Notes to Accounts of Lokesh Machines Ltd.

Mar 31, 2025

q) Provisions:

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably,
because of a past event, when it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized
for future operating losses.

Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is
recognized as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the
effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage
of time is recognized as a finance cost.

r) Contingencies:

Where it is not probable that an inflow or an outflow of economic resources will be required, or the amount cannot be
estimated reliably, the asset or the obligation is not recognized in the statement of balance sheet and is disclosed as a
contingent asset or contingent liability. Possible outcomes on obligations/rights, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or
contingent liabilities.

s) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to
the tax authorities in accordance with the respective laws of the state. Current tax includes taxes to be paid on the profit
earned during the year and for the prior periods.

Deferred income taxes are provided based on the balance sheet approach considering the temporary differences
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes down the
carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable income will
be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it
becomes reasonably certain that sufficient future taxable income will be available.

t) Prior period items:

In case prior period adjustments are material in nature the Company prepares the restated financial statement as
required under Ind AS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors”. Immaterial items
pertaining to prior periods are shown under respective items in the Statement of Profit and Loss.

u) Cash and cash equivalents:

Cash and cash equivalents include cash on hand and at bank, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less that are readily convertible to a known amount of cash
which are subject to an insignificant risk of changes in value and are held for meeting short-term cash commitments.

For the Statement of Cash Flows, cash and cash equivalents consist of short-term deposits, as defined above, net of
outstanding bank overdraft as they are being considered as integral part of the Company''s cash management.

v) Financial Instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity
instrument of another entity.

a. Financial Asset:

Initial recognition and measurement

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value
through profit & loss account transaction costs that are attributable to the acquisition of the financial asset, purchase or
sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent Measurement

For subsequent measurement financial assets are classified as measured at:

1) Amortized Cost

2) Fair value through profit and loss (FVTPL)

3) Fair value through other comprehensive income (FVTOCI)

Financial Asset measured at amortized cost.

Financial Assets held within a business model whose objective is to hold financial assets to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest
rate (EIR) method. The EIR amortization is recognized as finance income in the statement of Profit & Loss.

The company, while applying above criteria has classified all the financial assets (except investments in equity shares)
at amortized cost.

Financial Assets Measured at fair value through other comprehensive income.

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets, and
collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair
value through other comprehensive income. Fair value movements are recognized in the other comprehensive income
(OCI). Interest income is measured using the EIR method and impairment losses, if any are recognized in the Statement
of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity
to other income'' in the Statement of Profit and Loss.

Financial Assets at fair value through profit or loss (FVTPL)

Financial Asset is measured at fair value through Profit & Loss if it does not meet the criteria for classification as
measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit & loss.

De-recognition of Financial Assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the contractual rights to receive the cash flows from the asset.

Impairment of Financial Assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition
of impairment loss on the debt instruments, that are measured at amortized cost e.g., loans, debt securities, deposits,
trade receivables and bank balance.

Expected credit loss 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.

The management uses a provision matrix to determine the impairment loss on the portfolio of trade and other
receivables. The provision matrix is based on its historically observed expected credit loss rates over the expected life of
the trade receivables and is adjusted for forward-looking estimates.

Expected credit loss allowance or reversal recognized during the period is recognized as income or expense in the
statement of profit and loss. In the case of a balance sheet, it is shown as reduction from the specific financial asset.

b. Financial Liabilities.

Initial recognition and measurement

Financial liabilities are recognized initially at fair value plus any transaction cost that is attributable to the acquisition of
the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent Measurement

Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at
fair value through profit or losses are measured at fair value with all changes in fair value recognized in the Statement of
Profit and Loss.

Financial Liabilities at amortized cost

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition
minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any
difference between the initial amount and the maturity amount.

All the financial liabilities of the company are subsequently measured at amortized cost using the Effective Interest
method.

De recognition of Financial Liabilities

Financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the
contract is discharged or cancelled or expires.

w) Offsetting.

Financial assets and financial liabilities are off set and the net amount presented in the balance sheet when, and only
when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on
a net basis or to realize the asset and settle the liability simultaneously.

1 The Loans referred at (a to f) above are Primary secured by hypothecation of entire current assets, present and future on
pari-passu basis with other working capital lenders and First charge by way of equitable mortgage of properties standing
in the name of the company and Second charge on Fixed Assets of the company raking pari-passu with other lenders in
the working capital consortium.

2 The Loans referred at (g) & (j) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -B, Industrial park, and guaranted by Managing Director and other two promoter directors.

3 The Loans referred at (h & i) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -A, Industrial park, & 1st parripassu charge by hypothecation of plant & machinery created our of the
finance and guaranted by Managing Director and other two promoter directors.

4 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the Directors
of the Company and repayable in monthly installments.

5 Loan From Axis Finance Ltd is secured by hypothecation of Promoters Land at Medchal

6 Loan From Oxyzo Financial Services Ltd are secured by an exclusive charges on the personal property of Directors
situated at Shahazadiguda village, Medchal-Malkajgiri district, Telangana.

The loan is further secured by personal guarantee of Srikrishna Mullapudi (Exucutive director), Lokeswara Rao Mullapudi
(Managind Director), Srinivasa Mullapudi (Executive director) and M Vasantha Lakshmi (Promoter group)

Tprm?; nf Rpnavmpnts

c) Performance obligation:

All sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is
typically upon dispatch/ delivery. The Company does not have any remaining performance obligation for sale of goods or
rendering of services which remains unsatisfied as at March 31,2025 and March 31,2024.

d) Disaggregation of revenue:

Refer Note 44 for disaggregated revenue information. The management determines that the segment information
reported is sufficient to meet the disclosure objective with respect to disaggregation of revenue under Ind AS 115
"Revenue from contract with customers".

37. Fair Value Measurement:

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or
in the absence of a principal market, in the most advantageous market which is accessible to 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 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:

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

b. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is
directly or indirectly observable.

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

39. Employee benefits plan

a) Defined contribution plans

Refer Note 31 for the Company''s contribution to the defined contribution plans with respect to employee benefit
funds i.e Provident Fund and Employees'' State Insurance Scheme.

b) Defined benefit plan

The Company has a defined benefit gratuity plan (funded). The gratuity plan is governed by the Payment of Gratuity
Act, 1972. Under the Gratuity Act, an employee who has completed five years of service is entitled to specific
benefits. The level of benefits provided depends on the member''s length of service, managerial grade and salary at
retirement age.

41. Segment information

(a) The primary reporting of the company has been performed on the basis of business segment. The company is
organized into two business segments i.e. Machines Division and Component Division. Segments have been
identified and reported based on the nature of the products, risks and returns, the organization structure and the
internal financial reporting system.

The expenses that are not directly attributable to the business segments are shown as unallocated corporate
costs.

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories,
advances and fixed assets, net of allowances.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

42. Financial Risk Management

The Company''s activities expose it to market risk, credit risk and liquidity risk. Company''s overall risk management
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial
performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in
the price of a financial instrument. The value of a financial instrument may change as a result of changes in the
interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market
risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including
investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an
exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company''s exposure to
the risk of changes in foreign exchange rates relates primarily to impact of raw materials and spare parts, capital
expenditure and export of Machines. The company does not enter into any derivative instruments for trading or
speculative purposes and the impact foreign currency risk is negligible.

b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market
rates relates primarily to the Company''s short term borrowing. The Company constantly monitors the credit
markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since all
the borrowings are on floating rate and constantly monitored, no significant risk of change in interest rate.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities
(primarily trade receivables) and from its financing/investing activities, including deposits with banks. The
company has a prudent and conservative process for managing its credit risk arising in the course of its business
activities. The Company is receiving payments regularly from its customers and hence the Company has no
significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or at
reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities and the availability of funding through an adequate amount of credit facilities to meet obligations when
due. The Company''s treasury team is responsible for liquidity, funding as well as settlement management. In
addition, processes and policies related to such risks are overseen by senior management. Management monitors
the Company''s liquidity position through rolling forecasts based on expected cash flows.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2025
and 31 March, 2024

44. Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least
2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR)
activities. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a
corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

46. Additional disclosures as per Schedule III of the Companies Act, 2013:"

i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending
against the Company for holding any Benami property.

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

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

iv) The Company has not been declared a willful defaulter by any bank or financial institution or any other lender during
the current period.

v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds), other than in the ordinary course of business by the Company to or in any other person(s)
or entity(ies), including foreign entities ("Intermediaries”) with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate
Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding
that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on
behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries”

vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

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

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

47. OFAC Sanctions:

The Company soon after becoming aware that its name was featured in the sanctions list of the United States
Department of Treasury published on October 30, 2024, informed the Stock Exchanges vide letter dated November 02,
2024, stating that the company is not aware of any machines being sold or having dealt with any sanctioned entities or
individuals, which lead to the inclusion of Company''s name in the list.

Furthermore, due to OFAC Sanctions, during the period starting from October 30, 2024, to March 31,2025, the Company
was unable to enter into any foreign currency transactions.

Further, the Company is in the process of getting its name removed from the sanction list of the United State Department
of Treasury for which the Company through a US based lawyer firm filed an application before Office of Foreign Assets
Control, U.S. Department of the Treasury ("OFAC”) for expedited removal/reconsideration of Designation on the list of
Specially Designated Nationals and Blocked Persons on January 31,2025 (EST) and had also intimated to the Stock
Exchanges vide letter dated February 01,2025 (IST).

In view of the OFAC sanctions and challenging macro-economic conditions, the company has taken certain cost cutting
initiative and as a result of which, the Company is able to minimize the impact of sanctions on the operations of the
Company.

Furthermore, the Company has undertaken renewed strategic initiatives aimed at recouping the business. These
measures have begun to yield positive outcomes, evidenced by the emergence of new opportunities and the onboarding
of new customers

48. Previous Year''s figures have been regrouped wherever necessary to correspond with the current year''s figures. Except
when otherwise stated, the figures are presented in Rupees in Lakhs.

As per our report of even date attached

For and on behalf of the Board

For Brahamayya & Co M. LOKESWARA RAO M. SRINIVAS

Chartered Accountants Managing Director Director

Firm''s Registration No : 000513S DIN : 00989447 DIN : 00917565

K Shravan V. SUDHAKARA REDDY GURPRIT SINGH

Partner Chief Financial Officer Company Secretary

Membership No.:215798

Place : Hyderabad

Date : May 28, 2025

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Mar 31, 2024

Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares having a face value of '' 10/- per share with one vote per each share. The Company declares and pay dividends in Indian Rupees. The dividends proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting.

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

Preferential Allotment of Equity Shares

During the year ended March 31,2024, the Company has raised additional capital aggregating to '' 1,452.63 Lakhs (net of expenses of '' 6.87 Lakhs) by way of preferential allotment of equity shares. The Company has issued 6,00,000 shares at a price of '' 243.25/- per share whereby equity share capital has increased by '' 60.00 Lakhs and securities premium account is increased by '' 1,392.63 Lakhs (net of expenses of '' 6.87 Lakhs).

Convertible Share Warrants

During the year ended March 31,2024, the Company also issued and allotted 15,00,000 fully convertible share warrants of '' 10/- each with a premium of '' 233.25/- to promoters and received 25% towards warrants subscription i.e. '' 912.19 Lakhs. These warrants are outstanding for conversion as on date of balance sheet.

1 The Loans referred at (a to f) above are Primary secured by hypothecation of entire current assets, present and future on pari-passu basis with other working capital lenders and First charge by way of equitable mortgage of properties standing in the name of the company and Second charge on Fixed Assets of the company raking pari-passu with other lenders in the working capital consortium.

2 The Loans referred at (g) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at Toopran, Part -B, Industrial park, and guaranted by Managing Director and other two promoter directors.

3 The Loans referred at (h & i) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at Toopran, Part -A, Industrial park, & 1st parripassu charge by hypothecation of plant & machinery created our of the finance and guaranted by Managing Director and other two promoter directors.

4 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the Directors of the Company and repayable in monthly installments.

5 Loan From Axis Finance Ltd are secured by hypothecation land of promoters at Medchel.

6 Working capital limits from consortium banks are secured by way of :

Primary : Pari-passu first charge by way of hyphothecation of stocks of raw material, semi finished goods, finished goods, stores and spares, book debts and all movable and other current assets of the company.

Collateral : (i) Pari-passu first charge by way of Equitable Mortage of land & buildings at B-36, 25&27, Plot No 41 at Balanagar, Land & Buildings at Bonthapally and Medchel except the relating to the specific term loans.

Pari-passu second charge by way of Equitable Mortage of fixed assets of the Company.

| 34. EXCEPTIONAL ITEMS :

Exceptional item of NIL for the year ended March 31,2024 ( March 31,2023 - ''159.14 Lakhs ) is on account of insurance claim received with respect to damaged machinery in transit.

| 37. FAIR VALUE MEASUREMENT:

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or in the absence of a principal market, in the most advantageous market which is accessible to 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 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:

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

b. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is directly or indirectly observable.

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

| 39. RETIREMENT BENEFIT OBLIGATIONS:

The liability on account of Gratuity for this financial year is calculated as mentioned below. Based on the actuarial valuation, provision for the same is made in the books of accounts of '' 467.75 Lakhs. The Company is in the process of obtaining planned assets by way of Gratuity insured policy as per Ind AS 19.

4. An amount of '' 16.03 Lakhs towards sale of goods and '' 317.38 Lakhs towards advance for purchase of asset is pending settlement with MLR Auto Ltd and the same are likely to be settled on or before August 2024.| 41. SEGMENT INFORMATION:

The primary reporting of the Company has been performed on the basis of business segment. The Company is organized into two business segments i.e. Machines Division and Component Division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting system.

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

(Amounts in brackets represent previous year figures)

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the Company are largely confined in India, with export contributing to approximately 6.24% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

| 42. FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to market risk, credit risk and liquidity risk. Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to impact of raw materials and spare parts, capital expenditure and export of Machines. The Company does not enter into any derivative instruments for trading or speculative purposes and the impact foreign currency risk is negligible.

b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market rates relates primarily to the Company’s short term borrowing. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since all the borrowings are on floating rate and constantly monitored, no significant risk of change in interest rate.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks. The Company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. The Company is receiving payments regularly from its customers and hence the Company has no significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts based on expected cash flows.

| 44. CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

| 46. ADDITIONAL DISCLOSURES AS PER SCHEDULE III OF THE COMPANIES ACT, 2013:

i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

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

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

iv) The Company has not been declared a willful defaulter by any bank or financial institution or any other lender during the current period.

v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds), other than in the ordinary course of business by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

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

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

Previous Year’s figures have been regrouped wherever necessary to correspond with the current year’s figures. Except 47.

when otherwise stated, the figures are presented in Rupees in Lakhs.

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Mar 31, 2023

The Company has only one class of equity shares having a face value of '' 10/- per share with one vote per each share. The Company declares and pay dividends in Indian Rupees. The dividends proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting.

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

1 The Loans referred at (a to d) above are Primary secured by hypothecation of entire current assets, present and future on pari-passu basis with other working capital lenders and First charge by way of equitable mortgage of properties standing in the name of the Company and Second charge on Fixed Assets of the Company raking pari-passu with other lenders in the working capital consortium.

2 The Loans referred at (f) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at Toopran, Part -b, Industrial park, and guaranted by Managing Director and other two promoter directors.

3 The Loans referred at (g & h) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at Toopran, Part -A, Industrial park, & 1st parripassu charge by hypothecation of plant & machinery Created our of the finance and guaranted by Managing Director and other two promoter directors.

4 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the Directors of the Company and repayable in monthly installments.

5 Working capital limits from consortium banks are secured by way of :

Primary : Pari-passu first charge by way of hyphothecation of stocks of raw material, semi finished goods, finished goods, stores and spares, book debts and all movable and other current assets of the Company.

Collateral : (i) Pari-passu first charge by way of Equitable Mortage of land & buildings at B-36, 25 & 27, Plot No 41 at Balanagar, Land & Buildings at Bonthapally and Medchel except the relating to the specific term loans.

Pari-passu second charge by way of Equitable Mortage of fixed assets of the Company.

| 36. FAIR VALUE MEASUREMENT:

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or in the absence of a principal market, in the most advantageous market which is accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The 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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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

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

b. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is directly or indirectly observable.

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

| 37. CONTINGENT LIABILITIES & COMMITMENTS
Contingent Liabilities and commitments not provided for on account of:		('' in Lakhs)
S '' Particulars No	Year Ended March 31, 2023	Year Ended March 31, 2022
a Letter of credit	1923.08	1157.78
b Bank Guarantees	1068.24	344.75
c Damages U/s 14B of EPF Act	24.28	41.27

| 38. RETIREMENT BENEFIT OBLIGATIONS:

The liability on account of Gratuity for this financial year is calculated as mentioned below. Based on the accrual valuation, provision for the same is made in the books of accounts of '' 367.68 Lakhs. The Company is in the process of obtaining planned assets by way of Gratuity insured policy as per Ind AS 19

| 40. SEGMENT INFORMATION:

The primary reporting of the Company has been performed on the basis of business segment. The Company is organised into two business segments i.e. Machines Division and Component Division. Segments have been identified and reported based on the nature of the products, risks and returns, the organisation structure and the internal financial reporting system.

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the Company are largely confined in India, with export contributing to approximately 6.24% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

| 41. FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to market risk, credit risk and liquidity risk. Company’s overall risk management focuses on

the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to impact of raw materials and spare parts, capital expenditure and export of Machines. The Company does not enter into any derivative instruments for trading or speculative purposes and the impact foreign currency risk is negligible.

b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market rates relates primarily to the Company’s short term borrowing. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since all the borrowings are on floating rate and constantly monitored, no significant risk of change in interest rate.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks. The Company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. The Company is receiving payments regularly from its customers and hence the Company has no significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts based on expected cash flows.

| 43. CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. A CSR

committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilised through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

| 45. ADDITIONAL DISCLOSURES AS PER SCHEDULE III OF THE COMPANIES ACT, 2013:

i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending against the Company for holding any Benami property.

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

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

iv) The Company has not been declared a willful defaulter by any bank or financial institution or any other lender during the current period

v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds), other than in the ordinary course of business by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

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

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

| 46.

Previous Year’s figures have been regrouped wherever necessary to correspond with the current year’s figures. Except when otherwise stated, the figures are presented in Rupees in Lakhs.

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Mar 31, 2018

1. CORPORATE INFORMATION:

Lokesh Machines Limited (“the Company”) was incorporated on December 17th, 1983 under the Companies Act, 1956. The Company is listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). At present the Company is engaged in the business of manufacture of Special Purpose Machines (SPM), General Purpose Machines/CNC Lathes (GPM), Connecting Rods and machining of Cylinder Blocks and Heads.

These Financial Statements were approved by the Board of Directors and authorized for issue on May 16th, 2018.

2. BASIS OF PREPARATION:

These are the first Financial Statements prepared by the Company complying in all material respects with the notified Accounting Standards under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and the relevant provisions of the Companies Act, 2013 and in accordance with the generally accepted accounting principles in India.

The Company has consistently applied the accounting policies used in the preparation of opening balance sheet as at April 01, 2016 throughout all periods presented in these financial statements, as if these policies had always been in effect and are covered by Ind AS 101 ‘‘First-time adoption of Indian Accounting Standards’’. The transition was carried out from accounting principles generally accepted in India (‘‘Previous GAAP’’) as defined in Ind AS 101. The reconciliation of effects of the transition as required by Ind AS 101 is disclosed in Note No. 42 to these financial statements.

The financial statements have been prepared on a historical cost basis, except for financial instruments which have been measured at fair value at the end of each reporting period, as explained in the accounting policies mentioned below.

3.1. Standards issued, but not yet effective:

The standards issued, but not effective up to the date of issuance of the company’s financial statements are disclosed below.

Ind AS 115, Revenue from Contract with Customers:

On March 28th, 2018, Ministry of Corporate Affairs has notified the Ind AS 115, Revenue from Contract with Customers. The core principal of the new standard is that revenue should be recognized when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cashflows arising from the entity’s contracts with customers.

The Company will adopt the standard from April 1, 2018 and the management is in the process of determining the effect on adoption of Ind AS 115.

Ind AS 21, foreign currency transactions and advance consideration

On March 28, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transactions 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. This 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.

4) Fair Value Measurement:

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or in the absence of a principal market, in the most advantageous market which is accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The 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 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:

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

b. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is directly or indirectly observable.

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

The following table provides the fair value measurement hierarchy of the company’s assets and liabilities Quantitative disclosures of fair value measurement hierarchy as at March 31, 2018.

5. Retirement Benefit Obligations:

Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Gratuity.

The Company has created a Trust namely LML Employees Group Gratuity Trust vide Trust dated 01.03.1997 and obtained approvals from Income Tax Authorities vide letter No H.Qrs.I/GF/98-99 dated 23.03.1999. LIC has been appointed for management of the Trust fund for the benefits of the employees. The following tables summarize the components of net benefits.

Employee Benefits : Actuarial valuation of Leave encashment

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosure have been made as required by the standard for Actuarial valuation of Leave encashment.

6. Segment information:

The primary reporting of the company has been performed on the basis of business segment. The company is organized into two business segments i.e. Machines Division and Component Division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting system.

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

(Amounts in brackets represent previous year figures)

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the company are largely confined in India, with export contributing to approximately 1.91% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

7. Financial Risk Management

The Company’s activities expose it to market risk, credit risk and liquidity risk. Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

I. Market Risk

Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to impact of raw materials and spare parts, capital expenditure and export of Machines. The company does not enter into any derivative instruments for trading or speculative purposes and the impact foreign currency risk is negligible.

b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market rates relates primarily to the Company’s short term borrowing. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since all the borrowings are on floating rate and constantly monitored, no significant risk of change in interest rate.

II. Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/investing activities, including deposits with banks. The company has a prudent and conservative process for managing its credit risk arising in the course of its business activities. The Company is receiving payments regularly from its customers and hence the Company has no significant credit risk.

III. Liquidity Risk

Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts based on expected cash flows.

8. Capital Management

The Company’s objectives when managing capital are to

i) Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.

ii) Maintain an optimal capital structure to reduce the cost of capital

Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents) divided by Total ‘equity’ (as shown in the balance sheet)

9. First Time Adoption

These financial statements for the year ended 31st March 2018 are the company’s first annual Ind AS complied financial statements. For all period up to and including the year ended 31st march 2017, the company prepared its financial statements in accordance with Accounting Standards notified under Section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘previous GAAP’). Detailed explanation on how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet, financial performance and Cash flows given as under

In preparing these Ind AS financial statements, the company has availed certain exemptions and exceptions in accordance with Ind AS 101 as explained below

1. Mandatory Exceptions from retrospective application Estimates

a. Estimates

The estimates at 1st April 2016 and at 31st March,2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items under Indian GAAP did not require estimation:

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at 1st April,2016 and 31st March,2017

i. Fair values of financial assets & financial Liabilities.

ii. Impairment of financial assets based on expected credit loss model.

iii. Discount rates

b. Classification and measurement of financial asset:

The classification of financial assets to be measured at amortized cost or fair value through Profit and loss or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

2. Optional Exemptions from retrospective application

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has, accordingly, applied following exemption:

a. Deemed Cost

The Company has elected to consider carrying amount of all items of property, plant and equipments measured as per Indian GAAP as recognized in the financial statements as at the date of transition, as deemed cost at the date of transition. The effect of consequential changes arising on the application of other Ind AS has been adjusted to the deemed cost of Property, Plant &Equipment.

Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101

1. Reconciliation of Equity as at 1st April, 2016 & at at 31^st March 20117

2. Reconciliation of total comprehensive income for the year ended 31st March, 2017

Notes to reconciliation of balance sheet and Profit as previously reported under IGAAP to Ind-AS

i. Property, Plant & Equipment, Non-current Asset

Under the previous GAAP the transactions costs relating to origination of term loans raised specifically for acquisition of items of Property, Plant & Equipment were capitalized. Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the proceeds of borrowings on initial recognition. These costs are treated as part of the interest expense by applying the effective interest method (EIR). Hence upfront fees capitalized under Previous GAAP is reversed and reduced from term loan.

II. Leasehold land:

Under Previous GAAP leasehold lands were recognized as assets under PPE. As per Ind AS 17, the company has treated leasehold lands as operating leases and premium paid is considered as prepaid lease rentals.

III. Non-current investments:

As on the date of transition, the company decided to classify non-current investments as Financial Assets which are measured at fair value with gains or losses recognized in profit and loss (FVTPL). As per previous GAAP these are carried at cost. However, provision for permanent diminution in value is made to recognize any decline other than temporary in value of investments. As per Ind AS 109 all Equity Investments within the scope of Ind AS 109 are measured at Fair Value with the default recognition of gains and losses in Profit and Loss (FVTPL).

IV. Deferred tax

Under Previous GAAP, deferred taxes were recognized for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognized using the balance sheet approach for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases.

10. Previous Year’s figures have been regrouped wherever necessary to correspond with the current year’s figures. Except when otherwise stated, the figures are presented in Rupees in Lakhs.

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Mar 31, 2015

1 The Loans referred at (a), (e), (h) above are secured by 1st pari-passu charge by hypothecation of movable fixed assets (Plant & Machinery), Buildings at Balanagar created out of bank finance and Land at Toopran as per Machine Division expansion plan and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company.

2 The Loans referred at (d) above are secured by Extention of 1st pari-passu charge on current assets, 2nd charge on the fixed assets pari-passu basis and immovable property at Medchel standing in the name of Mr. M.Lokeswara Rao.

3 The Loans referred at (g) & (i) above are secured by 1st pari-passu charge by hypothecation of land & buildings and Plant & Machinery, created out of bank finance as per 2DI and Connecting rod expansion plan at Pune and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

4 The Loans referred at (j) above are secured by 1st pari-passu charge by hypothecation Plant & Machinery, created out of bank finance at pune and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

5 The Loans referred at (k) above are secured by 1st pari-passu charge by hypothecation of movable fixed assets (Plant & Machinery), created out of finance and guaranted by Managing Director and Director.

b) During the financial year, company has paid an amount of Rs.173.02 lacs on due date out of Rs.1403.47 lacs payable against Secured Non Convertible Debentures (NCD's) with interest due to the slow down in business. However the company has submitted its reschedulement proposal for revised repayment schedule and debenture holders consented for the same in principle.

6. Working capital limits from consortium banks are secured by way of :

i) Primary : pari-passu first charge by way of hyphothecation of stocks of raw material, semi finished goods, finished goods, stores and spares, book debts and all movable and other current assets of the company.

ii) Collateral : (i) pari-passu first charge by way of Equitable Mortage of land & buildings at B-36, 15&17,25&27, Plot No 41 at Balanagar, Land & Buildings at Bonthapalli and Medchel except the relating to the specific term loans.

(ii) pari-passu second charge by way of Equitable Mortage of fixed assets of the Company.

a) There are no delays in payments to Micro and Small enterprises as required to be disclosed under the Micro, Small and Medium Enterprises Development Act 2006. The information regarding Micro and Small enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

1 Raw materials and Components are at cost on first in first out basis(FIFO)

2 Finished good and work in progress are valued at lower of cost and net realizable value on full absorption cost basis

7. NOTES TO ACCOUNTS ANNEXED TO AND FORMING PART OF THE ACCOUNTS.

Figures in Rs. Lakhs

As on As on Particulars 31.03.2015 31.03.2014

1 Contingent Liabilities not provided for on account of :

(a) Letter of Credit 437.80 595.99

(b) Bank Guarantees 257.22 1,016.74

(c) Contracts to be executed on capital 50.00 10.25 projects

2 Earnings in Foreign Exchage FOB value 378.47 808.83 of Exports

3 Expenditure in Foreign Currency.

(a) Travel 3.64 4.86

(b) Captial Goods - 418.00

(c) Stores & Components 430.76 615.62

4 Value of Imports calculated on CIF basis in respect of :

(a) Stores, Spares & Components 468.57 842.69

(b) Captial Goods - -

8. Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of india, the following disclosures have been made as required by the Standard for Acturial valuation of Gratuity.

The Company has created a Trust namely LML Employess Group Gratuity Trust vide Trust dated 01.03.1997 and obtained approvals from Income Tax Authorities vide letter No H.Qrs.I/GF/98-99 dated 23.03.1999. LIC has been appointed for management of the Trust fund for the benefits of the employees. The following tables summarize the components of net benefits.

9. Employee Benefits : Actuarial valuation of Leave encashment

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) is- sued by the Institute of Chartered Accountants of India, the following disclosure have been made as re- quired by the standard for Acturial valuation of Leave encashment.

The primary reporting of the company has been performed on the basis of business segment. The com- pany is organized into two business segments i.e. Machines division and Components division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting systems.

Secondary segment reporting is performed on the basis of geographical location of customers. The opera- tions of the company are largely confined to India, with exports contributing to approximately 3.20% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

10. Segment revenue and results

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

11. Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances. Assets at the corporate level are not allocable to segments on a reasonable basis and thus the same have not been allocated.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

12. Inter segment transfers

There were no inter-segment transfers during the year.

13. The Company has decided to issue 10,00,000 equity shares to non promoters and 31,00,400 convertible warrants to promoters and non promoters on preferential basis in the EGM conducted on 30.03.2015 . Accordingly company has received an amount of Rs. 500 lakhs against equity shares and Rs. 25 lakhs against convertible warrants.

14. In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

15 Previous year's figures have been re-grouped and/or reclassified wherever necessary to make them comparable with those of current year.

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Mar 31, 2014

Rs. Lakhs Particulars 31.03.2014 31.03.2013 1 Contingent Liabilities not provided for on account of :

(a) Letter of Credit 595.99 778.84

(b) Bank Guarantees 1,016.74 825.37

(c) Contracts to be executed on capital projects 10.25 587.8

2 Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of india, the following disclosures have been made as required by the Standard for Acturial valuation of Gratuity.

The Company has created a Trust namely LML Employess Group Gratuity Trust vide Trust dated 01.03.1997 and obtained approvals from Income Tax Authorities vide letter No H.Qrs.I/GF/98-99 dated 23.03.1999. LIC has been appointed for management of the Trust fund for the benefits of the employees. The following tables summarize the components of net benefits.

The primary reporting of the company has been performed on the basis of business segment. The company is organized into two business segments i.e. Machines division and Components division. Segments have been identified and reported based on the nature of the products, risks and returns,

the organization structure and the internal financial reporting systems.

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the company are largely confined to India, with exports contributing to approximately 7.23% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

Segment revenue and results

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances. Assets at the corporate level are not allocable to segments on a reasonable basis and thus the same have not been allocated.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

Inter segment transfers

There were no inter-segment transfers during the year.

3 In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

4 Previous year''s figures have been re-grouped and/or reclassified wherever necessary to make them comparable with those of current year.

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Mar 31, 2013

1 Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of india, the following disclosures have been made as required by the Standard for Acturial valuation of Gratuity.

The Company has created a Trust namely LML Employess Group Gratuity Trust vide Trust dated 01.03.1997 and obtained approvals from Income Tax Authorities vide letter No H.Qrs.I/GF/98-99 dated 23.03.1999. LIC has been appointed for management of the Trust fund for the benefits of the employees. The following tables summarize the components of net benefits.

Employee Benefits : Actuarial valuation of Leave encashment

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosure have been made as required by the standard for Acturial valuation of Leave encashment.

The primary reporting of the company has been performed on the basis of business segment. The company is organized into two business segments i.e. Machines division and Components division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting systems.

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the company are largely confined to India, with exports contributing to approximately 5.35% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

Segment revenue and results

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances. Assets at the corporate level are not allocable to segments or a reasonable basis and thus the same have not been allocated.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Inter segment transfers There were no inter-segment transfers during the year.

In the opinion of the Board, the current assets and loans & advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

Previous year''s figures have been re-grouped and/or reclassified wherever necessary to make them comparable with those of current year.

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Mar 31, 2012

1 The Loans referred at (a), (e), (i) above are secured by 1st pari-passu charge by hypothecation of movable fixed assets (Plant & Machinery), Buildings at Balanagar created out of bank finance and Land at Toopran as per Machine Division expansion plan and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

2 The Loans referred at (b), (f), above are secured by 1st pari-passu charge by hypothecation of land & buildings and Plant & Machinery, created out of bank finance as per 2DI first phase expansion plan and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

3 The Loans referred at (c) above are secured by 1st pari-passu charge by hypothecation of movable fixed assets (Plant & Machinery), created out of bank finance as per 2DI second phase expansion plan and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

4 The Loans referred at (g) above are secured by 1st pari-passu charge by hypothecation of land & buildings and Plant & Machinery, created out of bank finance as per 2DI expansion plan at Pune and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on the fixed assets of the company(other than project assets exclusively financed) and current assets of the company

5 The Loans referred at (d), (h) above are secured by 1st pari-passu charge by hypothecation of fixed assets of the company and guaranted by Managing Director and Executive Director & 2nd pari-passu charge on current assets of the company

1 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the Directors of the Company

2 Terms of Repayment: Monthly Installments.

a) The promoters or their nominees has to purchase 75% of OCD's and to be convertible in to equity before 18 months from the date of issue of OCD's. The remaining 25%of OCD's are under option of IFCI Ventures for convertion in to equity shares before 18 months from the date of issue.

b) On the date of completion of tenure of OCD's, the Company will issue a Secured Non Convertible Debentures (NCD's) of face value of Rs. 59.40 against each of the OCD's not bought back by Promoters or their Nominees & not opted for conversion by IFCI Venture if OCD's are not converted in to equity.

c) The OCD's are secured by mortgage of land of 26.34 Acres located at Part-B, Automotive Park at survey No 148 of Kalakkal village, Toopan Mondal, Medak Dist, Andhra Pradesh and further secured by pledge the shares of 5,00,000 held by promoters and further guaranted by promoters.

1 Working capital limits from consortium banks are secured by way of :

i) Primary : pari-passu first charge by way of hyphothecation of stocks of raw material, semi finished goods, finished goods, stores and spares, book debts and all movable and other current assets of the company.

ii) Collateral: (i) pari-passu first charge byway of Equitable Mortage of land & buildings at B-36,15&17,25&27, Plot No 41 at Balanagar, Land

& Buildings at Bonthapalli and Medchel except the relating to the specific term loans

(ii) pari-passu second charge by way of Equitable Mortage of fixed assets of the Company.

1 Raw materials and Components are at cost on first in first out basis(FIFO)

2 Finished good and work in progress are valued at lower of cost and net realizable value on full absorption cost basis B NOTES TO ACCOUNTS

1 (A) Contingent Liabilities not provided for on account of:

Rs. In lakhs

2011-12 2010-11

(a) Letter of Credit 1,731.61 753.83

(b) Bank Guarantees 565.57 643.76

(c) Interest on OCD's 171.54 0.00

(B) Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs.154.45 lakhs (31.03.2011: Rs. 3535.39 lakhs) [(Net of Advances Rs.434.49 lakhs) (31.03.2011: Rs.403.90 lakhs

2 Expenditure in Foreign Currency.

a) Travel Rs.18.66 lakhs (2010-11: Rs.12.82 lakhs)

b) Capital Goods: Rs 676.64 (2010-11: Rs. Nil lakhs)

c) Stores and components Rs. 710.89 lakhs (2010-11:Rs. 516.36. lakhs)

3 Earnings in Foreign currency:

FOB value of goods exported: Rs.23.89 lakhs (2010-11: Rs. 165.72 lakhs)

4 CIF Value of Imports:

a) Stores, spares and components: Rs. 976.89 lakhs (2010-11: 743.68 lakhs)

b) Capital Goods: Rs 696.13 (2010-11: Rs. Nil lakhs)

5 Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Gratuity.

(Amounts in brackets represent previous year figures)

The primary reporting of the company has been performed on the basis of business segment. The company is organized into two business segments i.e. Machines division and Components division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting systems.

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the company are largely confined to India, with exports contributing to approximately 0.15% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

Segment revenue and results

The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.

Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of debtors, inventories, advances and fixed assets, net of allowances. Assets at the corporate level are not allocable to

segments on a reasonable basis and thus the same have not been allocated.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

Inter segment transfers

There were no inter-segment transfers during the year

(Figures in brackets represent transactions for the year 2010-11/ balance as on March 31, 2012 including opening balances)

6 Consequent to the Notification under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared under Revised Schedule VI accordingly. The previous year's figures also have been reclassified to confirm to this year's classification. There is a significant impact in presentation of the figures due to change in presentation arising out of schedule VI.

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Mar 31, 2010

1) A) Contingent Liabilities not provided for on account of:

(Rs. In Lakhs)

2009-10 2008-09 a) Letters of Credit 829.89 371.54

b) Bank Guarantees 562.90 321.16

B) Estimated amount of Contracts remaining to be executed on Capital account and not provided for Rs.2150.63 lakhs (31.03.2009: Rs. 2757.17 lakhs) [(Net of Advances Rs.140.00 lakhs) (31.03.2009: Rs.151.00 lakhs)]

2) (a) Term loans from State Bank of Hyderabad and State Bank of Indore and Punjab National Bank are secured by equitable mortgage of land, buildings, plant and machinery and hypothecation of all movables (except book debts) including movable machinery, machinery spares, tools and accessories, both present and future on pari passu basis and further secured by the personal guarantee of the Managing Director and Executive Director. The loan from Life Insurance Corporation of India is secured by surrender value of key men Insurance Policies further guaranteed by the personal guarantee of the Managing Director.

(b) Cash Credit from Banks are secured by hypothecation of stock and receivables and second charge on land, buildings and machinery and further secured by the personal guarantee of the Managing Director and Executive Director.

(c) Vehicles acquired under finance lease are secured by the hypothecation of the vehicles and further secured by personal guarantee of the Managing Director.

3) Advances for capital works under Loans and Advances includes Rs. 478.92 lakhs (Previous year: 310.78) given to M/s MLR Motors Ltd which is under the same management towards purchase of land. The Maximum amount out standing during the year is Rs. 478.92 lakhs. (Previous year: 310.78 lakhs).

4) Employee Benefits: The disclosures as required under the revised AS 15 are as under: A) Defined Benefit Plan

The Company has schemes for long term benefits such as provident fund, gratuity and leave encashment. In case of funded scheme, the funds are recognized by the Income tax authorities and administered through trustees/appropriate authorities. The Company’s defined benefit plans include provident fund, gratuity and leave encashment. In terms of Guidance on implementing the revised AS 15, issued by the Accounting Standards of the Institute of Chartered Accountants of India, the provident fund set up by the Company is treated as defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the year end no shortfall remains unprovided for. It is not practical or feasible to actuarially value the liability of provident fund considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investments for investible funds is as by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

5) Expenditure in Foreign Currency.

a) Travel Rs.15.49 lakhs (2008-09: Rs.13.10 lakhs)

b) Capital Goods: Rs Nil (2008-09: Rs.58.88 lakhs )

c) Stores and components Rs. 714.18 lakhs (Rs. 497.46 lakhs)

6) Earnings in Foreign currency: FOB value of goods exported: Rs.353.92 lakhs (2008-09: Rs. 424.90 lakhs)

7) CIF Value of Imports: Stores, spares and components: Rs. 729.96 lakhs (2008-09: 506.37 lakhs)

8) Auditor’s Remuneration:

9) Finance leases

The Company has outstanding finance leases as at March 31, 2010 on three motor vehicles These arrangements were entered for a period of three to four years. The liability payable in finance leases is analyzed as follows:

10) Earnings per share (EPS)

Basic earnings are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

The primary reporting of the company has been performed on the basis of business segment. The company is organized into two business segments i.e. Machines division and Components division. Segments have been identified and reported based on the nature of the products, risks and returns, the organization structure and the internal financial reporting systems.

Secondary segment reporting is performed on the basis of geographical location of customers. The operations of the company are largely confined to India, with exports contributing to approximately 3.66% of its annual net sales. The management views the Indian market and export market as distinct geographical segments.

Sales by market – The following are the distribution of the company’s sales by geographical market:

Segment revenue and results

The expenses that are not directly attributable to the business segments are shown as unallocated corpo- rate costs.

Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of debtors, invento- ries, advances and fixed assets, net of allowances. Assets at the corporate level are not allocable to segments on a reasonable basis and thus the same have not been allocated.

Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

Inter segment transfers

There were no inter-segment transfers during the year.

11) Related party disclosures

A) List of related parties and relationships

Sl. No. Related Party Nature of relationship

1) M.Lokeswara Rao

2) B.Kishore Babu

3) K.Krishna Swamy Key Management Personnel

4) M.Srinivas

5) M.Srikrishna

6) MLR Motors Limited Entities owned or significantly influenced

by Key Management Personnel

7) M.Vijayalakshmi

8) M.Kanaka Durga

Relatives of Key Management Personnel

9) M.Vasanthalakshmi

10) B. Vijayalakshmi

12) Derivative Instruments:

The company has entered into the following derivative instruments: