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A Oneindia Venture

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Notes to Accounts of Shanthi Gears Ltd.

Mar 31, 2025

3.13 Provisions and Contingent Liabilities

A provision is recognized when an enterprise
has a present obligation (legal or constructive)
as a result of past event; it is probable that
an outflow of resources will be required to
settle the obligation, in respect of which a
reliable estimate can be made. Provisions are
determined based on best estimate required
to settle the obligation at the balance sheet
date. These are reviewed at each balance
sheet date and adjusted to reflect the current
best estimates.

Provisions for warranty-related costs are
recognized when the product is sold or service
provided. Provision is estimated based on
historical experience and technical estimates.
The estimate of such warranty-related costs is
reviewed annually.

Provision for liquidated damages are
recognized based on the terms of the sales
agreed with customers, the delivery date
and the commitment date. The estimate of
liquidated damages is reviewed annually.

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

3.14 Financial Instruments

A financial instrument is any contract that gives
rise to a financial asset of one Company and a
financial liability.

A. Financial assets

i. Initial recognition and measurement

All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or
loss (FVTPL), transaction costs that are
attributable to the acquisition of the financial
asset. However, trade receivables that do not
contain a significant financing component
are measured at transaction price.

ii. Subsequent measurement

For purposes of subsequent measurement,
Debt instruments are measured at
amortised cost.

iii. De-recognition

A financial asset (or, where applicable, a part
of a financial asset or part of a Company
of similar financial assets) is derecognised
primarily when:

â¢ The rights to receive cash flows from the
asset have expired, or

â¢ The Company has transferred
substantially all the risks and rewards of
the asset.

iv. Impairment of financial assets

In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the following financial assets and
credit risk exposure:

Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balances.

The Company follows âsimplified approachâ
for recognition of impairment loss allowance
on Trade receivables.

The application of simplified approach
does not require the Company to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime
ECLs at each reporting date, right from its
initial recognition.

Lifetime ECL are the expected credit
losses resulting from all possible default
events over the expected life of a financial

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

â¢ All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options)
over the expected life of the financial
instrument. However, in rare cases
when the expected life of the financial
instrument cannot be estimated reliably,
then the entity is required to use the
remaining contractual term of the financial
instrument.

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

As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life
of the trade receivables and is adjusted for
forward-looking estimates. At every reporting
date, the historical observed default rates are
updated and changes in the forward-looking
estimates are analysed.

ECL impairment loss allowance (or reversal)
recognized during the period is recognized
as income/expense in the Statement of Profit
and Loss (P&L). This amount is reflected
under the head âother expensesâ in the P&L.
The Balance Sheet presentation for various
financial instruments is described below:

Financial assets measured as at amortised
cost: ECL is presented as an allowance, i.e., as
an integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the
asset meets write-off criteria, the Company
does not reduce impairment allowance from
the gross carrying amount.

For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to be
identified on a timely basis.

Significant Accounting Judgements,
Estimates and Assumptions

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

Judgements

In the process of applying the Companyâs
accounting policies, management has made
the following judgements, which have the most
significant effect on the amounts recognised in
the Financial Statements.

Estimates and Assumptions

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

Timing of Revenue Recognition

The Company deals with the designing,
manufacturing, supply and servicing
of gears and gear boxes. The type of
customers varies across these segments,
ranging from dealers to Original Equipment
Manufacturers, their suppliers, and Industrial
Customers. The Company recognizes
revenue from sale of goods at a point in
time based on the terms of the contract with
customers which may vary case to case.
Terms of sales arrangements with various
customers, including Incoterms, determine
the timing of transfer of control and require
judgement in determining the timing of
revenue recognition.

Property, Plant and Equipment and
Investment Property

The Company has estimated the useful life of
Property, Plant and equipment and Investment
Property as per the useful life prescribed in
Schedule II of the Companies Act 2013 except
in respect of certain categories of assets as
described in Note No. 3.10.

Defined Benefit Plans

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

Further details about defined benefit
obligations are given in Note 28.

Provision for Warranty and Liquidated
Damages

Provisions for warranty-related costs are
recognized when the product is sold or
service provided. Provision is estimated
based on historical experience and
technical estimates. The estimate of such
warranty-related costs is reviewed annually.

Allowances for Slow/Non-moving Inventory
and Obsolescence

An allowance for Inventory is recognised
for cases where the realisable value is
estimated to be lower than the inventory
carrying value. The inventory allowance
is estimated taking into account various
factors, including prevailing sales prices of
inventory item and losses associated with
obsolete/slow-moving/redundant inventory
items. The Company has, based on these
assessments, made adequate provision in
the books.

28. Employee Benefits Obligation

a. Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined
contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a
specified percentage of the payroll cost to fund the benefit. The Company recognised ^ 2.51 Crores (Previous
year ^ 2.80 crores) for Provident Fund contribution, ^ 0.21 Crores (Previous year ^ 0.17 crores) for Employee
State Insurance Scheme to charge in the Statement of Profit and Loss. The contribution payable to these plans
by the Company are at the rates specified in the rules of the scheme.

b. Defined Benefit Plan

(i) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed at least five years of
service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per
the Payment of Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying
insurance policy. The following table summarizes 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.

35. Capital management

The Companyâs capital management is intended to create value for shareholders by facilitating the meeting of longÂ¬
term and short-term goals of the Company. The Company determines the amount of capital required on the basis of
annual operating plans and long-term product and other strategic investment plans. The Company is equity financed
and has always been a net cash company with cash and bank balances along with investment which is predominantly
invested in liquid and short-term mutual funds.

36. Financial risk management objectives and policies

The Companyâs principal financial liabilities comprise of trade payables. The Company has various financial assets
such as trade receivables and cash and short-term deposits, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees
the management of these risks. The Companyâs senior management is supported by a Risk Management Committee
that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk
Management Committee provides assurance to the Companyâs senior management that the Companyâs financial risk
activities are governed by appropriate policies and procedures and that financial risks are identified, measured and
managed in accordance with the Companyâs policies and risk objectives.

A. 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 value of a financial instrument may change as a result of changes
in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market
movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity,
where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange
rate risks.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate
exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each
currency by 5%.

Foreign Currency Sensitivity

The following tables demonstrate the sensitivity to 5% appreciation in USD, EURO and GBP exchange rates on foreign
currency exposures as at the year end, with all other variables held constant. The Companyâs exposure to foreign
currency changes for all other currencies is not material.

B. CREDIT RISK

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the
contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of
creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans
and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk was ? 321.20 Crores as at 31 March 2025 and ? 264.94 Crores as at 31 March 2024, being the
total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, mutual fund
investments and other financial assets.

Customer credit risk is managed by the Company subject to the Companyâs established policy, procedures and control
relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March
2025, the Company has 1 customer (31 March 2024: 1 customer), the receivables from whom exceeds 5% of total
receivables which amounts to approximately 6% (31 March 2024: 10%) of all the total receivables outstanding.

The ageing of trade receivables as of balance sheet date is given below. The aging analysis has been considered from
the due date. The provision for the not due and less than six months receivables represents expected credit loss.

Note : Research and Development expenses of Revenue nature have been classified under the relevant heads of accounts in

the Statement of Profit and Loss and the expenditure of capital nature is grouped under PPE/CWIP

39. Other Statutory Information

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

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

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

(iv) No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either
from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other
person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing
or otherwise, 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 (âUltimate Beneficiariesâ) or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries.

(v) No funds (which are material either individually or in the aggregate) have been received by the Company from any
person(s) or entity(ies), including foreign entities (âFunding Partiesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee,
security or the like on behalf.

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

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

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

(ix) No Schemes of Arrangements have been applied or approved by the Competent Authority in terms of section
230 to 237 of the Companies Act, 2013.

40. Information relating to Proviso to Rule 3(1) of Companies (Accounts) Rules, 2014 on Audit Trail

a. The Company has used two accounting software systems for maintaining its books of account. In respect of one
of the software systems, the audit trail feature was enabled at the application level for additional tables for the
relevant transactions and at the database level for logging direct data changes, effective October 2024. The audit
trail feature has remained operational from the date of enablement and to the best of the Companyâs knowledge,
has not been tampered with. The Company has retained the audit trail data, to the extent enabled and recorded,
in accordance with applicable statutory requirements.

b. With respect to the software used for recording payroll transactions, the audit trail feature was enabled at the
application level throughout the year. The database servers for this application are hosted and managed by a
third-party service provider. Consequently, we could not are unable to confirm whether the audit trail feature
was enabled at the database level throughout the year. The audit trail data, to the extent enabled and recorded,
has been preserved in line with statutory requirements.

41. Previous yearâs figures are reclassified/recasted wherever necessary to conform to the current yearâs
classification

42. The financial statements were approved by the Board of Directors on 24 April 2025

For M S K A & Associates For and on behalf of the Board of Directors

Chartered Accountants

ICAI Firm Registration No.105047W

Geetha Jeyakumar M Karunakaran M A M Arunachalam

Partner Whole-time Director Chairman

Membership No.029409 (DIN: 09004843) (DIN: 00202958)

Place: Coimbatore Ranjan Kumar Pati Walter Vasanth P J

Date: 24 April 2025 Chief Financial Officer Company Secretary

Mar 31, 2024

3.14 Provisions and Contingent Liabilities

A provision is recognized when an enterprise has a present obligation (legal or constructive) as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Provisions for warranty-related costs are recognized when the product is sold or service provided. Provision is estimated based on historical experience and technical estimates. The estimate of such warranty-related costs is reviewed annually.

Provision for liquidated damages are recognized based on the terms of the sales agreed with customers, the delivery date and the commitment date. The estimate of liquidated damages is reviewed annually.

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

Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one Company and a financial liability.

A. Financial assets

i. Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at Fair Value Through Profit Or Loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.

ii. Subsequent measurement

For purposes of subsequent measurement, Debt instruments are measured at amortised cost

iii. De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised primarily when:

â¢ The rights to receive cash flows from the asset have expired, or

â¢ The Company has transferred substantially all the risks and rewards of the asset

iv. Impairment of financial assets

In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balances.

The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

â¢ All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

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

As a practical expedient, the Company uses a provision matrix to determine impairment loss

allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss (P&L). This amount is reflected under the head ''other expenses'' in the P&L. The Balance Sheet presentation for various financial instruments is described below:

â¢ Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

Significant accounting judgements, estimates and assumptions

The preparation of the Company''s Financial

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

Judgements

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

Estimates and assumptions

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

Property, Plant and Equipment and Investment Property

The Company has estimated the useful life of Property, Plant and equipment and Investment Property as per the useful life prescribed in Schedule II of the Companies Act 2013 except in respect of certain categories of assets as described in Note No. 3.12.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Defined benefit plans

The cost of the defined benefit gratuity plan and other post-employment leave encashment benefit and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly

sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about defined benefit obligations are given in Note 28.

Provision for Warranty and Liquidated Damages

Provisions for warranty-related costs are recognized when the product is sold or service provided. Provision is estimated based on historical experience and technical estimates. The estimate of such warranty related costs is reviewed annually.

Provision for liquidated damages are recognized based on the terms of the sales agreed with customers, the delivery date and the commitment date. The estimate of liquidated damages is reviewed annually.

Allowances for Slow, Non-moving Inventory and Obsolescence

An allowance for Inventory is recognised for cases where the realisable value is estimated to be lower than the inventory carrying value. The inventory allowance is estimated taking into account various factors, including prevailing sales prices of inventory item and losses associated with obsolete/slow-moving/redundant inventory items. The Company has, based on these assessments, made adequate provision in the books.

35. Capital management

The Company''s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the Company. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The Company is equity financed and has always been a net cash company with cash and bank balances along with investment which is predominantly invested in liquid and short-term mutual funds.

36. Financial risk management objectives and policies

The Company''s principal financial liabilities comprise of trade payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken.

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 5%.

B. CREDIT RISK

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ^ 214.73 Crores as at 31 March 2024 and ^ 161.42 Crores as at 31 March 2023, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2024, the Company has 1 customer (31 March 2023: 3 customer), the receivables from whom exceeds 5% of total receivables which amounts to approximately 10% (31 March 2023: 19%) of all the total receivables outstanding.

The ageing of trade receivables as of balance sheet date is given below. The aging analysis has been considered from the due date. The provision for the not due and less than six months receivables represents expected credit loss.

C. LIQUIDITY RISK

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

38. Other Statutory Information

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

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

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

(vii) No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 on behalf of the Ultimate Beneficiaries.

(viii) No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), 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.

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

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

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

(xii) No Schemes of Arrangements have been applied or approved by the Competent Authority in terms of section 230 to 237 of the Companies Act, 2013.

39. The financial statements were approved by the Board of Directors on 09 May 2024

For M S K A & Associates For and on behalf of the Board of Directors

Chartered Accountants

ICAI Firm Registration No.105047W

Geetha Jeyakumar M Karunakaran M A M Arunachalam

Partner Whole-time Director Chairman

Membership No.029409 (DIN: 09004843) (DIN: 00202958)

Pl_ace: C_oi_mb_at_ore Ranjan Kumar Pati Walter Vasanth P J

Date: 09 May 2024 Chief Financial Officer Company Secretary

Mar 31, 2023

The Company''s investment property consists of the property in Coimbatore and Mumbai which have been let out on rent As on 31 March 2023, the fair value of the property is ^ 40.00 crores (Previous year ^ 36.36 crores)

The fair value of the investment properties is determined based on the capitalisation of net income method, where the market rentals of all the lettable units were considered. The main inputs used are rental growth rates, expected vacancy rates, terminal yields and discount rates based on industry data. The resulting fair value estimates are classified under Level 3 of the Fair value hierarchy.

The Company has no restrictions on the disposal of its investment property and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancement.

Trade receivables are non-interest bearing and are generally have credit period of 60 days. The Company has used a practical expedient by computing the expected credit loss allowances for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information.

*Amount is below the rounding off norms adopted by the Company

(iv) Each Equity Shareholder is entitled to one vote per share. Pursuant to the approval of the Board of Directors on 25 January 2023, the company declared and paid an interim dividend of ^ 23.01 Crores (Previous Year ^ 19.18 Crores) during the year ended 31 March 2023. The Board of Director has proposed a final dividend of ^ 2/- per Equity Shares (As at March 31, 2022-Nil) for the year ended March31, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting. As per Ind AS 10, proposed final dividend of ^ 15.34 Crores (As at March 31,2022-Nil) is not recongnised as a liability as on March 31,2023.

Basic EPS amounts are calculated by dividing the profit after tax for the year and the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit after tax for the year and the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares if any.

The following details reflects the income and share data used in the basic and diluted EPS computations: 29. Employee Benefits Obligation

a. Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefit. The Company recognised ^ 2.42 crores (Previous year ^ 2.09 crores) for Provident Fund contribution, ^ 0.12 crores (Previous year ^ 0.09 crores) for Employee State Insurance Scheme to charge in the Statement of Profit and Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the scheme.

b. Defined Benefit Plan

(i) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed at least five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per the Payment of Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying insurance policy. The following table summarizes 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.

i. The entire Plan Assets are managed by LIC. In the absence of the relevant information from LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

iv. 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.

These plans typically expose the Company to actuarial risk such as interest rate risk, longevity risk and salary risk. Interest Rate Risk: A decrease in the bond interest rate will increase the plan liability.

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

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

30. Capital Commitment and Contingencies 30a. Contingent Liabilities

Crores)
Sl. No.	Particulars	As at 31 March 2023	As at 31 March 2022
i.	Claims against the Company not acknowledged as debts	0.55	0.55
ii.	Disputed Excise Duty on Inter Unit transfer of Machinery-Duty ^ 0.76 Crores and penalty ^ 0.76 Crores. The Appellate Tribunal has passed the order and the matter is remanded back to the Jurisdiction Officer	1.52	1.52
iii.	Disputed Income Tax Demand for financial year 2017-18	-	4.37
30b. Capital Commitment (^ Crores)
Sl. No.	Particulars	As at 31 March 2023	As at 31 March 2022
i.	Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances)	21.55	2.24
ii.	Export Obligation under EPCG/Advance License scheme to be fulfilled. The Company is confident of meetings its obligation under the scheme within the stipulated period	0.48	0.69

Note:

1.Show cause Notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

2.The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the outcome of various legal proceedings and therefore, cannot be predicted accurately.

The company has cancellable operating lease agreements for office space. As per the lease terms an amount of ^ 0.58 Crores (Previous year: ^ 0.33 Crores) is charged to Statement of Profit and Loss. As lessor, the Company realized an income of ^ 1.71 Crores (Previous year- ^ 1.64 Crores) on properties under leases.

The management assessed that cash and cash equivalents, trade receivables, current investments, other financial assets, trade payables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The Company''s capital management is intended to create value for shareholders by facilitating the meeting of longterm and short-term goals of the Company. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The company is equity financed and has always been a net cash company with cash and bank balances along with investment which is predominantly invested in liquid and short-term mutual funds.

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 1%.

Foreign Currency Sensitivity

The following tables demonstrate the sensitivity to 1% appreciation in USD, EURO and GBP exchange rates on foreign currency exposures as at the year end, with all other variables held constant. The Company''s exposure to foreign currency changes for all other currencies is not material.

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ^ 161.70 Crores as at 31 March 2023 and ^ 142.14 Crores as at 31 March 2022, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2023, the Company has 3 customers (31 March 2022: 3 customer), the receivables from whom exceeds 5% of total receivables which amounts to approximately 19% (31 March 2022: 21%) of all the total receivables outstanding.

The ageing of trade receivables as of balance sheet date is given below. The age analysis has been considered from the due date. The provision for the not due and less than six months receivables represents expected credit loss.

Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Company''s treasury department. The objective is to minimise the concentration of risks and therefore mitigate financial loss.

C. Liquidity Risk

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

39. Other Statutory Information

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

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

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

(iv) No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 on behalf of the Ultimate Beneficiaries.

(v) No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), 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.

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

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

(viii) The Company does not have any subsidiaries and hence it is in compliance with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(ix) No Schemes of Arrangements have been applied or approved by the Competent Authority in terms of section 230 to 237 of the Companies Act, 2013.

40. The financial statements were approved by the Board of Directors on 9 May, 2023

Mar 31, 2022

The Companyâs investment property consists of the property in Coimbatore and Mumbai which have been let out on rent As on 31 March 2022, the fair value of the property is H36.36 Crores (Previous year H36.24 Crores).

28. Earnings Per Share

Basic EPS amounts are calculated by dividing the profit after tax for the year and the weighted average number of Equity shares outstanding during the year.

29. Significant accounting judgements, estimates and assumptions

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

Judgements

In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Financial Statements:

Operating lease commitments â Company as lessor

The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases

Estimates and assumptions

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

Property, Plant and Equipment and Investment Property

The Company has estimated the useful life of Property, Plant and equipment and Investment Property as per the useful life prescribed in Schedule II of the Companies Act 2013 except in respect of certain categories of assets as described in Note No. 3.16.

Taxes

Defined benefit plans

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

Further details about defined benefit obligations are given in Note 30.

Allowances for slow / Non-moving Inventory and obsolescence

An allowance for Inventory is recognised for cases where the realisable value is estimated to be lower than the inventory carrying value. The inventory allowance is estimated taking into account various factors, including prevailing sales prices of inventory item and losses associated with obsolete / slow-moving / redundant inventory items. The Company has, based on these assessments, made adequate provision in the books.

30. Employee Benefits Obligationa. Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefit. The Company recognised H2.09 crores (Previous year H1.97 crores) for Provident Fund contribution, H0.09 crores (Previous year H0.10 crores) for Employee State Insurance Scheme in the Statement of Profit and Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the scheme.

b. Defined Benefit Plan (i) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed at least five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per Payment of Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying insurance policy. The following table summarizes 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.

i. The entire Plan Assets are managed by LIC. In the absence of the relevant information from LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

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

Interest Rate Risk: A decrease in the bond interest rate will increase the plan liability.

37 Capital management

The Companyâs capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the Company. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The company is equity financed and has always been a net cash company with cash and bank balances along with investment which is predominantly invested in liquid and short-term mutual funds.

38 Financial risk management objectives and policies

The Companyâs principal financial liabilities comprise of trade payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken.

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 1%.

Foreign Currency Sensitivity

The following tables demonstrate the sensitivity to 1% appreciation in USD, EURO and GBP exchange rates on foreign currency exposures as at the year end, with all other variables held constant. The Companyâs exposure to foreign currency changes for all other currencies is not material

B. CREDIT RISK

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was H 142.14 Crores as at 31 March 2022 and H106.45 Crores as at 31 March 2021, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2022, the Company has 3 customers (31 March 2021: 2 customer), the receivables from whom exceeds 5% of total receivables which amounts to approximately 21% (31 March 2021: 13%) of all the total receivables outstanding.

Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Companyâs treasury department. The objective is to minimise the concentration of risks and therefore mitigate financial loss.

C. LIQUIDITY RISK

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

40. Other Statutory Information

(i) The Company does not have any transactions with Companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956

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

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

(iv) No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(v) No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf

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

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

(ix) No Schemes of Arrangements have been applied or approved by the Competent Authority in terms of section 230 to 237 of the Companies Act, 2013.

41. The Indian Parliament approved the Code on Social Security, 2020 (âCodeâ) relating to employee benefits during employment and postemployment benefits in September 2020 and the same has received Presidential assent. 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. The Company is in the process of assessing the impact of the Code and will record any related impact in the period the Code becomes effective.

42. The financial statements were approved by the Board of Directors on 7 May 2022

Mar 31, 2019

Note on share buyback : The Board of Directors in a meeting held on 26 December 2018 approved a proposal for buyback of equity shares of the Company, not exceeding 50 lakh equity shares of Rs,1/- each fully paid-up, at a price of Rs,140 per share, through the âtender offerâ route on a proportionate basis, from the shareholders, which got approved by the shareholders through postal ballot on 29 January 2019 and approved by SEBI on 26 February 2019. Consequently 50,00,000 shares have been extinguished on 09 April 2019.

Consequent to the extinguishment of 50,00,000 shares on account of buyback the following adjustments will be made to Other Equity in the subsequent financial year :

- Increase in Capital Redemption Reserve by Rs,0.5 Crores

- Decrease in Securities Premium by Rs,24.29 Crores

- Decrease in General Reserve by Rs,45.71 Crores

Note :

1. Show Cause Notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

2. The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the outcome of various legal proceedings and therefore, cannot be predicted accurately.

3. The Supreme court of India vide judgement dated 28 February 2019, has issued clarification on the definition of "basic wage" considered for the contribution for Provident Fund which provides for the inclusion of special allowances. The said judgement is retrospective in nature. However, since all employer bodies have pleaded with EPFO and Ministry and the actual liability to be provided is unascertainable, no liabilities in the books of accounts has been created.

4. Significant accounting judgements, estimates and assumptions

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

Judgments

In the process of applying the Company''s accounting policies, management has made the following judgmentâs, which have the most significant effect on the amounts recognized in the Financial Statements:

Operating lease commitments - Company as lessor

Estimates and assumptions

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

Property, Plant and Equipment and Investment Property

The Company has estimated the useful life of Property, Plant and equipment and Investment Property as per the useful life prescribed in Schedule II of the Companies Act 2013 except in respect of certain categories of assets as described in Note No. 3.16.

Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Defined benefit plans

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

Further details about defined benefit obligations are given in Note 29.

5. Employee Benefits under Defined Benefit Plans

a) Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefit. The Company recognized Rs,1.58 Crores (PY Rs,1.49 Crores) for Provident Fund contribution, Rs,0.26 Crores (PY Rs,0.19 Crores) for Employee State Insurance Scheme in the Statement of Profit & Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the scheme.

b) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed atleast five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying insurance policy. The following table summarizes 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.

Notes :

i. The entire Plan Assets are managed by LIC. In the absence of the relevant information from LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

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

Interest Rate Risk : A decrease in the bond interest rate will increase the plan liability.

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

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

6 Segment Reporting

The Company''s main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Ind AS 108. The Company has opted to disclose information based on geographical location of customers.

The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities : __

7. Capital management

The Company''s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the Company. The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The company is equity financed and has always been a net cash company with cash and bank balances along with investment which is predominantly invested in liquid and short-term mutual funds.

8. Financial risk management objectives and policies

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

B. Credit Risk

Credit risk is the risk of financial loss arising from counter party failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs,63.57 Crores as at 31 March 2019 and Rs,112.69 Crores as at 31 March 2018, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2019, the Company has 1 customer (31 March 2018 : 3 customers), the receivables from whom exceeds 5% of total receivables which amounts to approximately 6% (31 March 2018 : 18%) of all the total receivables outstanding.

The ageing of trade receivables as of Balance Sheet date is given below. The age analysis have been considered from the due date. The provision for the not due and less than six months receivables represents expected credit loss.

Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Company''s treasury department. The objective is to minimize the concentration of risks and therefore mitigate financial loss.

C. Liquidity Risk

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

9. The figures of the previous year have been regrouped / recanted, wherever necessary to conform with the current year classification.

Mar 31, 2018

1. Corporate Information

Shanthi Gears Limited (the Company) is a Public Limited Company domiciled in India and listed on BSE Limited and National Stock Exchange of India Limited. The Company is in the business of design, manufacture, supply and servicing of gears and gear boxes. The registered office of the Company is located at 304-A, Trichy Road, Singanallur, Coimbatore, Tamil Nadu.

The financial statements were authorised for issue in accordance with a resolution of the directors on 02 May 2018.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Companies (Indian Accounting Standards) Amendment Rules, 2016.

The financial statements have been prepared on a historical cost basis, except for certain financial assets measured at fair value at the end of the reporting period(refer note 3.2: accounting policy regarding fair value measurement).

The financial statements are presented in INR and all values are rounded to the nearest crores, except when otherwise indicated.

The Companyâs investment property consists of the property in Coimbatore which has been let out on rent.

As on 31 March 2018 and on 31 March 2017, the fair values of the property is Rs.8.17 Crs and Rs.8.13 Crs respectively.

The fair value of the investment properties is determined based on the capitalisation of net income method, where the market rentals of all the lettable units was considered. The main inputs used are rental growth rates, expected vacancy rates, terminal yields and discount rates based on industry data. The resulting fair value estimates are classified under Level 3 of the Fair value hierarchy.

The cost of inventories recognised as an expense during the year in respect of continuing operations was Rs.81.42 Crs (for the year ended 31 March 2017: Rs.77.46 Crs).

The cost of inventories recognised as an expense includes Rs.2.48 Crs (during 2016-17: Rs.0.85 Crs) in respect of write downs (net) of inventory to net realisable value.

The inventories of Rs.0.47Crs (as at 31 March 2017 Rs.0.19 Crs) are expected to be recovered after more than twelve months.

Out of the above Rs.0.04 Crs. (PY Nil) is receivable from Holding Company and Rs.0.06 Crs (PY Rs.0.05 Crs) is receivable from TI Tsubamex Private Limited, a related party, disclosed in Note 35.

Trade receivables are non-interest bearing and are generally have credit period of 60 days.

The Company has used a practical expedient by computing the expected credit loss allowances for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information.

(iv) The Company has only one class of equity shares having par value of Rs.1/- each . Each holder of Equity shares is entitled to one vote per equity share. Dividends are paid in India Rupees. Dividends proposed by Board of Directors, if any is subject to approval of the Shareholders in the Annual General Meeting, except in case of Interim Dividend.

The Board of Directors at its meeting held on May 03, 2017 had recommended a final dividend of 75% (Rs.0.75 per equity share of par value Rs.1 each). The proposal was approved by shareholders at the Annual General Meeting held on July 26, 2017. This has resulted in a cash outflow of Rs.7.38 Crs inclusive of dividend distribution tax of Rs.1.25 Crs.

The Board of Directors at its meeting held on February 06, 2018 had declared an interim dividend of 100% (Rs.1 per equity share of par value Rs.1 each). The aforesaid interim dividend was paid during the year. This has resulted in a cash outflow of Rs.9.84 Crs inclusive of dividend distribution tax of Rs.1.66 Crs.

Trade payables are non-interest bearing and are normally settled within a period of 90 days.

Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act), and relied upon by the Auditors, there are no such dues to such suppliers.

Sale of goods include excise duty collected from customers of Rs.5.31 Crs (31 March 2017: Rs.19.24 Crs). Sale of goods net of excise duty is Rs.204.59 Crs (31 March 2017: Rs.176.59 Crs.)

Sale of scrap includes excise duty collected from customers of Rs.0.06 Crs (31 March 2017: Rs.0.38 Crs.). Sale of scrap net of excise duty is Rs.4.19 Crs (31 March 2017: Rs.3.19 Crs.)

3. Significant accounting judgements, estimates and assumptions

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

Judgements

In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Financial Statements:

Operating lease commitments - Company as lessor

Estimates and assumptions

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

Property, Plant and Equipment and Investment Property

The Company has estimated the useful life of Property, Plant and equipment and Investment Property as per the useful life prescribed in Schedule II of the Companies Act 2013 except in respect of certain categories of assets as described in Note No. 3.16.

Taxes

Defined benefit plans

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

Further details about defined benefit obligations are given in Note 33.

4. Employee Benefits under Defined Benefit Plans

a) Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefit. The Company recognised Rs.1.49 Crs (PY Rs.1.36 Crs) for Provident Fund contribution, Rs.0.19 Crs (PY Rs.0.10 Crs) for Employee State Insurance Scheme in the Statement of Profit & Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the scheme.

b) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed atleast five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying insurance policy. The following table summarizes 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.

Notes:

i. The entire Plan Assets are managed by LIC. In the absence of the relevant information from LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

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

Interest Rate Risk: A decrease in the bond interest rate will increase the plan liability.

Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and aftertheir employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

5. Segment Reporting

The Companyâs main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Ind AS 108.The Company has opted to disclose information based on geographical location of customers.

6. Operating Leases

The Company has cancellable operating lease agreements for office space. As per the lease terms an amount of Rs.0.44 Cr (PY- Rs.0.38Cr) is charged to Statement of Profit and Loss. As lessor, the Company realized an income of Rs.0.38 Cr (PY- Rs.0.35 Cr) on properties under lease.

The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:

7. Capital management

8. Financial risk management objectives and policies

The Companyâs principal financial liabilities comprise of trade payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken.

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

B. CREDIT RISK

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs.112.69 Cr as at 31 March 2018 and Rs.117.52 Cr as at 31 March 2017, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Companyâs established policy, procedures andcontrol relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2018, the Company has 3 customers (31 March 2017: 4 customers), the receivables from whom exceeds 5% of total receivables which amounts to approximately 18% (31 March 2017: 31%) of all the total receivables outstanding.

The ageing of trade receivables as of balance sheet date is given below. The age analysis have been considered from the due date.The provision for the not due and less than six months receivables represent expected credit loss.

C. LIQUIDITY RISK

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

9. The figures of the previous year have been regrouped/recasted, wherever necessary to conform with the current year classification.

Mar 31, 2017

The Companyâs investment property consists of the property in Coimbatore which has been let out on rent.

As on 31 March 2017 and on 31 March 2016, the fair values of the property is Rs.8.13 Crs and Rs. 8.10 Crs respectively.

The fair value of the investment properties is determined based on the capitalization of net income method, where the market rentals of all the lettable units was considered. The main inputs used are rental growth rates, expected vacancy rates, terminal yields and discount rates based on industry data. The resulting fair value estimates are classified under Level 3 of the Fair value hierarchy.

NOTES TO FINANCIAL STATEMENTS

The cost of inventories recognized as an expense during the year in respect of continuing operations was Rs.77.46 Crores (for the year ended 31 March 2016: Rs.62.53 Crores).

The cost of inventories recognized as an expense includes Rs.0.85 Crores (during 2015-16: Rs.1.22 Crores) in respect of write downs of inventory to net realizable value.

The inventories of Rs.0.19 Crores (as at 31 March 2016 '' Nil and as at 01 April 2015 Rs. Nil) are expected to be recovered after more than twelve months.

Out of the above Rs. Nil (PY Rs.0.05 Crores) is receivable from Holding Company and Rs.0.05 Crores (PY Rs. Nil) is receivable from TI Tsubamex Private Limited, a related party, disclosed in Note 35.

Trade receivables are non-interest bearing and are generally have credit period to a maximum of 60 days

Transaction in Specified Bank Notes

During the year, the Company had specified bank notes and other denomination note as defined in the MCA notification G.S.R.308(e) dated 31 March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 08 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

12(iv) The Company has only one class of equity shares having par value of Rs.1/- each . Each holder of Equity shares is entitled to one vote per equity share. Dividends are paid in India Rupees. Dividends proposed by Board of Directors, if any is subject to approval of the Shareholders in the Annual General Meeting, except in case of Interim Dividend.

General Reserve: It represents appropriation of profit by the company.

Securities Premium: Amounts received on issue of shares in excess of the par value has been classified as securities premium.

Retained earnings: Retained earnings comprise of the Companyâs prior yearsâ undistributed earnings after taxes.

In respect of the year ended 31 March 2017, the board of directors propose that a dividend of '' 0.75 per share be paid on fully paid equity shares. This dividend is subject to approval by shareholders at the Annual General Meeting. The total estimated cash outflow would be Rs.7.38 Crores including Dividend Distribution Tax.

Trade payable are non-interest bearing and are normally settled with in a period of 90 days

Sale of goods includes excise duty collected from customers of Rs.19.24 Crores (31 March 2016: Rs.16.89 Crores). Sale of goods net of excise duty is Rs. 176.59 Crores (31 March 2016: Rs.160.42 Crores.)

Sale of scrap includes excise duty collected from customers of Rs.0.38 (31 March 2016: Rs.0.24 Crores.). Sale of goods net of excise duty is Rs.3.19 Crores (31 March 2016: Rs.2.02 Crores.)

Note:

1. Show Cause Notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

2. The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the outcome of various legal proceedings and therefore, cannot be predicted accurately.

3. Imported and Indigenous Materials Consumed

A. Consumption of Raw Materials (Refer Note 21)

4. Significant accounting judgments, estimates and assumptions

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

Judgments

In the process of applying the Companyâs accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the Financial Statements:

Operating lease commitments - Company as lessor

Estimates and assumptions

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

Property, Plant and Equipment and Investment Property

The Company has estimated the useful life of Property, Plant and equipment and Investment Property as per the useful life prescribed in Schedule II of the Companies Act, 2013 except in respect of certain categories of assets as described in Note No. 3.16.

Taxes

Defined benefit plans

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

Further details about defined benefit obligations are given in Note 33.

5. Employee Benefits under Defined Benefit Plans

a) Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefit. The Company recognized Rs.1.36 Crores (PY Rs.1.22 Crores) for Provident Fund contribution, Rs.0.10 Crores (PY Rs.0.07 Crores) for Employee State Insurance Scheme in the Statement of Profit & Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the scheme.

b) Gratuity

Under the Gratuity plan operated by the Company, every employee who has completed at least five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per Gratuity Act, 1972. The scheme is funded with an Insurance Company in the form of qualifying insurance policy. The following table summarizes 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.

Notes:

i. The entire Plan Assets are managed by LIC. In the absence of the relevant information from LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

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

Interest Rate Risk: A decrease in the bond interest rate will increase the plan liability.

The Companyâs main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Ind AS 108. The Company has opted to disclose information based on geographical location of customers.

* Represents related Parties with whom the Company had Transactions during the year

Note: Related party relationships are as identified by the Management and relied upon by the Auditors.

6. Operating Leases

The Company has cancellable operating lease agreements for office space. As per the lease terms an amount of Rs.0.38 Crores (PY- Rs.0.25 Crores) is charged to Statement of Profit and Loss account. As lessor, the Company realized an income of Rs.0.35 Crores (PY- Rs.0.35 Crores) on properties under lease.

The following table presents the carrying amounts and fair value of each category of financial assets and liabilities

The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:

The Companyâs principal financial liabilities comprise of trade payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken.

A. 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 value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

i. Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

B. CREDIT RISK

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables and loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs.117.91 Crores as at 31 March 2017 and Rs.102.84 Crores as at 31 March 2016, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets.

Customer credit risk is managed by the Company subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. At 31 March 2017, the Company has 4 customers (31 March 2016: 4 customers, 1 April 2015: 3 customers), the receivables from whom exceeds 5% of total receivables which amounts to approximately 31% (31 March 2015: 31%, 1 April 2014: 29%) of all the total receivables outstanding.

The ageing of trade receivables as of balance sheet date is given below. The age analysis have been considered from the due date. The provision for the not due and less than six months receivables represent expected credit loss.

Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Companyâs treasury department. The objective is to minimize the concentration of risks and therefore mitigate financial loss.

C. LIQUIDITY RISK

The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks.

7. First Time Adoption of Ind AS

These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1 April 2015, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016.

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

1. Since there is no change in the functional currency, the Company has elected to continue with the carrying value as at 1 April 2015 for all of its investment property and property plant & equipment as recognized in its Previous GAAP financial as deemed cost at the transition date.

2. Estimates - The estimates at 1 April 2015 and at 31 March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from FVTOCI - equity shares and Impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2015 (i.e. the date of transition to Ind-AS) and as of 31 March 2016.

Effect of the Transition to Ind AS:

Reconciliations of the Companyâs balance sheets prepared under Indian GAAP and Ind AS as of 1 April 2015 and 31 March 2016 are also presented in Notes 42 & 43. Reconciliations of the Companyâs income statement for the year ended 31 March 2016 prepared in accordance with Indian GAAP and Ind AS presented in Note 44.

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

9. Foot Notes

10. Reclassification:

âPrevious periodsâ figures have been re-grouped / re-classified, where necessary to comply with Ind AS accounting.

11. FVTOPL:

Under previous GAAP, the entity accounted for investments in long term funds as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the entity has designated such investments as FVTOPL investments. Ind AS requires FVTOPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and previous GAAP carrying amount has been recognized in the profit and loss.

12. Trade receivables:

Under previous GAAP the entity has created provision for impairment of receivables if they remained outstanding over the prescribed period. Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). Due to ECL model, the entity impaired its trade receivable by Rs.0.38 Crores on 01 April 2015 which has been eliminated against retained earnings. The impact of Rs.0.43 Crores for the year ended 31 March 2016 has been recognized in the statement of profit and loss.

13. Events after reporting period:

Till the previous year proposed dividend and tax on dividend was accounted in the year pertaining to which dividend had been declared. However, under Ind AS, the liability to pay dividend is recognized only when it is appropriately authorized.

14. Excise duty:

Under previous GAAP sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus, sale of goods and sale of scrap in other operating revenue has increased by Rs.16.89 Crores and Rs.1.78 Crores with a corresponding increase in expense.

15. Defined benefit liabilities:

Under both previous GAAP and Ind AS, the entity recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI. Thus, the employee benefit cost is reduced by Rs.0.90 Crores and Re-measurement gains/ losses on defined benefit plans has been recognized in the OCI net of tax.

16. Deferred tax:

The various transitional adjustments lead to temporary differences and the entity has accounted for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. The net impact on deferred tax liabilities was Rs.0.13 Crores on the date of transition and Rs.0.38 Crores for the year ended 31 March 2016.

Mar 31, 2016

Notes:

i. The entire Plan Assets are managed by Life Insurance Corporation of India (LIC). In the absence of the relevant information from LIC/Actuary, the above detail do not include the composition of plan assets.

ii. The expected return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

iv. The details of Experience adjustments to the extent information available are given below.

1. Operating Lease

The Company has cancellable operating lease agreements for office space. As per the lease terms an amount of Rs. 0.25 Crores (PY- Rs. 0.28 Crores) is charged to statement of Profit and Loss account. As lesser the Company realized an income of Rs. 0.40 Crores (PY- Rs. 0.46 Crores) on properties under lease.

2. Previous period figures have been re-grouped wherever necessary to correspond with the current yearsâ classification / disclosure.

Mar 31, 2015

1 (a) There are no Balances with banks with remaining maturity of more than 12 months from the balance sheet date.

Rs.Crores

2. Commitments and Contingent Liabilities Year ended Year ended 31-03-2015 31-03-2014

A. Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) 1.64 0.85

B. Contingent Liabilities

a) Claims against the Company not acknowledged as debt 0.55 4.21

b) Disputed Demand for Additional Sales Tax on Central Sales Tax pertaining to the year 1998-99. The matter is pending before the Assistant Commissioner, Fast Track Assessment Circle-I, Coimbatore. The value has been paid under protest and writ petition is pending with Madras High Court. 0.01 0.01

c) Disputed Demand for Additional Sales Tax on Central Sales Tax pertaining to the year 1999-2000. The matter is pending before the Assistant Commissioner, Fast Track Assessment Circle-I, Coimbatore. The value has been 0.01 0.01 paid under protest and writ petition is pending with Madras High Court.

d) Disputed Excise Duty on Inter Unit transfer of Machinery - Duty Rs. 0.76 Crores and penalty Rs. 0.76 Crores. The matter is pending before the Appellate Tribunal, South 1.52 1.52 Zonal Bench, Chennai.

Note : Show Cause Notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

3. Employee Benefits Plans

a) Defined Contribution Plan

The Company makes Provident Fund and Employees State Insurance scheme contributions which are defined contribution plans for qualifying employees. Under the scheme the Company is required to contribute a specified percentage of the payroll cost to fund the benefits. The Company recognised Rs.1.18 crores P.Y. Rs.1.01 crores) for Provident Fund contribution and Rs.0.09 crores (P.Y.Rs.0.08 crores) for Employees State Insurance scheme in the Statment of Profit and Loss. The contribution payable to these plans by the Company are at the rates specified in the rules of the schemes.

4. Segment Reporting

The Company's main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Accounting Standard 17 (AS17). Secondary segmental reporting is based on geographical location of customers and assets.

5. Operating Leases

The Company has operating lease agreements for office space and is cancellable on mutual consent. As per the lease terms an amount of Rs. 0.28 crores (P.Y. Rs.0.18 crores) is charged to statement of Profit and Loss. As lessor the Company realized an income of Rs.0.46 crores (P.Y.Rs. 0.43 crores) on properties under lease.

6. Previous period figures have been re-grouped wherever necessary to correspond with the current years' classification / disclosure.

Mar 31, 2014

1. (i) The Company has only one class of equity shares having par value of Rs. 1/- each. Each holder of Equity shares is entitled to one vote per share.

2.(i) Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act), and relied upon by the Auditors, there are no dues to such suppliers.

ii) Trade payable includes Rs. 4.86 crores representing cheques issued and not presented for payment.

3.(i) Includes amount due to Holding Company Â Nil (PY Rs. 0.66 Crores Net of Tax). 8.(ii) There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

4.(i) There are no provisions that are not contingent and was not provided based on estimation as per Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29).

5. (a) During the year, the Company has invested an aggregate of Rs. 60.92 crores (Previous Year Rs. 80.31 crores) and redeemed an aggregate of Rs. 48.75 crores (Previous Year Rs. 44.59 crores) of units in various Cash Management Schemes of Mutual Funds, invested for the purpose of deployment of temporary cash surpluses.

6. Segment Reporting

The Company''s main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Accounting Standard 17 (AS17). Secondary segmental reporting is based on geographical location of customers and assets.

7. The working capital facility with State Bank of India is secured by hypothecation of Inventory, Book Debts, Land & Buildings of A and C Units and certain items of Plant & Machinery. The working capital facility with IDBI Bank is secured by an exclusive charge on certain items of Plant & Machinery.

8. Previous period figures have been re-grouped/re-classified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2013

1. Commitments and Contingent Liabilities

Rs. Crores

31-03-2013 31-03-2012

Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for 2.06 3.02

Contingent Liabilities

Bills Discounted 1.91

Claims against the Company not acknowledged as debt 7.25 7.25

Note:

Show Cause Notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.

2. Segment Reporting

The Company''s main business is manufacture of Gears & Gear Products. There are no separate reportable segments as per Accounting Standard 17 (AS 17).

3. Disclosure in respect of Related Parties pursuant to Accounting Standard 18

a) List of Related Parties

I. Entity with Significant Influence

Tube Investments of India Ltd (between 3rd September, 2012 and 19th November, 2012)

II. Holding Company

Tube Investments of India Ltd (with effect from 19th November, 2012)

III. Fellow Subsidiaries (with effect from 19th November, 2012)

a. Cholamandalam MS General Insurance Company Limited

b. Cholamandalam Investment and Finance Company Limited I. Cholamandalam Distribution Services Limited

ii. Cholamandalam Factoring Limited and

iii. Cholamandalam Securities Limited

(Subsidiaries of Cholamandalam Investment and Finance Company Limited)

c. TI Financial Holdings Limited

d. TICI Motors (Wuxi) Company Limited

e. Financiere C10 SAS I. Sedis SAS

ii. Societe De Commercialisation De Composants Industriels SARL and

iii. Sedis Co. Ltd.

(Subsidiaries of Financiere C10 SAS)

IV. Key Management Personnel (KMP)

Mr. P. Subramanian Â Chairman and Managing Director (upto 3rd September, 2012)

Mr. Sreeram Srinivasan - President & Executive Director (with effect from 3rd September, 2012)

4. The working capital facility with State Bank of India is secured by hypothecation of Inventory, Book Debts, Land & Buildings of A and C Units and certain items of Plant & Machinery. The working capital facility with IDBI Bank is secured by an exclusive charge on certain items of Plant & Machinery.

5. Previous period figures have been re-grouped wherever necessary to correspond with the current years'' classification / disclosure.

Mar 31, 2012

1. Contingent Liabilities and Commitments

(i) Contingent Liabilities

(a) Guarantees given by the Company 70,690,553 41,933,395

(b) Letter of Credits 24,808,000 55,818,000

(c) Bills Discounted 19,075,863 16,511,340

(d) Claims against the Company not acknowledged as debts 72,462,947 72,382,697

(ii) Commitments

Estimated amount of contracts remaining to be executed and not provided for on account of Capital Accounts 30,197,136 19,537,832

Show cause notices have not been considered as Contingent Liabilities

2. (a) Working Capital facilities availed from State Bank of India are secured by Hypothecation of Raw Materials, Work-in-Progress, Finished goods, Stock in Trade and on Book Debts of the Company. In addition they are secured by Hypothecation of Land and Buildings of A and C unit and on specific items of Plant & Machinery. The debit balance at the end of the year 31st March 2012 is Rs.96,483 (P.Y.Rs.776,497 Dr)

(b) Against the facilities availed/to be availed from IDBI Bank Ltd., by way of Letter of Credit/ Bank Guarantee / Short term loan, the Company has created exclusive charge on the machines to be imported for Rs.10 Crores

3. Term loans (Foreign Currency Loans) availed from ICICI Bank are secured by Specific items of Plant & Machinery

4. The Company has never defaulted in payment of Loans & Interest

5. The Company has given counter guarantee to the Bank for the guarantees issued for Rs.20,802,035 (P.Y.Rs.13,382,866)

6. Income Tax Assessment is completed upto Assessment Year 2009-10

7. The Company's main business segment is manufacturing Gears and Gear Products. Hence there are no separate reportable segments as per Accounting Standard 17 (AS 17)

8. As per the information available with the Company, there are no dues outstanding including interest as on 31st March, 2012 to Small and Micro Enterprises as defined under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

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

Mar 31, 2011

1. CONTINGENT LIABILITIES:

Estimated amount of contracts remaining to be executed and not provided for:

a) On Capital Accounts Rs.1.95 Crores. (Previous Year Rs.13.32 Crores)

b) On account of Guarantees issued Rs. 4.19 Crores. (Previous Year Rs.4.72 Crores)

c) On account of Letter of credits established Rs. 5.58 Crores. (Previous Year Rs.9.03 Crores)

d) Claim against the Company not acknowledged as debts Rs. 7.24 Crores. (Previous Year Rs.7.24 Crores)

2. a) The Working Capital facilities and Corporate Loan availed from State Bank of India are secured by hypothecation of Raw Materials, Work-in-Progress, Finished Goods, Stock-in-Trade and on Book Debts of the Company. In addition, they are secured by the Hypothecation of Land and Buildings of A Unit and C Unit and on specific items of Plant & Machinery.

b) Foreign Currency Loans (External Commercial Borrowings) availed from ICICI Bank Limited are secured by specific items of Plant and Machinery.

c) Against the facilities availed / to be availed from IDBI Bank Ltd by way of Letter of Credit / Bank Guarantee / Short Term Loan, the Company has created exclusive charge on the machines to be imported for Rs.10.00 Crores.

4. The Company has given counter guarantee to the Bank for the Guarantees issued for Rs.1.34 Crores. (Previous Year Rs.2.42 Crores)

5. Income Tax assessment is completed upto the Assessment year 2009-10

6. As per the information available with the Company there are no dues outstanding including interest as on 31st March, 2011 to Small and Micro enterprises as defined under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

7. Auditors Remuneration inclusive of Certification Fees of Rs. 25,250. (Previous Year Rs.19,800)

8. Additional information pursuant to provisions of paragraph 3,4C and 4D of part II of Schedule VI to the Companies Act, 1956.

A. Licensed and Installed Capacity:

Licensed Capacity : Not Applicable

Installed Capacity : Most of the Plant & Machinery being common for different Products manufactured by the Company and installed capacity being dependent on Product mix, which in turn is decided by the actual demand for various Products from time to time, and also on availing of sub-contracting facilities, it is not feasible for the Company to indicate the exact installed capacity.

9. The Companys main business segment is manufacturing Gears and Gear Products. Hence there are no separate reportable segments as per the Accounting Standard 17 (AS 17).

List of Related Parties

1. Key Managerial Personnel

Mr. P. Subramanian, Chairman & Managing Director Ms. S. Sangeetha, Wholetime Director (Upto 30.06.2010)

2. Relatives of Key Managerial Personnel

a) Relatives : Ms. S. Savitha - Daughter of Shri. P. Subramanian and Sister of Ms. S. Sangeetha

Ms. S. Sathya - Daughter of Shri. P. Subramanian and Sister of Ms. S. Sangeetha

b) Enterprises

Savitha Engineering Works (SEW) Ã Proprietrix Ã Ms. S. Savitha

10. The Company has not entered into any derivative contracts.

11. Disclosure under Accounting Standard 15 on Employee Benefits:

Disclosures in respect of Defined benefit obligations in respect of gratuity pursuant to Accounting Standard 15 :

12. Figures have been rounded off to the nearest rupee. Previous years figures have been regrouped and reclassified wherever necessary.

Mar 31, 2010

1. CONTINGENT LIABILITIES:

Estimated amount of contracts remaining to be executed and not provided for:

a) On Capital Accounts Rs. 13.32 Crores.

b) On account of Guarantees issued Rs.4.72 Crores.

c) On account of Letter of credits established Rs.9.03 Crores

d) Claim against the Company not acknowledged as debts Rs.7.24 Crores

2. a) The Working Capital facilities and Corporate Loan availed from State Bank of India are secured by hypothecation of Raw Materials, Work-in-Progress, Finished Goods, Stock-in-Trade and on Book Debts of the Company. In addition, they are secured by the Hypothecation of Land and Buildings of SA Unit and XC Unit and on specific items of Plant & Machinery.

b) Foreign Currency Loans (External Commercial Borrowings) availed from ICICI Bank Limited are secured by specific items of Plant and Machinery.

c) Against the facilities availed / to be availed from IDBI Bank Ltd by way of Letter of Credit / Bank Guarantee / Short Term Loan, the Company has created exclusive charge on the machines to be imported for Rs. 10.00 Crores.

3. The Company has given counter guarantee to the Bank for the Guarantees issued for Rs.2.42 Crores.

4. Income Tax assessment is completed upto the Assessment year 2008-09

5. As per the information available with the Company there are no dues outstanding including inter- est as on 31st March, 2010 to Small and Micro enterprises as defined under Micro, Small and Me- dium Enterprises Development (MSMED) Act, 2006.

6. Additional information pursuant to provisions of paragraph 3,4C and 4D of part II of Schedule VI to the Companies Act, 1956,

A. Licensed and Installed Capacity:

Licensed Capacity : Not Applicable

Installed Capacity : Most of the Plant & Machinery being common for different Products manu- factured by the Company and installed capacity being dependent on Prod- uct mix, which in turn is decided by the actual demand for various Products from time to time, and also on availing of sub-contracting facilities, it is not feasible for the Company to indicate the exact installed capacity.

7. The Companys main business segment is manufacturing Gears and Gear Products. Hence there are no separate reportable segments as per the Accounting Standard 17 (AS 17).

List of Related Parties

1. Key Managerial Personnel

Mr. P. Subramanian, Chairman & Managing Director Ms. S. Sangeetha, Wholetime Director

2. Relatives of Key Managerial Personnel

a) Relatives: Ms. S. Savitha - Daughter of Shri. P. Subramanian and Sister of Ms. S. Sangeetha Ms. S. Sathya - Daughter of Shri. P. Subramanian and Sister of Ms. S. Sangeetha

b) Enterprises

Savitha Engineering Works (SEW) - Proprietrix - Ms. S. Savitha

8. The Company has not entered into any derivative contracts.

9. Disclosure under Accounting Standard 15 on Employee Benefits:

Disclosures in respect of Defined benefit obligations in respect of gratuity pursuant to Accounting Standard 15:

10. Figures have been rounded off to the nearest rupee. Previous years figures have been regrouped and reclassified wherever necessary.

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