilities, less cash and cash equivalents. The Company''s gearing ratio, which is total borrowings divided by total
capital employed is as below:

44 Other Statutory information for the years ended March 31, 2025 and March 31, 2024

(I) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(II) The Company do not have any transactions with companies struck off under Section 248 of the Companies Act, 2013
or Section 560 of Companies Act, 1956.

(III) The Company do not have any charges or satisfaction which Is yet to be registered with ROC beyond the statutory period.
(Iv) The Company have not traded, Invested nor holding any crypto currency or virtual currency.

(v) The Company have not advanced or loaned or Invested funds to any other person or entity, Including foreign entities
(Intermediaries) with the understanding that the 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

(vi) The Company have 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,

(vii) The Company has not entered Into any such 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).

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

45 Transfer pricing

The Company maintains the Information and documents as required under the transfer pricing regulations under Section
92-92F of the Income Tax Act, 1961. The Management Is In the process of updating the transfer pricing documentation
for the financial year ended March 31,2025 and Is of the view that Its transactions are at arm''s length and the aforesaid
legislation will not have any Impact on the financial statements, particularly on the amount of tax expense and that of
provision for taxation.

46 Proper books of account as required by law have been kept by the Company.

The Company has used accounting software SAP for maintaining Its books of account which has a feature of recording
audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded In
the software, except that audit trail feature Is not enabled at the database level Insofar as It relates to SAP accounting
software. Further no Instance of audit trail feature being tampered with was noted In respect of accounting software
where the audit trail has been enabled.

Additionally, based on the requirements of section 128(5) of the Companies Act, 2013, the Company has preserved
the requirements of recording audit trail to the extent It was enabled and recorded In respect of the prior year

47 I n light of the tariffs imposed by U.S.A., the Management has evaluated the likely impact of prevailing uncertainties
relating to imposition or enhancement of reciprocal tariffs and believes that there are no material impacts on the
financial statements of the Company for the year ended March 31, 2025. However, the Management will continue to
monitor the situation from the perspective of potential impact on the operations of the Company.

48 Events occurring after balance sheet

The Board of Directors have proposed dividend of '' 30.50 per share after the balance sheet date which is subject to
approval by the shareholders at the annual general meeting.

As per our report of even date attached

For S.R. Batliboi & Associates LLP For and on behalf of the Board of Directors of

Chartered Accountants Automotive Axles Limited

ICAI Firm Registration Number: 101049W/E300004 CIN: L51909KA1981PLC004198

per Sunil Gaggar Nagaraja Gargeshwari Dr. B. N. Kalyani

Partner Whole Time Director Chairman

Membership No.: 104315 DIN: 00839616 DIN: 00089380

Place: Bengaluru Place : Pune Place : Pune

Date : May 20, 2025 Date : May 20, 2025 Date : May 20, 2025

Ranganathan S Debadas Panda

Chief Financial Officer Company Secretary

Membership No: 16898

Place : Pune Place : Pune

Date : May 20, 2025 Date : May 20, 2025

---

Mar 31, 2024

(j) Provisions and contingent liability

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pretax 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.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

Provisions, contingent liabilities are reviewed at each Balance Sheet date.

(k) Retirement and other employee benefits

Employees'' State Insurance Corporation (ESIC) are defined contribution schemes whose contributions are charged to the statement of profit and loss for the period when they are due to the respective funds. There are no obligations other than the contributions to the respective funds.

Retirement benefit in the form of provident fund & Superannuation fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the

scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

The Company operates a defined benefit gratuity plan. The Company contributes to a gratuity fund maintained by an independent insurance company. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

Remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

?? Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

?? Net interest expense or income

Leave encashment / Compensated absences

Accumulated leave, which is expected to be utilised within the next twelve months, is treated as shortterm employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gain/loss are immediately taken to the statement of profit and loss and are

not deferred. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

(l) Financial instruments

Financial instruments are recognised when the Company becomes a party to the contract that gives rise to financial assets and financial liabilities. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

Financial Assets

Financial assets at amortised cost

A ''financial asset'' is measured at the amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

This category is the most relevant to the Company. 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 that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. The Company''s financial assets at amortised cost includes trade receivables, Cash and cash equivalents, other bank balances and Net investment in leases and Security deposits included under other current and non-current financial assets.

Financial assets at fair value through OCI (FVTOCI)

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss. This category includes investment in mutual fund.

Impairment of financial assets:

For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain in statement of profit and loss.

Financial liabilities

Financial liabilities at amortised cost

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

The Company enters into deferred payment arrangements (acceptances) whereby overseas lenders such as banks and other financial institutions make payments to supplier''s banks for purchase of raw materials and others. The banks and financial institutions are subsequently repaid by the Company at a later date providing working capital benefits. These arrangements are in the nature of credit extended in normal operating cycle and these arrangements for raw materials are recognised as Acceptances (under trade payables).

Derecognition of financial instruments

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. 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 derecognition 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 and loss.

(m) Fair value measurement

The Company measures financial instruments, such as, mutual funds at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

?? In th e principal market for the asset or liability, or

?? I n 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 Company. 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 in their economic best interest.

The Company 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 liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 —Quoted prices (unadjusted) in active market or Net Asset Value (NAV) for identical assets or liabilities.

Level 2 — Val uation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Val 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 a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

(n) Cash and cash equivalents

Cash and cash equivalents for purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

(o) Dividend

The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised, and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders.

(p) Borrowing costs

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.

(q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

2.3.Changes in accounting policies and disclosures

New and amended standards.

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind AS which are effective for annual periods beginning on or after 1 April 2023. The Company applied for the firsttime these amendments.

(i) Definition of Accounting Estimates -Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.

The amendments had no impact on the Company''s financial statements.

(ii) Disclosure of Accounting Policies -Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more

useful by replacing the requirement for entities to disclose their ''significant'' accounting policies with a requirement to disclose their ''material'' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments have had an impact on the Company''s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company''s financial statements.

(iii) Deferred Tax related to Assets and

Liabilities arising from a Single Transaction -Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.

The Company previously recognised for deferred tax on leases on a net basis. As a result of these amendments, the Company has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12, there is no impact in the balance sheet. There was also no impact on the opening retained earnings as at 1 April 2022.

Apart from these, consequential amendments and editorials have been made to other Ind AS like Ind AS 101, Ind AS 102, Ind AS 103, Ind AS 107, Ind AS 109, Ind AS 115 and Ind AS 34.

2.4.Standards notified but not yet effective.

There are no standards that are notified and not yet

effective as on the date.

6.1 Pu rsuant to requirements of Electricity Act, the Company has subscribed 2,250,000 equity shares* of INR 10 each of Parola Renewables Private Limited ("Parola") for a purchase consideration of INR 22.50 million ("Subscription Price"). Further, pursuant to Power Supply and Offtake Agreement, the Company has agreed to purchase total solar power to be generated from solar plant having installed capacity i.e., 7.5 MWDC. As per the Share Subscription and Shareholders Agreement ("SSSA") between the Company, Parola and Ray Future Energy India Private Limited ("Majority Shareholder"), the Company has an option to sell back the aforesaid equity shares at the Subscription Price and Majority Shareholder have an option to call for selling the share at the subscription price. Accordingly, these investments are carried at amortised cost as financial assets. At the inception, these financial assets are recognised at fair value and the difference between the fair value and the subscription price of INR 13.32 million is recorded as prepaid power expenses being amortised over the term of the agreement.

6.2 Pu rsuant to requirements of Electricity Act, the Company has agreed to subscribe and pay for 4,146,559 equity shares* of INR 10 each of Torrent Saurya Urja 3 Private Limited ("Torrent ") for a purchase consideration of INR 41.47 million ("Subscription Price"). As at March 31, 2024, the Company has made investment of INR 2.8 million. Further, pursuant to Power Supply and Offtake Agreement, the Company has agreed to purchase total solar power to be generated from solar plant having installed capacity i.e., 12 MWDC. As per the Share Subscription and Shareholders Agreement ("SSSA") between the Company, Torrent and Torrent Power Limited ("Majority Shareholder"), the Company has an option to sell back the aforesaid equity shares at the Subscription Price and Majority Shareholder have an option to call for selling the share at the subscription price. Accordingly, these investments are being carried at amortised cost as financial assets.

14.1 Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) Retained Earnings

Retained earnings are the profits/(loss) that the company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

c) General reserves

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Other disclosures relating to the Company''s exposure to risks and uncertainties includes:

i) Capital management (Note 42)

ii) Financial risk management risk and policies (refer note 41)

iii) Sensitivity analyses disclosures (refer note 41)

32.1 Judgements:

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

a) Lease classification - Company as lessor:

The Company has entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct test lab building (''Building'') and lease to MCVSIPL for R&D activities. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, the present value of the minimum lease payments amounts to substantially all of the fair value of the property and accounted for the contracts as finance lease. [Refer Note 34(b)]

32.1 Judgements: (Contd.)

b) Determination of significant influence over investee:

In accordance with the provisions of the Electricity Act applicable to a Captive User, the Company invested INR 22.5^ million in exchange for a 26% equity shares in Parola Renewables Private Limited (Parola). The Company lacks significar influence over the operations of Parola. Therefore, it is not classified as an Associate under the guidelines of Ind AS 2i "Investments in Associates and Joint Ventures".

Furthermore, in accordance with the provisions of the Electricity Act applicable to a captive user, the Company wi subscribe to and pay for 26% equity shares of Torrent Saurya Urja 3 Private Limited for a purchase consideration of IN 41.47 million. As at March 31, 2024, the Company has made investment of INR 2.80 million. However, the Compan does not have significant influence over the operations of Torrent. Therefore, it is not classified as an Associate unde the gu idelines of Ind AS 28 "Investments in Associates and Joint Ventures."

32.2 Estimates and assumptions:

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

a) Defined benefit plans (gratuity benefits):

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determine^ using actuarial valuations. An actuarial valuation involves making various assumptions that may differ fror actual developments in the future. These include the determination of the discount rate, future salary increase and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benef obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date The parameter most subject to change is the discount rate. In determining the appropriate discoun rate for plans operated in India, the management considers the interest rates of governmen bonds in currencies consistent with the currencies of the post-employment benefit obligation The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at interva in response to demographic changes. Future salary increases and gratuity increases are based on expected futur inflation rates.

b) Provision for inventories:

Management reviews the aged inventory on a periodic basis. The purpose is to ascertain whether an allowance is require'' to be made in the financial statements for any obsolete and slow-moving items. The management also evaluates on th usability of existing inventories as a result of technological and regulatory changes in the automotive sector if any an provides for the required allowances for slow moving/ non-moving and obsolete inventory. This review also involve comparison of the carrying value of the aged inventory item with the respective net realisable value. Managemen believes that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements

c) Impairment of financial assets:

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on Company''s past history, existing market conditions as well as forward looking estimates at the end of eac reporting period.

d) Provision for warranty:

Warranty estimates are established using historical information on the nature, frequency and average cost of warrant claims and also management estimates regarding possible future outflow on servicing the customers for any correctiv action in respect of product failure.

e) 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 borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

f) Useful lives of property, plant and equipment:

Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lifes of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. This reassessment may result in change in depreciation and amortisation expected in future periods.

33 Segment reporting

The Board of Directors is the Chief Operating Decision Maker (CODM) and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The Company is predominantly engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment and is governed by similar set of risks and returns. The operations of the Company primarily cater to the market in India, which the Chief Operating Decision Maker (CODM) views as a single segment. The CODM monitors the operating results of its single segment for the purpose of making decisions about resource allocation and performance assessment.

Revenues from transactions with a single external customer amounting to 10 per cent or more of the Company''s revenues is INR 17,497.32 million (March 31, 2023: INR 18,182.87 million).

The Company is domiciled in India. The Company''s revenue from operations from external customers primarily relate to operations in India and all the non-current assets of the Company are located in India.

34 Leases

a) Company as a lessee

i) The Company has entered into leases contracts consisting of the Company''s manufacturing facilities which includes land and buildings. These leases are for a period of ten to fifteen years and lease of land is for 99 years with renewal option included in the contracts. The Company is restricted from assigning and sub leasing the lease assets. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. The Company also has certain leases with lease terms of 12 months or less. The Company applies the ''short-term lease'' recognition exemption for these leases.

b) Company as a lessor

The Company has entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct test lab building (''Building'') and lease to MCVSIPL for R&D activities. This lease term is 20 years for both the leases. Both of these lease contracts were entered with the related parties on the same date and negotiated as one lease, these leases are essentially treated as a single contract in substance, wherein, the Company is the lessor of building and MCVSIPL is the lessee. The carrying amount of net investment in lease is INR 112.93 million (March 31, 2023: 113.25 million). Net finance income on lease receivables recognised by the Company during the year is INR 9.83 million (March 31, 2023: INR 9.83 million).

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

37 Employee benefits Defined contribution plans

A. Provident fund and employee state insurance scheme

The Company makes contributions to provident fund and employee state insurance scheme ("Schemes"), which are defined contribution plan for eligible employees and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. Under the Schemes, the Company is required to contribute a specified percentage of the salary to fund the benefits. The Company recorded an expense of INR 54.48 million (March 31, 2023: 52.71 million) towards contribution of provident fund and INR 4.48 million (March 31, 2023: INR 4.38 million) towards contribution of employee state insurance scheme in the statement of profit and loss.

B. Superannuation fund

Retirement benefits in the form of superannuation fund (being administered by LIC) are funded defined contribution schemes and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable. The contributions for the year ended March 31, 2024 is INR 7.03 million (March 31, 2023: INR 6.55 million).

Defined benefit plans

The Company has a defined benefit gratuity plan for its employees. 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 Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and defined benefit obligation recognized in the Balance Sheet.

37 Employee benefits (Contd.)

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Assumptions regarding future mortality are based on published statistics and mortality tables.

Risk analysis

The Company is exposed to the following risks in the defined benefits plans :

Investment Risk: The present value of the defined benefit obligation is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan assets is below this rate, it will create a plan deficit.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by 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 growth risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan''s liability.

The Company''s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, short term investments and cash and cash equivalents that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:"

i. 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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at March 31, 2024 and March 31, 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.

The analyse exclude the impact of movement in market variables on the carrying values of gratuity and other post retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2024 and March 31, 2023.

a. Interest rate risk

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 following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected.The Company manages its interest rate risk by monitoring the movements in the market interest rates closely. With all other variables held constant, the Company''s profit before tax and equity is affected through the impact on floating rate borrowings, as follows:

C. Commodity price risk

Commodity price risk results from changes in market prices for raw materials, mainly steel, forgings and casting which forms the largest portion of Company''s cost of sales.

The principal raw materials for the Company products are steel, forgings and casting which are purchased by the Company from the approved list of suppliers. Most of the input materials are procured from domestic vendors. Further, a significant portion of the Company''s volume is sold based on price adjustment mechanism which allows for recovery of the changed raw material cost from its customers. The Company is affected by the price volatility of certain commodities. However the Company is able to pass on price fluctuations to its customers resulting from changes in commodity prices, thereby neutralizing the impact on profit due to commodity price risk.

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions, other receivables and deposits, and other financial instruments.

a. Trade Receivable

The Company mainly sells to its related parties, OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2024, receivable from Company''s top 3 customers accounted for approximately 99% (March 31, 2023: 99%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis for major clients. Based on historical experience, the Company does not have any material bad debts. The Company does not hold collateral as security. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. Further, for movement in provision for doubtful receivables during the year refer note 10.

b. Bank Balance and other Financial Assets

Credit risk from balances with banks is managed by the Company in accordance with its policy. Investments of surplus funds of INR 209.93 millions (March 31, 2023: Nil ) are made only with approved counterparties and within credit limits assigned to each counterparty. Further other financial assets include net investment of lease of INR 112.93 millions, (March 31, 2023: INR 113.25 millions) receivables from related party. Based on historical experience, the Company does not have any material bad debts.

41 Financial risk management objectives and policies (Contd.)

iii. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that the funds are available for use as per the 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 by matching the maturity profiles of financial assets and liabilities. The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.

42 Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves. The primary objective of the Company''s capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company''s gearing ratio, which is total borrowings divided by total capital employed is as below:

44 Other Statutory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the year.

(v) The Company have not advanced or loaned or invested funds to any other person or entity, including foreign entities (intermediaries) with the understanding that the 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

(vi) The Company have 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,

(vii) The Company has not entered into any such 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).

(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

45 Transfer pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The Management is in the process of updating the transfer pricing documentation for the financial year 2023 - 2024 and is of the view that its transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

46 Audit trail

The Company has used accounting software (SAP S/4 Hana) for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for certain changes made, if any, using privileged/ administrative access rights to the SAP application and the underlying Hana database. Further no instance of audit trail feature being tampered with was noted in respect of the software.

47 Events occurring after balance sheet

The Board of Directors have proposed dividend of INR 32 per share after the balance sheet date which is subject to approval by the shareholders at the annual general meeting.

The accompanying notes are an integral part of the financial statements.

As per our report of even date

For S.R. Batliboi & Associates LLP For and on behalf of the Board of Directors of

Chartered Accountants Automotive Axles Limited

ICAI Firm Registration Number: 101049W/E300004 CIN: L51909KA1981PLC004198

per Sunil Gaggar Nagaraja Gargeshwari Dr. B. N. Kalyani

Partner Whole Time Director Chairman

Membership No.: 104315 DIN: 00839616 DIN: 00089380

Place: Bengaluru Place : Pune Place : Pune

Date: May 27, 2024 Date : May 27, 2024 Date : May 27, 2024

Ranganathan S Debadas Panda

Chief Financial Officer Company Secretary

Membership No: 16898

Place : Pune Place : Pune

Date : May 27, 2024 Date : May 27, 2024

---

Mar 31, 2023

1. Pursuant to requirements of Electricity Act, the Company has subscribed 2,250,000 equity shares* of INR 10 each of Parola Renewables Private Limited ("Parola") for a purchase consideration of INR 22.50 million ("Subscription Price"). Further, pursuant to Power Supply and Offtake Agreement, the Company has agreed to purchase 90% of total solar power generated from solar plant having installed capacity i.e., 7.5 MWDC. As per the Share Subscription and Shareholders Agreement ("SSSA") between the Company, Parola and Ray Future Energy India Private Limited ("Majority Shareholder"), the Company has an option to sell back the aforesaid equity shares at the Subscription Price and Majority Shareholder have an option to call for selling the share at the subscription price. Accordingly, these investments are carried at amortised cost as financial assets. At the inception, these financial assets are recognised at fair value and the difference between the fair value and the subscription price of INR 13.32 million is recorded as prepaid expenses being amortised over the term of the agreement.

2. At 31 March, 2023, the Company had available INR 1,950 million (31 March, 2022: INR 1,700 million) of undrawn committed fund & non-fund based facilities. Sanction limits of domestic operations are secured against entire current assets.

3. The quarterly returns or statements of current assets filed by the Company against sanctioned working capital limits with banks are in agreement with the books of accounts .

Terms/right attached to equity shares

The Company has issued only one class of equity share having par value of INR 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval by the shareholders at the ensuin g An nual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

14.1 Nature and purpose of reservesa) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) Retained Earnings

Retained earnings are the profits/(loss) that the company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

c) General reserves

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.

a) During the financial year 2018-19, a term loan of INR 1,500 million was sanctioned towards capital expansion against which the Company had withdrawn INR 730 million. The term loan is repayable in 24 quarterly instalments after the moratorium period of one year. During the current year, the Company has repaid the loan to the extent of INR 41.67 million. The loan is secured by hypothecation of plant and machinery and other movable assets both present and future procured out of the said term loan at all locations.

b) The loan carries an interest @ 3 month MCLR (with a quarterly rest) plus 5 bps in the range of 7% - 8.65%, p.a. (March 31, 2022: 7% - 7.95%, p.a.)

(a) Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days. In March 2023, INR 2.85 million (March 2022: INR 6.11 million) was recognised as provision for expected credit losses on trade receivables.

(b) Contract liabilities include short-term advances received to deliver goods and temporary credit balance of customer for various claims and settlement

22.3 Performance obligation

(a) The performance obligation is satisfied upon shipment/ delivery of goods

(b) The amount of revenue recognised in the current year of INR 30.50 million (March 2022: INR 60.72 million) that was included in the opening contract liability balance towards unsatisfied performance obligation.

22.4 There are no significant adjustment between the contracted price and revenue recognised

''The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/ interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

32 Significant accounting judgements, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Other disclosures relating to the Company''s exposure to risks and uncertainties includes:

i) Capital Management (Note 42)

ii) Financial risk management risk and policies (refer note 41)

iii) Sensitivity analyses disclosures (refer note 41)

32.1 Judgements:

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

(a) Lease classification - Company as lessor:

The Company has entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct test lab building (''Building'') and lease to MCVSIPL for R&D activities. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, the present value of the minimum lease payments amounts to substantially all of the fair value of the property and accounted for the contracts as finance lease. [Refer Note 34(b)]

(b) Determination of significant influence over investee:

In accordance with the provisions of the Electricity Act applicable to a Captive User, the Company invested INR 22.50 million in exchange for a 26% equity shares in Parola Renewables Private Limited (Parola). However, the Company lacks significant influence over the operations of Parola. Therefore, it is not classified as an Associate under the guidelines of Ind AS 28 "Investments in Associates and Joint Ventures".

32.2 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.

(a) Defined benefit plans (gratuity benefits):

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. 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.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

(b) Provision for inventories:

Management reviews the aged inventory on a periodic basis. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete and slow-moving items. The management also evaluates on the usability of existing inventories as a result of technological and regulatory changes in the automotive sector if any and provides for the required allowances for slow moving/ non-moving and obsolete inventory. This review also involves comparison of the carrying value of the aged inventory item with the respective net realisable value. Management believes that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.

(c) Impairment of financial assets:

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(d) Provision for warranty:

Warranty estimates are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure.

(e) 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 borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

33 Segment reporting

The Company is predominantly engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment and is governed by similar set of risks and returns. The operations of the Company primarily cater to the market in India, which the Chief Operating Decision Maker (CODM) views as a single segment. The CODM monitors the operating results of its single segment for the purpose of making decisions about resource allocation and performance assessment.

One customer individually accounted for INR 18,182.87 million (March 31, 2022: INR 11,490.15 million) which is more than 10% of the total revenue of the Company for the year ended March 31, 2023.

The Company is domiciled in India. The Company''s revenue from operations from external customers primarily relate to operations in India and all the non-current assets of the Company are located in India.

34 Leasesa) Company as a lessee

i) The Company has entered into leases contracts consisting of the Company''s manufacturing facilities which includes land and buildings. These leases are for a period of ten to fifteen years and lease of land is for 99 years with renewal option included in the contracts. The company is restricted from assigning and sub leasing the lease assets. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. The Company also has certain leases with lease terms of 12 months or less. The Company applies the ''short-term lease'' recognition exemption for these leases.

b) Company as a lessor

The Company has entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct test lab building (''Building'') and lease to MCVSIPL for R&D activities. This lease term is 20 years for both the leases. Both of these lease contracts were entered with the related parties on the same date and negotiated as one lease, these leases are essentially treated as a single contract in substance, wherein, the Company is the lessor of building and MCVSIPL is the lessee. The carrying amount of net investment in lease is INR 113.25 million (March 31, 2022: 113.46 million). Net finance income on lease receivables recognised by the Company during the year is INR 9.83 million (March 31, 2022: INR 9.73 million).

35 Commitments and contingencies a) Commitments
	March 31, 2023	March 31, 2022
Estimated amount of contracts remaining to be executed on capital account and not provided for	54.86	22.70
Other commitments- refer note 6.1

b) Contingent liabilities
	March 31, 2023	March 31, 2022
Claims against the Company not acknowledged as debts	0.21	0.21

During the financial year 2020-21, the Company has received demand order from the Income tax authorities for the financial year 2017-18 towards disallowance of deduction taken by the Company under Section 80JJAA of Income tax act, 1961. The Company has filed an appeal against the disallowance with the Commissioner of Income tax (Appeals) on March 23, 2021 and is currently pending before CIT(A). The Company based on its assessment believe that no further adjustment is required in the financial statements in the current year.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

37 Employee benefits Defined contribution plans

A. Provident fund and employee state insurance scheme

The Company makes contributions to provident fund and employee state insurance scheme ("Schemes"), which are defined contribution plan for eligible employees and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. Under the Schemes, the Company is required to contribute a specified percentage of the salary to fund the benefits. The Company recorded an expense of INR 52.71 million (March 31, 2022: 50.71 million) towards contribution of provident fund and INR 4.38 million (March 31, 2022: INR 5.39 million) towards contribution of employee state insurance scheme in the statement of profit and loss.

B. Superannuation fund

Retirement benefits in the form of superannuation fund (being administered by LIC) are funded defined contribution schemes and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable. The contributions for the year ended March 31, 2023 is INR 6.55 million (March 31, 2022: INR 6.42 million).

Defined benefit plans

The Company has a defined benefit gratuity plan for its employees. 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 Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Assumptions regarding future mortality are based on published statistics and mortality tables.

Risk analysis

The Company is exposed to the following risks in the defined benefits plans :

Investment Risk: The present value of the defined benefit obligation is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan assets is below this rate, it will create a plan deficit.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by 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 growth risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan''s liability.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

The loan has been given for meeting the fixed and working capital requirements.

In respect of loans granted to companies, the repayment or receipts are regular as per the stipulated schedule of repayment for principal and interest, except in case of AB Auto Brakes (P) Ltd., where an amount of INR 1.97 million is overdue for 151 days as on March 31, 2023.

Management has assessed that Cash and cash equivalents, Other balances with banks, Loans, Trade receivables, Other financial assets, Borrowings, Trade payables and Other financial liabilities carried at amortised cost approximate their carrying amounts largely due to the short-term maturities of these instrument.

41 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, short term investments and cash and cash equivalents that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

i. 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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at March 31, 2023 and March 31, 2022. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.

The analyse exclude the impact of movement in market variables on the carrying values of gratuity and other post retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2023 and March 31, 2022.

a. Interest rate risk

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 following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax and equity is affected through the impact on floating rate borrowings, as follows:

b. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency). As on March 31, 2023, the Company has following foreign currency exposures:

C. Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase and manufacture of automotive parts and therefore require a continuous supply of steel.

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions, other receivables and deposits, and other financial instruments.

a. Trade Receivable

The Company mainly sells to its related parties, OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31,2023, receivable from Company''s top 3 customers accounted for approximately 99% (March 31, 2022: 99%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis for major clients. Based on historical experience, the Company does not have any material bad debts. The Company does not hold collateral as security. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. Further, for movement in provision for doubtful receivables during the year refer note 10.

b. Financial instrument and cash deposit

Credit risk from balances with banks is managed by the Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.

iii. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that the funds are available for use as per the 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 by matching the maturity profiles of financial assets and liabilities. The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.

44 Other Statutory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the year.

(v) The Company have not advanced or loaned or invested funds to any other person or entity, including foreign entities (intermediaries) with the understanding that the 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

(vi) The Company have 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,

(vii) The Company has not entered into any such 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).

(viii) The Company is maintaining its books of account in electronic mode and these books of account are accessible in India at all times and the back-up of books of account has been kept in servers physically located in India on a daily basis from the applicability date of the Companies (Accounts) Rules, 2014, i.e. 5 August, 2022 onwards.

45 Transfer pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The Management is in the process of updating the transfer pricing documentation for the financial year 2022 - 2023 and is of the view that its transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

46 Events occurring after balance sheet

The Board of Directors have proposed dividend of INR 32 per share after the balance sheet date which is subject to approval by the shareholders at the annual general meeting.

47 Reclassifications

Certain amount in the Balance sheet as at year ended March 31, 2022 have been reclassified in order to conform to the presentation for the current year. These changes have been made to improve the quality of information presented. Such reclassification does not affect previously reported profit or total equity.

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Mar 31, 2022

Pursuant to an agreement between the Company and the Government of Madhya Pradesh (''Government''), on September 2012, the Company had taken a land on lease at Pithampur, Madhya Pradesh, for setting up a manufacturing unit and paid an upfront premium of INR 97 million (including a stamp duty of INR 20.24 million). The Company has applied to the Government for surrender of the land due to non-utilisation of the land. In accordance with the agreement, a surrender charge of 50% of upfront premium paid is applicable on surrender of the land.

During the previous year, the Company entered into another agreement with the Government for acquisition of another land for 99 years for a consideration of INR 124.86 million. As per the communication from the Government, the Company has remitted INR 88.81 million after adjusting INR 36.05 million pertaining to the amount recoverable on surrender of the existing leasehold land. During the previous year, the Company has provided for the initial registration and stamp duty charges, paid

towards acquisition of the land amounting to INR 20.24 million. Based on the outcome of final discussion with governmental authorities, the Company provided for the surrender charges of INR 37.69 million during the year ended March 31, 2021.

31 Disclosures in accordance with Guidance Note on Accounting for Expenditure on Corporate Social Responsibility ("CSR") Activities

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (''CSR'') committee has been formed by the Company. The primary function of the Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation and progress of the same from time to time. Gross amount required to be spent by the Company during the year was '' 18.74 Million (March 31, 2021: '' 24.98 Million). The expenses incurred and accrued towards CSR activities amounting to '' 19.24 Million (March 31, 2021: 7.99 INR Million) has been charged to the statement of profit and loss and is disclosed under other expenses.

33 Significant accounting judgements, estimates and assumptions

The preparation of the Company''s financial statements in conformity with Ind AS requires the management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses for the year reported. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and future periods are affected. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Other disclosures relating to the Company''s exposure to risks and uncertainties includes:

i) Capital

ii) Financial risk

iii) Senstivity

Judgements:

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Determining the lease term of contracts with renewal options - Company as lessee:

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has lease contracts that include extension options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew.

The Company has entered into a property lease. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, the present value of the minimum lease payments amounts to substantially all of the fair value of the property and accounted for the contracts as finance lease.

Estimates and assumptions:

Key source of estimation of uncertainty as at the date of financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of the following:

Defined benefit plans (gratuity benefits):

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. 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.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Provision for inventories:

Management reviews the aged inventory on a periodic basis. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete and slow-moving items. The management also evaluates on the usability of existing inventories as a result of technological and regulatory changes in the automotive sector if any and provides for the required allowances for slow moving/ non-moving and obsolete inventory. This review also involves comparison of the carrying value of the aged inventory item with the respective net realisable value. Management believes that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.

Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Provision for warranty:

Warranty estimates are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure.

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 borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

34 Segment reporting

The Company is predominantly engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment and is governed by similar set of risks and returns. The operations of the Company primarily cater to the market in India, which the management views as a single segment. The management monitors the operating results of its single segment for the purpose of making decisions about resource allocation and performance assessment.

One customer individually accounted for INR 11,490.15 million (March 31, 2021: INR 7,648.53 million) which is more than 10% of the total revenue of the Company for the year ended March 31, 2022.

The Company is domiciled in India. The Company''s revenue from operations from external customers primarily relate to operations in India and all the non-current assets of the Company are located in India.

35 Leasesa) Company as a lessee

i) The Company has entered into property leases consisting of the Company''s manufacturing facilities which includes land and buildings. These leases are for a period of five to ten years and lease of land is for 99 years with renewal option included in the contracts. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets.The Company also has certain leases with lease terms of 12 months or less. The Company applies the ''short-term lease'' recognition exemption for these leases.

The Company has entered into lease agreements with Meritor HVS India Limited (''MHVSIL'') and Meritor Commercial Vehicle Systems India Private Limited (''MCVSIPL'') to obtain a land on lease from MHVSIL and to construct a R&D test lab building (''R&D Building'') and lease it back to MCVSIPL for R&D activities. This lease have a term of 20 years. Since both of these lease contracts were entered with the related parties on the same date and negotiated as one lease, these leases are essentially treated as a single contract in substance, wherein, the Company is the lessor of R&D building and MCVSIPL is the lessee. The Company at the commencement of the agreement, recognised INR 111.13 million being the present value of net lease rent receivables. Net finance income on lease receivables recognised by the Company during the year is INR 9.73 million (March 31, 2021: INR 9.72 million).

36 Commitments and contingencies a) Capital commitments
	March 31, 2022	March 31, 2021
Estimated amount of contracts remaining to be executed on capital account and not provided for	22.70	63.64
b) Contingent liabilities
	March 31, 2022	March 31, 2021
Income tax demands under appeal	0.21	0.21

During the financial year 2020-21, the Company has received demand order from the Income tax authorities for the financial year 2017-18 towards the disallowance of deduction taken by the Company under section 80JJAA of Income tax act, 1961. The Company has filed an appeal against the disallowance with the Commissioner of Income tax (Appeals) on March 23, 2021. The Company based on its assessment believe that no further adjustment is required in the financial statements in the current year.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

38 Employee benefitsDefined contribution plans

A. Provident fund and employee state insurance scheme

The Company makes contributions to provident fund and employee state insurance scheme, which are defined contribution plan for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the salary to fund the benefits. The Company recognized INR 50.71 million (March 31, 2021: 44.32 million) for provident fund contributions and INR 5.39 million (March 31, 2021: INR 4.48 million) for employee state insurance scheme contribution in the statement of profit and loss.

B. Superannuation fund

Retirement benefits in the form of superannuation fund (being administered by LIC) are funded defined contribution schemes and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable. The contributions for the year ended March 31, 2022 is INR 6.42 million (March 31, 2021: INR 6.39 million).

Defined benefit plans

The Company has a defined benefit gratuity plan for its employees. 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 Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

* The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly, these are classified as level 3 fair value hierarchy.

** The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.

*** These investments are made in quoted mutual funds and accordingly classified as level 1 fair value hierarchy. These investments are carried at their fair value as at the year end.

# These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair value.

41 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, short term investments and cash and cash equivalents that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

i. 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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at March 31, 2022 and March 31, 2021. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.

The analysis exclude the impact of movement in market variables on the carrying values of gratuity and other post retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2022 and March 31, 2021.

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions, other receivables and deposits, and other financial instruments.

a. Trade Receivable

The Company mainly sells to its related parties, OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31,2022, receivable from Company''s top 3 customers accounted for approximately 99% (March 31, 2021: 93%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis for major clients. Based on historical experience, the Company does not have any material bad debts. The Company does not hold collateral as security. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. Further, for movement in provision for doubtful receivables during the year refer note 9.

b. Financial Instrument and Cash Deposit

Credit risk from balances with banks is managed by the Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.

The Company''s maximum exposure to credit risk for the component of balance sheet as at March 31, 2022 and March 31, 2021 is the carrying amounts of trade receivables as illustrated in note 8.

43 Transfer pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The management is in the process of updating the transfer pricing documentation for the financial year 2021 - 2022 and is of the view that its transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

44 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/ interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

46 Other Statutory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the period.

(iv) The Company have not advanced or loaned or invested funds to any other person or entity, including foreign entities (intermediaries) with the understanding that the 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

(v) The Company have 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,

(vi) The Company have not entered into any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the period 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).

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Mar 31, 2018

1. Corporate information

Automotive Axles Limited (“the Company”) is a joint venture of Kalyani Group and Meritor Inc., USA (formerly the automotive division of Rockwell International Corporation) incorporated in 1981. The Company is a public company domiciled in India. The registered office of the company is located at Hootagalli Industrial Area, Off Hunsur Road, Mysuru, Karnataka- 570018. The Company CIN is L51909KA1981PLC004198.

The Company is primarily engaged in manufacturing of Axles and Brakes at Mysuru, Rudrapur and Jamshedpur.

The financial statements were authorised for issue in accordance with a resolution of the Company’s Board of Directors on May 08, 2018.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).

For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended March 31, 2018 are the first the Company has prepared in accordance with Ind AS. Refer to note 39 and note 41 for information on first time adoption of Ind AS from April 01, 2016.

These financial statements have been prepared on a historical cost basis as explained in the accounting policies below, except for the following assets and liabilities which have been measured at fair value:

o Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)

The financial statements are presented in Indian Rupees (‘) and all values are rounded to the nearest million (Rs.000,000), except when otherwise indicated.

(a) Terms/right attached to equity shares

The Company has issued only one class of equity share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval by the shareholders at the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Details of dues to micro and small enterprises as defined under the MSMED Act, 2006

The Company has amounts due to Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at March 31, 2018, March 31, 2017 and April 01, 2016. The details in respect of such dues are as follows:

There are no Micro, Small and Medium Enterprises to whom the company owes dues which are outstanding for more than 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the company.

Sale of products includes excise duty collected from customers of Rs.341.76 (March 31, 2017 : Rs.1,296.65).

Sale of products net of excise duty is Rs.14,788.02 (March 31, 2017 : Rs.11,452.63).

The Government of India has implemented Goods and Service Tax (“GST”) from July 01, 2017 replacing Excise Duty, Service tax and various other indirect taxes. As per Ind AS 18, the revenue for the year ended March 31, 2018 is reported net of GST.

3.Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements in conformity with Ind AS requires the management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses for the year reported. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and future periods are affected. Key source of estimation of uncertainty as at the date of financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of the following:

Defined benefit plans (gratuity benefits):

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. 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 (refer note 35). The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Estimation of current tax expense and payable:

The Company’s tax jurisdiction is India. Significant judgments are involved in determining the provision for income taxes and tax credits including the amount expected to be paid or refunded. Also refer note 2.2(d), note 19 and note 20.

Provision for Inventories:

Management reviews the aged inventory on a periodic basis. This review involves comparison of the carrying value of the aged inventory item with the respective net realisable value. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete and slow-moving items. Management is satisfied that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.

Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Provision for warranty:

Warranty estimates are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure.

4. Segment reporting

The Company is predominately engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment and is governed by similar set of risks and returns. The operations of the Company primarily cater to the market in India, which the management views as a single segment. The management monitors the operating results of its single segment for the purpose of making decisions about resource allocation and performance assessment.

One customer individually accounted for Rs.12,379.21 (March 31, 2017: Rs.9,273.35) which is more than 10% of the total revenue of the Company for the year ended March 31, 2018.

The Company is domiciled in India. The Company’s revenue from operations from external customers primarily relate to operations in India and all the noncurrent assets of the Company are located in India.

5. Commitments and contingencies

a) Finance lease: Company as lessee

The Company has taken certain Computers & Data processing units under finance lease on non- cancellable basis. The minimum lease payments as per agreement is given below:

b) Operating lease: Company as a lessee

The Company has entered into property leases consisting of Company’s corporate office, a manufacturing facility, branch offices and certain equipments. These leases are for a period of one to five years with renewal option included in the contracts. Rent expense for such operating lease recognised in the statement of profit & loss is Rs.16.12 for the year ended March 31, 2018 (March 31, 2017 : Rs.15.95)

The future minimum lease payments under non-cancellable operating leases are as follows:

The above does not include leasehold land taken by the Company for 99 years for which the upfront lease premium has been paid in earlier years. (Refer note 6)

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: Nil, April 01, 2016: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

6. Employee benefits Defined contribution plans

The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs.45.95 (March 31, 2017: Rs.38.33) for Provident Fund contributions and Rs.9.62 (March 31, 2017: Rs.7.29) for Employee State Insurance scheme contribution in the statement of profit and loss.

Defined benefit plans

The Company has a defined benefit gratuity plan for its employees. 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 following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet.

The average duration of the defined benefit plan obligation at the end of the reporting period is 6.78 years (March 31, 2017: 7.25 years).

7. Fair values hierarchy

The carrying value of financial instruments by categories is as follows:

* The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly, these are classified as level 3 of fair value hierarchy.

** The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.

# These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair value.

8. Financial risk management objectives and policies

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

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

i. 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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at March 31, 2018 and March 31, 2017. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.

The analysis exclude the impact of movement in market variables on the carrying values of gratuity and other post retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018 and March 31, 2017.

a. Interest rate risk

I nterest 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 does not have any debt obligation, hence there is no interest rate risk.

b. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because in foreign exchange rates. The Company does not have material foreign currency transaction. Hence, it does not have any significant foreign currency risk.

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, other receivables and deposits, and other financial instruments.

a. Trade Receivable

The Company mainly sells to its related party and other marquee OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2018, receivable from Company’s top 3 customers accounted for approximately 92% (March 31, 2017: 96.27%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis for major clients. Based on historical experience, the Company does not have any material bad debts. The Company does not hold collateral as security. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 8. Further, for movement in provision for doubtful receivables during the year refer note 8.

b. Financial Instrument and Cash Deposit

Credit risk from balances with banks is managed by the Company in accordance with its policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.

The Company’s maximum exposure to credit risk for the component of balance sheet as at March 31, 2018 and March 31, 2017 is the carrying amounts as illustrated in Note 8.

9. Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents. The Company’s gearing ratio, which is net debt divided by total capital plus net debt is as below:

10. First time adoption of Ind AS

These financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with generally accepted accounting principle in India (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for period ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening statement of financial position was prepared as at April 01, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the statement of financial position as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017.

Exemptions applied

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS:

The Company has applied the following exemptions:

1 Deemed cost for property, plant and equipment and intangible assets: - The Company has elected to avail exemption under Ind AS 101 to use previous GAAP carrying value as deemed cost at the date of transition for all items of property, plant and equipment and intangible assets as per the financial statements prepared in accordance with previous GAAP

2 Embedded lease:- Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

11. Standards issued but not yet effective

The standards issued, but not yet effective up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards when they become effective.

i) Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was notified on March 28, 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after April 01, 2018. The Company will adopt the new standard on the required effective date using the modified retrospective method. The Company has established an implementation team to implement Ind AS 115 related to the recognition of revenue from contracts with customers and it continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary. A reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will only be possible once the implementation project has been completed. However, considering the nature of business of the Company, the impact is not likely to be material.

ii) Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix. The Appendix is effective for annual periods beginning on or after 1 April 2018. The Company’s operation primarily relate to operations in India. The directors of the Company do not anticipate that the application of the new standard in future will have significant impact on the financial statement.

C) Notes to reconciliation between previous GAAP and Ind AS

a. Fair valuation of security deposit

Under Ind AS interest free security deposits are carried at amortised cost by, discounting the same using interest rates applicable to the counter party. The difference between transaction cost and fair value is recognised as prepaid lease and amortised over the period of the lease on a straight-line basis. Further, interest income is recognised on the amortised cost of the security deposits over the lease period.

b. Employee benefits

Under previous GAAP actuarial gains and losses were recognized in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability/asset which is recognized in other comprehensive income in the respective periods.

c. Proposed dividend and dividend distribution tax thereon

Under Ind AS, liability for dividend is recognized in the period in which obligation to pay is established. Under previous GAAP, dividend payable is recorded as liability in the period to which the dividend relates, even though the dividend may be approved by the Board of Directors/Shareholders subsequent to the reporting date. This has resulted in an increase in equity of April 01, 2016

d. Effect of Income tax

Tax adjustments include deferred tax impact on account of differences between Ind AS and Previous GAAP This has resulted in change in equity and profit and loss.

e. Provision of warranty

The Company provides normal warranty provisions for general repairs for three years on all its products sold, in line with the industry practice. A liability is recognised at the time the product is sold - see Note 16 for more information. The Company does not provide any extended warranties or maintenance contracts to its customers.

f. Other comprehensive income

Under previous GAAP, the Company had not presented other comprehensive income separately. Hence, it has reconciled previous GAAP profit or loss to total comprehensive income as per Ind AS.

Statement of cash flows

The transition from previous GAAP to Ind AS did not have a material impact on statement of cash flows.

12. Transfer Pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The management is of the view that its transactions are at arm’s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

13. Events after reporting period

The Board of Directors recommended a final dividend of Rs.13.50 per equity share for the financial year ended March 31, 2018. The payment is subject to the approval of the shareholders in the ensuing Annual General Meeting of the Company. The final dividend declared in the previous year was Rs.8.00 per equity share.

14. Previous year figures

The comparative financial information of the Company for the transition date opening balance sheet as at April 01, 2016 and comparative period ended March 31, 2017 included in these Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by a firm of Chartered Accountants, other than S.R. Batliboi & Associates LLP

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Mar 31, 2017

1. CORPORATE INFORMATION

Automotive Axles Limited (AAL) is a joint venture of Kalyani Group and Meritor Inc., USA (formerly the automotive division of Rockwell International Corporation) incorporated in 1981 under the Companies Act, 1956 with manufacturing facilities located at Mysore, Rudrapur and Jamshedpur.

NOTE 2 SHARE CAPITAL

(i) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period

(ii) Details of shares held by each shareholder holding more than 5% shares:

(iii) Right, preferences and restrictions attached to shares

The Company has issued only one class of equity share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval by the shareholders at the ensuing Annual General Meeting.

NOTE 3. DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

There are no Micro, Small and Medium Enterprises to whom the company owes dues which are outstanding for more than 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the company. This has been relied upon by the auditors.

NOTE 4. FOREIGN EXCHANGE EXPOSURE :

There is no outstanding forward exchange contract as at 31st March 2017. Currency exposure as on 31st March 2017 that have not been hedged by a derivative instrument or otherwise are given below:

NOTE 5. EMPLOYEE BENEFITS: I Defined Contribution Plans:

During the year, the Company has recognized the following amount in the Statement of Profit and Loss

II Defined Benefit Plan : Contribution to Gratuity Fund:

In accordance with Accounting Standard 15 (Revised 2005) actuarial valuation as on March 31st, 2017 was carried out in respect of the defined benefit plan of Gratuity based on the following assumptions.

NOTE 6. SEGMENT REPORTING

The company is predominately engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment. The company has no export sales or limited export sales, as such there are no reportable geographical segments. Hence the segment information as per Accounting Standard -17 “Segment reporting” is not disclosed.

NOTE 7. DEFERRED TAX

a) The net deferred tax liability comprises the tax impact arising from timing differences on account of:

b) Transfer Pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The management is of the view that its transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. The Payment of Bonus Act has been amended with retrospective effect from April1, 2014, to enhance the, eligibility limit for payment of bonus to employees from Rs.10,000 to Rs.21,000 per month, and the wage ceiling from Rs.3,500 to Rs.7,000 per month or the minimum wage for the scheduled employment, as fixed by the Government, whichever is higher. However the Company has created the liability only for FY 2015-16 and not for FY 2014-15. The additional liability for FY 2014-15 amounts to Rs.11.52 Million.

9. Disclosures in accordance with Guidance Note on Accounting for Expenditure on Corporate Social Responsibility Activities

10. Disclosure of Specified Bank Notes(SBN) held and transacted during the period from 08th November 2016 to 30th December 2016 provided in the below table

11. The Board of Directors recommended a final dividend of Rs.8.00 per equity share for the financial year ended March 31, 2017. The payment is subject to the approval of the shareholders in the ensuing Annual General Meeting of the Company. The final dividend declared in the previous year was Rs.5.50 per equity share.

12. Previous year’s figures have been regrouped or reclassified wherever necessary to correspond to the current year’s grouping/ classification and disclosure.

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Mar 31, 2016

(i) Right, preferences and restrictions attached to shares

The Company has issued only one class of equity share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval by the shareholders at the ensuing Annual General Meeting.

Details of security provided for long term borrowings:

(a) The loan is secured by first pari-passu charge on all existing and future fixed assets excluding the Land and existing Building (both movable and immovable) of the Borrower, to be shared with existing term lenders. Mortgage by way of first pari-passu charge on the immovable properties being building (funded out of term loan) to be situated at Hootagalli Industrial Area, Mysuru. Repayable in 6 quarterly installments along with interest ranging from 10.95% to 1 1.25%

(b) The loan is secured by hypothecation of first pari-passu charge on all movable and immovable plant and machinery of the company both present and future. Repayable in 2 quarterly installments along with interest ranging from 10.95% to 1 1.50 %

(c) The unsecured finance lease is repayable in 8 quarterly installments along with interest ranging from 10% to 12%

Details of security provided for long term borrowings:

(a) The loan is secured by first pari-passu charge on all existing and future fixed assets excluding the Land and existing Building (both movable and immovable) of the Borrower, to be shared with existing term lenders. Mortgage by way of first pari-passu charge on the immovable properties being building (funded out of term loan) to be situated at Hootagalli Industrial Area, Mysuru. Repayable in 6 quarterly installments along with interest ranging from 10.95% to 1 1.25%

(b) The loan is secured by hypothecation of first pari-passu charge on all movable and immovable plant and machinery of the company both present and future. Repayable in 2 quarterly installments along with interest ranging from 1 0.95% to 1 1.50 %

(c) The unsecured finance lease is repayable in 8 quarterly installments along with interest ranging from 10% to 12%

NOTE 1. DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

There are no Micro, Small and Medium Enterprises to whom the company owes dues which are outstanding for more than 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the company. This has been relied upon by the auditors.

The estimated rate escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

Note: The details with respect to investment by the fund manager (Life Insurance Corporation of India) in to major category of plan assets have not been disclosed, in absence of such information.

NOTE 2. SEGMENT REPORTING

The company is predominately engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment. The company has no export sales or limited export sales, as such there are no reportable geographical segments. Hence the segment information as per Accounting Standard -17 "Segment reporting" is not disclosed.

NOTE 3. RELATED PARTY TRANSACTIONS : a. List of Related Parties and Relationships

Relationship Related Parties

(i) Entity having substantial Influence Meritor Heavy Vehicle System LLC, USA

Meritor Inc., Troy

BF Investments Ltd- Pune

(ii) Other Related Parties with whom the

Company had transactions :

Enterprises under Common Control / Meritor HVS (S) Pte Ltd, Singapore

Enterprises over which Key Arvin Meritor, Brazil

Management Personnel have Arvin Meritor, Sweden

significant influence Meritor Heavy Vehicle Systems LLC, Maxtown

Meritor HVS Cameri Spa, Italy

Meritor Automotive Inc, Fletcher, USA

Meritor Automotive Inc., Ohio

Meritor LLC, Florance

Xuzhou Meritor Axle Co.Ltd., China

Meritor HVS (India) Limited, Mysuru

Fonderie Venissieux Sas

Meritor Hvbs Cwmbran

Sistemas Automotrices

Meritor Commercial Vehicle Systems (India) Pvt Ltd

Meritor do Brasil Sistemas Automotivos LTDA

Bharat Forge Limited, Pune

Dr. N. Muthukumar President & Whole Time Director

Mr. S. RamkumarChief Financial Officer & Company Secretary

1. Related Party relationships are as identified by the Company on the basis of information available with them and accepted by the auditors.

2. The above amounts exclude reimbursement of expenses.

3. No amount is/has been written off or written back during the year in respect of debts due from or to related party except as disclosed above.

4. Figures in brackets relate to the previous year.

b) Transfer Pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1 961. The management is of the view that its transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

NOTE 4.(b) The Payment of Bonus Act has been amended with retrospective effect from 1st April 2014, to enhance the, eligibility limit for payment of bonus to employees from Rs, 1 0,000 to Rs, 21,000 per month, and the wage ceiling from Rs, 3,500 to Rs, 7,000 per month or the minimum wage for the scheduled employment, as fixed by the Government, whichever is higher. However the Company has created the liability only for FY 201 5-1 6 and not for FY 201 4-1 5. The additional liability for FY 2014-1 5 amounts toRs, 1 1.52 Million.

NOTE 5. Disclosures in accordance with Guidance Note on Accounting for Expenditure on Corporate Social Responsibility Activities

NOTE 6. During the year, pursuant to Schedule II to the Companies Act, 2013 with effect from 1st April 2015, the Company has carried out componentization of fixed assets. The depreciation expense in the Statement of Profit and Loss for the year is higher by Rs, 20.05 Millions consequent to the componentization of fixed assets.

NOTE 7. Current year figures represent operations for 12 months i.e. 1st April 2015 to 31st March 2016, while the previous period figures represents operations for 6 months starting 1 st October 201 4 to 31 st March 201 5 and hence are not comparable. Previous period figures have been regrouped or reclassified wherever necessary to correspond to the current year''s grouping/ classification and disclosure.

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Sep 30, 2014

1. Disclosures required under Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006

There are no Micro, Small and Medium Enterprises to whom the Company owes dues which are outstanding for more than 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small Enterprises determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the auditors.

2. Foreign exchange exposure :

There is no outstanding forward exchange contract as at 30th September,2014. Currency exposure as on 30th September, 2014 that have not been hedged by a derivative instrument or otherwise are given below:

3. Employee benefits:

I) Defined Contribution Plans:

During the year, the Company has recognised the following amount in the Statement of Profit and Loss

II) Defined Benefit Plan

Contribution to Gratuity Fund:

In accordance with Accounting Standard 15 (Revised 2005) actuarial valuation as on 30th September, 2014 was carried out in respect of the defined benefit plan of Gratuity based on the following assumptions.

Note: The details with respect to investment by the fund manager (Life Insurance Corporation of India) in to major category of plan assets have not been disclosed, in absence of such information.

Expected payment / contribution within next one year '' 8,744,437/-

The estimated rate escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

(i) Entity having substantial Influence

Meritor Heavy Vehicle System LLC., USA Meritor Inc.,

BF Investments Ltd- Pune

(ii) Other Related Parties with whom the Company had transactions : -

Enterprises under Common Control / Arvin Meritor Brazil Enterprises over which Key Arvin Meritor Sweden

Management Personnel have Bharat Forge Limited

significant influence Ege Fren As Turkey

Meritor Italy Meritor York

Meritor Automotive Inc Heath -Ohio

Meritor HVS LLC - Maxtown Meritor HVS -Nc Fletcher

Meritor Heavy Vehicle Systems LLC

Meritor Hvbs Cwmbran Meritor HVS LLC

Morristown Meritor HVS (India) Limited - Mysuru

Meritor HVS (India) Limited - Pune Meritor LLC Florence

Key Management Personnel

Dr. B. N. Kalyani Chairman (Non-retiring) Senior Vice President & Whole time Mr. N. Muthukumar Director

1. Related Party relationships are as identified by the Company on the basis of information available with them and accepted by the auditors.

2. The above amounts exclude reimbursement of expenses.

3. No amount is/has been written off or written back during the year in respect of debts due from or to related party except as disclosed above.

4. Figures in brackets relate to the previous year.

4. Finance Lease

The Company has taken certain vehicles and office equipments under finance lease on non- cancelable basis. The minimum lease payments under agreement is given below:

b) Transfer Pricing

The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The management is of the view that its transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

5. Contingent Liability

Particulars 2013-14 2012-13 Contingent liabilities

a) Amount payable to sales tax - 636,000 authorities

b) Excise matters under appeal

The Company has won the case at Commissioner of Central excise 1,802,810 - appeals) however the department has appealed against this order with Customs, Excise and Service tax Appellate Tribunal.

6. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Sep 30, 2013

1. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

There are no Micro, Small and Medium enterprises to whom the Company owes dues which are outstanding for more than 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the auditors.

2. Segment Reporting

The Company is predominately engaged in the business of manufacturing and sale of automotive components, which constitutes a single business segment. The Company has no export sales or limited export sales, as such there are no reportable geographic segments. Hence the segment information as per Accounting Standard -17 "Segment reporting" is not disclosed.

3. Contingent Liability

Sl. Particulars 2012-13 2011-12 No.

a) Contingent liabilities 636,000 -

Amount payable to sales tax authorities

4. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Sep 30, 2012

1. CORPORATE INFORMATION

Automotive Axles Limited (AAL) is a joint venture of Kalyani Group and Meritor Inc., USA (formerly the automotive division of Rockwell International Corporation) incorporated in 1981 under the Companies Act, 1956 with manufacturing facilities located at Mysore, Noida and Rudrapur.

(i) Right, preferences and restrictions attached to shares

The Company has issued only one class of equity share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval by the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the equity shareholders are entitled to receive only residual assets of the Company

(i) The loan is secured by first pari-passu charge on all existing and future fixed assets excluding the Land and existing Building (both movable and immovable) of the Borrower, to be shared with existing term lenders. Mortgage by way of first pari-passu charge on the immovable properties being building (funded out of term loan) to be situated at Hootagalli Industrial Area, Mysore. Repayable in equal quarterly installments along with interest ranging from 12.75% to 13.5% .

(ii) The loan is secured by hypothecation of first pari-passu charge on all movable and immovable plant and machinery of the Company both present and future. Repayable in equal quarterly installments along with interest ranging from 11.5% to 12% .

(iii) The loan is secured by hypothecation of first pari-passu charge on all movable and immovable assets of the wind mill project at Jadeshwar site in Rajkot District, Gujarat (excluding the land which is being leased by Govt. of Gujarat). The entire recievables of the project and escrow with axis bank designated account of the receivables from the sale of power generated. Repayable in equal quarterly installments starting from July 2013. Intererst payable monthly ranging from 12.5% to 13%

The finance lease is secured by first pari-passu charge on leased vehicle. Repayable in equal monthly installments along with interest ranging from 13% to 14.60%.

The unsecured finance lease is repayable in equal quarterly installments alongwith interest ranging from 10% to 12%

The unsecured term loan repayable in equal quarterly installments along with interest at LIBOR 0.65%.

The above working capital borrowings are secured by first pari-passu charge on inventory, spares, packing material, receivables and the entire other current assets of the Company (both existing and future) and second pari-passu charge on entire gross block of fixed assets including capital work in progress of the Company

2. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

There are no Micro, Small and Medium enterprises to whom the Company owes dues which are outstanding for more 45 days from the due date at the balance sheet date. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the auditors.

3. Segment Reporting

Hitherto, the Company''s primary reporting segment was based on geographies. The Company has changed its segment reporting from the current year to report by business segments to correspond with the way in which the Company now manages its business. The activities of the Company are classified into a single segment of ''Automotive Components''

1. Related Party relationships are as identified by the Company on the basis of information available with them and accepted by the auditors.

2. The above amounts exclude reimbursement of expenses.

3. No amount is/has been written off or written back during the year in respect of debts due from or to related party

4. Figures in brackets relate to the previous year.

4. Operating Lease

Operating lease expenses debited to the Statement of Profit and Loss during the year is Rs. 1,860,694/- (Rs. 2,142,579/-). There is no contingent rent.

(b) Transfer Pricing : The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act, 1961. The management is of the view that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

5. Contingent Liability

Company has certain labour disputes which are pending adjudication. The liability that may arise on account of these disputes cannot be reasonably estimated but is not expected to be material.

6. The revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Sep 30, 2010

Warranty expenses are provided for in the year of sale based on technical estimates. In addition, specific provision is also made against customer claims for manufacturing defects, where necessary, even though the same may pertain to prior years.

1. The Company has identified its primary segment as geographical, i.e., domestic and exports. Export Markets have been considered together as the product sold to these markets have comparable risks and rewards.

2. Sales for Exports represent export sales channelised through Meritor HVS (India) Limited and includes DEPB.

3. There are no Inter-segment Transactions during the year (Previous year None).

4. Fixed Assets of the Company have not been identified to the segments as they are common to the segments. Depreciation has been allocated to segments based on standard rates determined by the Company.

5. Secondary Segment disclosures have not been furnished as there is only a Single Business Segment.

6. Figures in brackets relate to the previous year.

7. Related party transactions :

a. List of Related Parties and Relationships

Relationship Related Parties

(i) Controlling Enterprises Meritor Heavy Vehicle System LLC., USA Arvin Meritor Inc.,

(ii) Other related parties with whom the Company had transactions : -

Enterprises under Common Control Bharat Forge Limited

Kalyani Forge Limited

Meritor HVS Cameri, SPA, Italy.

Meritor HVS India Ltd

Meritor HVS, Florence

Meritor Automotive Inc, Fletcher, USA

Meritor Automotive Inc, Ohio, USA

Meritor HVS, Sweden.

Meritor Automotive

Export Ltd., UK Arvin

Meritor China (Wuxi)

TRW Automotive U.S. LLC, USA

Meritor Heavy Vehicle, Australia

Arvin Meritor, Brazil

Arvin Meritor

Frankfort, USA

Arvin Meritor Inc., Maxton, USA

Meritor Automotive Export, South Wales NP

TRW Commercial Sterring

Key Management Personnel Dr. B.N. Kalyani Chairman (Non-retiring) Mr. Ashok Rao President and Wholetime Director

Mr. C. K. Sabareeshan Chief Financial Officer & Company Secretary

1. Related Party relationships are as identified by the Company on the basis of information available with them and accepted by the auditors.

2. The above amounts exclude reimbursement of expenses.

3. No amount is/has been written off or written back during the year in respect of debts due from or to related party.

4. Transactions reported above reflects, relationship with the parties from the date such relationship came into effect and hence the current year figures may not be comparable to the previous years figures.

5. Figures in brackets relate to the previous year.

8. Taxation

a) The net deferred tax liability comprises the tax impact arising from timing differences on account of :

2009-10 2008-09

Depreciation & Amortisation 438,460,140 560,945,436

Provision for employee benefits & others (30,989,400) (144,056,198)

407,470,740 416,889,238

Net deferred tax liability relating to the above 135,350,652 141,700,652

(b) Transfer Pricing: The Company maintains the information and documents as required under the transfer pricing regulations under Section 92-92F of the Income Tax Act 1961. The management is of the view that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation

9. Contingent Liability :

a) Company has certain labour disputes which are pending adjudication. The liability that may arise on account of these

disputes cannot be reasonably estimated but is not expected to be material.

b) Other claims against the company not acknowledged as debt for Rs.Nil (Previous year Rs.Nil).

c) Company has discounted endorsed customer bills with its bankers which are with recourse and the liability that may rise on account of the same is to the extent of Rs.Nil (Previous Year Rs.172 million).

10. The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 and that given in Current Liabilities - Schedule 10 regarding Micro and Small enterprises determined to the extent such parties have been identified on the basis of the information available with the company. This has been relied upon by the auditors.

11. Foreign Exchange Exposure:

(a) The company has entered into the following hedging mechanism:

(i) Forward Exchange Contracts, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(ii) There is no outstanding Forward Exchange Contract as on 30th September, 2010:

12. Previous years figures have been regrouped/reclassified wherever necessary. Signatures to Schedule 1 to 18.