Notes to Accounts of India Nippon Electricals Ltd.

Mar 31, 2025

2.11 Provisions and contingent liabilities:

i) Provisions:

A provision is recorded when the Company has a
present legal or constructive obligation as a result
of past events, it is probable that an outflow of
resources will be required to settle the obligation
and the amount can be reasonably estimated.
The estimated liability for product warranties
is recorded when products are sold based on
technical evaluation.

Provisions are measured at the present value of
management''s best estimate of the expenditure
required to settle the present obligation at the end
of the reporting period. The discount rate used to
determine the present value is a pre-tax rate that
reflects current market assessments of the time
value of money and the risks specific to the liability.
The increase in the provision due to the passage
of time is recognised as finance cost.

ii) Contingent liabilities:

Wherever there is a possible obligation that
arises from past events and whose existence
will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events
not wholly within the control of the entity or a
present obligation that arises from past events
but is not recognised because (a) it is not probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation;

or (b) the amount of the obligation cannot be
measured with sufficient reliability. The Company
does not recognise a contingent liability but
discloses its existence in Financial Statements.

2.12 Cash and Cash equivalents:

Cash and cash equivalents comprise cash on hand
and demand deposits, together with other short-term,
highly liquid investments maturing within 3 months
from the date of acquisition that are readily convertible
into known amounts of cash and which are subject to
an insignificant risk of changes in value.

2.13 Cash flow statement

Cash flows are reported using the indirect method,
whereby profit / (loss) before exceptional items and tax
is adjusted for the effects of transactions of non-cash
nature and any deferrals or accruals of past or future
receipts or payments. In the cash flow statement, cash
and cash equivalents includes cash in hand, cheques
on hand, balances with banks in current accounts and
other shortterm highly liquid investments with original
maturities of 3 months or less, as applicable.

2.14 Earnings per share

Basic earnings per equity share is calculated by dividing
the total profit for the period attributable to equity
shareholders (after deducting attributable taxes) by the
weighted average number of equity shares outstanding
during the period. The weighted average number of
equity shares outstanding during the period is adjusted
for events including a bonus issue, bonus element in
a rights issue to existing shareholders, share split and
reverse share split (consolidation of shares). In this
scenario, the number of equity shares outstanding
increases without an increase in resources due to
which the number of equity shares outstanding before
the event is adjusted for the proportionate change in
the number of equity shares outstanding as if the event
had occurred at the beginning of the earliest period
reported.

2.15 Leases:

The Company''s lease asset classes primarily consist of
leases for land and buildings. The Company assesses
whether a contract contains a lease, at inception of
a contract. A contract is, or contains, a lease if the

contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the
Company assesses whether: (i) the contract involves
the use of an identified asset (ii) the Company has
substantially all of the economic benefits from use of
the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.

At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and
low value leases. For these short-term and low value
leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the
term of the lease.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country
of domicile of these leases. Lease liabilities are re¬
measured with a corresponding adjustment to the
related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a
termination option.

Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.

Amendment to Ind AS H6 - Leases:

On 9^th September, 2024, the Ministry of Corporate
Affairs notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024. The
amendments to Ind AS 116 clarifies the requirements
that a seller-lessee uses in measuring the lease
liability arising in a sale and leaseback transaction,
to ensure the seller-lessee does not recognise any
amount of the gain or loss that relates to the right of
use it retains. The amendment is intended to improve
the requirements for sale and leaseback transactions
in Ind AS 116 and will not change the accounting for
leases unrelated to sale and leaseback transactions.
These amendments are effective for annual reporting
periods beginning on or after 1^st April, 2024, and are
to be applied retrospectively, with earlier application
permitted. The adoption of these amendments to Ind
AS 116 did not have any impact on the Standalone
Financial Statements of the Company.

2.16 Financial instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets
other than equity instruments are classified into
categories: financial assets at fair value through profit
or loss and at amortised cost. Financial assets that are
equity instruments are classified as fair value through
profit or loss or fair value through other comprehensive
income. Financial liabilities are classified into financial
liabilities at fair value through profit or loss or amortised
cost. Financial instruments are recognised on the

balance sheet when the Company becomes a party to
the contractual provisions of the instrument.

At Initial recognition, the Company measures a
financial asset at its fair value plus (in the case of a
financial asset not at fair value through profit or loss)
transaction cost that are directly attributable to the
acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or
loss are expensed in profit or loss. Purchases or sales
of financial assets that require delivery of assets within
a time frame established by regulation or convention in
the market place (regular way trades) are recognised on
the trade date, i.e., the date that the Company commits
to purchase or sell the asset.

i) Classification and subsequent measurement of
financial assets

For the purpose of subsequent measurement
financial assets are classified and measured
based on the entity’s business model for managing
the financial asset and the contractual cash flow
characteristics of the financial asset at:

a) Amortised cost

b) Fair value through other comprehensive
income (FVOCI) or

c) Fair value through profit and loss (FVTPL)"

All financial assets are reviewed for impairment
at least at each reporting date to identify whether
there is any objective evidence that a financial
asset or a group of financial assets is impaired.
Different criteria to determine impairment are
applied for each category of financial assets,
which are described below.

a) Financial asset at amortised cost

Assets that are held for collection of
contractual cash flows where those cash
flows represent solely payments of principal
and interest are measured at amortised cost.
These assets are measured subsequently at
amortised cost using the effective interest
method. The loss allowance at each reporting
period is evaluated based on the expected
credit losses for next 12 months and credit
risk exposure. The Company shall also

measure the loss allowance for a financial
instrument at an amount equal to the lifetime
expected credit losses if the credit risk on
that financial instrument has increased
significantly since initial recognition.

b) Financial asset at fair value through other
comprehensive income (FVOCI)

Assets that are held within a business
model where the objective is both collecting
contractual cash flows and selling financial
assets along with the contractual terms
giving rise on specified dates to cash flows
that are solely payments of principal and
interest in the principal amount outstanding.
At initial recognition, the Company, based
on its assessment, makes an irrevocable
election to present in other comprehensive
income the changes in the fair value of an
investment in an equity instrument that is
not held for trading. These selections are
made on an instrument-by-instrument
(i.e., share-by-share) basis. If the Company
decides to classify an equity instrument as
at FVOCI, then all fair value changes on the
instrument, excluding dividends, impairment
gains or losses and foreign exchange
gains and losses, are recognised in other
comprehensive income. There is no recycling
of the amounts from OCI to profit or loss,
even on sale of investment. The dividends
from such instruments are recognised in
statement of profit and loss.

The fair value of financial assets in this
category are determined by reference
to active market transactions or using a
valuation technique where no active market
exists.

The loss allowance at each reporting period
is evaluated based on the expected credit
losses for next 12 months and credit risk
exposure. The Company shall also measure
the loss allowance for a financial instrument
at an amount equal to the lifetime expected
credit losses if the credit risk on that financial
instrument has increased significantly since

initial recognition. The loss allowance shall be
recognised in other comprehensive income
and shall not reduce the carrying amount of
the financial asset in the balance sheet.

c) Financial asset at fair value through profit
and loss (FVTPL)

Financial assets at FVTPL include financial
assets that are designated at FVTPL upon
initial recognition and financial assets that
are not measured at amortised cost or at fair
value through other comprehensive income.
All derivative financial instruments fall into
this category, except for those designated
and effective as hedging instruments, for
which the hedge accounting requirements
apply. Assets in this category are measured
at fair value with gains or losses recognised
in profit or loss. The fair value of financial
assets in this category are determined by
reference to active market transactions or
using a valuation technique where no active
market exists.

The loss allowance at each reporting period
is evaluated based on the expected credit
losses for next 12 months and credit risk
exposure. The Company shall also measure
the loss allowance for a financial instrument
at an amount equal to the lifetime expected
credit losses if the credit risk on that financial
instrument has increased significantly since
initial recognition. The loss allowance shall
be recognised in profit and loss.

d) De-recognition of financial assets

A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognized
(i.e. removed from the Company’s standalone
balance sheet) when:

a. The rights to receive cash flows from
the asset have expired, or

b. The Company has transferred its rights
to receive cash flows from the asset
or has assumed an obligation to pay
the received cash flows in full without

material delay to a third party under
a ''pass-through’ arrangement; and
either (i) the Company has transferred
substantially all the risks and rewards of
the asset, or (ii) the Company has neither
transferred nor retained substantially all
the risks and rewards of the asset, but
has transferred control of the asset.

When the Company has transferred its
rights to receive cash flows from an
asset or has entered into a passthrough
arrangement, it evaluates if and to
what extent it has retained the risks
and rewards of ownership. When it
has neither transferred nor retained
substantially all of the risks and rewards
of the asset, nor transferred control of
the asset, the Company continues to
recognise the transferred asset to the
extent of the Company’s continuing
involvement. In that case, the Company
also recognizes an associated liability.
The transferred asset and the associated
liability are measured on a basis that
reflects the rights and obligations that
the Company has retained.

Continuing involvement that takes the
form of a guarantee over the transferred
asset is measured at the lower of
the original carrying amount of the
asset and the maximum amount of
consideration that the Company could
be required to repay

ii) Financial liabilities

a) Initial recognition and measurement

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge,
as appropriate. All financial liabilities are
recognised initially at fair value and, in the
case of loans and borrowings and payables,
net of directly attributable transaction costs.

The Company’s financial liabilities include
trade and other payables

b) Subsequent measurement

The measurement of financial liabilities
depends on their classification, as described
below:

Financial liabilities at fair value through
profit or loss

Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are incurred for
the purpose of repurchasing in the near
term. This category also includes derivative
financial instruments entered into by the
Company that are not designated as hedging
instruments in hedge relationships as
defined by Ind AS 109 Financial Instruments

Gains or losses on liabilities held for trading
are recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated as such at the initial
date of recognition, and only if the criteria
in Ind AS 109 are satisfied. For liabilities
designated as FVTPL, fair value gains/ losses
attributable to changes in own credit risk are
recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However,
the Company may transfer the cumulative
gain or loss within equity. All other changes
in fair value of such liability are recognised in
the statement of profit or loss. The Company
has not designated any financial liability as at
fair value through profit and loss.

De-recognition of financial liabilities

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.

Equity instruments

Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issuance of new ordinary shares and share
options and buyback of ordinary shares are
recognised as a deduction from equity, net of
any tax effects.

Offsetting of financial instruments

Financial assets and financial liabilities
are offset and the net amount is reported
in the balance sheet if there is a currently
enforceable legal right to offset the
recognised amounts and there is an intention
to settle on a net basis, to realise the assets
and settle the liabilities simultaneously

Fair value of financial instruments

In determining the fair value of its financial
instruments, the Company uses a variety of
methods and assumptions that are based
on market conditions and risks existing at
each reporting date. The methods used to
determine fair value include discounted cash
flow analysis, available quoted market prices,
and dealer quotes. All methods of assessing
fair value result in general approximation of
value, and such value may never actually be
realized. For financial assets and liabilities
maturing within one year from the Balance
sheet date and which are not carried at fair
value, the carrying amounts approximate
fair value due to the short maturity of these
instruments

c) Fair value measurement

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 the 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.

A fair value measurement of a non¬
financial asset takes into account a market
participant''s ability to generate economic
benefits by using the asset in its highest and
best use or by selling it to another market
participant that would use the asset in its
highest and best use.

The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the use of
relevant observable inputs and minimizing
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:

Levell 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities

Levell 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities

Level 3 - Inputs for the assets and liabilities
that are not based on observable market
data (unobservable inputs)

d) Impairment of financial assets

In accordance with Ind AS 109 Financial
Instruments, the Company applies expected
credit loss (ECL) model and specific
identification method based on the credit
risk for measurement and recognition of
impairment loss for financial assets.

The Company tracks credit risk and changes
thereon for each customer. For recognition
of impairment loss on other financial assets
and risk exposure, the Company determines
that whether there has been a significant
increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to
provide for impairment loss, except for trade
receivables.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the
cash flows that the entity expects to receive
(i.e., all cash shortfalls), discounted at the
original EIR. When estimating the cash flows,
an entity is required to consider

- All contractual terms of the financial
instrument over the expected life of
the financial instrument. However, in
rare cases when the expected life of
the financial instrument cannot be
estimated reliably, then the entity uses
the remaining contractual term of the
financial instrument.

- Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms.

The Company uses default rate for credit risk
to determine impairment loss allowance on
portfolio of its trade receivables

Trade receivables

The Company applies approach permitted
by Ind AS 109 Financial Instruments,
which requires expected lifetime losses to
be recognised from initial recognition of

receivables. Default is considered to exist
when the counter party fails to make the
contractual payment within 90 days of
when they fall due. A trade receivable is
considered to be credit impaired when the
management considers the amount to be
non recoverable.

Other financial assets

For recognition of impairment loss on other
financial assets and risk exposure, the
Company determines whether there has
been a significant increase in the credit risk
since initial recognition and if credit risk has
increased significantly, impairment loss is
provided.

The amount of expected credit losses
(or reversal) that is required to adjust the
loss allowance at the reporting date to the
amount that is required to be recognized is
recognized as an impairment gain or loss in
the Statement of Profit and Loss.

e) Impairment of non-financial assets

For impairment assessment purposes,
assets are grouped at the lowest levels for
which there are largely independent cash
inflows (cash-generating units). As a result,
some assets are tested individually for
impairment and some are tested at cash¬
generating unit level.

An impairment loss is recognised for the
amount by which the asset’s (or cash¬
generating unit’s) carrying amount exceeds
its recoverable amount, which is the higher
of fair value less costs of disposal and
value in-use. To determine the value-in-use,
management estimates expected future
cash flows from each cash generating unit
and determines a suitable discount rate in
order to calculate the present value of those
cash flows. The data used for impairment

testing procedures are directly linked to the
Company’s latest approved budget, adjusted
as necessary to exclude the effects of future
reorganisations and asset enhancements.
Discount factors are determined individually
for each cashgenerating unit and reflect
current market assessments of the time
value of money and asset specific risk
factors.

All assets are subsequently reassessed
for indications that an impairment loss
previously recognised may no longer exist.
An impairment loss is reversed if the asset’s
or cashgenerating unit’s recoverable amount
exceeds its carrying amount.

2.17 Government grants

Government grants are not recognised until there is
reasonable assurance that the Company will comply
with the conditions attaching to them and that the
grants will be received.

| Segment information

Operating segments are reported in a manner
consistent with the internal reporting provided to the
Chief operating decision maker. The Managing Director
of the Company has been identified as being the chief
operating decision maker.

In accordance with Ind AS 108, Operating Segments,
the Company has identified manufacture and sale of
Ignition Systems for auto industry with special focus
on two-wheeler and support with the collaborators, the
Company has a developed research and development
centre recognised by DSIR, Government of India. As per
Ind AS 108 Operating Segments, the Chief Operating
Decision Maker (CODM) evaluates the Company’s
performance and allocates resources based on an
analysis of various performance indicators by business
segments. Accordingly, the Company has identified
only one segment as reportable segment for the year
ended 31^st March, 2025 and 31^st March, 2024.

General Reserve:

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose. As the
general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive
income, items included in the general reserve will not be reclassified subsequently to profit or loss.

Retained Earnings:

The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the separate
financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts
reported above are not distributable in entirety.

Reserve for equity instruments through other comprehensive income:

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

9| Employee benefits

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a
lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount on the
respective employee''s salary and the tenure of employment with the Company. The employee benefits notified under section
133 of the Companies Act, 2013 are given below:

a) Defined contribution plan:

i) Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions
along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the
employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by
Government of India equal to a specified percentage of the covered employee''s salary.

ii) Superannuation fund

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate
contributions along with interest theron are paid at retirement, death, incapacitation or termination of employment.
The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance
Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance
Corporation of India as the balance sheet date, based upon which, the Company contributes all the ascertained
liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

b) Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the
unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or
termination of employment for the unutilized accrued compensated absence for a maximum of 52 days (up to the age of
50) and 90 days (age beyond 50). The Company records an obligation for compensated absences in the period in which
employees render services that increase this entitlement. The Company measures the expected cost of compensated
absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has
accumulated at the balance sheet date. The liability has been actuarially determined and accounted in the books.

c) Defined benefit Plan:

Gratuity:

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount
calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit
vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on
termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company
provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India
(LIC).

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and
salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is
determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep
market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans,
investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and
Asset Backed, Trust Structured securities as per notification of Ministry of Finance.

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

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

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

i) The Company has received a favourable order from Gurugram District court in respect of a claim for compensation for
a land acquired from the Company in 2010 to the extent of '' 445 Lakhs plus interest as specified in the order. The
Company’s execution petition is in the process of being heard and concluded. The said compensation will be accounted
on conclusion of the matter.

ii) The Company has received an eligibility letter during the year on 24^th March, 2025, as per which the Company is entitled
to receipt of capital subsidy for investments from SIPCOT. As per the eligibility letter, the Company has to enter into the

Fair value measurements
(i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are classified into
three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to
the measurements:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable

a) Level 1: level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed
equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock
exchanges is valued using the closing price as at the reporting period

b) Level 2: level 2 hierarchy includes mutual funds. The mutual funds are valued using the closing NAV provided by
the fund management Company at the end of each reporting year.

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

d) The investments in unlisted equity instruments are not held for trading. Instead, they are held for medium or
long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these
investments in equity instruments as at FVTOCI as the directors believe that this provides a more meaningful
presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately
in profit or loss.

e) The Company has invested in the energy generating companies as per the regulation of Electricity Act. Although
the investments are classified as "Equity" shares, as per IND AS 32 -"Financial Instruments, Presentation" the
definition of "equity" requires an entitlement in the residual interest in net assets whereas the Company as per
share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the
above as per IND AS 32, since the regulation of Electricity Act does not permit distribution in any other manner.
IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be
valued at "Fair Value Through Other Comprehensive Income" if elected initially or valued at "Fair Value Through
Profit and Loss Account". However, on account of what is stated in the previous paragraph, these shares are
shown at cost and the fair value is deemed to be the cost.

f) The Company has invested in the equity shares of Lucas TVS Limited. This investment is considered to be a
level 3 fair valuation. Valuation technique used - Market Approach: Comparable companies Method ("CCM")
(EV/EBITDA Multiple i.e. Enterprise Value/Earnings Before Interest Tax Depreciation and Amortization multiple).

g) Significant unobservable inputs - EV/EBITDA Multiple at 8x (Previous Year - EV/EBITDA Multiple at 9x)

Relationship of Unobservable Inputs to Fair Value - A slight increase or decrease in the multiple will result in
an increase or decrease in the fair value. A decrease in the multiple by 0.5x would result in a decrease in the
fair value by '' 1,350 Lakhs and an increase in the multiple by 0.5x would result in a increase in the fair value by
'' 1,350 Lakhs .

h) The Company has not disclosed the fair values for loans, cash and bank balances, trade receivables, other
financial assets, trade payables, and other financial liabilities because their carrying amounts are a reasonable
approximation to the fair value.

i) There have been no transfers between levels 1 and 2 during the year.

] Financial risk management
Financial Risk Management Framework

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

Risk Exposures and Responses

The Company is exposed to market risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company’s
senior management oversees the management of these risks. The Company’s senior management assesses the financial risks
and the appropriate financial risk governance framework in accordance with the Company’s policies and risk objectives. The
Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

i) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company has adopted policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts
with entities that are rated the equivalent of investment grade and above. The Company uses other publicly available
financial information and its own trading records to rate its major customers. The Company’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread
amongst approved counterparties.

Trade receivables consist of a four to five major OEMs and large number of small customers, spread across diverse
industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
At 31^st March, 2025, the Company did not consider there to be any significant concentration of credit risk which had not
been adequately provided for. The carrying amount of the financial assets recorded in the financial statements represents
the maximum exposure to credit risk.

Other financial assets mainly comprises of rental deposits, security deposits and loans which are given to landlords or
other governmental agencies in relation to contracts executed and related parties are assessed by the Company for credit
risk on a continuous basis.

ii) 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 prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.

Interest rate risk

The Company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk rate is
perceived.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because
of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e.
imports of materials, recognised assets and liabilities denominated in a currency that is not the Company’s functional
currency. The Company has not entered into any derivative contracts to hedge its foreign currency exposure during the
reporting period.

Commodity Risk

The Company has commodity price risk, primarily related to the purchases of Steel, Aluminium and Copper. However, the
Company do not bear significant exposure to earnings risk, as such changes are included in the rate-recovery mechanisms
with the customers.

iii) Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from
operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is
sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

] Additional regulatory information as required by Schedule III to the Companies Act, 2013

a) The Company does not have any benami property, where any proceeding has been initiated or pending against the
Company for holding any benami property.

b) The Company did not have any transactions with companies struck off.

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

d) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(intermediaries) with the understanding that the intermediary shall:

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

(i) 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

(ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries,

g) The Company does not have any transaction which is not recorded in the books of account 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).

h) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.

i) The Company does not have any scheme of arrangements which have been approved by the competent authority in terms
of sections 230 to 237 of the Act.

j) The Company has complied with the number of layers prescribed under of Section 2(87) of the Act read with the Companies
(Restriction on number of Layers) Rules, 2017.

k) The Company has no borrowings, accordingly no return is required to be furnished on periodical basis to banks, financial
institutions or others.

Audit Trial:

The Company has deployed various accounting software for maintaining its books of account for the year ended 31^st March,
2025, which have 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 was not enabled at the database level to log any
direct data changes with respect to Payroll software.. This has not resulted in any impact on the operating effectiveness of
the Company’s internal financial controls. Adequate alternate control exists to ensure that the internal financial controls over
financial reporting have operated effectively throughout the financial year. The audit trail that was enabled and operated for
the year ended 31^st March, 2024, has been preserved by the Company as per the statutory requirements for record retention.

] Material reclassification:

Pursuant to the opinion issued by the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India in
February 2025, the Company has reclassified employee-related payables pertaining to the previous year, amounting to '' 788
Lakhs, from ''Trade Payables’ to ''Other Financial Liabilities’ to ensure alignment with the presentation requirements under Ind
AS and Schedule III to the Companies Act, 2013.

J Particulars of Loans, Guarantees or Investments covered under Section 186(4) of the Companies Act, 2013 :

(i) Advances in the nature of loans given to Companies as at 31^st March, 2025: '' Nil (As at 31^st March, 2024: '' Nil)

(ii) Details of investments made under Section 186 of the Companies Act, 2013 are disclosed in Note 8. There are no loans/
guarantees issued under Section 186 of the Companies Act, 2013 read with rules issued thereunder.

] Approval of Financial Statements

The Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed
that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised
in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets
in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial
statements at its meeting held on 30^th May, 2025.

J Events after the reporting period

No adjusting or significant non-adjusting events have occurred since the reporting date.

For and on behalf of the Board of Directors of
India Nippon Electricals Limited

CIN: L31901TN1984PLC011021

T K Balaji Arvind Balaji

Chairman Managing Director

DIN:00002010 DIN:00557711

Elango Srinivasan S Logitha

Chief Financial Officer Company Secretary

Place: Chennai
Date: 30^th May, 2025

---

Mar 31, 2024

2.11 Provisions and contingent liabilities:

i) Provisions:

A provision is recorded when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. The estimated liability for product warranties is recorded when products are sold based on technical evaluation.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as finance cost.

ii) Contingent liabilities:

Wherever there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognise a contingent liability but discloses its existence in Financial Statements.

2.12 Cash and Cash equivalents:

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 3 months from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2.13 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future receipts or payments. In the cash flow statement, cash and cash equivalents includes cash in hand, cheques on hand, balances with banks in current accounts and other shortterm highly liquid investments with original maturities of 3 months or less, as applicable.

2.14 Earnings per share

Basic earnings per equity share is calculated by dividing the total profit for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). In this scenario, the number of equity shares outstanding increases without an increase in resources due to which the number of equity shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

2.15 Leases:

The Company’s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is

determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.16 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets other than equity instruments are classified into categories: financial assets at fair value through profit or loss and at amortized cost. Financial assets that are equity instruments are classified as fair value through profit or loss or fair value through other comprehensive income. Financial liabilities are classified into financial liabilities at fair value through profit or loss or amortized cost. Financial instruments are recognized on the balance sheet when the Company becomes a party to the contractual provisions of the instrument.

At Initial recognition, the Company measures a financial asset at its fair value plus (in the case of a financial asset not at fair value through profit or loss) transaction cost that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

i) Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement financial assets are classified and measured based on the entity’s business model for managing the financial asset and the contractual cash flow characteristics of the financial asset at:

a) Amortized cost

b) Fair value through other comprehensive income (FVOCI) or

c) Fair value through profit and loss (FVTPL)

All financial assets are reviewed for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.

a) Financial asset at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. These assets are measured subsequently at amortized cost using the effective interest method. The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition.

b) Financial asset at fair value through other comprehensive income (FVOCI)

Assets that are held within a business model where the objective is both collecting contractual cash flows and selling financial assets along with the contractual terms giving rise on specified dates to cash flows that are solely payments of principal and interest in the principal amount outstanding.

At initial recognition, the Company, based on its assessment, makes an irrevocable election to present in other comprehensive income the changes in the fair value of an investment in an equity instrument that is not held for trading. These selections are made on an instrument-by-instrument (i.e., share-by-share) basis. If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, impairment gains or losses and foreign exchange gains and losses, are recognized in other comprehensive income. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. The dividends from such instruments are recognized in statement of profit and loss.

The fair value of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying amount of the financial asset in the balance sheet.

c) Financial asset at fair value through profit and loss (FVTPL)

Financial assets at FVTPL include financial assets that are designated at FVTPL upon initial recognition and financial assets that are not measured at amortized cost or at fair value through other comprehensive income. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for

which the hedge accounting requirements apply. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair value of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The loss allowance shall be recognized in profit and loss

d) De-recognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company’s standalone balance sheet) when:

a. The rights to receive cash flows from the asset have expired, or

b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through’ arrangement; and either (i) the Company has transferred substantially all the risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained

substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay

ii) Financial liabilities

a) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables

b) Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative

financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109 Financial Instruments

Gains or losses on liabilities held for trading are recognized in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss

De-recognition of financial liabilities

A financial liability is derecognized 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 recognized in the Statement of Profit and Loss.

Equity instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buyback of ordinary shares are recognized as a deduction from equity, net of any tax effects.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously

Fair value of financial instruments

In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices, and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments

c) Fair value measurement

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 the 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.

A fair value measurement of a nonfinancial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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:

Levell 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Levell 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 3 - Inputs for the assets and liabilities that are not based on observable market data (unobservable inputs)

d) Impairment of financial assets

In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model and specific identification method based on the credit risk for measurement and recognition of impairment loss for financial assets.

The Company tracks credit risk and changes thereon for each customer. For recognition of impairment loss on other financial assets and risk exposure, the Company determines

that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss, except for trade receivables.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider

- All contractual terms of the financial instrument over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity uses the remaining contractual term of the financial instrument.

- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

The Company uses default rate for credit risk to determine impairment loss allowance on portfolio of its trade receivables

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables. Default is considered to exist when the counter party fails to make the contractual payment within 90 days of when they fall due. A trade receivable is considered to be credit impaired when the management considers the amount to be non recoverable.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk

since initial recognition and if credit risk has increased significantly, impairment loss is provided.

The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss.

Impairment of non-financial assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cashgenerating unit level.

An impairment loss is recognized for the amount by which the asset’s (or cashgenerating unit’s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value in-use. To determine the value-in-use, management estimates expected future cash flows from each cash generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Company’s latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cashgenerating unit and reflect current market assessments of the time value of money and asset specific risk factors.

All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the asset’s or cashgenerating unit’s recoverable amount exceeds its carrying amount.

2.17 Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief operating decision maker. The Managing Director of the Company has been identified as being the chief operating decision maker.

3. Application of new accounting pronouncements

The company has applied the following Ind AS pronouncements pursuant to issuance of the Companies (Indian Accounting Standards) Amendment Rules, 2023 with effect from April 1,2023. The effect is described as below:

Ind AS 1 - Presentation of Financial Statements - The amendment requires disclosure of material accounting policies instead of significant accounting policies. In the Standalone financial statements the disclosure of accounting policies has been accordingly modified. The impact of such modifications to the accounting policies is insignificant

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - The amendment has defined accounting estimate as well as laid down the treatment of accounting estimate to achieve the objective set out by accounting policy. There is no impact of the amendment on the Standalone Financial Statements.

Ind AS 12 - Income Taxes - the definition of deferred tax asset and deferred tax liability is amended to apply initial recognition exception on assets and liabilities that does not give rise to equal taxable and deductible temporary differences. There is no impact of the amendment on the Standalone Financial Statements.

c) Segment information

In accordance with Ind AS 108, Operating Segments, the Company has identified manufacture and sale of Ignition Systems for auto industry with special focus on two-wheeler and support with the collaborators, the Company has a developed research and development centre recognized by DSIR, Government of India. As per Ind AS 108 Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, the Company has identified only one segment as reportable segment for the year ended 31^st March, 2024 and 31^st March, 2023.

d) Geographical information

The Company is domiciled in India. The amount of its revenue from external customers and non-current assets other than financial instruments, and deferred tax assets, broken down by location of the assets, is shown below:

a) Defined contribution plan:

i) Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

ii) Superannuation fund

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions along with interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the Company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

iii) Employee State Insurance Benefits

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Employee State Insurance, which is defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue.

b) Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 52 days (up to the age of 50) and 90 days (age beyond 50). The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially determined and accounted in the books.

Gratuity:

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC).

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans, investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and Asset Backed, Trust Structured securities as per notification of Ministry of Finance.

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

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

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

In respect of the above plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at 31^st March, 2024 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Notes:

a) Level 1: level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period

b) Level 2: level 2 hierarchy includes mutual funds. The mutual funds are valued using the closing NAV provided by the fund management Company at the end of each reporting year.

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

d) The investments in equity instruments are not held for trading. Instead, they are held for medium or long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the directors believe that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.

e) The Company has invested in the energy generating companies as per the regulation of Electricity Act. Although the investments are classified as "Equity" shares, as per IND AS 32 -"Financial Instruments, Presentation" the definition of "equity" requires an entitlement in the residual interest in net assets whereas the Company as per share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the above as per IND AS 32, since the regulation of Electricity Act does not permit distribution in any other manner. IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be valued at "Fair Value Through Other Comprehensive Income" if elected initially or valued at "Fair Value Through Profit and Loss Account". However, on account of what is stated in the previous paragraph, these shares are shown at cost and the fair value is deemed to be the cost. Accordingly, investment in IRIS Ecopower is considered to be a Level 3 fair valuation.

f) The Company has invested in the equity shares of Lucas TVS Limited. This investment is considered to be a level 3 fair valuation. Valuation technique used - Market Approach: Comparable companies Method ("CCM") (EV/EBITDA Multiple i.e. Enterprise Value/Earnings Before Interest Tax Depreciation and Amortization multiple).

g) Significant unobservable inputs - EV/EBITDA Multiple at 9x

Relationship of Unobservable Inputs to Fair Value - A slight increase or decrease in the multiple will result in an increase or decrease in the fair value. A decrease in the multiple by 0.5x would result in a decrease in the fair value by '' 1,058 Lakhs and an increase in the multiple by 0.5x would result in a increase in the fair value by '' 1,058 Lakhs

h) The Company has not disclosed the fair values for loans, cash and bank balances, trade receivables, other financial assets, trade payables, and other financial liabilities because their carrying amounts are a reasonable approximation to the fair value.

i) There have been no transfers between levels 1 and 2 during the year.

46 Financial risk management a Financial Risk Management Framework

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

Risk Exposures and Responses

The Company is exposed to market risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management assesses the financial risks and the appropriate financial risk governance framework in accordance with the Company’s policies and risk objectives. The Board of Directors review and agree on policies for managing each of these risks, which are summarized below.

i) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. The Company uses other publicly available financial information and its own trading records to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a four to five major OEMs and large number of small customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. At 31st March, 2024, the Company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk.

Other financial assets mainly comprises of rental deposits, security deposits and loans which are given to landlords or other governmental agencies in relation to contracts executed and related parties are assessed by the Company for credit risk on a continuous basis.

ii) 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 prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.

Interest rate risk

The Company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk is perceived.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e. imports of materials, recognized assets and liabilities denominated in a currency that is not the Company’s functional currency. The Company has not entered into any derivative contracts to hedge its foreign currency exposure during the reporting period.

Commodity Risk

The Company has commodity price risk, primarily related to the purchases of Steel, Aluminium and Copper. However, the Company do not bear significant exposure to earnings risk, as such changes are included in the rate-recovery mechanisms with the customers.

iii. Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

47 Additional regulatory information as required by Schedule III to the Companies Act, 2013

a) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

b) The Company did not have any transactions with companies struck off.

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

d) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

(i) 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

(ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries,

g) The Company does not have any transaction which is not recorded in the books of account 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).

h) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.

i) The Company does not have any scheme of arrangements which have been approved by the competent authority in terms of sections 230 to 237 of the Act.

j) The Company has complied with the number of layers prescribed under of Section 2(87) of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

k) The Company has no borrowings, accordingly no return is required to be furnished on periodical basis to banks, financial institutions or others.

48 Audit Trial:

The Company has deployed various accounting software for maintaining its books of account for the year ended March 31,2024, which have 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 was not enabled a) for certain master tables in the Company’s ERP relating to sales, procurement, production, treasury and financial reporting business processes b) at the database level to log any direct data changes. This has not resulted in any impact on the operating effectiveness of the Company’s internal financial controls.Adequate alternate control exists to ensure that the internal financial controls over financial reporting have operated effectively throughout the financial year.

49 Particulars of Loans, Guarantees or Investments covered under Section 186(4) of the Companies Act, 2013 :

(i) Advances in the nature of loans given to Companies as at Mar 31,2024: '' Nil (As at Mar 31,2023: '' Nil)

(ii) Details of investments made under Section 186 of the Companies Act, 2013 are disclosed in Note 8. There are no loans/guarantees issued under Section 186 of the Companies Act, 2013 read with rules issued thereunder.

51 Approval of Financial Statements

In connection with the preparation of the standalone financial statements for the year ended 31^st March, 2024, the Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels of authorization and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements at its meeting held on 30^th May, 2024. The shareholders of the Company have the rights to amend the Financial Statements in the ensuing Annual general meeting post issuance of the same by the Board of directors.

52 Events after the reporting period

No adjusting or significant non-adjusting events have occurred since the reporting date other than those disclosed.

For and on behalf of the Board of Directors of India Nippon Electricals Limited

CIN: L31901TN1984PLC011021

T K Balaji Arvind Balaji

Chairman Managing Director

DIN:00002010 DIN:00557711

Elango Srinivasan S Logitha

Chief Financial Officer Company Secretary

Place: Chennai Date: 30^th May, 2024

---

Mar 31, 2023

2.11 Provisions and contingent liabilities:

i) Provisions:

A provision is recorded when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. The estimated liability for product warranties is recorded when products are sold based on technical evaluation.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as finance cost.

ii) Contingent liabilities:

Wherever there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in Financial Statements.

2.12 Cash and Cash equivalents:

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 3 months from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2.13 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future receipts or payments. In the cash flow statement, cash and cash equivalents includes cash in hand, cheques on hand, balances with banks in current accounts and other shortterm highly liquid investments with original maturities of 3 months or less, as applicable.

2.14 Earnings per share

Basic earnings per equity share is calculated by dividing the total profit for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). In this scenario, the number of equity shares outstanding increases without an increase in resources due to which the number of equity shares outstanding before the event is adjusted for the proportionate change in

the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

2.15 Leases:

The Company''s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment

testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.16 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets other than equity instruments are classified into categories: financial assets at fair value through profit or loss and at amortized cost. Financial assets that are equity instruments are classified as fair value through profit or loss or fair value through other comprehensive income. Financial liabilities are classified into financial liabilities at fair value through profit or loss or amortized cost. Financial instruments are recognized on the balance sheet when the Company becomes a party to the contractual provisions of the instrument.

At Initial recognition, the Company measures a financial asset at its fair value plus (in the case of a financial asset not at fair value through profit or loss) transaction cost that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

i) Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement financial assets are classified and measured based on the entity''s business model for managing the financial asset and the contractual cash flow characteristics of the financial asset at:

a) Amortised cost

b) Fair value through other comprehensive income (FVOCI) or

c) Fair value through profit and loss (FVTPL)

All financial assets are reviewed for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.

a) Financial asset at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. These assets are measured subsequently at amortized cost using the effective interest method. The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition.

b) Financial asset at fair value through other comprehensive income (FVOCI)

Assets that are held within a business model where the objective is both collecting contractual cash flows and selling financial assets along with the contractual terms giving rise on specified dates to cash flows that are solely payments of principal and interest in the principal amount outstanding. At initial recognition, the Company, based

on its assessment, makes an irrevocable election to present in other comprehensive income the changes in the fair value of an investment in an equity instrument that is not held for trading. These selections are made on an instrument-by-instrument (i.e., share-by-share) basis. If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, impairment gains or losses and foreign exchange gains and losses, are recognized in other comprehensive income. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. The dividends from such instruments are recognized in statement of profit and loss.

The fair value of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying amount of the financial asset in the balance sheet.

c) Financial asset at fair value through profit and loss (FVTPL)

Financial assets at FVTPL include financial assets that are designated at FVTPL upon initial recognition and financial assets that are not measured at amortized cost or at fair value through other comprehensive income. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. Assets in this category are measured

at fair value with gains or losses recognized in profit or loss. The fair value of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

The loss allowance at each reporting period is evaluated based on the expected credit losses for next 12 months and credit risk exposure. The Company shall also measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The loss allowance shall be recognized in profit and loss

d) De-recognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s standalone balance sheet) when:

a. The rights to receive cash flows from the asset have expired, or

b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (i) the Company has transferred substantially all the risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize

the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay

ii) Financial liabilities

a) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company''s financial liabilities include trade and other payables

b) Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109 Financial Instruments

Gains or losses on liabilities held for trading are recognized in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss

De-recognition of financial liabilities

A financial liability is derecognized 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 recognized in the Statement of Profit and Loss.

Equity instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buyback of ordinary shares are recognized as a deduction from equity, net of any tax effects.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously

Fair value of financial instruments

In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analyzis, available quoted market prices, and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments

c) Fair value measurement

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 the 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.

A fair value measurement of a nonfinancial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market

participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing 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:

Levell 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Levell 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 3 - Inputs for the assets and liabilities that are not based on observable market data (unobservable inputs)

d) Impairment of financial assets

In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model and specific identification method based on the credit risk for measurement and recognition of impairment loss for financial assets.

The Company tracks credit risk and changes thereon for each customer. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss, except for trade receivables.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider

- All contractual terms of the financial instrument over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity uses the remaining contractual term of the financial instrument.

-Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

The Company uses default rate for credit risk to determine impairment loss allowance on portfolio of its trade receivables

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables. Default is cosidered to exist when the counter party fails to make the contractual payment within 90 days of when they fall due. A trade receivable is considered to be credit impaired when the management considers the amount to be non recoverable.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.

The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss.

Impairment of non-financial assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for

impairment and some are tested at cashgenerating unit level.

An impairment loss is recognized for the amount by which the asset''s (or cashgenerating unit''s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and valuein-use. To determine the value-in-use, management estimates expected future cash flows from each cashgenerating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Company''s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cashgenerating unit and reflect current market assessments of the time value of money and assetspecific risk factors.

All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the asset''s or cashgenerating unit''s recoverable amount exceeds its carrying amount.

2.17 Segment information

In accordance with Ind AS 108, Operating Segments, the Company has identified manufacture and sale of Ignition Systems for auto industry with special focus on two-wheeler and support with the collaborators, the Company has a developed research and development centre recognized by DSIR, Government of India. As per Ind AS 108 Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analyzis of various performance indicators by business segments. Accordingly, the Company has identified only one segment as reportable segment for the year ended 31^st March, 2023 and 31^st March, 2022.

3 Recent accounting pronouncements and other Latest regulatory updates

Ministry of Corporate Affairs ("MCA”) notifies new standard or amendments to the existing standards

under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31^st March, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendments Rules, 2023, applicable from 01 April, 2023, as below:

Ind AS 1 - Presentation of financial statements

The ammendments specify that Companies should now disclose material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements.

Ind AS 8 - Accounting policies, change in accounting estimates and errors

Definition of ''change in account estimate has been replaced by revised definition of ''accounting estimate''.

• As per revised definition, accounting estimates are monetary amounts in the financial statements that are subject to measurement uncertainty.

• A company develops an accounting estimate to achieve the objective set out by an accounting policy.

• Accounting estimates include:

a) Selection of a measurement technique (estimation or valuation technique)

b) Selecting the inputs to be used when applying the chosen measurement technique.

Ind AS 12 - Income taxes

The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The Company does not expect any of the aforesaid amendments to have any significant impact in its standalone financial statements.

General Reserve:

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

Retained Earnings:

The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the separate financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety.

Reserve for equity instruments through other comprehensive income:

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

a) Disaggregation of revenue information

The table below presents disaggregated revenues from contracts with customer which is recognized based on goods transferred at a point of time by geography and offerings of the Company. As per the management, the below disaggregation best depicts the nature, amount, timing and uncertainty of how revenues and cash flows are affected by industry, market and other economic factors.

c) Segment information

In accordance with Ind AS 108, Operating Segments, the Company has identified manufacture and sale of Ignition Systems for auto industry with special focus on two-wheeler and support with the collaborators, the Company has a developed research and development centre recognized by DSIR, Government of India. As per Ind AS 108 Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analyzis of various performance indicators by business segments. Accordingly, the Company has identified only one segment as reportable segment for the year ended 31^st March, 2023 and 31^st March, 2022.

d) Geographical information

The Company is domiciled in India.The amount of its revenue from external customers and non-current assets other than financial instruments,and deferred tax assets, broken down by location of the assets, is shown below:

e) Information about major customers

Revenue from operations include revenue from major customer group contributing individually to more than 10% of the Company''s total revenue from operations as given below. There is no other single customer who contributed more than 10% to the Company''s revenue for the respective years.

39. Employee benefits

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount on the respective employee''s salary and the tenure of employment with the Company. The employee benefits notified under section 133 of the companies act are given below:

a) Defined contribution plan:

i) Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

ii) Superannuation fund

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the Company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

b) Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

c) Defined benefit Plan:

Gratuity:

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC).

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans, investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and Asset Backed, Trust Structured securities as per notification of Ministry of Finance.

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

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

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

Fair value measurements (i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are classified into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurements:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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

Notes:

a) Level 1: level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period

b) Level 2: level 2 hierarchy includes mutual funds. The mutual funds are valued using the closing NAV provided by the fund management Company at the end of each reporting year.

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

d) The investments in equity instruments are not held for trading. Instead, they are held for medium or long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the directors believe that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.

e) The Company has invested in the energy generating companies as per the regulation of Electricity Act. Although the investments are classified as "Equity" shares, as per IND AS 32 -"Financial Instruments, Presentation" the definition of "equity" requires an entitlement in the residual interest in net assets whereas the Company as per share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the above as per IND AS 32, since the regulation of Electricity Act does not permit description in any other manner. IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be valued at "Fair Value Through Other Comprehensive Income" if elected initially or valued at "Fair Value Through Profit and Loss Account". However, on account of what is stated in the previous paragraph, these shares are shown at cost and the fair value is deemed to be the cost. Accordingly, investment in IRIS Ecopower is considered to be a Level 3 fair valuation.

f) The Company has invested in the equity shares of Lucas TVS Limited. This investment is considered to be a level 3 fair valuation. Valuation technique used - Market Approach: Comparable companies Method ("CCM”) (EV/EBITDA Multiple i.e. Enterprise Value/Earnings Before Interest Tax Depreciation and Amortization multiple).

g) Significant unobservable inputs - EV/EBITDA Multiple at 8x

Relationship of Unobservable Inputs to Fair Value - A slight increase or decrease in the multiple will result in an increase or decrease in the fair value. A decrease in the multiple by 0.5x would result in a decrease in the fair value by '' 946.51 Lakhs and an increase in the multiple by 0.8x would result in a increase in the fair value by '' 946.51 Lakhs .

h) The Company has not disclosed the fair values for loans, cash and bank balances, trade receivables, other financial assets, trade payables, and other financial liabilities because their carrying amounts are a reasonable approximation to the fair value.

i) There have been no transfers between levels 1 and 2 during the year.

46. Financial risk management a Financial Risk Management Framework

Company''s principal financial liabilities comprise trade payables and Other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Investments, Trade receivables, loans, cash and bank balances and other financial assets that derive directly from its operations

Risk Exposures and Responses

The Company is exposed to market risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management assesses the financial risks and the appropriate financial risk governance framework in accordance with the Company''s policies and risk objectives. The Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

i) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. The Company uses other publicly available financial information and its own trading records to rate its major customers. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a four to five major OEMs and large number of small customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

At 31^st March, 2023, the Company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk.

Other financial assets mainly comprises of rental deposits, security deposits and loans which are given to landlords or other governmental agencies in relation to contracts executed and related parties are assessed by the Company for credit risk on a continuous basis.

ii) 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 prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.

Interest rate risk

The Company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk is perceived.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e. imports of materials, recognized assets and liabilities denominated in a currency that is not the Company''s functional currency.

47. Additional regulatory information as required by Schedule III to the Companies Act, 2013

a) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

b) The Company did not have any transactions with companies struck off.

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

The Company has not traded or invested in crypto currency or virtual currency during the financial year.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

(i) 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

(ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries,

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

h) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.

i) The Company does not have any scheme of arrangements which have been approved by the competent authority in terms of sections 230 to 237 of the Act.

j) The Company has complied with the number of layers prescribed under of Section 2(87) of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

k) The Company has no borrowings, accordingly no returns required to furnished on periodical basis to banks, financial institutions or others.

48. Transfer pricing

As per the Transfer pricing norms introduced in India with effect from 1^st April, 2001, the Company is required to use certain specific methods in computing arm''s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Transfer pricing study for the financial year ended 31^st March, 2023 has been completed the outcome of the study will not have material impact on the Company''s results.

48. Approval of Financial Statements

In connection with the preparation of the standalone financial statements for the year ended 31^st March, 2023, the Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels of authorisation and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements at its meeting held on 26^th May, 2023. The shareholders of the Company have the rights to amend the Financial Statements in the ensuing Annual general meeting post issuance of the same by the Board of directors.

49. Events after the reporting period

No adjusting or significant non-adjusting events have occurred since the reporting date other than those disclosed.

In terms of our report attached

For Deloitte Haskins & Sells LLP For and on behalf of the Board of Directors

Chartered Accountants India Nippon Electricals Limited

Firm''s Registration No. 11736W/W-100018 CIN: L31901TN1984PLC011021

Ananthi Amarnath T K Balaji Arvind Balaji

Partner Chairman Managing Director

Membership No. 209252 DIN:00002010 DIN:00557711

Elango Srinivasan Logitha

Chief Financial Officer Company Secretary

Place : Chennai Place : Chennai

Date : 26^th May, 2023 Date : 26^th May, 2023

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Mar 31, 2018

1) Company overview and significant Accounting Policies:

India Nippon Electricals Ltd. (“the Company”) is a public limited company incorporated and domiciled in India and has its registered office at No.11 & 13, Patullos Road, Chennai-600 002, Tamilnadu, India.

The shares of the Company are listed on the BSE Limited and National Stock Exchange of India Ltd.

The Company is a leading manufacturer of Electronic Ignition Systems for auto industry with special focus on two-wheeler industry in technical collaboration with Mahle Electric Drives Japan Corporation, Japan. In addition to the support from the collaborators, the Company has a developed Research & Development centre recognised by DSIR,Govt of India. The Company has four manufacturing facilities in India and it is also exporting volumes.

2) Basis of preparation of Financial Statements:

The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention under accrual basis of accounting except for certain financial assets and liabilities (as per the accounting policy below), which have been measured at fair value, the provisions of The Companies Act, 2013 (The Act) and where applicable, the guidelines issued by the Securities and Exchange Board of India (SEBI). The IND AS.s are notified under Section 133 of theAct, Companies (Indian Accounting Standards) Rules, 2015, and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Use of estimates:

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future period.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.

The areas involving critical estimates or judgments are:

i) Estimation of fair value of unlisted securities - The fair value of unlisted securities is determined using the valuation techniques. The company uses its judgement to select the methods and make assumptions at end of each reporting period. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

ii) Defined benefit obligation - The cost of the defined benefit plans and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. 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, etc. 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 Balance Sheet date.

iii) Impairment testing - Property, plant and equipment and Intangible assets are tested for impairment when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The recoverable amount of cash generating units is higher of value-in-use and fair value less cost to sell. The calculation involves use of significant estimates and assumptions which includes turnover and earnings multiples, growth rates and net margins used to calculate projected future cash flows, risk-adjusted discount rate, future economic and market conditions.

iv) Estimation and evaluation of provisions and contingencies relating to tax litigation - Provision for tax liabilities require judgements on the interpretation of tax legislation, developments in case law and the potential outcomes of tax audits and appeals which may be subject to significant uncertainty. Therefore the actual results may vary from expectations resulting in adjustments to provisions, the valuation of deferred tax assets, cash tax settlements and therefore the tax charge in the statement of profit or loss.

v) Estimation Warranty claims - Provision is made for estimated warranty claims in respect of product sold which are still under warranty at the end of the reporting period. The claims are expected to be settled in the next financial year. The company estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from the historical amounts.

Standards issued but not yet effective:

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.

Ind AS 115- Revenue from Contract with Customers: On 28 March 2018, the Ministry of Corporate Affairs (MCA), notified Ind AS 115, Revenue from Contracts with Customers, as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. The new standard is based on IFRS 15, Revenue from Contracts with Customers. The standard is effective for the accounting periods commencing on or after 1 April 2018.

I nd AS 115 replaces Ind AS 11 Construction contracts and Ind AS 18 Revenue. The core principle of Ind AS 115 is that an entity recognises revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework:

- I dentify the contract(s) with a customer - assess whether the contract is within the scope of Ind AS 115. ‘Customer’ has now been defined.

- I dentify the performance obligations in the contract - determine whether the goods and services in a contract are distinct.

- Determine the transaction price - transaction price will include fixed, variable and non cash considerations.

- Allocate the transaction price to the performance obligations in the contract - allocation based on a stand-alone selling price basis using acceptable methods.

- Recognise revenue when (or as) the entity satisfies a performance obligation - i.e. recognise revenue at a point in time or over a period of time based on performance obligations.

The Company is currently evaluating the requirements of the standards, and the transition effects on the financial statements.

The average credit period on sale of goods is 45 days. No interest is charged on overdue trade receivables. Out of total trade receivables as at 31 March 2018, Rs. 8,211.47 lacs (previous year Rs. 5702.15 lacs) represent receivable from customers who represent more that 5 % of total receivables.

The company’s receivables are predominantly from its related parties and large Original Equipment Manufacturers. The Company has never experienced doubtful debts in earlier years, therefore, there is no credit risk and thus no allowance for expected credit losses have been made. Also refer Note 38 (a) (i) to the standalone financial statements for the year ended March 31, 2018.

* The shareholders had approved the sub-division of the company’s equity shares of face value of Rs. 10 each to two equity shares of face value of Rs. 5 each through postal ballot on 8th March 2018. Accordingly, as per requirements of Ind AS 33, earnings per share has been computed by taking the Increased number of shares for all the periods reported. e Rights attached to equity shares: The Company has only one class of equity shares having par value of Re.5 per share ( March 31, 2017 - Rs. 10/-). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

During the year ended March 31, 2018, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 6/- (March 31, 2017: Rs.10/-). Also Refer Note 42.

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 payments.The distribution will be in proportion to the number of equity shares held by the shareholders.

3 EMPLOYEE BENEFITS:

The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount on the respective employee’s salary and the tenure of employment with the company. The employee benefits notified under section 133 of the companies act are given below:

a) Defined Contribution Plan:

i) Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee’s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee’s salary.

ii) Superannuation Fund:

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India’s Employees Superannuation Fund.

The Company recognised Rs.212.35 Lacs (LY-217.80 Lacs) for Provident Fund and superannuation fund contribution in the statement of profit and loss.

iii) Employee State Insurance Benefits:

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Employee State Insurance, which is defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Employee state Insurance for the year aggregated to Rs. 13.11 lacs (March 31, 2017: Rs. 12.23 lacs) and is included in “Staff Welfare Expenses”.

b) Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

c) Defined benefit Plan:

Gratuity:

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC).

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans, investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and Asset Backed, Trust Structured securities as per notification of Ministry of Finance.

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

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

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

I n respect of the above plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at 31 March 2018 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

4 THE FOLLOWING TABLE SET OUT THE STATUS OF THE GRATUITY PLAN AND THE AMOUNT RECOGNISED IN THE COMPANY’S FINANCIAL STATEMENT AS AT MARCH 31, 2018 AND MARCH 31, 2017

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.

The carrying amounts for trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values due to their short-term nature. For Financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Fair value measurements (i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurements:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: I nputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data.

The investments in equity instruments are not held for trading. Instead, they are held for medium or longterm strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the directors believe that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.

The company has invested in the energy generating companies as per the regulation of Electricity Act. Although the investments are classified as “Equity” shares, as per IND AS 32 -”Financial Instruments, Presentation” the definition of “equity” requires an entitlement in the residual interest in net assets whereas the company as per share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the above as per IND AS 32, since the regulation of Electricity Act does not permit description in any other manner. IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be valued at “Fair Value Through Other Comprehensive Income” if elected initially or valued at “Fair Value Through Profit and Loss Account”. However, on account of what is stated in the previous paragraph, these shares are shown at cost and the fair value is deemed to be the cost. Accordingly, investment in IRIS Ecopower is considered to be a Level 1 fair valuation.

The company has invested in the equity shares of Synergy Shakthi Renewable Energy Private Limited (SSREL). Fair valuation of this investment is based on the value of land, building and plant and machinery of SSREL wherein building, plant and machinery have been valued at realizable value after considering depreciation and land is valued based on the land rates observable from Tamil Nadu government owned industrial park website. Therefore, this investment is considered to be a level 2 fair valuation.

The company has invested in the equity shares of Lucas TVS Limited. This investment is considered to be a level 3 fair valuation.

Valuation technique used - Market Approach: Comparable companies Method (“CCM”) (EV/EBITDA Multiple i.e. Enterprise Value/Earnings Before Interest Tax Depreciation and Amortization multiple).

Significant unobservable inputs - EV/EBITDA Multiple at 6.5x

Relationship of Unobservable Inputs to Fair Value - A slight increase or decrease in the multiple will result in an increase or decrease in the fair value. A decrease in the multiple by 0.5x would result in a decrease in the fair value by Rs. 1,079 lacs and an increase in the multiple by 0.5x would result in a increase in the fair value by Rs. 61.42 lacs.

There are no transfer between levels during the periods.

(iv) Fair value of financial assets and financial liabilities that are not measured at fair value

The Company considers that the carrying amount of financial assets and financial liabilities recognised at amortised cost in the balance sheet approximates their fair value. Fair value hierarchy of these financial assets and liabilities are categorized as Level 3.

5 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

a Financial Risk Management Framework

Company’s principal financial liabilities comprise trade payables and Other financial liabilities. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include Investments, Trade receivables, loans, cash and bank balances and other financial assets.

Risk Exposures and Responses

The Company is exposed to credit risk, market risk and liquidity risk. The Board of Directors reviews policies for managing each of these risks, which are summarised below:

i) Credit risk

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. The Company uses other publicly available financial information and its own trading records to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a four to five major OEMs and large number of small customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

At 31 March 2018, the Company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk.

ii) 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 prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.

Interest rate risk

The company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk is perceived.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e. imports of materials, recognised assets and liabilities denominated in a currency that is not the company’s functional currency.

Foreign currency sensitivity

The Company is exposed to the following currencies - Euro, US Dollars and Japan Yen.

The following table details the Company’s sensitivity to a 5% increase and decrease in the Rs. against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates.

Commodity Risk

The company has commodity price risk, primarily related to the purchases of Steel, Aluminium and Copper. However, the company do not bear significant exposure to earnings risk, as such changes are included in the rate-recovery mechanisms with the customers.

iii) Liquidity risk

The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company has no outstanding bank borrowings. The company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

6 OPERATING LEASE

T he Company is obligated under some cancellable operating leases for office premises which are renewable on a periodical basis. The lease payments under cancellable operating leases for the year ended 31 March 2018 amounts to Rs. 71.98 lacs (PY - Rs. 87.10 lacs). The Company has also entered in to cancellable operating lease agreements primarily for factory space at Rewari and Kolhapur plant. The lease period is for 10 years. The lease payments under non-cancellable leases for the year ended 31 March 2018 amounts to Rs. 42.54 lacs (PY - Rs. 37.78 lacs), the future expected minimum lease payments under Operating Leases are as follows:

7 OPERATING SEGMENT:

The operations of the company relate to only one segment which is Electronic products for two/three wheelers and engines. The Chief Operating Decision Maker (Board of Directors) review the operating results as a whole for purposes of making decisions about resources to be allocated and assess its performance, the entire operations are to be classified as a single business segment. The geographical segments considered for disclosure are - India and Rest of the World. All the manufacturing facilities are located in India. Accordingly, there is no other reportable segment as per Ind AS 108 Operating Segments.

Geographical Information

Revenue and receivables are specified by location of customers while the other geographic information is specified by the location of the assets. The following table presents revenue, expenditure and assets information regarding the Company’s geographical segments:

The Board of Directors in their meeting held on 8th March 2018 had approved the split of the company’s equity shares of face value of Rs. 10 each into 2 equity shares of face value of Rs. 5 each. Accordingly, as per requirements of Ind AS 33, earnings per share has been computed by taking the increased number of shares for the all the periods reported.

8 APPROVAL OF FINANCIAL STATEMENTS

The standalone financial statements were approved for issue by the board of directors on 8th May 2018.

9 The financial statements of the company for the year ended 31 March 2017 were audited by the previous auditors - M/s. Brahmayya & Co.

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Mar 31, 2017

1. EMPLOYEE BENEFITS:

The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount on the respective employee''s salary and the tenure of employment with the company. The employee benefits notified under section 133 of the companies act are given below:

2. Defined Contribution Plan:

3. Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment.

Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

4. Superannuation Fund:

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan.

Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

The Company recognized Rs. 217.80 Lakhs (LY-188.06 Lakhs) for Provident Fund and superannuation fund contribution in the statement of profit and loss.

5. Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

6. Defined benefit Plan:

Gratuity:

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India. The liability has been actuarially evaluated and accounted in the books.

The carrying amounts for trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values due to their short-term nature. For Financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Fair value measurements

7. Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurem

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data.

The fair value of mutual funds is based on quoted price. The fair value of Venture capital Funds, tax free bonds and government bonds is based on quoted prices and market observable inputs.

The fair value of unquoted equity Shares is determined using Level 3 inputs like Discounted cash flows, Market multiple method, Option pricing model, etc There are no transfer between levels during the periods.

The company has invested in the energy generating companies as per the regulation of Electricity Act. Although the investments are classified as "Equity" shares, as per IND AS 32 -"Financial Instruments, Presentation" the definition of "equity" requires an entitlement in the residual interest in net assets whereas the company as per share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the above as per IND AS 32, since the regulation of Electricity Act does not permit description in any other manner.

IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be valued at "Fair Value Through Other Comprehensive Income" if elected initially or valued at "Fair Value Through Profit and Loss Account". However, on account of what is stated in the previous paragraph, these shares are shown at cost and the fair value is deemed to be the cost.

8. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES a Financial Risk Management Framework

Company''s principal financial liabilities comprise trade payables and Other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Investments, Trade receivables, loans, cash and bank balances and other financial assets.

Risk Exposures and Responses

The Company is exposed to credit risk, market risk and liquidity risk. The Board of Directors reviews policies for managing each of these risks, which are summarized below.

9. Credit risk

Credit risk management

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The company is mainly exposed to credit risk from credit sales. At 31 March 2017, the company has trade receivables of Rs. 6638.56 Lakhs.

The company is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the company''s financial results. The company attempts to mitigate credit risk by assessing the creditworthiness of customers and closely monitoring payment history.

Credit risk on cash and cash equivalents is limited as company generally invest in deposits with banks. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations.

The Directors are unaware of any factors affecting the recoverability of outstanding balances at 31 March 2017, and consequently no material provisions have been made for bad and doubtful debts

10. 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 prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.

Interest rate risk

The company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk is perceived.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e. imports of materials, recognized assets and liabilities denominated in a currency that is not the company''s functional currency.

The company foreign currency exposure on net basis is minimal. Accordingly, no Foreign currency risk is perceived.

Commodity Risk

The company has commodity price risk, primarily related to the purchases of Steel, Aluminum and Copper. However, the company do not bear significant exposure to earnings risk, as such changes are included in the rate-recovery mechanisms with the customers.

11. Liquidity risk

The company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

The company has no outstanding bank borrowings. The company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

The tables below set out the maturities of the company''s financial liabilities:

12. The agreement with the Union of Workmen at Puducherry plant of the company is under negotiation with the Management for the period commencing from March, 2015. Pending the finalization of the same, an estimated amount has been provided for the year ended 31st March 2017. Pending finalization of the amount, the Plant Performance Incentive Payment of employees is provided on estimated basis for the year ended 31st March 2017.

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Mar 31, 2016

1. Disclosure required under Accounting Standard 15 “Employee Benefits”:

The company has provided for long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method. The disclosure required under Accounting Standard 15 "Employees Benefits" notified under Section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 are given below:

(a) Defined Contribution Plan:

I. Provident fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

II. Superannuation fund:

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

The Company recognized Rs. 188.06 Lacs (LY-159.61 Lacs) for Provident Fund and superannuation fund contribution in the statement of profit and loss.

(b) Defined benefit plan:

Gratuity:

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

(c) Leave encashment:

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

2. The Company is in the business of manufacturing Electronic Ignition Systems and therefore there is only one business segment. While the Company sells its products in the domestic and export markets, in view of the fact that, there is no significant variation in the risks and returns profile of these markets, it is considered that, there are no different geographical segments

3. Related Party Disclosures:

Related Parties and their relationship:

Joint Ventures of the Company : Mahle Electric Drives Japan Corpn. (MEDJC)

(formerly Kokusan Denki Co, Ltd, Japan)

Lucas Indian Service Ltd (LIS)

Subsidiary of the Company : PT Automotive Systems Indonesia (PT ASI)

Associate Company : Synergy Shakthi Renewable Energy Pvt. Ltd., (SSREL)

Key Managerial Personnel (KMP) : Mr Arvind Balaji - Managing Director

Mr Elango Srinivasan - Chief Financial Officer Mr S Sampath - Company Secretary

Enterprise over which KMP has significant influence : Lucas TVS Limited (LTVS)

4. The agreement with the Union of Workmen at Hosur plant of the company is under negotiation with the Management for the period commencing from 1st October 2013. Pending the finalization of the same, an estimated amount has been provided for the year ended 31st March 2016. Pending finalization of the amount, the Plant Performance Incentive Payment also is provided on estimated basis for the year ended 31st March 2016.

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Mar 31, 2015

1. The Company has only one class of share capital, i.e. equity shares of par value Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

2. Disclosure required Under Accounting Standard 15 "Employee Benefits"

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified under Section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 are given below:

(a) Defined Contribution Plan

I. Provident fund :

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee's Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee's salary.

II. Superannuation fund :

Eligible employees receive benefits form the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Superannuation Fund.

The Company recognised Rs. 159.61 lacs for Provident Fund and superannuation fund contribution in the statement of profit and loss.

(b) Defined benefit plan

Gratuity :

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Gratuity Fund Trust (the "Trust"). Trustees administer contrbutions by means of a group gratuity policy with Life Insurance Corporation of India

(c) Leave encashment

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

3. The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs , in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

4. Related Party Disclosures :

Related Parties and their relationship

Joint Venturers of the Company : Kokusan Denki Co Ltd (KDCL) Lucas Indian Service Ltd (LIS)

Subsidiary of the Company : P T Automotive Systems Indonesia (PT ASI)

Associate Company : Synergy Shakthi Renewable Energy Ltd (SSREL

Key Managerial Personnel (KMP) : Mr Subhasis Dey - Manager (*)

Mr Arvind Balaji - Managing Director

Mr S Sampath - Chief Financial Officer & Company Secretary

Enterprise over which KMP has significant influence : Lucas TVS Limited (LTVS)

Firm in which Director is a : Subbarya Aiyar Padmanabhan & Ramamani partner Associates (SAPRA)

( * ) Mr Subhasis Dey held the position of Manager of the Company until 27th August 2014

5. Sales excludes sales tax. Sales tax collected and paid Rs. 1147.37 lacs (Previous year Rs. 945.22 lacs)

6. Investments :

The Company is considering various options for activating the Indonesian subsidiary. In the opinion of the Directors, the value of the land is not less than the investment made by the Company. Hence, no losses are expected on this investment.

7. Contingent liabilities & Commitments

(i) Contingent liabilities

a Claims against the company not acknowledged - - as debt

b Letter of Credit 64.63 69.72

c Letter of Guarantee - -

d Sales tax demand in appeal 0.41 0.41

e Excise Duty/Service Tax 23.99 26.89

f Other money for which the company 2.00 2.00 is contingently liable

(ii) Commitments

a Estimated amount of contracts remaining to be executed on capital account 416.71 509.47 and not provided for

b Uncalled liability on shares and other investments partly paid 0.01 0.01

c other commitments - -

8. The agreement with the Union of Workmen at Hosur plant of the company is under negotiation with the Management for the period commencing from 1st October 2013. Pending the finalisation of the same, an estimated amount has been provided for the year ended 31st March 2015. Pending finalization of the amount, the Plant Performance Incentive Payment also is provided on estimated basis for the year ended 31st March 2015

9. Previous year figures have been regrouped/reclassified wherever necessary.

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Mar 31, 2014

1. Disclosure required Under Accounting Standard 15 "Employee Benefits" :

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules 2006 are given below:

(a) Defined Contribution Plan

I. Provident fund :

Eligible employees receive benefits from a provident fund, which is a defined contribution plan Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

II. Superannuation fund :

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest thereon are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as at the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund. The Company recognised Rs. 131.65 lacs for Provident Fund and superannuation fund contribution in the statement of profit and loss.

(b) Defined benefit plan Gratuity :

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Gratuity Fund Trust (the "Trust"). Trustees administer contrbutions by means of a group gratuity policy with Life Insurance Corporation of India.

Note : The estimates of rate of 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.

(c) Leave encashment

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

2. The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs , in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

3. Related Party Disclosures :

Related Parties and their relationship

Joint Venturers of the Company : Kokusan Denki Co Ltd (KDCL)

Lucas Indian Service Ltd (LIS)

Subsidiary of the Company : PT Automotive Systems Indonesia (PT ASI)

Associate Company : Synergy Shakthi Renewable Energy Ltd (SSREL)

Key Managerial Personnel (KMP) : Mr Subhasis Dey - Manager

Mr Arvind Balaji - Whole Time Director

Enterprise over which KMP has

significant influence : Lucas TVS Limited (LTVS)

4. Investments :

The Company is considering various options for activating the Indonesian subsidiary. In the opinion of the Directors, the value of the land is not less than the investment made by the Company. Hence, no losses are expected on this investment.

2013-2014 2012-2013

lacs lacs

5. Contingent liabilities & Commitments

(i) Contingent liabilities

a Claims against the company not acknowledged as debt - -

b Letter of Credit 69.72 72.14

c Letter of Guarantee - -

d Sales tax demand in appeal 0.41 0.41

e Excise Duty/Service Tax 26.89 26.89

f Other money for which the company is contingently liable 2.00 2.00

(ii) Commitments

a Estimated amount of contracts remaining to be executed on capital account and not provided for 509.47 159.85

b Uncalled liability on shares and other investments partly

0.01 0.01 paid

c other commitments - -

6. The agreement with the Union of Workmen at Hosur plant of the company is under negotiation with the Management for the period commencing from 1st October 2013. Pending the finalisation of the same, an estimated amount has been provided for the year ended 31st March 2014. Pending finalization of the amount, the Plant Performance Incentive Payment also is provided on estimated basis for the year ended 31st March 2014.

7. Previous year figures have been regrouped/reclassified wherever necessary.

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Mar 31, 2013

1. Disclosure required Under Accounting Standard 15 "Employee Benefits" :

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules 2006 are given below:

(a) Defined Contribution Plan

I. Provident fund :

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee''s Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee''s salary.

II. Superannuation fund :

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as at the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Superannuation Fund.

The Company recognised Rs. 12047571 for Provident Fund and superannuation fund contribution in the statement of profit and loss.

(b) Defined benefit plan

Gratuity :

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India''s Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

(c) Leave encashment

The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods

or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The liability has been actuarially evaluated and accounted in the books.

2.The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs , in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

3. Sales excludes sales tax. Sales tax collected and paid Rs. 890.74 lacs (Previous year Rs. 814.44 lacs)

4. Investments :

The Company is considering various options for activating the Indonesian subsidiary. In the opinion of the Directors, the value of the land is not less than the investment made by the Company. Hence, no losses are expected on this investment.

2012-2013 2011-2012 Rs. lacs Rs. lacs

5. (i) Contingent liabilities

a Claims against the company not acknowledged as debt b Letter of Credit 72.14 34.39

c Letter of Guarantee 1.65

d Sales tax demand in appeal 0.41 0.41

e Excise Duty/Service Tax 26.89 43.50

f Other money for which the company is 2.00 2.00 contingently liable (ii) Commitments

a Estimated amount of contracts remaining to be 159.85 520.04 executed on capital account and not provided for b Uncalled liability on shares and other investments 0.01 0.01 partly paid c other commitments (specify)

6. Previous year figures have been regrouped/reclassified wherever necessary.

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Mar 31, 2012

1. Disclosure required Under Accounting Standard 15 "Employee Benefits":

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules 2006 are given below:

(a) Defined Contribution Plan

I. Provident fund ;

Eligible employees receive benefits from a provident fund, which is a defined contribution plan.

Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee's Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee's salary.

II. Superannuation fund :

Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as at the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Superannuation Fund,

The Company recognised Rs 13620298 for Provident Fund and superannuation fund contribution in the statement of profit and loss.

(b) Defined benefit plan

Gratuity:

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

(c) Leave encashment

The Employees of the Company are entitled to compensated absence, Employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which employees render services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date.

2. The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs, in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

3. Investments :

The Company is considering various options for activating the Indonesian subsidiary. In the opinion of the Directors, the value of the land is not less than the investment made by the Company. Hence, no losses are expected on this investment.

Considering that the investment of India Nippon Electricas Limited in Synergy Shakthi Renewable Energy Limited is a long term investment and that the investment is a strategic investment no provision is considered necessary to recognise the loss of Synergy Shakthi Renewable Energy Limited.

2011-2012 2010-2011

Rs lacs Rs lacs

4. (i) Contingent liabilities

a Claims against the company not acknowledged - - as debt

b Letter of Credit 34.39 43.89

c Letter of Guarantee 1.65 7.14

d Sales tax demand in appeal 0.41 0.41

e Excise Duty/Service Tax 43.50 134.36

2011-2012 2010-2011

Rs lacs Rs lacs

f Other money for which the company is 2.00 2.00 contingently liable

(ii) Commitments

a Estimated amount of contracts remaining 520.04 155.72 to be executed on capital account and not provided for

b Uncalled liability on shares and other 0.01 0.01 investments partly paid c other commitments (specify) - -

5. Consequent upon the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 have been prepared as per Revised Schedule VI. Accordingly, the previous year figures which had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956 for the purposes of the financial statements for the year ended March 31,2011 have also been reclassifies to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles.

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Mar 31, 2011

1. Contingent Liabilities :

Description 2010-2011 2009-2010 Rs. lacs Rs. lacs

a) Letter of Credit 43.89 51.39

b) Letter of Guarantee 7.14 1.30

c) Sales Tax Demand in appeal 0.41 1.39

d) Uncalled liability on 0.01 0.01 shares partly paid up

e) Excise Duty/Service Tax 134.36 48.44

f) Others 2.00 2.00

2.The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs, in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

3. As mentioned in item 11 (I) of Accounting Policy statement, the company is accounting for taxes in accordance with the Accounting Standard 22 "Accounting for Taxes on Income" notified under Company (Accounting Standards) Rules 2006. Accordingly, an amount of Rs.2.28 lacs

4. a) Sales excludes sales tax. Sales tax collected and paid Rs.639.61 lacs (Previous year Rs.436.50 lacs)

b) lncrease/(decrease) in excise duty on finished goods has been shown under the head "Materials consumed" in schedule No, 14

5. The sum of Rs.22.00 lacs towards commission to Non-Whole Time Directors is outstanding as at 31st March 2011 and is included in sundry creditors (Previous year Rs. 14.00 lacs)

6. Disclosure required Under Accounting Standard 15 "Employee Benefits":

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules 2006 are given below:

(a) Defined Contribution Plan

I. Provident fund :

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee's Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employee's salary.

The Company recognised Rs.80,23,953 for provident fund contribution in the profit and loss account.

II. Superannuation fund:

Eligible employees receive benefits form the superannuation fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance Corporation of India as at the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Superannuation Fund.

The Company recognised Rs. 13,06,372 for superannuation fund contribution in the profit and loss account.

(p) Defined benefit plan

Gratuity:

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as at the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Life Insurance Corporation of India's Employees Gratuity Fund Trust (the "Trust"). Trustees administer contrbutions by means of a group gratuity policy with Life Insurance Corporation of India.

(c) Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods

7. Investments:

The Company is considering various options for activating the Indonesian subsidiary. In the opinion of the Directors, the value of the land is not less than the investment made by the Company. Hence, no losses are expected on this investment.

Considering that the investment of India Nippon Electricas Limited in Synergy Shakthi Renewable Energy Limited is a long term investment and that the investment is a strategic investment, no provision is considered necessary to recognise the loss of Synergy Shakthi Renewable Energy Limited.

8. Capital commitments not provided for Rs.155.72 lacs (Previous year lacs)

9. Figures for the previous year have been reclassified wherever necessary.

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Mar 31, 2010

2009-2010 2008-2009

Rs. lacs Rs. lacs

1. Contingent Liabilities :

a) Letter of Credit 51.39 228.31

b) Letter of Guarantee 1.30 1.29

c) Income Tax Demands in appeal - 16.30

d) Sales Tax Demand in appeal 1.39 1.39

e) Uncalled liability on shares partly paid up 0.01 0.01

f) Excise Duty/Service Tax 48.44 49.27

g) Others 2.00 2.00

2. The Company has sent circular to suppliers/vendors for getting information as required under "Micro, Small and Medium Enterprises Development Act 2006". No vendor has given registration details. However, they have indicated their status of undertaking as defined under the Act. With the available information, the amount outstanding as on 31st March 2010 Rs.141.70 lacs (Previous year Rs.231.17 lacs). Further no interest has been paid or payable in the opinion of the Management to such parties as per the said Act.

3. The fixed assets were revalued in the year 1992-93 by which the value of the assets were written up by Rs.230.71 lacs after technical assessment with the corresponding credit being given to Revaluation Reserve. These assets were fully written off in the books of account as on 31st March 1997. In the year 1997-98, the fixed assets comprising of plant & machinery and electrical installations were revalued again after a technical assessment by which the values of these assets were written up by Rs.233.30 lacs with the corresponding credit being given to Revaluation Reserve. As mentioned in Note No.11(h)(iii) of notes on accounts, depreciation is computed on the revalued amounts and is charged off to the Profit and Loss Account in full without withdrawing any amount from the revaluation reserve. The additional amount charged as depreciation for the year is Rs.2.00 lacs (previous year Rs.2.94 lacs).

4. The company is in the business of manufacturing electronic ignition systems and therefore there is only one business segment. While the company sells its products in the domestic and export markets and to OEMs, in view of the fact that there is no significant variation in the risks and returns profile of these markets, it is considered that there are no different geographical segments.

5. a) Sales excludes sales tax. Sales tax collected and paid Rs.436.50 lacs (Previous year Rs.364.30 lacs)

b) Increase/(decrease) in excise duty on finished goods has been shown under the head "Materials consumed" in schedule No.14

6. The sum of Rs.14.00 lacs towards commission to Non-Whole Time Directors is outstanding as at 31st March 2010 and is included in sundry creditors (Previous year Rs.11.00 lacs)

7. Disclosure required Under Accounting Standard 15 "Employee Benefits" :

The company has provided long term employee benefits on the basis of actuarial valuation carried out as per Projected Unit Credit Method.

The disclosure required under Accounting Standard 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules 2006 are given below:

(a) Defined Contribution Plan

I. Provident fund :

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment.

Both the employee and the Company make monthly contributions to the Employees Provident Fund scheme administered by Government of India equal to a specified percentage of the covered employees salary.

The Company recognised Rs.62,45,606 for provident fund contribution in the Profit and Loss Account.

II. Superannuation fund :

Eligible employees receive benefits from the Superannuation Fund, which is a defined contribution plan. Aggregate contributions alongwith interest theron are paid at retirement, death, incapacitation or termination of employment. The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance Corporation of India. Liabilities with regard to the Superannuation Fund are determined by the Life Insurance Corporation of India as at the Balance Sheet date, based upon which, the company contributes all the ascertained liabilities to the India Nippon Electricals Limited Executives Superannuation Scheme.

The Company recognised Rs.10,40,925 for Superannuation Fund contribution in the Profit and Loss Account.

(b) Defined benefit plan

Gratuity :

The Company provides a gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the Balance Sheet date, based upon which, the company contributes all the ascertained liabilities to the India Nippon Electricals Limited Employees Group Gratuity Scheme (the "Trust"). Trustees administer contrbutions by means of a group gratuity policy with Life Insurance Corporation of India.

The following table set out the status of the gratuity plan as required under AS 15:

Note: The estimates of rate of 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.

(c) Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 30 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date.

8. Capital commitments not provided for Rs.30.20 lacs (Previous year Rs.377.48 lacs)

9. Figures for the previous year have been reclassified wherever necessary.