Notes to Accounts of Munjal Showa Ltd.

Mar 31, 2025

xii) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If
it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is
reversed.

Warranties

The estimated liability for product warranties is recorded when products are sold. These estimates are established
using historical information on the nature, frequency and average cost of warranty claims and management
estimates regarding possible future incidence based on corrective actions on product failures. The timing of
outflows will vary as and when warranty claim will arise- being typically two to five years. The estimate of such
warranty-related costs is revised annually.

xiii) Contingent liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company or a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be
made.

xiv) Contingent assets

Contingent assets are disclosed in the financial statements only when an inflow of economic benefits is probable.

xv) Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately
in the Statement of Profit and Loss.

a) Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair
value, depending on the classification of the financial assets

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost (except
for debt instruments that are designated as at fair value through profit or loss on initial recognition):

• the asset is held within a business model whose objective is to hold assets in order to collect
contractual cash flows; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding

Debt instruments that meet the following conditions are subsequently measured at fair value through other
comprehensive income ("FVTOQ") (except for debt instruments that are designated as at fair value through
profit or loss on initial recognition):

• the asset is held within a business model whose objective is achieved both by collecting contractual
cash flows and selling financial assets; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

Interest income is recognised in profit or loss for FVTOCI debt instruments.

All other financial assets are subsequently measured at fair value.

Trade receivables that do not contain a significant financing component are measured at transaction price.
Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets
classified as at FVTPL. Interest income is recognised in the Statement of Profit and Loss and is included in the
"Other income" line item.

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

Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial
recognition to present subsequent changes in fair value in other comprehensive income for investments in
equity instruments which are not held for trading.

Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria are measured at FVTPL. In
addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as
at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may
be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising
the gains and losses on them on different bases.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses
arising on re-measurement recognised in the Statement of Profit and Loss. The net gain or loss recognised in
Statement of Profit and Loss incorporates any dividend or interest earned on the financial asset and is included
in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right
to receive the dividends is established, it is probable that the economic benefits associated with the dividend
will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the
amount of dividend can be measured reliably.

Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial assets
measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive
cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring
as the weights.

De-recognition of financial assets

The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset
expires, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another party.

b) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by Company are classified as either financial liabilities or as'' equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and
an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities.

Financial liabilities

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised
cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are
subsequently measured at amortised cost are determined based on the effective interest method. Interest
expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' Line item.

The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and points paid or received that form an integral part of
the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial liability.

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at
FVTPL.

De-recognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company''s obligations are
discharged, cancelled or have expired.

c) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign
exchange rate risks, including foreign exchange forward contracts, option contracts, etc.

Embedded derivatives

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS
109 are treated as separate derivatives when their risks and characteristics are not closely related to those of
the host contracts and the host contracts are not measured at FVTPL.

xvi) Equity share capital

Equity shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are
recognised as a deduction from equity, net of any tax effects.

xvii) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed at the
end of each reporting period to determine whether there is any indication of impairment. If any such indication
exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use or its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually
are grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or group of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset
belongs.

An impairment loss is recognised, if the carrying amount of an asset or its cash-generating unit exceeds its
estimated recoverable amount and are recognised in Statement of Profit and Loss. Impairment losses recognised
in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill, if any, allocated
to the units and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.''

Impairment losses recognised in prior periods are assessed at end of each reporting period for any indications that
the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable a mount. An impairment loss is reversed only to the extent that the asset''s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.

xviii) Employee benefits

Short Term Employee benefits

All employee benefits expected to be settled wholly within twelve months of rendering the service are classified
as short-term employee benefits. When an employee has rendered service to the Company during an accounting
period, the Company recognises the undiscounted amount of short-term employee benefits expected to be paid
in exchange for that service as an expense unless another Ind AS requires or permits the inclusion of the benefits
in the cost of an asset. Benefits such as salaries, wages and short-term compensated absences and bonus etc. are
recognised in Statement of Profit and Loss in the period in which the employee renders the related service.

Defined Contribution Plan

Provident fund and superannuation fund

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly
contributions towards provident fund and superannuation fund which are defined contribution plans.The Company
has no obligation, other than the contribution payable to the funds. The Company recognises contribution payable
to the fund in the Statement of Profit and Loss, when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet date exceeds the contribution already paid,
the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services received before the balance sheet date, then
excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future
payment or a cash refund.

Long term Employee benefits Defined Benefit Plan
Gratuity

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of
defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in
return for their service in the current and prior periods; this benefit is discounted to determine its present value.
Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the
Company''s obligation under this plan is performed annually by a qualified actuary using the projected unit credit
method.

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

All other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss as employee
benefit expenses. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised
when the curtailment or settlement occurs. Curtailment gains and losses are accounted for as past service costs.

Compensated absences

The employees can carry forward a portion of the unutilized accrued compensated absences and utilise it in future
service periods or receive cash compensation during termination of employment.

Compensated absence, which is expected to be utilized within the next 12 months, is treated as short-term
employee benefit. The Company measures the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company
treats compensated absences expected to be carried forward beyond twelve months, as long-term employee
benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial
valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to
the Statement of Profit and Loss.

xix) Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax'' as
reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.

Current and deferred tax for the year

Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are
also recognised in other comprehensive income or directly in equity respectively.

xx) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the
related asset.

When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value
amounts and released to the Statement of Profit and Loss over the expected useful life in a pattern of consumption
of the benefit of the underlying asset i.e. by equal annual instalments.

xxi) Earnings per share

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

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

xxii) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the
reporting period.

xxiii) Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company accounting policies, which are described in note 2, the management of the
Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual results may differ from these
estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in
the process of applying the Company''s accounting policies:

(a) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed
at the end of each reporting period to determine whether there is any indication of impairment. If any such
indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or groups of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset
belongs.

(b) Useful life of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. As at March 31, 2025
management assessed that the useful lives represent the expected utility of the assets to the Company.
Further, there is no change in the useful lives as compared to previous year.

(c) Provisions and contingent liabilities

On an ongoing basis, the Company reviews pending cases, claims by third parties and other contingencies.
For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial
statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent
liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the
financial statements.

(d) Estimation of defined employee benefits

The present value of the gratuity and compensated absence obligations are determined using actuarial
valuation. An actuarial valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount rate, future salary increases and
mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting
date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for
plans operating in India, the management considers the interest rates of government bonds in currencies
consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on
publicly available mortality tables for the specific countries. Those mortality tables tend to change only at
interval in response to demographic changes. Future salary increases and gratuity increases are based on
expected future inflation rates.

Further details about gratuity obligations are given in Note 28.

(e) Provision for warranty

A provision is recognised for expected warranty claims on products sold during the latest five years (including
current year) as per warranty period on respective models, based on past experience of level of repairs and
returns. Assumption used to calculate the provision for warranties are based on current sales level and current
information available about past returns based on the warranty period for all products sold.

3. APPLICABILITY OF NEW AND REVISED IND AS

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025, MCA has notified
Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f April 1, 2024. The Company has reviewed the new pronouncements and based on its
evaluation has determined that it does not have any impact on the financial statements.

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Mar 31, 2024

xii) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Warranties

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise- being typically two to five years. The estimate of such warranty-related costs is revised annually.

xiii) Contingent liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

xiv) Contingent assets

Contingent assets are disclosed in the financial statements only when an inflow of economic benefits is probable.

xv) Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial

assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.

a) Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

• the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOQ") (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

• the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest income is recognised in profit or loss for FVTOCI debt instruments.

All other financial assets are subsequently measured at fair value.

Trade receivables that do not contain a significant financing component are measured at transaction price. Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the Statement of Profit and Loss and is included in the "Other income" line item.

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

Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.

Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in the Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights.

De-recognition of financial assets

The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expires, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

b) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by Company are classified as either financial liabilities or as'' equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Financial liabilities

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' Line item.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability.

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

De-recognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired.

c) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts, option contracts, etc.

Embedded derivatives

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

xvi) Equity share capital

Equity shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are recognised as a deduction from equity, net of any tax effects.

xvii) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use or its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised, if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount and are recognised in Statement of Profit and Loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill, if any, allocated to the units and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

Impairment losses recognised in prior periods are assessed at end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

xviii) Employee benefits

Short Term Employee benefits

All employee benefits expected to be settled wholly within twelve months of rendering the service are classified as short-term employee benefits. When an employee has rendered service to the Company during an accounting period, the Company recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as an expense unless another Ind AS requires or permits the inclusion of the benefits in the cost of an asset. Benefits such as salaries, wages and short-term compensated absences and bonus etc. are recognised in Statement of Profit and Loss in the period in which the employee renders the related service.

Defined Contribution Plan

Provident fund and superannuation fund

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards provident fund and superannuation fund which are defined contribution plans.The Company has no obligation, other than the contribution payable to the funds. The Company recognises contribution payable to the fund in the Statement of Profit and Loss, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.

Long term Employee benefits Defined Benefit Plan Gratuity

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; this benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company''s obligation under this plan is performed annually by a qualified actuary using the projected unit credit method.

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

All other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss as employee benefit expenses. Gains or losses on the curtailment or settlement of any defined benefit plan are

recognised when the curtailment or settlement occurs. Curtailment gains and losses are accounted for as past service costs.

Compensated absences

The employees can carry forward a portion of the unutilized accrued compensated absences and utilise it in future service periods or receive cash compensation during termination of employment.

Compensated absence, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats compensated absences expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss.

xix) Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year

Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

xx) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to the Statement of Profit and Loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.

xxi) Earnings per share

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

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

xxii) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

xxiii) Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company accounting policies, which are described in note 2, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies:

(a) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

(b) Useful life of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. As at March 31, 2024 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no change in the useful lives as compared to previous year.

(c) Provisions and contingent liabilities

On an ongoing basis, the Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements.

(d) Estimation of defined employee benefits

The present value of the gratuity and compensated absence obligations are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operating in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Further details about gratuity obligations are given in Note 28.

(e) Provision for warranty

A provision is recognised for expected warranty claims on products sold during the latest five years (including current year) as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about past returns based on the warranty period for all products sold.

28. Employee benefits

Defined Contribution Plans - General Description

The Company makes contribution towards employees'' provident fund and superannuation fund. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the schemes to these defined contribution schemes. The Company has recognised following amounts as an expense towards contribution to these schemes.

29. Ind AS 116: ''Leases''

The Company has entered into cancellable operating lease arrangement for various residential properties for use by its employees. Considering the nature of these leases, lease payments are recognized as expenses in the Statement of Profit and Loss during the year ended March 31,2024 is '' 32.64 lakhs (March 31, 2023: '' 30.29 lakhs).

30. Contingent liabilities, commitments and assets (to the extent not provided for) a. Capital and other commitments

At March 31 2024, the estimated amount of contracts remaining to be executed on capital account was '' 8.25 lakhs (March 31, 2023: '' 108.01 lakhs)

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

The above matters are subject to legal proceedings in the ordinary course of business. The legal proceeding when

ultimately concluded, in the opinion of the management, will not have a material effect on financial position of the

Company.

Nature of disputes:

(i) The Company has outstanding Income-tax demands aggregating to '' 9,350.80 lakhs, in relation to disallowance of royalty and other transfer pricing adjustments with associated enterprises. Considering favourable ITAT judgements for earlier years viz. AY 2006-07, AY 2007-08 and AY 2008-09, demand for royalty disallowance aggregating to '' 8,819.06 lakhs have been considered as remote. All other matters, mainly related to domestic transfer pricing are considered contingent by the Company. As on March 31, 2024, the total amounts paid under protest, including amounts withheld by tax authorities is '' 5,717.03 lakhs (March 31, 2023: '' 5,044.37 lakhs).

(ii) The Company has outstanding excise duty demands of Nil (March 31, 2023''31.06 lakhs) in relation to royalty paid for import of services.

(iii) The Company has outstanding demands of '' 50.76 with Employee state insurance court in relation to pending submission of requisite details with authorities against which the Company has paid '' 19.54 Lakhs (March 31, 2023''28.14 lakhs) under protest.

(iv) Imposition of penalty on the Company for dealing in forged DEPB scrips amounting to '' 129.44 lakhs. The Company has deposited '' 32.36 lakhs (25% of the penalty amount) and filed an appeal in compliance with the condition of pre-deposit of 7.5% under section 129E of the Customs Act, 1962.

34. Segment information

The Company primarily operates in the auto components segment. The Company operates as an ancilliary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being shock absorbers, struts and window balancers.

The board of directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company''s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of IND AS 108 "Operating Segments".

Geographical Locations: The Geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.

35. Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds into various investment options. The Company does not have debts and meets its capital requirement through equity.

The Company is not subject to any externally imposed capital requirements

The management of the Company reviews the capital structure of the Company on regular basis. As part of this review, the Board considers cost of capital and the risks associated with the movement in the working capital.

The following is the basis of categorising the financial instruments measured at fair value into Level 1 to Level 3:

Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of quoted debentures and open-ended mutual funds.

Level 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Fair value of the Company''s financial assets that are measured at fair value on a recurring basis:

There are certain Company''s financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:

The fair value of the financial assets and financial liabilities are included at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between the market participants. The following methods and assumptions were used to estimate the fair values:

- Investments traded in active markets are determined by reference to quotes from the stock exchanges; for example: quoted price of debentures in the stock exchange etc. The fair value of listed debentures and mutual funds are based on direct market observable inputs.

- The fair value of unquoted mutual funds is verified from the Net Assets Value (i.e. NAV) declared by the Mutual Fund houses / third party websites.

- The fair value of Alternate Investment Fund fund is as per the valuation statement received from the fund.

- Trade receivables, cash & cash equivalents, other bank balances, loans, other current financial assets, trade payables and other current financial liabilities: Approximate their carrying amounts largely due to short-term maturities of these instruments.

- Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

36.3 Financial risk management objectives

The Company''s senior management monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company seeks to minimise the effects of these risks by using diversification of investments, credit limit to exposures, etc., to hedge risk exposures. The use of financial instruments is governed by the Company''s policies on foreign exchange risk and the investment. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity which impact returns on investments. Future specific market movements cannot be normally predicted with reasonable accuracy. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies and consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. The counter party for these contracts is generally a bank, however there are no outstanding forward exchange contracts at year end.

Foreign currency sensitivity

The following table details the Company''s sensitivity to a 5% increase and decrease in the rupee 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. A positive number below indicates an increase in profit or equity. For a 5% strengthening/weakening of the rupee against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be positive or negative.

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 as a means of mitigating the risk of financial loss from defaults. Trade receivables balance at the end of the year includes '' 14,385.05 Lakhs (March 31, 2023: '' 16,117.98 Lakhs) due from the Company''s largest customer, which is creditworthy and Company doesn''t have any past history of any losses on account of credit risk. The Company''s exposure and wherever appropriate, the credit ratings of its counterparties are continuously monitored and spread amongst various counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management of the Company. Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables and loans and advances. Other than trade receivables, none of the financial instruments of the Company result in material concentrations of credit risks.

Balances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The age analysis of trade receivables as of the balance sheet date have been considered from the due date and disclosed in the note no. 9 above.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, debentures, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower:

• profit for the year ended March 31,2024 would increase/decrease by '' 262.69 lakhs (for the year ended March 31,

2023: increase/decrease by '' '' 269.89 lakhs)"

Liquidity risk

Liquidity risk represents the inability of the Company to meet its financial obligations within stipulated time. To mitigate this risk, the Company maintains sufficient liquidity by way of readily convertible instruments and working capital limits from banks. The company has a sanctioned Cash credit limits of '' 3,000 Lakhs (March 31, 2023 : '' 3,000 Lakhs) which remained unutilised as at March 31, 2024.

39. The Company neither had transactions with struck off Company during the year nor does it have any outstanding

balance at reporting date.

40. Additional regulatory information

(a) Borrowings are made from banks/ FI on the basis of security of current asset. The returns or statements viz. Financial follow-up report/Financial report filed by the Company with such banks are in agreement with the unaudited books of account of the Company for the said period.

(b) The Company has complied with the number of layers of companies as prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(c) No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition) Act, 1988.

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

(e) The Company has not advanced or loaned or invested funds to any other person or entity, including foreign entities (Intermediaries) with the understanding that the Intermediary shall: 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 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 or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(g) Proper books of account as required by law have been kept by the Company including the daily back-up of the books of account and other books and papers of the Company maintained in electronic mode are kept in servers physically located in India.

(g) Proper books of account as required by law have been kept by the Company including the daily back-up of the books of account and other books and papers of the Company maintained in electronic mode are kept in servers physically located in India.

41. The Company has neither traded nor invested in crypto currency or virtual currency during the financial year.

42. Undisclosed Income

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).

43. The Company has no cases of any charges or satisfaction yet to be registered with ROC beyond the statutory time limits.

44. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

45. As per the proviso to Rule 3(1) of Companies (Accounts) Rules, 2014, for the financial year commencing on or after the 1st day of April 2023, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company has used accounting software for maintaining its books of account for the year ended March 31, 2024 where in audit trial (edit log) feature is enabled for capturing audit logs for transactions processed through transaction codes (user interface) and the same has operated throughout the year for all relevant transactions recorded in the software, except that the audit trail feature was not enabled for certain tables at application level and no audit trail enabled at the database level for this accounting software to log any direct data changes. Further, as no audit trail enabled all tables at transaction level and database level, we are unable to assure whether there were any instances of the audit trail feature been tampered with.

46. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund. Unpaid dividend (refer note 16 (b)) does not include any amount outstanding as at March 31, 2024 which are required to be credited to Investor Education and Protection Fund.

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

48. The financial statements were approved for issue by the board of directors on May 29, 2024.

For and on behalf of the Board of Directors

Yogesh Chander Munjal Ashok Kumar Munjal

Chairman & Managing Director Director

DIN-00003491 DIN-00003843

Pankaj Gupta Neha Bansal

Place : Gurugram Chief Financial Officer Company Secretary

Date : May 29, 2024 Membership No. A38848

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Mar 31, 2023

xii) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Warranties

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise- being typically two to five years. The estimate of such warranty-related costs is revised annually.

xiii) Contingent liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

xiv) Contingent assets

Contingent assets are disclosed in the financial statements only when an inflow of economic benefits is probable.

xv) Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.

a.) Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

• the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOQ") (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

• the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and

• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest income is recognised in profit or loss for FVTOCI debt instruments.

All other financial assets are subsequently measured at fair value.

Trade receivables that do not contain a significant financing component are measured at transaction price.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the Statement of Profit and Loss and is included in the "Other income" line item.

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

Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.

Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in the Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights.

De-recognition of financial assets

The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expires, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

b.) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by Company are classified as either financial liabilities or as'' equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Financial liabilities

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' Line item.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability.

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

De-recognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired.

c.) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts, option contracts, etc.

Embedded derivatives

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

xvi) Equity share capital

Equity shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are recognised as a deduction from equity, net of any tax effects.

xvii) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use or its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised, if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount and are recognised in Statement of Profit and Loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill, if any, allocated to the units and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

Impairment losses recognised in prior periods are assessed at end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

xviii) Employee benefits

Short Term Employee benefits

All employee benefits expected to be settled wholly within twelve months of rendering the service are classified as short-term employee benefits. When an employee has rendered service to the Company during an accounting period, the Company recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as an expense unless another Ind AS requires or permits the inclusion of the benefits in the cost of an asset. Benefits such as salaries, wages and short-term compensated absences and bonus etc. are recognised in Statement of Profit and Loss in the period in which the employee renders the related service.

Defined Contribution Plan

Provident fund and superannuation fund

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards provident fund and superannuation fund which are defined contribution plans.The Company has no obligation, other than the contribution payable to the funds. The Company recognises contribution payable to the fund in the Statement of Profit and Loss, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.

Long term Employee benefits

Defined Benefit Plan

Gratuity

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; this benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company''s obligation under this plan is performed annually by a qualified actuary using the projected unit credit method.

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

All other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss as employee benefit expenses. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Curtailment gains and losses are accounted for as past service costs.

Compensated absences

The employees can carry forward a portion of the unutilized accrued compensated absences and utilise it in future service periods or receive cash compensation during termination of employment.

Compensated absence, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats compensated absences expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss.

xix) Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year

Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

xx) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to the Statement of Profit and Loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.

xxi) Earnings per share

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

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

xxii) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

xxiii) Amendments to Ind AS issued but not yet effective

MCA vide notification no. G.S.R. 242(E) dated March 31, 2023 has issued the Companies (Indian Accounting Standards) Amendment Rules, 2023 which amends following Ind AS (as applicable to the Company):

• Ind AS 107, Financial Instruments: Disclosures

• Ind AS 109, Financial Instruments

• Ind AS 115, Revenue from Contracts with Customers

• Ind AS 1, Presentation of Financial Statements

• Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors

• Ind AS 12, Income Taxes

• Ind AS 34, Interim Financial Reporting

The amendments are applicable for annual periods beginning on or after April 1, 2023. The Company has evaluated the amendments and the impact is not expected to be material.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies:

(a) Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (''CGU'') is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (''CGU'').

The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

(b) Useful life of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. As at March 31, 2023 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no change in the useful lives as compared to previous year.

(c) Provisions and contingent liabilities

On an ongoing basis, the Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements.

(d) Estimation of defined employee benefits

The present value of the gratuity and compensated absence obligations are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operating in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 29."

34. Related party disclosures under IND AS 24

(i) Names of related parties and related party relationship

(a) Key management personnel

- Mr. Yogesh Chander Munjal - Chairman & Managing Director

- Mr. Yasuhiro Ashiki - Joint Managing Director w.e.f June 23, 2021

- Mr. Shigeki Kobayashi - Joint Managing Director Upto April 10, 2021

- Mr. Avi Munjal- Senior Vice President (SVP) Grandson of Mr. Yogesh Chander Munjal and son of Mrs. Charu Munjal

- Mr. Pankaj Gupta (Chief Financial Officer)

- Mrs. Neha Bansal (Company Secretary) w.e.f. October 29, 2021

- Ms. Geetanjali Sharma (Company Secretary) Upto September 30, 2021

- Mr. Ashok Kumar Munjal- Non executive director

- Mr. Vinod Kumar Agrawal- Independent director

- Mr. Nand Lal Dhameja- Independent director

- Mrs. Charu Munjal- Non executive director

- Mr. Surinder Kumar Mehta- Independent director Upto February 22, 2022

- Mrs. Geeta Anand- Independent director Upto February 17, 2022

- Mrs. Kavita Venugopal- Independent director w.e.f. May 17, 2022

- Mr. Devi Singh- Independent director

- Mr. Kazuhiro Nishioka- Non executive director w.e.f .June 23, 2021

- Mr. Yasuhiro Yamamoto- Non executive director Upto June 29, 2021

(b) Relatives of key management personnel

- Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

(c) Enterprise with significant influence over the Company

- Hitachi Astemo Limited, Japan w.e.f. January 01,2021 (refer note below)

- Dayanand Munjal Investments Private Limited

(d) Enterprises owned or controlled by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Shivam Autotech Limited

- Earthly Possessions

36.3 Financial risk management objectives

The Company''s senior management monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company seeks to minimise the effects of these risks by using diversification of investments, credit limit to exposures, etc., to hedge risk exposures. The use of financial instruments is governed by the Company''s policies on foreign exchange risk and the investment. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes"

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity which impact returns on investments. Future specific market movements cannot be normally predicted with reasonable accuracy. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies and consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. The counter party for these contracts is generally a bank, however there are no outstanding forward exchange contracts at year end.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

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 as a means of mitigating the risk of financial loss from defaults. Trade receivables balance at the end of the year includes '' 16,117.98 Lakhs (March 31, 2022: '' 13,837.17 Lakhs) due from the Company''s largest customer, which is creditworthy and Company doesn''t have any past history of any losses on account of credit risk. The Company''s exposure and wherever appropriate, the credit ratings of its counterparties are continuously monitored and spread amongst various counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management of the Company. Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables and loans and advances. Other than trade receivables, none of the financial instruments of the Company result in material concentrations of credit risks.

Balances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The age analysis of trade receivables as of the balance sheet date have been considered from the due date and disclosed in the note no. 9 above.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

40. Additional regulatory information

(a) Borrowings are made from banks/ FI on the basis of security of current asset. The returns or statements viz. Financial follow-up report/Financial report filed by the Company with such banks are in agreement with the unaudited books of account of the Company for the said period.

(b) The Company has complied with the number of layers of companies as prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(c) No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition) Act, 1988.

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

(e) The Company has not advanced or loaned or invested funds to any other person or entity, including foreign entities (Intermediaries) with the understanding that the Intermediary shall: 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 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 or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(g) Proper books of account as required by law have been kept by the Company including the daily back-up of the books of account and other books and papers of the Company maintained in electronic mode are kept in servers physically located in India.

41. The Company has neither traded nor invested in crypto currency or virtual currency during the financial year.

42. Undisclosed Income

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).

43. The Company has no cases of any charges or satisfaction yet to be registered with ROC beyond the statutory time limits.

44. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

45. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund. Unpaid dividend (refer note 16 (b)) does not include any amount outstanding as at March 31, 2023 which are required to be credited to Investor Education and Protection Fund.

46. The Company''s operations and financial results for the first quarter (i.e. quarter ended June 30, 2021) of the previous year ended March 31, 2022 were adversely impacted by COVID-19 Pandemic. The results for the year ended March 31, 2023, are therefore, not comparable with previous year.

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

48. The financial statements were approved for issue by the board of directors on May 30, 2023.

For and on behalf of the Board of Directors

Yogesh Chander Munjal Vinod Kumar Agrawal

Chairman & Managing Director Director

DIN-00003491 DIN-00004463

Pankaj Gupta Neha Bansal

Place : Gurugram Chief Financial Officer Company Secretary

Date : May 30, 2023 Membership No. A38848

---

Mar 31, 2018

B. Terms/Rights attached to equity shares

1. The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.

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

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by 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.

Dividends

After the reporting date, the following dividends were proposed by the directors subject to the approval at the annual general meeting; the dividends have not been recognised as a liability. Dividends would attract dividend distribution tax (DDT) when declared or paid.

A provision is recognised for expected warranty claims on products sold during the last one to five years as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about past returns based on the warranty period for all products sold. The table above gives information about movement in warranty provision.

Provision for contingency

The Company had received a show-cause notice from Haryana State Pollution Control Board (‘HSPCB’) in 2009-10 towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management had submitted a time bound remediation plan as per which specified milestones were to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 500 lacs had also been submitted to HSPCB. The management had initiated adequate steps suggested by the experts and had completed the plan within the overall time frame. Against the appeal filed by the Company with Appellate Authority, HSPCB, the case had been decided by the appellate authority on November 4, 2011 and as per the order of the appellate authority, bank guarantee of Rs. 375 lacs had been released and bank guarantee of Rs. 125 lacs had been forfeited by HSPCB. The Company had filed a writ petition against the order of the appellate authority before the Hon’ble High Court of Punjab and Haryana, which gave the decision for transfer of the case to National Green Tribunal, New Delhi. National Green Tribunal has disposed off our Appeal vide Judgment dated 03.11.2016 stating that we see no reason to interfere with the order dated 09.08.2010 passed by the HSPCB, partially encashing the bank guarantee furnished by the appellant industry to the extent of Rs.125 lacs and directed the Chairman of the HSPCB to personally conduct an inquiry into the matter, fix responsibility and take action in accordance with law. Provision of Rs. 75 lacs (March 31, 2017: Rs. 75 lacs, April 1, 2016; Rs. 75 lacs), over and above the amount already forfeited by HSPCB, had been retained towards any contingency, as per management’s assessment of the costs to be incurred.

* Includes diminution in value of investments in Taurus Ultra Short Term Bond Fund of Rs. Nil (for the year ended March 31, 2017: Rs. 172.37 lacs)

# Government grants have been received for the purchase of certain items of property, plant and equipment. There are no unfulfilled conditions or contingencies attached to these grants. The grant set up as deferred income is recognised in the Statement of Profit and Loss on a systematic basis over the useful life of the property, plant & equipment.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company accounting policies, which are described in note 2, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company’s accounting policies:

(a) Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (‘CGU’) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (‘CGU’).

The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

(b) Useful life of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2018 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

(c) Provision and contingent liabilities

(i) Provision for contingent liabilities

On an on-going basis, the Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable. Gain contingencies are, however disclosed in the financial statements.

(ii) Estimation of defined benefits and compensated absences

The present value of the gratuity and compensated absence obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity and leave encashment obligations are given in Note 29.

(iii) Provision for warranty

A provision is recognised for expected warranty claims on products sold during the last one to five years as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about past returns based on the warranty period for all products sold.

4. Employee benefits

Defined Contribution Plans - General Description

The Company makes contribution towards employees’ provident fund, superannuation fund & employees state insurance. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the schemes to these defined contribution schemes. The Company has recognised Rs. 591.32 lacs (201617: Rs. 539.54 lacs) as an expense towards contribution to these plans.

Defined Benefit Plans - General Description Gratuity:

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employees who have completed five years of service are entitled to specific benefit. The level of benefit provided depends on the member’s length of service, salary and retirement age. The employee is entitled to a benefit equivalent to 15 days salary last drawn for each completed year of service with part thereof in excess of six months. The same is payable on termination of service or retirement or death whichever is earlier.

This is a funded benefit plan for qualifying employees. The Company makes contributions to LIC policy to cover the liability of the Company. The scheme provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

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

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by Mr. K. K. Wadhwa (Membership no. 00209), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the respective plans:

The Company makes annual contribution to Life Insurance Corporation (LIC). As LIC does not disclose the composition of its portfolio investments, break-down of plan investments by investment type is not available to disclose.

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the year, while holding all other assumptions constant.

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 87.87 lacs (increase by Rs. 95.02 lacs) [as at March 31, 2017: decrease by Rs. 64.94 lacs (increase by Rs. 69.95 lacs)] [as at April 1, 2016: decrease by Rs. 45.10 lacs (increase by Rs. 48.52 lacs)].

- If the expected salary growth increases (decreases) by 50 basis points, the defined benifit obligation would increase by Rs. 93.85 lacs (decrease by Rs. 87.65 lacs) [as at March 31, 2017: increase by Rs. 69.98 lacs (decrease by Rs. 65.55 lacs)] [as at April 1, 2016: increase by Rs. 48.76 lacs (decrease by Rs.45.71 lacs)]

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of reporting year, which is same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

The Company expects to make a contribution of Rs. 221.52 lacs (as at March 31, 2017 Rs 165.80 lacs, as at April 1, 2016 Rs. 92.45 lacs) to the defined benefit plans during the next financial year.

5. Disclosure in respect of operating leases

Operating lease : Company as lessee

The Company has taken various residential properties under operating lease agreements. These are cancellable leases and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

6. Contingent liabilities, commitments and assets (to the extent not provided for) a. Capital and other commitments

At March 31 2018, the estimated amount of contracts remaining to be executed on capital account was Rs. 200.19 lacs (March 31, 2017: Rs. 59.47 lacs, April 1, 2016: Rs. 257.79 lacs)

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee’s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

* The Company has filed subsidy claim amounting to Rs. 670 lacs equivalent to 20% of the land cost (including enhanced price) related to plant at Manesar with Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDCL) on April 25, 2005 in accordance with the Notification No.2/I/22-IIB-II-99 issued by Industries Department of the State of Haryana, which was rejected by HSIIDCL on May 20, 2008 on certain grounds. The Company, thereafter, challenged the rejection by filing writ petition before High Court of Punjab & Haryana. on July 25, 2014 During the current year, the Company received a favorable order dated August 10, 2017 from High Court directing HSIIDCL to pass fresh orders by November 30, 2017 and pay the subsidy claim within eight weeks. No order is received from HSIIDCL confirming the subsidy claim. till date The Company is considering filing a writ petition to get HSIIDCL to comply with the High Court order

7. Related party disclosures under IND AS 24

(i) Names of related parties and related party relationship

(a) Key management personnel and their relatives

- Mr. Yogesh Chander Munjal - Chairman cum Managing Director

- Mr. Matsui Masanao- Non executive director

- Mr. Ashok Kumar Munjal- Non executive director

- Mr. Pankaj Munjal- Independent director

- Ms. Charu Munjal- Non executive director

- Mr. Vinod Kumar Agrawal- Independent director

- Mr. Nand Lal Dhameja- Independent director

- Mrs. Devi Singh- Independent director

- Mr. Surinder Kumar Mehta- Independent director

- Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

- Mr. Isao Ito - Joint Managing Director- Upto September 30, 2016

- Mr. Shigeki Kobayashi - Joint Managing Director w.e.f. October 26, 2016

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or controlled by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Majestic Auto Limited

- Shivam Autotech Limited

(d) Additional related parties as per Companies Act 2013, with whom transactions have taken during the year Key managerial personnel

- Mr. Pankaj Gupta- Chief Financial Officer

- Mr. Saurabh Agrawal- Company Secretary

Enterprises in which Director is a member/partner

- Sunbeam Auto Private Limited

- Munjal Castings (Partnership firm)

8. Segment information

The Company primarily operates in the auto components segment. The Company operates as an ancilliary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being shock absorbers, struts and window balancers.

The board of directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company’s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of IND AS 108 “Operating Segments”.

Geographical Locations: The Geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.

a) Domestic segment includes sales to customers located in India.

b) Overseas segment includes sales to customers located outside India.

c) There are no non-current assets located outside India.

d) The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Revenue from operations have been allocated to segments on the basis of their relationship to the operating activities of the segment.

Information about major customers

Included in revenue from operations (net of taxes) arising from domestic sales are revenues which arose from following customers which were 10% or more of the Company’s revenue:

No other single customers contributed 10% or more to the company’s revenue for both 2017-2018 and 2016-2017.

9. Financial instruments

10 Capital Management

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds into various investment options. The Company does not have debts and meets its capital requirement through equity.

The Company is not subject to any externally imposed capital requirements

The management of the Company reviews the capital structure of the Company on regular basis. As part of this review, the Board considers cost of capital and the risks associated with the movement in the working capital.

11 Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

The following is the basis of categorising the financial instruments measured at fair value into Level 1 to Level 3: Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of quoted debentures and open-ended mutual funds Level 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observ able current market transactions in the same instrument nor are they based on available market data.

Fair value of the Company’s financial assets that are measured at fair value on a recurring basis:

There are certain Company’s financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:

The fair value of the financial assets and financial liabilities are included at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between the market participants. The following methods and assumptions were used to estimate the fair values:

- Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in open-ended mutual funds declared by mutual fund house, quoted price of equity shares in the stock exchange etc.

- The fair value of debenture is based on direct market observable inputs.

- Trade receivables, cash & cash equivalents, other bank balances, loans, other current financial assets, trade payables and other current financial liabilities: Approximate their carrying amounts largely due to short-term maturities of these instruments.

- Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

12. Financial risk management objectives

The Company’s senior management monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using diversification of investments, credit limit to exposures, etc., to hedge risk exposures. The use of financial instruments is governed by the Company’s policies on foreign exchange risk and the investment. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

“Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity which impact returns on investments. The Company enters into derivative financial instruments to manage its exposure to foreign currency risk including import payables. Future specific market movements cannot be normally predicted with reasonable accuracy. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies and consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. The counter party for these contracts is generally a bank, however there are no outstanding forward exchange contracts at year end. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

Foreign currency sensitivity

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 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity where the Rs. strengthens ( )(-)5% against the relevant currency. For a 5% weakening of the Rs. against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be positive or negative.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year/ in future years.

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 as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and wherever appropriate, the credit ratings of its counterparties are continuously monitored and spread amongst various counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management of the Company. Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result in material concentrations of credit risks.

Balances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The age analysis of trade receivables as of the balance sheet date have been considered from the due date and disclosed in the note no. 9 above.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, debentures, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analyses below have been determined based on the exposureto NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower:

- profit for the year ended March 31, 2018 would increase/decrease by Rs. 244.05 lacs (for the year ended March 31, 2017: increase/decrease by Rs. 170.94 lacs).

Liquidity risk

Liquidity risk represents the inability of the Company to meet its financial obligations within stipulated time. To mitigate this risk, the Company maintains sufficient liquidity by way of readily convertible instruments and working capital limits from banks.

13. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

14. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund. Unpaid dividend (refer note 16 (b)) does not include any amount outstanding as at March 31, 2018 which are required to be credited to Investor Education and Protection Fund.

15. The financial statements were approved for issue by the board of directors on May 30, 2018.

16. First-time adoption of Ind AS

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Indian AS, not recognising items of assets or liabilities which are not permitted by Indian AS, by classifying items from previous GAAp as required under Ind AS in measurement of recognised assets and liabilities.

However, this principle is subject to optional exemptions availed by the Company as detailed below

Deemed cost-Previous GAAP carrying amount: (Property, Plant and Equipment and Intangible)

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

Accordingly, the company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

17 Cash flow Statements

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

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Mar 31, 2017

(b) Terms/ rights attached to equity shares

1. The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2. During the year ended March 31, 2017, the amount of per share dividend recognized as distributions to equity shareholders is Rs. Nil (March 31, 2016: Rs. 4.00).

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

Provision for warranties

A provision is recognized for expected warranty claims on products sold during the last two to five years as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about returns based on the warranty period for all products sold. The table below gives information about movement in warranty provision:

Provision for contingency

The Company had received a show-cause notice from Haryana State Pollution Control Board (‘HSPCB’) in 2009-10 towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management had submitted a time bound remediation plan as per which specified milestones were to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 50,000,000 had also been submitted to HSPCB. The management had initiated adequate steps suggested by the experts and had completed the plan within the overall time frame. Against the appeal filed by the Company with Appellate Authority, HSPCB, the case had been decided by the appellate authority on November 4, 2011 and as per the order of the appellate authority, bank guarantee of Rs. 37,500,000 had been released and bank guarantee of Rs. 12,500,000 had been forfeited by HSPCB. The Company had filed a writ petition against the order of the appellate authority before the Hon’ble High Court of Punjab and Haryana, which gave the decision for transfer of the case to National Green Tribunal, New Delhi. National Green Tribunal has disposed off our Appeal vide Judgment dated 03.11.2016 stated that we see no reason to interfere with the order dated 09.08.2010 passed by the HSPCB, partially encashing the bank guarantee furnished by the appellant industry to the extent of Rs.125 Lakhs and directed the Chairman of the HSPCB to personally conduct an inquiry into the matter, fix responsibility and take action in accordance with law. Provision of Rs. 7,500,000 (March 31, 2016; Rs. 7,500,000), over and above the amount already forfeited by HSPCB, had been retained towards any contingency, as per management’s assessment of the costs to be incurred. The table below gives information about movement in provision :

4. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved debt market scenario.

5. Leases

Operating lease : Company as lessee

The Company has taken various residential properties under operating lease agreements. These are cancellable leases and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

6. Segment Information

Based on the guiding principles given in Accounting Standard on ‘Segmental Reporting’ (AS-17), notified under the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014 and Companies (Accounting standards) Amendment Rules, 2016 , the Company’s primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company operates only in India i.e. only one business and geographical segment and thus, no further disclosures are required to be made as per Accounting Standard (AS-17).

7. Related party disclosures

(i) Names of related parties and related party relationship

(a) Key management personnel and their relatives

- Mr. Yogesh Chander Munjal - Managing Director

- Mr. Isao Ito - Joint Managing Director- Upto September 30, 2016

- Mr. Shigeki Kobayashi - Joint Managing Director w.e.f. October 26, 2016

- Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Majestic Auto Limited

- Shivam Autotech Limited

(d) Additional related parties as per Companies Act 2013, with whom transactions have taken during the year

Key managerial personnel

- Mr. Pankaj Gupta- Chief Financial Officer

- Mr. Saurabh Agrawal- Company Secretary

Enterprises in which Director is a member/partner

- Sunbeam Auto Private Limited

- Munjal Castings (Partnership firm)

8. Capital and other commitments

At March 31, 2017, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.5,947,449 (March 31, 2016: Rs.25,778,837).

a) Demands raised by Income Tax Authorities:

i) In respect of Assessment Year 1998-99, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal before ITAT The issue has been set aside by ITAT and sent back to the Assessing Officer to follow the order of earlier years. The total amount involved is Rs. 298,942 (March 31, 2016: Rs. 298,942).

ii) In respect of Assessment Years 2003-04, allowability of prior period expenses of Assessment year 2004-05 allowed by ITAT as deduction in Assessment year 2003-04 has not been allowed by the Assessing Officer on the ground that assessed income cannot be less than returned income. The CIT(A) has allowed the appeal filed by us and received the appeal effect. However, while giving appeal effect, the assessing officer had not given the credit of TDS. On filing of application for rectification the assessing office has passed the rectification order in April 2017 in favour of the Company. The amount involved is Rs. Nil (March 31, 2016: Rs. 252,082).

iii) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs. 92,272,211 (March 31, 2016: Rs. 92,272,211).

iv) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. During the current year, the assessing officer has decided the case in favour of the Company and refund was granted with interest. Total amount involved is Rs. Nil (March 31, 2016: Rs.103,112,323) including interest.

v) In respect of Assessment Year 2008-09, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. During the current year, the assessing officer has decided the case in favour of the Company and refund was granted with interest. Total amount involved is Rs. Nil (March 31, 2016: Rs. 99,266,894 ) including interest.

vi) In respect of Assessment Year 2009-10, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT. The amount involved is Rs. 125,175,660 (March 31, 2016: Rs. 125,175,660) including interest.

vii) In respect of Assessment Year 2010-11, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT The amount involved is Rs. 138,590,560, including interest (March 31, 2016: Rs 138,590,560).

viii) In respect of Assessment Year 2011-12, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises. The matter is pending before ITAT. The amount of disallowances is Rs.385,573,006, on which income tax amounts to Rs. 206,046,500, including interest (March 31, 2016: Rs. 206,046,500).

ix) In respect of Assessment Year 2012-13, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty, technical fee. The matter is pending before ITAT The amount of disallowances is Rs.432,743,656 on which income tax amounts to Rs.216,398,770, including interest (March 31, 2016: Rs. 140,403,679) (excluding interest, penalty etc.).

x) In respect of Assessment Year 2013-14, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises on account of margin computation of comparable and specified domestic transaction. The Company has filed an objection against the draft assessment order before Dispute Resolution Panel (‘DRP’) and the same is currently pending disposal. The amount of disallowances is Rs.40,901,950, on which income tax amounts to Rs. 13,270,638 (March 31, 2016: Rs. Nil) (excluding interest, penalty etc.).

xi) In respect of Assessment Year 2015-16, an adjustment was made by not allowing bad debts written off claimed in the income tax return in the intimation under section 143(1) by CPC Centre. The matter is pending before CIT(A). The amount of disallowances is Rs. 1,653,264 on which income tax amounts to Rs. 625,857 including interest (March 31, 2016: Rs. Nil).

b) Show cause/demand notices issued by Excise Authorities:

(i) The Excise authorities had issued Show Cause Notices (SCN’s) on the Company proposing to levy of Service tax on royalty payments amounting to Rs. 157,284,357 (March 31, 2016: Rs. 157,284,357) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31, 2010. In an order passed by the Commissioner (Adjudication), Service Tax during an earlier year against the above show cause notices, service tax demand of Rs. 87,561,221 has been confirmed and balance demand has been dropped. In addition, penalty of Rs. 122,561,221 (March 31, 2016: Rs. 122,561,221) has also been levied. The Company has paid Rs. 63,406,462 against the above demand as per its computation along with interest under protest and has filed appeal before CESTAT which is pending for disposal.

(ii) The Excise authorities have issued show cause/ demand notices (SCN’s) on the Company for wrong availment of service tax credit and cenvat aggregating to Rs. 20,361,664 (March 31, 2016: Rs 20,361,664 ). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(iii)The Excise authorities have issued show cause/demand notices (SCN’s) on the Company for wrong calculation of education cess and higher education cess. The Company has filed reply against the above show cause/ demand notices. During the year, the case has been decided in favour of the Company. The total demand is aggregating to Rs. Nil (March 31, 2016: Rs. 2,948,481).

c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represents amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company premises. The demand has been stayed by Hon’ble Judge, Employee Insurance Court, Gurgaon

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (i) and (iii) to (xi), (b) (i) to (iii) and (c) above and hence, no provision is considered necessary against the same at this stage.

9. Previous year figures have been regrouped and/or rearranged wherever necessary to conform to this year’s classification.

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Mar 31, 2016

(b) Terms/ rights attached to equity shares

1. The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

2. During the year ended March 31, 2016, the amount of per share dividend recognized as distributions to equity shareholders is Rs. 4.00 (March 31, 2015: Rs. 4.00).

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

Provision for warranties

A provision is recognized for expected warranty claims on products sold during the last one to five years as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about returns based on the warranty period for all products sold. The table below gives information about movement in warranty provision: _

Provision for contingency

The Company had received a show-cause notice from Haryana State Pollution Control Board (‘HSPCB’) in 2009-10 towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management had submitted a time bound remediation plan as per which specified milestones were to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 50,000,000 had also been submitted to HSPCB. The management had initiated adequate steps suggested by the experts and had completed the plan within the overall time frame. Against the appeal filed by the Company with Appellate Authority, HSPCB, the case had been decided by the appellate authority on November 4, 2011 and as per the order of the appellate authority, bank guarantee of Rs. 37,500,000 had been released and bank guarantee of Rs. 12,500,000 had been forfeited by HSPCB. The Company had filed a writ petition against the order of the appellate authority before the Hon’ble High Court of Punjab and Haryana, which gave the decision for transfer of the case to National Green Tribunal, New Delhi. Since the matter is sub-judice and pending at Tribunal level, provision of Rs. 7,500,000 (March 31, 2015: Rs. 7,500,000), over and above the amount already forfeited by HSPCB, had been retained towards any contingency, as per management’s assessment of the costs to be incurred. The table below gives information about movement in provision :

4. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved debt market scenario.

Note :

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.

5. Segment Information

Based on the guiding principles given in Accounting Standard on ‘Segmental Reporting’ (AS-17), notified under the Companies Account Rules, 2014, the Company’s primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company operates only in India i.e. only one business and geographical segment and thus, no further disclosures are required to be made as per Accounting Standard (AS-17).

6. Related party disclosures

(i) Names of related parties and related party relationship

(a) Key management personnel and their relatives

- Mr. Yogesh Chander Munjal - Managing Director

- Mr. Isao Ito - Joint Managing Director

- Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Majestic Auto Limited

- Shivam Autotech Limited

(d) Additional related parties as per Companies Act 2013, with whom transactions have taken during the year Key managerial personnel

- Mr. Pankaj Gupta- Chief Financial Officer

- Mr. Saurabh Agrawal- Company Secretary

Enterprises in which Director is a member/partner

- Sunbeam Auto Private Limited

- Munjal Castings (Partnership firm)

7. Capital and other commitments

At March 31, 2016, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.25,778,837 (March 31, 2015: Rs..38,147,834).

(a) Demands raised by Income Tax Authorities:

i) In respect of Assessment Year 1998-99, allow ability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal before iTAT. The issue has been set aside by ITAT and sent back to the Assessing Officer to follow the order of earlier years. The total amount involved is Rs. 298,942 (March 31, 2015: Rs.298,942).

ii) In respect of Assessment Years 2003-04 , allow ability of prior period expenses of Assessment year 200405 allowed by ITAT as deduction in Assessment year 2003-04 has not been allowed by the Assessing Officer on the ground that assessed income cannot be less than returned income. The CIT(A) has allowed the appeal filed by us and received the appeal effect. However, while giving appeal effect, the assessing officer has not given the credit of TDS. The amount involved is Rs. 252,082 (March 31, 2015: Rs. 36,53,248 ).

iii)In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs.92,272,211 (March 31, 2015: Rs.92,272,211).

iv) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs.103,112,323 (March 31, 2015: Rs.103,112,323) including interest.

v) In respect of Assessment Year 2008-09, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs. 99,266,894 (March 31, 2015: Rs.99,266,894 ) including interest.

vi) In respect of Assessment Year 2009-10, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT. The amount involved is Rs. 125,175,660 (March 31, 2015: Rs 125,175,660) including interest.

vii) In respect of Assessment Year 2010-11, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT. The amount involved is Rs. 138,590,560, including interest (March 31, 2015: Rs 138,590,560).

viii) In respect of Assessment Year 2011-12, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises. The matter is pending before ITAT. The amount of disallowances is Rs.385,573,006, on which income tax amounts to Rs.206,046,500 (March 31, 2015: Rs. 115,935,434) (excluding interest, penalty etc).

ix) In respect of Assessment Year 2012-13, certain adjustments were made to the transaction values by the tax authorities based on arm’s length price of international transactions entered with associated enterprises and on account of disallowance of royalty, technical fee. The Company has filed an objection against the draft assessment order before Dispute Resolution Panel (‘DRP’) and the same is currently pending disposal. The amount of disallowances is Rs.432,743,656, on which income tax amounts to Rs. 140,403,679 (March 31, 2015: Rs. Nil) (excluding interest, penalty etc).

(b) Show cause/demand notices issued by Excise Authorities:

(i) The Excise authorities had issued Show Cause Notices (SCN’s) on the Company proposing to levy Service tax on royalty payments amounting to Rs. 157,284,357 (March 31, 2015: Rs. 157,284,357) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31, 2010. In an order passed by the Commissioner (Adjudication), Service Tax during an earlier year against the above show cause notices, service tax demand of Rs. 87,561,221 has been confirmed and balance demand has been dropped. In addition, penalty of Rs. 122,561,221 (March 31, 2015: Rs. 122,561,221) has also been levied. The Company has paid Rs. 63,406,462 against the above demand as per its computation along with interest under protest and has filed appeal before CESTAT which is pending for disposal.

(ii) The Excise authorities have issued show cause/ demand notices (SCN’s) on the Company for wrong a ailment of service tax credit and cenvat aggregating to Rs. 20,361,664 (March 31, 2015: Rs 24,368,034 ). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(iii)The Excise authorities have issued show cause/demand notices (SCN’s) on the Company for wrong calculation of education cess and higher education cess aggregating to Rs. 2,948,481 (March 31, 2015: Rs. 2,967,690). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represents amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company premises. The demand has been stayed by Hon’ble Judge, Employee Insurance Court, Gurgaon.

Based on favorable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (i) and (iii) to (ix), (b) (i) to (iii) and (c) above and hence, no provision is considered necessary against the same at this stage.

8. Effective April 1, 2014, Schedule II of the Companies Act, 2013 became applicable to the Company. Accordingly, during the year ended March 31, 2015, the Company revised the estimated useful life of its assets from rates prescribed under Schedule XIV of the Companies Act, 1956 to the rates and useful life prescribed under Schedule II of Companies Act, 2013 and in accordance with transitional provisions of Schedule II, Rs. 17,798,818 (net of deferred tax) was adjusted from reserves as at April 01, 2014.

9. During earlier years, the Company had received demand notice of Rs. 216,052,602 from Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) towards payment of enhanced compensation for Company’s Manesar land. During the year ended March 31, 2015, the Hon’ble High Court, Punjab & Haryana (HC), in its decision against the writ petition filed against HSIIDC, reduced the demand. Considering HSIIDC had accepted the basis of enhanced compensation as decided by the Hon''ble Court, the Company in accordance with the HC order recomputed the liability and reduced Rs. 7,762,931 from Manesar land cost capitalized in earlier years and further, had written back interest liability of Rs. 6,774,393 (disclosed as an exceptional item) during the previous year.

10. Previous year figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification.

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Mar 31, 2015

1. Corporate information

Munjal Showa Limited (''the Company'') is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. It was established in 1985 as a result of technical and financial collaboration between Hero Group and Showa Corporation, Japan. The Company operates as an ancillary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being front forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The Company has three manufacturing locations, two in the state of Haryana and one in the state of Uttarakhand. These units are located at Gurgaon, Manesar and Haridwar.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3 Terms/ rights attached to equity shares

1. The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2. During the year ended March 31,2015, the amount of per share dividend recognized as distributions to equity shareholders is Rs. 4 (March 31,2014: Rs. 3.50).

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

4 Provision for contingency

The Company had received a show-cause notice from Haryana State Pollution Control Board (''HSPCB'') in 2009-10 towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management had submitted a time bound remediation plan as per which specified milestones were to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 50,000,000 had also been submitted to HSPCB. The management had initiated adequate steps suggested by the experts and had completed the plan within the overall time frame. Against the appeal filed by the Company with Appellate Authority, HSPCB, the case had been decided by the appellate authority on November 4, 2011 and as per the order of the appellate authority, bank guarantee of Rs. 37,500,000 had been released and bank guarantee of Rs. 12,500,000 had been forfeited by HSPCB. The Company had filed a writ petition against the order of the appellate authority before the Hon''ble High Court of Punjab and Haryana, which gave the decision for transfer of the case to National Green Tribunal, New Delhi. Since the matter is sub-judice and pending at Tribunal level, provision of Rs. 7,500,000 (March 31,2014: Rs. 7,500,000), over and above the amount already forfeited by HSPCB, had been retained towards any contingency, as per management''s assessment of the costs to be incurred. The table below gives information about movement in provision :

5. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

6. Segment Information

Based on the guiding principles given in Accounting Standard on ''Segmental Reporting'' (AS-17), notified under the Companies Account Rules, 2014, the Company''s primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company operates only in India i.e. only one business and geographical segment and thus, no further disclosures are required to be made as per Accounting Standard (AS-17).

7. Related party disclosures

(i) Names of related parties and related party relationship

(a) Key management personnel and their relatives

* Mr. Yogesh Chander Munjal - Managing Director

* Mr. Isao Ito - Joint Managing Director

* Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

* Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

* Dayanand Munjal Investments Private Limited

* Majestic Auto Limited

* Shivam Autotech Limited

(d) Additional related parties as per Companies Act 2013, with whom transactions have taken during the year Key managerial personnel

* Mr. Mahesh Chand Taneja - Chief Financial Officer (till February 28, 2014)

* Mr. Pankaj Gupta- Chief Financial Officer & Company Secretary* (w.e.f. March 1,2014)

* Mr. Saurabh Agrawal- Company Secretary (w.e.f February 6, 2015)

Enterprises in which Director is a member/partner

* Sunbeam Auto Private Limited

* Munjal Castings (Partnership firm)

* Resigned from the post of Company Secretary effective February 6, 2015

8. Capital and other commitments

At March 31,2015, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.38,147,834 (March 31,2014: Rs.10,626,508).

9. Contingent Liabilities

March 31, 2015 March 31, 2014 Rs. Rs.

Demands raised by Income Tax Authorities, being disputed by the Company 678,305,272 511,889,281

Show cause notices / demands issued by Excise Authorities, being disputed by the Company 307,168,848 301,976,335

Demand raised by Employees State Insurance Recovery Officer, being disputed by the Company 4,365,036 4,365,036

(a) Demands raised by Income Tax Authorities:

i) In respect of Assessment Year 1998-99, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal before ITAT. The issue has been set aside by ITAT and sent back to the Assessing Officerto follow the order of earlier years. The total amount involved is Rs. 298,942 (March 31,2014: Rs. 298,942).

ii) In respect of Assessment Years 1999-00, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal before ITAT. The issue has been set aside by ITAT and the Assessing Officer has given effect of the order of ITAT and reassessed the demand as Rs. Nil. The total amount involved is Rs. Nil (March 31,2014: Rs. 74,345).

iii) In respect ofAssessment Years 2003-04 , allowability of prior period expenses of Assessment year2004-05 allowed by ITAT as deduction in Assessment year 2003-04 has not been allowed by the Assessing Officer on the ground that assessed income cannot be less than returned income. The amount involved is Rs. 3,653,248 (March 31,2014: Rs.Nil ).

iv) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs.92,272,211 (March 31,2014: Rs.92,272,211).

v) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs.103,112,323 (March 31,2014: Rs.103,112,323) including interest.

vi) In respect of Assessment Year 2008-09, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter has been set aside by the ITAT and sent back to the assessing officer with the direction to decide the issue afresh by way of speaking order in accordance with law. The amount involved is Rs. 99,266,894 (March 31,2014: Rs.99,266,894 ) including interest.

vii) In respect of Assessment Year 2009-10, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT. The amount involved is Rs. 125,175,660 (March 31,2014: Rs 125,175,660) including interest.

viii) In respect of Assessment Year 2010-11, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty and technical fee. The matter is pending before ITAT. The amount involved is Rs. 138,590,560, including interest (March 31,2014: Rs 91,688,906, excluding interest).

ix) In respect of Assessment Year 2011-12, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on account of disallowance of royalty, technical fee. The Company has filed an objection against the draft assessment order before Dispute Resolution Panel (''DRP'') and the same is currently pending disposal. The amount of disallowances is Rs.341,086,891, on which income tax amounts to Rs. 115,935,434 (March 31, 2014: Rs. Nil) (excluding interest, penalty etc).

(b) Show cause/demand notices issued by Excise Authorities:

(i) The Excise authorities had issued Show Cause Notices (SCN''s) on the Company proposing to levy Service tax on royalty payments amounting to Rs. 157,284,357 (March 31, 2014: Rs. 157,284,357) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31,2010. In an order passed by the Commissioner (Adjudication), Service Tax during an earlier year against the above show cause notices, service tax demand of Rs. 87,561,221 has been confirmed and balance demand has been dropped. In addition, penalty of Rs. 122,561,221 (March 31,2014: Rs. 122,561,221) has also been levied. The Company has paid Rs. 63,406,462 against the above demand as per its computation alongwith interest under protest and has filed appeal before CESTAT which is pending for disposal.

(ii) The Excise authorities have issued show cause/ demand notices (SCN''s) on the Company for wrong availment of service tax credit and cenvat aggregating to Rs. 24,346,580 (March 31,2014: Rs 21,368,034 ). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(iii) The Excise authorities have issued show cause/demand notices (SCN''s) on the Company for wrong calculation of education cess and higher education cess aggregating to Rs. 2,976,690 (March 31,2014: Rs. 762,723). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represents amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company premises. The demand has been stayed by Hon''ble Judge, Employee Insurance Court, Gurgaon.

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (i) and (iii) to (ix), (b) (i) to (iii) and (c) above and hence, no provision is considered necessary against the same at this stage.

10. During the quarter ended September 30, 2012, the Company had received demand notice of Rs. 2,160.53 lakhs (including interest upto 30.09.2012) from Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) towards payment of enhanced compensation for Company''s Manesar land. During the year, the Hon''ble High Court, Punjab & Haryana (HC), in its decision against the writ petition filed against HSIIDC has reduced the demand. Considering HSIIDC has accepted the basis of enhanced compensation as decided by the Hon''ble Court, the Company in accordance with the HC order has recomputed the liability and has reduced Rs. 77.62 lacs from Manesar land cost capitalized in earlier years and further, has written back interest liability of Rs. 67.74 lacs (disclosed as an exceptional item) in these financial statements.

11. Previous year figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification..

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Mar 31, 2013

1. Corporate information

Munjal Showa Limited (''the Company'') is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. It was established in 1985 as result of technical and financial collaboration between Hero Group and Showa Corporation, Japan. The Company operates as an ancillary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being front forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The Company has two manufacturing locations in the state of Haryana and one plant at Haridwar.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

4. Leases

Operating lease : Company as lessee

The Company has taken various residential properties under operating lease agreements. These are cancellable leases and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

5. Segment Information

Based on the guiding principles given in Accounting Standard on ''Segmental Reporting'' (AS-17), notified under the Companies (Accounting Standards) Rules, 2006, (as amended) ,the Company''s primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company is having negligible export and operates mainly in India i.e. only one business and geographical segment and thus no further disclosures are required to be made as per Accounting Standard (AS-17).

6. Related party disclosures

Names of related parties and related party relationship

(a) Key management personnel and their relatives

- Mr. Yogesh Chander Munjal – Managing Director

- Mr. Tetsuo Terada – Joint Managing Director

- Mrs. Nidhi Kapoor – Daughter of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Majestic Auto Limited

- Shivam Autotech Limited

7. Capital and other commitments

At 31st March 2013, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.9,839,822, (Previous year Rs.24,949,953).

8. Contingent Liabilities

March 31, 2013 March 31, 2012 Rs. Rs.

Demands raised by Income Tax Authorities, being disputed by the Company 201,073,766 310,327,530

Show cause notices / demands issued by Excise Authorities, being disputed by the Company 229,361,897 227,506,616

Demand raised by Employees State Insurance Recovery Officer, being disputed by the Company 4,365,036 4,365,036

Pending cases with Income Tax Appellate Authorities / High Court Liability not Liability not

where Income Tax Department has preferred appeals ascertainable ascertainable

(a) Demands raised by the Income Tax Authorities comprise of:

i) In respect of Assessment Years 1993-94 and 1996-97, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. ITAT has decided in favour of Company. The Income tax department has appealed against the Company before the High Court wherein the High Court has ordered in favour of the Company which is pending for appeal effect. The total amount involved is Rs. Nil (Previous year Rs. 1,494,076).

ii) In respect of Assessment Years 1998-99 and 1999-00, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. The issue has been set aside by the Tribunal to the file of the assessing officer to follow the order of earlier years. The total amount involved is Rs. 373,287 (Previous year Rs. 373,287).

iii) In respect of Assessment Years 2002-03, 2003-04 and 2004-05 issues relating to allowability some percentage of expenses like royalty, technician fee, design and drawing, prior period (2004-05) is pending with ITAT. The amount involved is Rs. 22,649,734 (Previous year Rs. 22,649,734).

iv) In respect of Assessment Year 2005-06, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises. The issue is decided by Commissioner of Income Tax (Appeals) in favour of the Company during the year. The amount involved is Rs. Nil (Previous year Rs. 115,302,063). Pending receipt of appeal effect order for the Assessment Year 2005-06, where appeal has been decided in favour of the Company by the CIT (Appeals), interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

v) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The matter is pending with ITAT. The amount involved is Rs.77,495,260 (Previous year Rs.77,495,260).

vi) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The matter is pending with ITAT. The amount involved is Rs.93,013,110 (Previous year Rs.93,013,110) including interest.

vii) In respect of Assessment Year 2008-09, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The matter is pending with ITAT. The amount involved is Rs.90,771,580 including interest.

viii) In respect of Assessment Year 2009-10, certain adjustments were made to the transaction values by the tax authorities based on arm''s length price of international transactions entered with associated enterprises and on disallowance of royalty, technical fee etc. The Company has preferred filing the objection against the draft assessment order and is pending before Dispute Resolution Panel (''DRP'') for disposal. The amount of disallowances is Rs.227,605,687, on which income tax amounts to Rs 77,363,173 (excluding interest, penalty etc).

(b) Show cause/demand notices issued by Excise Authorities comprise of:

(i) The Excise authorities had issued Show Cause Notices (SCN''s) on the Company proposing to levy Service tax on royalty payments amounting to Rs. 157,284,357 (Previous year Rs. 157,284,357) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31, 2010. In an order passed by the Commissioner (Adjudication), Service Tax during the last year, against the above show cause notices, service tax demand of Rs. 87,561,221 has been confirmed and balance demand has been dropped. In addition, penalty of Rs. 122,561,221 (Previous year Rs. 122,561,221) have also been levied. The Company has paid Rs. 63,406,462 against the above demand as per its computation alongwith interest under protest and has filed appeal with CESTAT which is pending for disposal.

(ii) The Excise authorities have issued show cause/ demand notices (SCN''s) on the Company for wrong availment of service tax and cenvat aggregating to Rs. 22,130,757 (Previous year Rs 20,275,476 ). The Company has filed reply against the above show cause/ demand notices and has protested the same.

(c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represent amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company. The demand has been stayed by Hon''ble Judge, Employee Insurance Court, Gurgaon.

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (ii), (iii) and (v) to (viii), (b) (i) to (ii) and (c) above and hence no provision is considered necessary against the same.

9. During the year, the Company has revised the estimated useful life of vehicles and certain plant and machinery based on technical estimates made by the management. Accordingly, additional depreciation of Rs. 11,127,479 has been accounted for in the financial statements.

Had the Company continued to use the earlier basis of providing depreciation, the charge to the statement of profit and loss for the current year would have been lower by Rs.7,517,169 (net of tax of Rs.3,610,310) and the net block of fixed assets would correspondingly have been higher by Rs.11,127,479.

10. During the year, the Company has recognized Rs 35,200,000 (Previous year Nil) as Minimum Alternative Tax (MAT) credit entitlement under ''Loans and advances'' which represents that portion of the MAT liability, the credit of which would be available based on the provision of Section 115JAA of the Income Tax Act, 1961. The management based on the future profitability projections and also profit earned during the current year is confident that there would be sufficient taxable profit in foreseeable future which will enable the Company to utilize the said MAT credit entitlement.

11. The Haryana State Industrial and Infrastructure Development Corporation Limited based on Hon''ble Supreme Court''s final order has further demanded an amount of Rs.131,834,893 from the Company as land enhancement cost including interest in relation to Manesar land to be payable in five half yearly installment. Based on final working, Company has capitalised Rs.70,400,675 as land cost and charged off Rs.61,434,218 as interest cost (disclosed as exceptional item) during the year. Company as a member of Industrial Association, Manesar has filed CWP with the Honorable High Court, Punjab & Haryana challenging the aforesaid demand amount. Since the matter is subjudice, Company has not made any payment towards installment due already on 31 October 2012 and consequently an additional interest of Rs.8,299,040 due till 31 March 2013 has been charged off. The total amount payable towards additional land cost is Rs.70,400,675 (disclosed in note 7 of Rs.28,160,270 and note 10 of Rs.42,240,405 to the financial statements) and towards interest cost is Rs.69,733,258 (disclosed in note 7 of Rs.24,573,687 and note 10 of Rs.45,159,571 to the financial statements).

12. Previous year figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification.

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Mar 31, 2012

1. Corporate information

Munjal Showa Limited ('the Company') is a Company established in 1985 as result of technical and financial collaboration between Hero Group and Showa Corporation, Japan. The Company operates as an ancillary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being front forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The Company has two manufacturing locations in the state of Haryana and one plant at Haridwar.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

3. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

4. Leases

Operating lease : Company as lessee

The Company has taken various residential properties under operating lease agreements. These are cancellable leases and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

5. Segment Information

Based on the guiding principles given in Accounting Standard on 'Segmental Reporting' (AS-17), issued by the Institute of Chartered Accountants of India, the Company's primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company is having negligible export and operates mainly in India i.e. only one business and geographical segment and thus no further disclosures are required to be made as per Accounting Standard (AS-17).

6. Related party disclosures

Names of related parties and related party relationship

(a) Key management personnel and their relatives

- Mr. Brijmohan Lall Munjal - Chairman *

- Mr. Yogesh Chander Munjal - Managing Director

- Mr. Tetsuo Terada - Joint Managing Director (from 18th May, 2010)

- Mrs. Nidhi Kapoor - Daughter of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

- Dayanand Munjal Investments Private Limited

- Majestic Auto Limited

- Rockman Industries Limited*

- Hero MotoCorp Limited (Formerly Hero Honda Motors Limited)

- Shivam Autotech Limited*

- Sunbeam Auto Private Limited*/**

- Hero Corporate Services Limited*

*Related party till last year

**Public limited company till 18th May, 2010.

7. Capital and other commitments

(a) At 31st March 2012, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 24,949,953, (Previous year Rs. 28,509,546).

(b) For commitments relating to lease arrangements, please refer note 27.

8. Contingent Liabilities

March 31,2012 March 31,2011 Rs. Rs.

Demands raised by Income Tax Authorities, being disputed by the 310,327,530 217,314,420 Company

Show cause notices / demands issued by Excise Authorities, 227,506,616 177,506,951 being disputed by the Company

Demand raised by Employees State Insurance Recovery Officer, 4,365,036 4,365,036 being disputed by the Company

Pending cases with Income Tax Appellate Authorities / High Court where Income Liability not Liability not Tax Department has preferred appeals ascertainable ascertainable

a) Demands raised by the Income Tax Authorities comprise of:

(i) In respect of Assessment Years 1993-94 and 1996-97, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. ITAT has decided in favour of Company. The Income tax department has appealed against the Company before the High Court wherein the High Court has ordered in favour of the Company which is pending for appeal effect. The total amount involved is Rs. 1,494,076 (Previous year Rs. 1,494,076),.

(ii) In respect of Assessment Years 1998-99 and 1999-00, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. The issue has been set aside by the Tribunal to the file of the assessing officer to follow the order of earlier years. The Company has obtained legal opinion as per which the Company has possibility of success. The total amount involved is Rs. 373,287 (Previous year Rs. 373,287).

(iii) In respect of Assessment Years 2002-03, 2003-04 and 2004-05 issues relating to allowability some percentage of expenses like royalty, technician fee, design and drawing, prior period (2004-05) is pending with ITAT. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs. 22,649,734 (Previous year Rs. 22,649,734).

(iv) In respect of Assessment Year 2005-06, certain adjustments were made to the transaction values by the tax authorities based on arm's length price of international transactions entered with associated enterprises. The issue is pending with CIT (Appeals), based on which demand was raised. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs. 115,302,063 (Previous year Rs. 115,302,063).

(v) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by the tax authorities based on arm's length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The matter is pending with ITAT. The Company has obtained legal opinion as per which there is a possibility of success. The amount involved is Rs.77,495,260 (Previous year Rs.77,495,260).

(vi) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by the tax authorities based on arm's length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The matter is pending with ITAT. The Company has obtained legal opinion as per which there is a possibility of success. The amount involved is Rs.93,013,110 including interest.

(vii) In respect of Assessment Year 2008-09, certain adjustments were made to the transaction values by the tax authorities based on arm's length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The Company has preferred filing the objection against the draft assessment order and is pending before Dispute Resolution Panel (DRP') for disposal.

The Company has obtained legal opinion as per which there is a possibility of success. The amount of disallowances is Rs.197,888,932, on which income tax amounts to Rs 67,262,448 (excluding interest, penalty etc).

b) Show cause/demand notices issued by Excise Authorities comprise of:

(i) The Excise authorities had issued Show Cause Notices (SCN's) on the Company proposing to levy Service tax on royalty payments amounting to Rs. 157,284,357 (Previous year Rs. 157,284,357) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31, 2010. In an order passed by the Commissioner (Adjudication), Service Tax during the year, against the above show cause notices, service tax demand of Rs. 87,561,221 has been confirmed and balance demand has been dropped. In addition, interest and penalty have also been levied. The Company has paid Rs. 63,406,462 against the above demand as per its computation along with interest under protest and has filed appeal with CESTAT which is pending for disposal.

(ii) The Excise authorities have issued show cause/ demand notices (SCN's) on the Company for wrong availment of service tax and cenvat aggregating to Rs. 20,275,476 (Previous year Rs 20,222,594). The Company has filed reply against the above show cause/ demand notices and has protested the same. The Company has obtained legal opinion as per which there is a possibility of success.

c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represent amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company. The demand has been stayed by Hon'ble Judge, Employee Insurance Court, Gurgaon.

9. Previous year figures

Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has re-classified previous year's figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosure made in the financial statements, particularly presentation of balance sheet.

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Mar 31, 2011

1. Nature of operations

Munjal Showa Limited (the Company) is a Company established in 1985 as result of technical and financial collaboration between Hero Group and Showa Corporation, Japan. The Company operates as an ancillary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being front forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The Company has two manufacturing locations in the state of Haryana and one plant at Haridwar.

2. Segmental information

Based on the guiding principles given in Accounting Standard on Segmental Reporting (AS-17), issued by the Institute of Chartered Accountants of India, the Companys primary business segment is manufacturing of auto components for two- wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company is having negligible export and operates mainly in India i.e. only one business and geographical segment and thus no further disclosures are required to be made as per Accounting Standard (AS-17).

3. Related party disclosure

(i) Names of related parties

(a) Key management personnel and their relatives

- Mr. Brijmohan Lall Munjal- Chairman

- Mr. Yogesh Chander Munjal – Managing Director

- Mr. Tetsuo Terada - Joint Managing Director (from 18th May, 2010)

- Mr. Kazuhiro Nishioka- Joint Managing Director (upto 23rd March, 2010)

- Mr. Suresh Munjal- Relative of Mr. Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

- Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

- Hero Honda Motors Limited

- Sunbeam Auto Private Limited *

- Hero Cycles Limited

- Hero Corporate Services Limited

- Majestic Auto Limited

- Dayanand Munjal Investments Private Limited

- Thakurdevi Investments Private Limited

- Arrow Infrastructure Limited

- Rockman Industries Limited

- Shivam Autotech Limited

* Public limited company till 18th May, 2010.

Provision for Warranty

A provision is recognized for expected warranty claims on products sold during the last two years for some models and three years for others, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties were based on current sales level and current information available about returns based on the warranty period for all products sold.

Provision (others)

The Company has in the last year received a show-cause notice from Haryana State Pollution Control Board (HSPCB) towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management had submitted a time bound remediation plan as per which specified milestones are to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 50,000,000 has also been submitted to HSPCB. The management has initiated adequate steps suggested by the experts and has completed the plan within the overall time frame. The matter is pending with Appellate Authority, HSPCB. Since the matter is sub-judice, provision of Rs.20,000,000 (Previous year Rs. 32,500,000) is being retained towards any contingency, as per managements assessment of the costs to be incurred.

4 Contingent liabilities (not provided for) in respect of: (Amount in Rs.)

Particulars March 31, 201 March 31, 2010

a) Demands raised by Income Tax Authorities, being disputed by the Company. 217,314,420 151,149,021

b) Show cause notices issued by Excise Authorities, being disputed by the Company. 177,506,951 39,228,000

c) Demand raised by Employees State Insurance Recovery Officer, being disputed by the Company. 4,365,036 4,365,036

d) Pending cases with Income Tax Appellate Authorities / High Liability not Liability not Court where Income Tax Department has preferred appeals. ascertainable ascertainable

a) Demands raised by the Income Tax Authorities comprise of:

i) In respect of Assessment Years 1993-94 and 1996-97, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. ITAT has decided in favour of Company. The Income tax department has appealed against the Company before the High Court wherein the High Court has ordered in favour of the Company which is pending for appeal effect. The total amount involved is Rs. 1,494,076 (Previous year Rs. 1,494,076).

ii) In respect of Assessment Years 1998-99 and 1999-00, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT. The issue has been set aside by the Tribunal to the file of the assessing officer to follow the order of earlier years. The Company has obtained legal opinion as per which the Company has possibility of success. The total amount involved is Rs. 373,287 (Previous year Rs. 373,287).

iii) In respect of Assessment Years 2002-03, 2003-04 and 2004-05 issues relating to some percentage of expenses like royalty, technician fee, design and drawing, prior period (2004-05) is pending with ITAT. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs. 22,649,734 (Previous year Rs. 32,433,639).

iv) In respect of Assessment Year 2005-06, certain adjustments were made to the transaction values by the tax authorities based on arms length price of international transactions entered with associated enterprises. The issue is pending with CIT (Appeals), based on which demand was raised. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs. 115,302,063 (Previous year Rs. 116,848,019).

v) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by the tax authorities based on arms length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee is pending with ITAT. The Company has obtained legal opinion as per which there is a possibility of success. The amount involved is Rs.77,495,260 (Previous year Rs.53,191,210 excluding interest, penalty etc).

vi) In respect of Assessment Year 2007-08, certain adjustments were made to the transaction values by the tax authorities based on arms length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The Company has preferred filing the objections against the draft assessment order and is pending before Dispute Resolution Panel (DRP) for disposal. The Company has obtained legal opinion as per which there is a possibility of success. The amount of disallowances is Rs 1,433,774,260, on which income tax amounts to Rs.482,608,417 (excluding interest, penalty etc).

b) Show cause/demand notices issued by Excise Authorities comprise of:

(i) The Excise authorities have issued Show Cause Notices (SCNs) on the Company proposing to levy Service tax on royalty payments amounting to Rs. 157,284,357 (Previous year Rs. 39,228,000) as recipient of services under reverse charge mechanism on the royalty paid for such import of services during the period from September 10, 2004 to March 31, 2010. The amount of interest and penalty at this stage is not determinable. The Company has filed reply against the above show cause notices for rectification of mistake by Rs. 70,280,250 and has protested the balance demand of Rs. 87,004,107. The hearing on the same is pending for disposal. However, the Company can claim service tax credit of material amount.

(ii) The Excise authorities have issued show cause/ demand notices (SCNs) on the Company for wrong availment of service tax and cenvat aggregating to Rs. 20,222,594. The Company has filed reply against the above show cause/ demand notices and has protested the same. The Company has obtained legal opinion as per which there is a possibility of success.

c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represent amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company. The demand has been stayed by Honble Judge, Employee Insurance Court, Gurgaon.

5. In accordance with explanations below Para 10 of Notified Accounting Standard 9 - Revenue Recognition, excise duty on sales amounting to Rs. 975,728,763 (Previous Year Rs. 730,594,416) has been reduced from sales in Profit & Loss Account and excise duty on variation of opening and closing stock of finished goods and scrap amounting to Rs. 426,523 (Previous Year income of Rs. 860,690) has been considered as expense in the financial statements.

6. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.The following tables summarise the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the gratuity plan.

7. Operating Lease Obligations

The Company has taken various residential under operating lease agreements. These are generally not "non- cancellable” and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

Lease payments for the year are Rs. 2,371,400 (Previous Year Rs. 1,754,900)

Minimum Lease Payments:

Not later than one year – Rs 1,837,800 (Previous Year Rs. 2,342,250)

Later than one year but not later than five years – Rs 509,250 (Previous Year Rs. 1,085,340)

Later than five years – Rs. Nil

8. A sum of Rs. 2,620,522 (Previous year Rs. 847,089) on account of unamortized foreign exchange premium on outstanding forward exchange contracts is being carried forward to be charged to Profit and Loss Account of subsequent period.

9. Previous year comparatives

Previous years figures have been regrouped, where considered necessary, to conform to this years classification.

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Mar 31, 2010

1. Nature of operations

Munjal Showa Limited (the Company) is a Company established in 1985 as result of technical and financial collaboration between Hero Group and Showa Corporation, Japan. The Company operates as an ancillary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being front forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The Company has two manufacturing locations in the state of Haryana and one plant at Haridwar where the commercial production was started on April 06,2009.

2. Segmental information

Based on the guiding principles given in Accounting Standard on Segmental Reporting (AS-17), issued by the Institute of Chartered Accountants of India, the Companys primary business segment is manufacturing of auto components for two-wheeler and four-wheeler industry. The business comprises manufacturing and selling of various auto components, viz, front fork, shock absorbers, struts, gas springs and window balancers, having similar risks and rewards because of similar nature of these items. The Company is having negligible export and operates mainly in India i.e. only one business and geographical segment and thus no further disclosures are required to be made as per Accounting Standard (AS-17).

4. Related party disclosure

(i) Names of related parties

(a) Key management personnel and their relatives

MrBrijmohan Lall Munjal- Chairman

Mr Yogesh Chander Munjal - Managing Director

Mr. Kazuhiro Nishioka-Joint Managing Director (upto 23"1 March, 2010)

Mr Suresh Munjal-Relative of Yogesh Chander Munjal

(b) Enterprise with significant influence over the Company

Showa Corporation, Japan

(c) Enterprises owned or significantly influenced by key management personnel and their relatives

Hero Honda Motors Limited

Sunbeam Auto Limited

Hero Cycles Limited

Hero Corporate Services Limited.

Majestic Auto Limited

Dayanand Munjal Investments Private Limited

Thakurdevi Investments Private Limited

Arrow Infrastructure Limited

Rockman Industries Limited

(ii) The remuneration paid to directors is disclosed in Note no. 12 of the notes to accounts.

During the year, the Company has entered into transactions with related parties. Those transactions along with related balances as at March 31, 2010 and 2009 and for the years then ended are presented in the following table:

Provision forWarranty

A provision is recognized for expected warranty claims on products sold during the last two years for some models and three years for others, based on past experience of level of repairs and returns. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the warranty period for all products sold. Provision (others)

The Company has received a show-cause notice from Haryana State Pollution Control Board (HSPCB) towards contamination of ground water caused due to higher concentration of chromium used by the Company as compared to the minimum expected level. Pursuant to the show cause notice, the management has submitted a time bound remediation plan as per which specified milestones are to be achieved at the end of each quarter till December 2010. A bank guarantee of Rs. 50,000,000 has also been submitted to HSPCB. While currently there are delays in implementation of the plan, the management is confident of completing the plan within the overall time frame. Accordingly, provision of Rs. 32,500,000 has been made in the books as per managements assessment of the costs to be incurred.

3 Contingent liabilities (not provided for) in respect of: (Amount in Rs.)

Particulars March 31, 2010 March 31, 2009

a) Demands raised by Income Tax Authorities, being disputed by the 151,149,021 153,805,945 Company.

b) Show cause notices issued by Excise Authorities, being disputed by the 39,228,000 39,228,000 Company.

c) Demand raised by Employees State Insurance Recovery Officer, being 4,365,036 4,365,036 disputed by the Company.

d) Pending cases with Income Tax Appellate Authorities/ High Court where Liability not Liability not Income Tax Department has preferred appeals. ascertainable ascertainable

e) Land matter (refer Note no. 11 of the notes to accounts) Liability not Liability not ascertainable ascertainable

a Demands raised by the Income Tax Authorities comprise of:

i) In respect of Assessment Years 1993-94, 1996-97, 1998-99 and 1999-00, allowability of certain expenses like foreign technician expenses, design and drawing fees were pending under appeal with ITAT For the Assessment Years 1993-94 & 1996-97, ITAT has decided in favour of Company which pending for appeal effect. Further, for the Assessment Years 1998-99 & 1999-00, the issue has been set aside by the Tribunal to the file of the assessing officer to follow the order of earlier years. The Company has obtained legal opinion as per which the Company has possibility of success. The total amount involved is Rs 1,867,363 (Previous year Rs 1,867,363).

ii) In respect of Assessment Year 2000-01 and 2001-02, issues relating to some percentage of royalty has been decided by ITAT in favour of the Company which pending for appeal effect. The amount involved for the same is Rs.8,026,345. In respect of Assessment Years 2002-03,2003-04 and 2004-05 issues relating to some percentage of expenses like royalty, technician fee, design and drawing, prior period (2004-05) is pending with ITAT. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs. 32,433,639 (Previous year Rs 40,459,984).

iii) In respect of Assessment Year 2005-06, certain adjustments were made to the transaction values by the tax authorities based on arms length price of international transactions entered with associated enterprises. The issue is pending with CIT (Appeals), based on which demand was raised. The Company has obtained legal opinion as per which the Company has possibility of success. The amount involved is Rs 116,848,019 (Previous year Rs 111,478,598).

iv) a) In respect of Assessment Year 2006-07, certain adjustments were made to the transaction values by the tax authorities based on arms length price of international transactions entered with associated enterprises and on disallowance of royalty and technical fee. The Company has preferred filing the objections against the draft assessment order and is pending before Dispute Resolution Panel (DRP) for disposal. The Company has obtained legal opinion as per which there is a possibility of success. The amount of disallowances is Rs 156,490,763, on which income tax amounts to Rs.53,191,210 (excluding interest, penalty etc).

b) The Excise authorities have issued a Show Cause Notice (SCN) on the Company proposing to levy Service tax on the Company amounting to Rs. 39,228,000 along with interest and penalty as recipient of services under reverse charge mechanism on the royalty paid for such Import of services during the period from September 10, 2004 to September 30, 2007. The aggregate exposure on account of the above matter till March 31, 2010 aggregates to Rs. 100,636,965. However, the Company can claim service tax credit in most of the above amount. The Company has filed replies for all the SCNs, However, hearing on the same is pending.

c) Demands raised by Employee State Insurance Recovery Officer:

Contingent liabilities in respect of demands raised by the Employee State Insurance Recovery Officer represent amount demanded from the Company due to lack of records for the period 1994 to 1998 on the basis of inspections carried out at the Company. The demand has been stayed by Honble Judge, Employee Insurance Court, Gurgaon.

4. In accordance with explanations below Para 10 of Notified Accounting Standard 9 - Revenue Recognition, excise duty on sales amounting to Rs. 730,594,416 (Previous Year Rs. 1,105,134,118) has been reduced from sales in Profit & Loss Account and excise duty on variation of opening and closing stock of finished goods and scrap amounting to Rs. 860,690 (Previous Year income of Rs. 2,706,352) has been considered as income in the financial statements.

5. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the gratuity plan.

6. Operating Lease Obligations

The Company has taken various residential under operating lease agreements. These are generally not "non- cancellable" and are renewable by mutual consent on mutually agreed terms. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

Lease payments for the year are Rs. 1,754,900 (Previous Year 1,162,000)

Minimum Lease Payments:

Not laterthan one year- Rs. 2,342,250 (Previous Year Rs. 1,217,790)

Later than one year but not later than five years - Rs. 1,085,340 (Previous Year Rs. Nil)

Later than five years - Rs. Nil

7. Honble Punjab and Haryana High Court had, in an earlier year passed the order by enhancing the compensation to the tune of Rs. 15 lacs per acre in relation to Manesar Land owned by the Company. Haryana State Industrial Infrastructure Development Corporations Limited (HSIIDC) as well as the various landowners have preferred Special leave.petition (SLP) before the Honble Supreme Court against the order of Honble high court. The Honble Supreme court during the pendency of SLPs has issued interim directions for disbursement of the compensation to the land owners at the rate of Rs. 10 lacs per acre, which is subject to the final decision by the Honble Supreme Court in the SLPs. Pursuance to interim directions by the Honble Supreme Court, HSIIDC has during the year demanded an amount of Rs 60,458,233 (including interest of Rs. 19,195,277) from the Company in five equated six monthly installments. The Company has during the year, accounted for the said liability in the books. The Company has during the year paid two installments and balance unpaid amount is shown under deferred payment liability.

8. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Sched- ule VI to the Companies Act, 1956

9. Previous year comparatives

Previous years figures have been regrouped, where considered necessary, to conform to this years classification.