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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

Ashok Leyland Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2023

3. The equity investments in a joint venture company can be transferred / pledged / disposed off / encumbered only with the consent of banks / financial institutions who have given loans to the joint venture company. The equity investments in certain subsidiaries and associates can be disposed off only with the consent of banks / financial institutions who have given loans to these companies.

5. During the year, Switch Mobility Automotive Limited, a step-down subsidiary of the Company, settled the consideration on transfer of Electric vehicle business along with the interest accrued and working capital adjustments thereon, aggregating to '' 301 crores by issuing 3,01,00,000 8.5% Non-Cumulative Non-Convertible Redeemable Preference Shares (NCRPS), at a nominal value and issue price of '' 100/- each. Consequently, the Company recognised a deemed equity portion on fair valuation of the aforementioned preference shares of Switch Mobility Automotive Limited, being a transaction between common control entities. Also refer Note 3.8.

6. Number of shares held by the Company includes joint holding / beneficial interest.

7. The Company holds 9.09% of Class A units in the special limited partnership.

8. The investments made by the Company is in compliance with section 180 and 186 with respect to layers of investment permitted under the Companies Act, 2013.

9. Hinduja Leyland Finance Limited (HLFL), a subsidiary of the Company has made an application to BSE Limited (Stock Exchange) for the proposed Merger with Nxtdigital Limited on November 25, 2022 and the said application is under process. HLFL is also in the process of filing application to Competition Commission of India (CCI) for the proposed merger and in this regard had a pre-filing consultation meetings with CCI during March / April 2023. Nxtdigital Limited (Transferee Company, whose name has been changed to NDL Ventures Limited w.e.f. April 20, 2023) has also submitted application to Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd (NSE) where its shares are listed and for merger they will be also filing application to CCI for the proposed merger. NDL Ventures Limited has also submitted application to RBI for registration as NBFC on December 23, 2022.

10. The Company has recorded a gain on fair valuation of equity investment in Hinduja Energy (India) Limited (HEIL) amounting to '' 65.67 crores (March 31, 2022: loss on fair valuation '' 107.13 crores) under exceptional item based on business plan of HEIL, external factors and the independent valuers report.

During the year ended March 31, 2022, the Company has recorded an impairment loss on equity investment in its subsidiary viz Albonair GmbH (Cash Generating Unit (CGU)) amounting to '' 239.36 crores based on future business plan, internal and external factors and the independent valuers report.

The Company has used discounted cash flow method for arriving at the value in use of the CGU. The discounted cash flow method uses post tax discount rate ranging between 10% - 20% for current and previous years for the aforementioned entities. Both pre tax discount rate and post tax discount rate gives the same recoverable amount.

In the meeting held on November 12, 2021, the Board of Directors of the Company had approved the transfer of “Electric Vehicle Mobility As A Service (EMAAS)" business to Ohm Global Mobility Private Limited (step down Subsidiary of the Company) with effect from October 1, 2021. The Company has since received the regulatory approvals and accordingly classified the associated assets and liabilities as “Held for sale". The provision relating to EMAAS business classified as assets held for sale is shown under Note 2.8.

The fair value of the EMAAS business was determined using the Income approach. In this approach, the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the business. This is a level 3 measurement as per the fair value hierarchy set out in fair value measurement disclosures. The key inputs are:

a) the estimated cash flows; and

b) the discount rate to compute the present value of the future expected cash flows

2. Shares issued in preceding 5 years for consideration other than cash

Hinduja Foundries Limited (amalgamating company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company Law Tribunal on April 24, 2017. Consequently, 80,658,292 equity shares of '' 1 each of the Company has been allotted on June 13, 2017 as fully paid up to the shareholders of the amalgamating company.

3. As on March 31, 2023, there are 35,29,18,140 (March 2022: 35,31,58,140) equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 1,16,43,32,742 (March 2022: 1,16,43,32,742) Equity shares and 54,86,669 (March 2022: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (March 2022: 32,92,00,140) Equity shares of '' 1 (March 2022: '' 1) each aggregating to 50.87% (March 2022: 50.88%) of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the equity share capital

There are no shareholders holding more than 5% of the equity share capital of the Company other than the Holding Company as at March 31, 2023 and March 31, 2022.

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [March 2022: 60 equity shares] of '' 1 each, per GDR, and their voting rights can be exercised through the Depository.

7. The Company allotted 6,00,000 (March 2022: Nil) equity shares pursuant to the exercise of options under Employee Stock Option Plan Scheme. For Information relating to Employees Stock Option Plan Scheme including details of options outstanding as at March 31, 2023 - Refer Note 3.4.

A. Capital reserve represents reserve created pursuant to the business combinations.

B. Securities premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

C. Capital redemption reserve represent the reserve arising pursuant to the business combination during 2016-17.

D. Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.4)

E. General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend payout, bonus issue, etc.

F. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

G. In respect of the year ended March 31, 2023, the Board of Directors has declared a dividend of '' 2.60 per equity share (March 2022: '' 1.00 per equity share) subject to approval by shareholders at the ensuing Annual General Meeting after which dividend will be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act. Revaluation reserve amounting to '' 1,210.21 crores transferred to retained earnings on transition date may not be available for distribution.

1. These are carried at amortised cost.

2. Refer Note 1.21 for current maturities of non-current borrowings.

3. Refer Note 3.11 for security and terms of the borrowing.

4. The Company has been authorised to issue 36,500,000 (March 2022: 36,500,000) Non-Cumulative Redeemable Non-Convertible Preference Shares of '' 10 each valuing '' 36.50 crores (March 2022: '' 36.50 crores) and 77,000,000 (March 2022: 77,000,000) Non-Convertible Redeemable Preference Shares of '' 100 each valuing '' 770.00 crores (March 2022: '' 770.00 crores). No preference shares has been issued during the year.

5. Refer Note 3.6 for details on debt covenants.

6. The Company has not obtained any fresh term loans during the year. For the previous year the borrowings were utilized for the purposes as mentioned in the respective agreements.

7. The Company is not declared as a wilful defaulter by any bank or financial institution or government or any government authority.

3.2 Retirement benefit plans3.2.1 Defined contribution plans

Payments to defined contribution plans i.e., Company''s contribution to superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees.

The total expense recognised in profit or loss of '' 28.40 crores (2021-22: '' 25.6 crores) represents contribution paid/ payable to these schemes by the Company at rates specified in the schemes.

3.2.2 Defined benefit plans

The Company has an obligation towards gratuity as per payment of gratuity act, 1972, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at the time of retirement, separation, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions through trusts to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined benefit plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions are made to the provident fund and pension fund set up as irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than / equal to the statutory rate of interest declared by the Central Government.

Company''s liability towards gratuity (funded), provident fund, other retirement benefits and compensated absences are actuarially determined at the end of each reporting period using the projected unit credit method as applicable.

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

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation, since the above analysis are based on change in an assumption while holding other assumptions constant. In practice, it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

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

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of '' 35.00 crores (March 2022: '' 36.00 crores) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) is 7.2 years (March 2022: 7.5 years).

3.2.9 Provident Fund Trust - actuarial valuation of interest guarantee :

Ashok Leyland has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. The administered rates are determined annually predominantly considering the social rather than the economic factors and in most cases, the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by the Actuarial Society of India and based on the assumptions provided below.

3.4 Share based payments3.4.1 Details of employees stock option plan of the Company

The Company has Employees Stock Options Plan (ESOP) scheme granted to employees which has been approved by the shareholders of the Company. In accordance with the terms of the plan, eligible employees may be granted options to purchase equity shares of the Company if they are in service on exercise of the grant. Each employee share option converts into one equity share of the Company on exercise at the exercise price as per the scheme. The options carry neither rights to dividend nor voting rights. Options can be exercised at any time from the date of vesting to the date of their expiry.

3.4.2 Fair value of share options granted during the year

There are no options granted during the year. The weighted average fair value of the stock options granted during the financial year is '' Nil (2021-22: '' Nil). Options granted in the earlier years were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on Management''s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. Expected volatility is based on the historical share price volatility.

3.4.4 Share options vested but not exercised during the year

ESOP 3: 2,00,000 options (Year ended March 31, 2022: ESOP 3: 4,00,000 options), ESOP 5: 44,17,500 (Year ended March 31, 2022: ESOP 5: Nil options)

3.4.5 Share options outstanding at the end of the year

The share options outstanding at the end of the year had a weighted average exercise price of '' 90.74 (as at March 31, 2022: '' 90.41) and a weighted average remaining contractual life of 5.71 years (as at March 31, 2022: 6.58 years).

3.5 Lease arrangements Company as lessee

Company has applied following practical expedients for the purpose of lease on initial recognition :

1) Single discount rate has been applied for leases with same characteristics.

2) Non - lease component which are difficult to be separated from the lease components are taken as the part of lease calculation.

3) Short term leases i.e. leases having lease term of 12 months or less had been ignored for the purpose of calculation of right-of-use asset. Expenses for the year ended March 31, 2023 includes lease expense classified as Short term lease expenses aggregating to '' 15.54 crores (March 31, 2022: '' 18.11 crores) and variable lease payments aggregating to '' 63.55 crores (March 31, 2022: '' 64.82 crores) which are not required to be recognised as part of the practical expedient under Ind AS 116 ''Leases'' mentioned above.

3.6.1 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year''s corporate plan for working capital, capital outlay and long-term product and strategic involvements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The quarterly returns or statements of current assets filed by the Company with Banks and Financial Institutions are in agreement with the books of account.

The Company has complied with covenants given under the facility agreements executed for its borrowings.

3.6.2 Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

(A) Market risk

Market risk represent changes in market prices, liquidity and other factors that could have an adverse effect on realisable fair values or future cash flows to the Company. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralised treasury division and uses derivative instruments such as foreign currency forward contracts and currency swaps to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

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

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s export proceeds, import payments and cost of borrowings.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on the other components of equity arises from foreign currency forward contracts designated as cash flow hedges. The following table details the Company''s sensitivity movement in the increase / decrease in foreign currencies exposures (net):

Included in the balance sheet under ''Current - other financial assets'' and ''Current - other financial liabilities''. [Refer Notes 1.12 and 1.23]

# amount is below rounding off norms adopted by the Company.

(2) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower, the Company''s profit / loss for the year ended March 31, 2023 would decrease / increase by '' 0.77 crores (March 31, 2022 decrease / increase by '' 0.69 crores). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

(3) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken foreign currency and interest rate swap (FCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. The mark-to-market gain / (loss) as at March 31, 2023 is '' 96.93 crores (March 31, 2022: '' 39.89 crores). If the foreign currency movement is 2% higher / lower and interest rate movement is 200 basis points higher / lower with all other variables remaining constant, the Company''s profit / loss for the year ended March 31, 2023 would approximately decrease/ increase by '' Nil (year ended March 31, 2022: decrease / increase by '' Nil).

(4) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company''s investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export / domestic customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit/ Bank guarantee/ Letter of credit and other forms. The Company''s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk except in case of a STU.

The Company makes a loss allowance using simplified approach for expected credit loss (ECL) and on a case to case basis. ECL are the weighted average of credit losses with the expected risk of default occurring as the weights (historically not significant). ECL is 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.

Expected credit loss for other than trade receivables has been assessed and based on life-time expected credit loss, loss allowance provision has been made. The ageing on trade receivable is given in Note 1.10.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(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 has obtained fund and non-fund based working capital limits from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures, and other debt instruments. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks.

3.6.4 Fair value measurements:

(A) Financial assets and liabilities that are not measured at fair values but in respect of which fair values are as follows:

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. The fair values for loans, security deposits were calculated based on cash flows discounted using a current lending rate. The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(B) Financial assets and financial liabilities that are measured at fair value on a recurring basis as at the end of each reporting period:

Some of the Company''s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values for material financial assets and material financial liabilities have been determined (in particular, the valuation technique(s) and inputs used).

1) There were no transfers between Level 1, 2 and 3 during the year.

2) Other things remaining constant, a 5% increase / decrease in the WACC or discount rate used would decrease / increase the fair value of

the unquoted preference shares by '' 83.66 crores / '' 165.18 crores (as at March 31, 2022: '' 14.61 crores / '' 20.27 crores).

3) Other things remaining constant, a 50 basis points increase / decrease in the WACC or discount rate used would decrease / increase the

fair value of the unquoted equity instruments by '' 14.98 crores / '' 14.37 crores (as at March 31, 2022: '' 12.96 crores / '' 13.70 crores).

4) Other things remaining constant, a 5% increase / decrease in the revenue would increase / decrease the fair value of the unquoted equity

instruments by '' 48.61 crores / '' 49.59 crores (as at March 31, 2022: '' 44.82 crores / '' 44.76 crores).

5) Gain / loss recognised in profit or loss included in other income (Refer Note 2.2) arising from fair value measurement of Level 3 financial assets is a gain of '' 6.34 crores (as at March 31, 2022: gain of '' 1.44 crores). The Company has also recorded a fair value gain of '' 65.67 crores (March 31, 2022: loss of '' 107.13 crores) in equity investment of Hinduja Energy India Limited and presented the same under exceptional items in Note 2.8.

Guarantees given during the year amounts to '' 463.39 crores (2022: '' 140.97 crores), which are given for the borrowings availed by Switch Mobility Limited, UK (March 31, 2022: Optare Pic and Ashley Alteams India Limited). Guarantees released during the year amounts to '' 3.12 crores (2022: '' 14.70 crores), pertaining to borrowing availed by Ashley Alteams India Limited.

The terms are in compliance with Section 186(7) of the Companies Act, 2013.

3.9 Contingent liabilities

As at

March 31, 2023

As at

March 31, 2022

'' Crores

'' Crores

a) Claims against the Company not acknowledged as debts (net)

i) Sales tax / VAT / GST #

257.22

246.25

ii) Excise duty #

9.20

8.68

iii) Service Tax #

110.72

110.80

iv) Customs Duty #

0.43

0.43

v) Income tax $

-

142.95

vi) Others

43.02

42.97

b) Corporate guarantees given to others for loans taken by subsidiaries and a joint venture company

892.72

422.29

$ These relates to issues of deductibility and taxability in respect of which the Company is in appeal and inclusive of the effect of similar matters in respect of assessments remaining to be completed.

# These have been disputed by the Company on account of issues of applicability and classification.

Future cash outflows in respect of the above are determinable only on receipt of judgement / decisions pending with various forums / authorities. Notes :

The Company evaluated the impact of the recent Supreme Court Judgement in relation to non-exclusion of certain allowances from the definition of “basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and the Management believes that further clarity is required on this matter for the time period prior to 31st March 2019. However, it is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

The Company is involved in various claims and actions in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. In the opinion of the management the outcome of any existing claims, legal and regulatory proceedings, if decided adversely, is not expected to have a material adverse effect on the business, financial condition, results of operations and cash flows of the Company based on the current position of such claims / legal actions.

3.10 Commitments

As at

March 31, 2023

As at

March 31, 2022

'' Crores

'' Crores

a) Capital commitments (net of advances) not provided for

275.27

313.43

[including '' 9.70 crores (March 2022: '' 19.55 crores) in respect of intangible assets]

b) Uncalled liability on partly paid shares / investments [Refer Note 1.3]

#

27.00

c) Other commitments

i) Financial support given to certain subsidiaries, joint ventures, etc.

(including undertaking provided to customers of certain subsidiaries).

ii) Lock-in commitment in shareholders agreement [Refer Note 1.3]

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved. # Amount is below rounding off norms adopted by the Company.

(i) TL -12 - Term loan was secured by way of first ranking charge on the specified plant and machinery of a manufacturing unit of the Company located at Pantnagar to the extent of '' 400 crores.

(ii) TL - 13 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Hosur to the extent of 1.25 times of the amount of loan.

(iii) TL - 14 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of a manufacturing unit of the Company located at Pantnagar to the extent of 1.10 times of the amount of loan.

(iv) TL - 15 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of the manufacturing units of the Company located at Pantnagar and Hosur to the extent of 1.25 times of the amount of loan.

(v) TL -16 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Chennai to the extent of '' 200 crores.

(vi) TL -17 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Hosur and Bhandara to the extent of 1.10 times of the amount of loan.

(vii) NCD - Series 1 - 8% AL 2023 are secured by way of first ranking charge over specific plant and machinery of manufacturing and research and development units situated at Ennore, Pantnagar, Hosur and Vellivoyalchavadi and specific immoveable properties of manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(viii) NCD - Series 2 - 7.65% AL 2023 are secured by way of First Ranking charge over specific plant and machinery of the manufacturing units situated at Hosur and Alwar and specific immoveable properties situated at manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(ix) NCD - Series 3 - 7.30% AL 2027 are secured by way of First Ranking charge over specific plant and machinery of manufacturing unit situated at Hosur to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(x) The above SIPCOT soft loan are secured by way of first charge on the fixed assets created and the same shall be on pari passu with other first charge holders of LCV division.

The company has registered the charges / satisfaction of charges with the Registrar of Companies within the stipulated period.

Allocation of goodwill to cash-generating units

Pursuant to business combination, Light Commercial Vehicle division (LCV division) is identified as a separate cash generating unit. Goodwill has been allocated for impairment testing purposes to this cash-generating unit.

Cash-generating units to which goodwill is allocated are tested for impairment annually at each reporting date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit. The Company has used post tax discount rate of 17% (March 2022: 16%) and terminal growth rate of 3% (March 2022: 3%) for the purpose of impairment testing based on the next five years projected cash flows. Both pre tax and post tax discount rates give the same recoverable amount. The Company believes that any reasonable further change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount.

Also Refer Notes 1B.16 and 1C.

3.18 The Company does not have any transactions with struck off companies under Companies Act, 2013 or Companies Act, 1956, during the year.

3.19 The Company has not advanced or loaned or invested funds to any other person or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

3.20 No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

3.21 The Company has complied with the number of layers prescribed under the Companies Act.

3.22 There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

3.23 The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

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

3.25 Impairment loss reversal in Optare PLC

The Company holds 91.63% equity stake in Optare Plc and has invested '' 931.58 crores till March 31, 2022. Optare Plc has around 98.90% stake in Switch Mobility Limited, UK and Switch Mobility Limited, UK in turn holds 100% stake in Switch Automotive Mobility Limited (India), with focus on manufacture and sale of electric commercial vehicles globally. Till March 31, 2021, the Company has recognised an impairment of '' 781.19 Crores against the equity investment made in Optare Plc.

As at March 31, 2022, the Company identified certain triggers for reversal of the previously recorded impairment based on both external and internal indicators.

The key drivers for this improved outlook include:

- Improved market conditions especially on account of growing demand for adoption of electric vehicles

- Product positioning in markets where it did not have a presence earlier

- Global Sourcing and Cost reduction initiatives

- Restructuring of operations

Considering factors above, the recoverable amount has been determined using fair value less costs of disposal which is based on recent equity infusion by an external investor in Switch Mobility Limited, UK at a valuation of approximately $ 1.6 Bn and the interest shown by potential investors in Switch Mobility Limited, UK which indicates that the fair value of the investment is significantly higher than the cost of investment in the books.

The fair value of investment determined is also supported by a report obtained from an independent valuer. The fair value less cost of disposal has been determined using a discounted cash flow model, which requires the use of assumptions. The valuation is considered to be Level 3 in the fair value hierarchy. The calculations include cash flow projections based on financial budgets for the next nine years, approved by the Board. Cashflows beyond the nine years period are extrapolated using the estimated growth rate of 1.5% and post-tax discount rate of 15% has been used. Other key assumptions include revenue growth rate and EBITDA margins. The management believes that any reasonable further change in the key assumptions (if revenue and EBITDA changes by 5% - 10%) on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount. The fair value range obtained by discounted cash flow model is also corroborated by the fair value of similar companies listed in global stock exchanges.

Based on the above the Company has reversed the impairment of '' 781.19 crores and '' 33.26 crores of provisions for obligations in the previous financial year.

3.26 The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

3.27 The figures for the previous year have been reclassified / regrouped wherever necessary including for amendments relating to Schedule III of the Companies Act, 2013 for better understanding and comparability.


Mar 31, 2021

2. Shares issued in preceding 5 years for consideration other than cash

Hinduja Foundries Limited (amalgamating Company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company Law Tribunal on April 24, 2017. Consequently, 80,658,292 equity shares of Re.1 each of the Company has been allotted on June 13, 2017 as fully paid up to the shareholders of the amalgamating Company.

3. As on March 31, 2021, there are 353,158,140 (March 2020: 353,158,140) equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding Company, holds 1,164,332,742 (March 2020: 1,164,332,742) Equity shares and 5,486,669 (March 2020: 5,486,669) Global Depository Receipts (GDRs) equivalent to 329,200,140 (March 2020: 329,200,140) Equity shares of Re.1 (March 2020: Re.1) each aggregating to 50.88% (March 2020: 50.88%) of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the equity share capital

There are no shareholders holding more than 5% of the equity share capital of the Company other than the Holding Company as at March 31, 2021. Reliance Capital Trustee Co Ltd held 165,184,502 equity shares constituting 5.63% of the equity share capital of the Company as at March 31, 2020.

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [ March 2020: 60 equity shares] of Re. 1 each, per GDR, and their voting rights can be exercised through the Depository.

A Capital reserve represents reserve created pursuant to the business combinations.

B Securities premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

C Capital redemption reserve represent the reserve arising pursuant to the business combination during 2016-17.

D Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.4)

E General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend payout, bonus issue, etc.

F Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

G In respect of the year ended March 31, 2021, the Board of Directors has declared a dividend of '' 0.60 per equity share subject to approval by shareholders at the ensuing Annual General Meeting after which dividend will be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act (Interim dividend for March 2020: '' 0.50 per equity share). Revaluation reserve amounting to '' 1,210.21 crores transferred to retained earnings on transition date may not be available for distribution.

These are carried at amortised cost.

Refer Note 1.24 for current maturities of non-current borrowings.

Refer Note 3.11 for security and terms of the borrowings.

The Company has been authorised to issue 36,500,000 (March 2020: 36,500,000) Non-Cumulative Redeemable Non-Convertible Preference Shares of '' 10 each valuing '' 36.50 crores (March 2020: '' 36.50 crores) and 77,000,000 (March 2020: 77,000,000) NonConvertible Redeemable Preference Shares of '' 100 each valuing '' 770.00 crores (March 2020: '' 770.00 crores). No preference shares has been issued during the year.

Refer Note 3.6 for details on debt covenants.

This provision is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 24 months.

3.2.1 Defined contribution plans

Payments to defined contribution plans i.e., Company''s contribution to superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees.

The total expense recognised in profit or loss of '' 22.99 crores (2019-20: '' 24.65 crores) represents contribution paid / payable to these schemes by the Company at rates specified in the schemes.

3.2.2 Defined benefit plans

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at the time of retirement, separation, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined benefit plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions are made to the provident fund and pension fund set up as irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than / equal to the statutory rate of interest declared by the Central Government.

Company''s liability towards gratuity (funded), provident fund, other retirement benefits and compensated absences are actuarially determined at the end of each reporting period using the projected unit credit method as applicable.

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

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk

A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

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

Salary 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.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation, since the above analysis are based on change in an assumption while holding other assumptions constant. In practice, it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

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

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of '' 26.00 crores (March 2020: '' 57.85 crores) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) is 8 years (March 2020: 8.1 years).

3.6 Financial Instruments 3.6.1 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year''s corporate plan for working capital, capital outlay and long-term product and strategic involvements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

During the financial year ended March 31, 2021, for borrowings aggregating to '' 1,678.93 crores, some of the financial covenants have been breached mainly due to the impact of COVID 19. Out of the above, for Rupee Term Loans and External Commercial Borrowings to the extent of '' 1,378.93 crores, the lenders have the option to recall the loan. On representation from the Company considering the special circumstances, the lenders have waived the testing of financial covenants for the year ended March 31, 2021. For the other Rupee Term Loan of '' 300 crores, the Lender does not have the option to recall the loan. Hence, these loans have been classified under Non-current borrowing in the financial statements.

3.6.2 Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictablity to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the Board of directors.

(A) Market risk

Market risk is the risk that changes in market prices, liquidity and other factors that could have an adverse effect on realizable fair values or future cash flows to the Company. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralised treasury division and uses derivative instruments such as foreign currency forward contracts and currency swaps to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

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

Foreign currency sensitivity analysis:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s export proceeds, import payments and cost of borrowings.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financials instruments and the impact on the other components of equity arises from foreign currency forward contracts designated as cash flow hedges.

(2) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher / lower, the Company''s loss / profit for the year ended March 31, 2021 would decrease / increase by '' 1.60 crores (March 31, 2020 decrease / increase by '' 0.10 crores). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

(3) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken foreign currency and interest rate swap (FCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. The mark-to-market gain / (loss) as at March 31, 2021 is ('' 8.95) crores (March 31, 2020: '' 26.16 crores). If the foreign currency movement is 2% higher / lower and interest rate movement is 200 basis points higher / lower with all other variables remaining constant, the Company''s loss / profit for the year ended March 31, 2021 would approximately decrease / increase by '' Nil (March 31, 2020 decrease / increase by '' Nil).

(4) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company''s investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit / Bank guarantee / Letter of credit and other forms. The Company''s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk except in case of a STU.

The Company makes an allowance for doubtful debts using simplified approach for expected credit loss and on a case to case basis.

(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 has obtained fund and non-fund based working capital limits from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures, and other debt instruments. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks.

(A) Financial assets and liabilities that are not measured at fair values but in respect of which fair values are as follows:

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. The fair values for loans, security deposits were calculated based on cash flows discounted using a current lending rate. The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(B) Financial assets and financial liabilities that are measured at fair value on a recurring basis as at the end of each reporting period:

Some of the Company''s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values for material financial assets and material financial liabilities have been determined (in particular, the valuation technique(s) and inputs used).

There were no transfers between Level 1, 2 and 3 during the year.

Other things remaining constant, a 5% increase / decrease in the WACC or discount rate used would decrease / increase the fair value of the unquoted preference shares by '' 11.87 crores / 17.37 crores (as at March 31, 2020: '' 13.55 crores / 20.93 crores).

Other things remaining constant, a 50 basis points increase / decrease in the WACC or discount rate used would decrease / increase the fair value of the unquoted equity instruments by '' 8.56 crores / '' 9.78 crores (as at March 31, 2020: '' 7.03 crores / '' 7.64 crores).

Other things remaining constant, a 5% increase / decrease in the revenue would increase / decrease the fair value of the unquoted equity instruments by '' 5.50 crores / '' 4.89 crores (as at March 31, 2020: '' 20.52 crores / '' 20.48 crores).

Gain / loss recognised in profit or loss included in other income (Refer Note 2.2) arising from fair value measurement of Level 3 financial assets is a loss of '' 6.85 crores (as at March 31, 2020: loss of '' 4.25 crores).

The Company evaluated the impact of the recent Supreme Court Judgement in relation to non-exclusion of certain allowances from the definition of “basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and the Management believes that further clarity is required on this matter for the time period prior to 31st March 2019. However, it is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

The Company is involved in various claims and actions in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. In the opinion of the management the outcome of any existing claims, legal and regulatory proceedings, if decided adversely, is not expected to have a material adverse effect on the business, financial condition, results of operations and cash flows of the Company based on the current position of such claims / legal actions.

(i) TL -12 - Term loan was secured by way of first ranking charge on the specified plant and machinery of a manufacturing unit of the Company located at Pantnagar to the extent of '' 500 crores.

(ii) TL - 13 - Term loan was secured by way of first ranking charge on the specified plant and machinery of three manufacturing units of the Company located at Hosur to the extent of 1.25 times of the amount of loan.

(iii) TL - 14 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of a manufacturing unit of the Company located at Pantnagar to the extent of 1.10 times of the amount of loan.

(iv) TL - 15 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of a manufacturing unit of the Company located at Pantnagar to the extent of 1.25 times of the amount of loan.

(v) NCD - Series 1 - 8% AL 2023 are secured by way of first ranking charge over specific plant and machinery of manufacturing and research and development units situated at Ennore and Vellivoyalchavadi and specific immoveable properties of manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures.

(vi) NCD - Series 2 - 7.65% AL 2023 are secured by way of first ranking charge over specific plant and machinery of three manufacturing units situated at Hosur and specific immoveable properties situated at manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures.

(vii) The above SIPCOT soft loan shall be secured by way of first charge on the fixed assets created / proposed to be created and the same shall be on pari passu with other first charge holders of LCV division.

3.14 Accounting for long term foreign currency monetary items

The Company has elected the option under Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' and has continued the policy adopted for accounting of exchange differences arising from translation of long term foreign currency monetary items recognised in the standalone financial statements upto March 31, 2016. Accordingly, exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or as at April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences, arising effective April 1, 2011, are accumulated in “Foreign currency monetary item translation difference" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

Accordingly,

a) Foreign exchange loss relating to acquisition of depreciable assets, capitalised during the year ended March 31, 2021 aggregated '' Nil [year ended March 31, 2020 '' 6.04 Crores].

b) Amortized net exchange difference loss in respect of long term monetary items relating to other than acquisition of depreciable assets, charged to the statement of profit and loss for the year ended March 31, 2021 is '' Nil [year ended March 31, 2020 '' 24.75 Crores].

c) The un-amortised net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is '' Nil as at March 31, 2021 [March 31, 2020: loss of '' Nil]. These amounts are reflected as part of the “Other Equity".

3.15 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company. The amount of principal and interest outstanding is given below:

Allocation of goodwill to cash-generating units

Pursuant to business combination, Light Commercial Vehicle division (LCV division) is identified as a separate cash generating unit. Goodwill has been allocated for impairment testing purposes to this cash-generating unit.

Cash-generating units to which goodwill is allocated are tested for impairment annually at each reporting date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit. The Company has used post tax discount rate of 13% (March 2020: 13.1%) and terminal growth rate of 2% (March 2020: 2%) for the purpose of impairment testing based on the next five years projected cash flows. Both pre tax and post tax discount rates give the same recoverable amount. The Company believes that any reasonable further change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount.

Also Refer Notes 1B.16 and 1C.

3.18 The Company has taken due care in concluding on accounting judgements and estimates; viz., in relation to recoverability of receivables, assessment of impairment of goodwill and intangibles, investments and inventory, based on the internal and external information available to date, while preparing the Company''s standalone financial statements as of and for the year ended March 31, 2021. Owing to the improvement in COVID-19 situation during the second half of the financial year, the Company saw recovery in its performance. The Company continues to assess external and internal factors which can have an impact on its performance. The Company will continue to monitor future economic conditions and update its assessment.

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

3.20 The figures for the previous year have been reclassified / regrouped wherever necessary for better understanding and comparability.


Mar 31, 2019

IA. 1. General information

Company Background:

Ashok Leyland Limited ("the Company") is a public limited company incorporated and domiciled in India and governed by the Companies Act, 2013 ("Act"). The Company''s registered office is situated at 1, Sardar Patel Road, Guindy, Chennai, Tamil Nadu, India. The main activities of the Company are those relating to manufacture and sale of a wide range of commercial vehicles. The Company also manufactures engines for industrial and marine applications, forgings and castings.

Notes:

1. A portion of the Buildings in Bhandara valued at Rs.9.50 crores is on a land, the title for which is yet to be transferred to the Company.

2. The title of land and buildings acquired through business combination, which are in the name of the amalgamating company, are yet to be transferred in the name of the Company.

3. Cost of Buildings as at March 31, 2019 includes:

a) Rs.0.03 crores being cost of shares in Housing Co-operative Society representing ownership rights in residential flats and furniture and fittings thereat.

b) Rs.1.32 crores representing cost of residential flats including undivided interest in land.

4. Additions to PPE and Capital work-in-progress include exchange (gain) / loss aggregating to Rs.20.78 crores capitalised as under:

Building Rs. 4.96 crores, Plant and equipment Rs.15.06 crores, Furniture and fittings Rs.0.17 crores, Office equipment Rs.0.24 crores, Capital Work in progress Rs.0.35 crores.

5. For details of assets given as security against borrowings, Refer Note 3.11(a).

6. For amount of contractual commitments for the acquisition of PPE, Refer Note 3.10(a).

7. Freehold land includes purchase of land from Andhra Pradesh Industrial Infrastructure Corporation Limited and Telengana State Industrial Infrastructure Corporation Limited, the title of which will be transferred in the Company''s name upon fulfilment of certain conditions.

8. Expenses capitalised Rs.2.35 crores - Refer Notes 2.4, 2.5 and 2.7 to the standalone financial statements.

# amount is below rounding off norms adopted by the Company.

# # Freehold land located at Hyderabad, which was classified as asset held for sale in FY 2016-17 is now reclassified.

1. A portion of the Buildings in Bhandara valued at Rs.9.50 crores is on a land, the title for which is yet to be transferred to the Company.

2. The title of land and buildings acquired through business combination, which are in the name of the amalgamating company, are yet to be transferred in the name of the Company. Further, this includes a land, the title of which will be transferred in the Company''s name upon fulfilment of certain conditions.

3. Cost of Buildings as at March 31, 2018 includes:

a) Rs.0.03 crores being cost of shares in Housing Co-operative Society representing ownership rights in residential flats and furniture and fittings thereat.

b) Rs.1.32 crores representing cost of residential flats including undivided interest in land.

4. Additions to PPE and Capital work-in-progress include exchange (gain) / loss aggregating to Rs.6.25 crores capitalised as under:

Building Rs..29 crores, Plant and equipment Rs.4.76 crores, Furniture and fittings Rs.0.04 crores, Vehicles and aircraft (refer #), Office equipment Rs.0.08 crores, Capital Work in progress Rs.0.08 crores.

5. For details of assets given as security against borrowings, Refer Note 3.11(a).

6. For amount of contractual commitments for the acquisition of PPE, Refer Note 3.10(a).

7. Freehold land includes purchase of land from Andhra Pradesh Industrial Infrastructure Corporation Limited, the title of which will be transferred in the Company''s name upon fulfilment of certain conditions.

Notes:

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs.1.88 crores capitalised as under:

Software Rs.1.43 crores, Technical Knowhow Rs.(0.03) crores, Intangible assets under development Rs.0.48 crores.

b) Expenses capitalised Rs.282.52 crores - Refer Notes 2.4, 2.5 and 2.7 to the standalone financial statements.

2. For amount of contractual commitments for the acquisition of intangible assets, Refer Note 3.10(a).

Notes:

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs.0.30 crores capitalised as under:

Software Rs.0.25 crores, Technical Knowhow Rs. (0.02) crores, Intangible assets under development Rs.0.07 crores.

b) Expenses capitalised Rs.128.89 crores - Refer Notes 2.4, 2.5 and 2.7 to the standalone financial statements.

2. For amount of contractual commitments for the acquisition of intangible assets, Refer Note 3.10(a).

2. Shares issued in preceding 5 years

a) Hinduja Foundries Limited (amalgamating company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company LawTribunal on April 24, 2017. Consequently, 80,658,292 equity shares of Rs.1 each of the Company has been allotted onJune 13, 2017 as fully paid upto the shareholders of the amalgamating company.

b) The Company allotted 8,423,175 (March 2018 : 569,175) equity shares pursuant to the exercise of options under Employee Stock Option Scheme. For Information relating to Employees Stock Option Plan including details of options outstanding as at March 31, 2019 - Refer Note 3.4.

3. As on March 31, 2019, there are 353,202,640 (March 2018: 352,201,640) equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 1,164,332,742 (March 2018:1,164,332,742) Equity shares and 5,486,669 (March 2018: 5,486,669) Global Depository Receipts (GDRs) equivalent to 329,200,140 (March 2018: 329,200,140) Equity shares of Rs.1 (March 2018: Rs.1) each aggregating to 50.88% (March 2018: 51.02%) of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the equity share capital Nil (March 2018 : Nil)

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [March 2018: 60 equity shares] of Rs.1 each, per GDR, and their voting rights can be exercised through the Depository.

Refer "Statement of Changes in Equity" for additions / deletions in each reserve.

Notes:

A. Pursuant to the business combination during the year the reserves and surplus of the amalgamating company as on April 01, 2017 have been taken over at the carrying values. (Refer Note 3.18)

B. Capital reserve represents reserve created pursuant to the business combinations upto year end.

C. Securities premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

D. Capital redemption reserve represent the reserve arising pursuant to the business combination during 2016-17.

E. Debenture redemption reserve represents reserve created out of profit / retained earnings at specified value of debentures to be redemeed.

F. Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.4).

G. General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend payout, bonus issue, etc.

H. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

I. Foreign currency monetary items translation difference represents exchange differences on translation of long term foreign currency monetary items at rates different from those at which they were initially recorded in so far as they do not relate to acquisition of depreciable asset. These exchange differences in respect of borrowings upto March 31, 2017 are amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

J. In respect of the year ended March 31, 2019, the Board of Directors has proposed a dividend of Rs.3.10 per equity share

(March 2018: Rs.2.43 per equity share) subject to approval by the shareholders at the ensuing Annual General Meeting after which dividend would be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act. Revaluation reserve transferred to retained earnings on transition date may not be available for distribution.

Notes :

1. These are carried at amortised cost.

2. Refer Note 1.27 for current maturities of non-current borrowings.

3. Refer Note 3.11 for security and terms of the borrowings.

4. The Company has been authorised to issue 36,500,000 (March 2018: 36,500,000) Non-Cumulative Redeemable Non-Convertible Preference Shares of Rs.10 each valuing Rs.36.50 crores (March 2018: Rs.36.50 crores) and 77,000,000 (March 2018: 77,000,000) Non-Convertible Redeemable Preference Shares ofRs.100 each valuing Rs.770.00 crores (March 2018: Rs.770.00 crores). No preference shares has been issued during the year.

This provision is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 24 months.

This provision is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 24 months.

Deferred tax assets and liabilities are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, unused tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses and unused tax credits could be utilised.

2.1 RETIREMENT BENEFIT PLANS

2.1.1 Defined contribution plans

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions are made to the provident fund and pension fund set upas irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than the statutory rate of interest declared by the Central Government and there have been no shortfalls on this account. To the extent of interest rate guarantee it is classified as defined benefit plan. The Company also has a superannuation plan.

The total expense recognised in profit or loss of Rs. 90.98 crores (2017-2018: Rs.88.91 crores) represents contribution paid/ payable to these plans by the Company at rates specified in the plan.

2.2.2 Defined benefit plans

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Company''s liability towards gratuity (funded), provident fund (interest guarantee), other retirement benefits and compensated absences are actuarially determined at the end of each semi-annual period using the projected unit credit method as applicable. These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

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

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

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of Rs.48.00 crores (March 2018: Rs.68.37 crores) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) is 7.7 years (March 2018: 7.4 years).

3. Provident Fund Trust - actuarial valuation of interest guarantee :

Ashok Leyland has an obligation to fund any shortfall on the yield of the trust''s investments over the administered interest rates on an annual basis. The administered rates are determined annually predominantly considering the social rather than the economic factors and in most cases, the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by the Actuarial Society of India and based on the assumptions provided below, there is no shortfall as at March 31, 2019 and March 31, 2018 respectively.

3.1 SHARE BASED PAYMENTS

3.1.1 Details of employees stock option plan of the Company

The Company has Employees Stock Options Plan (ESOP) scheme granted to employees which has been approved by the shareholders of the Company. In accordance with the terms of the plan, eligible employees may be granted options to purchase equity shares of the Company if they are in service on exercise of the grant. Each employee share option converts into one equity share of the Company on exercise at the exercise price as per the scheme. The options carry neither rights to dividend nor voting rights. Options can be exercised at anytime from the date of vesting to the date of their expiry.

Note:

Under ESOP 3, ESOP 4 and ESOP 5 shares vest on varying dates within the expiry date mentioned above with an option life of 5 years after vesting.

3.2.2 Fair value of share options granted during the year

The weighted average fairvalue of the stock options granted during the financial year is Rs.41.27 (2017-18: Rs.55.47). Options were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on Management''s best estimate for the effects of non-transferability, exercise restrictions and behavioral considerations. Expected volatility is based on the historical share price volatility.

3.1.3 Share options vested but not exercised during the vear

Nil (Year ended March 31, 2018 : ESOP 2 - 3,727,000 options)

3.1.4 Share options outstanding at the end of the vear

The share options outstanding at the end of the year had a weighted average exercise price of Rs. 91.72 (as at March 31, 2018: Rs. 30.40) anda weighted average remaining contractual life of 9.5 years (as at March 31, 2018: 6.9 years).

3.2 OPERATING LEASE ARRANGEMENTS

Company as lessee

Operating leases relate to leases of land and building with lease term ranging from 1 year to 5 years.

3.3 FINANCIAL INSTRUMENTS

3.3.1 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year''s corporate plan for working capital, capital outlay and long-term product and strategic involvments. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

3.3.2 Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictablity to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

(A) Market risk

Market risk is the risk that changes in market prices, liquidity and other factors that could have an adverse effect on realizable fair values or future cash flows to the Company. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralised treasury division and uses derivative instruments such as foreign currency forward contracts and currency swaps to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

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

Foreign currency sensitivity analysis:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost offinancing the Company''s capital expenditures.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financials instruments and the impact on the other components of equity arises from foreign currency forward contracts designated as cash flow hedges. The following table details the Company''s sensitivity movement in the increase / decrease in foreign currencies exposures (net):

(2) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period.

For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower, the Company''s profit for the year ended March 31, 2019 would decrease/ increase by Rs. 0.14 crores (2017-18: decrease/ increase by Rs. 0.64 crores). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

(3) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken foreign currency and interest rate swap (FCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. This FCIRS contracts are composite contracts for both the foreign currency and interest rate risks and thus the mark-to-market value is determined for both the risks together. The mark-to-market gain/(loss) as at March 31, 2019 is Rs. 2.48 crores (March 31, 2018: Rs. (25.35) crores). If the foreign currency movement is 2% higher/ lower and interest rate movement is 200 basis points higher/ lower with all other variables remaining constant, the Company''s profit for the year ended March 31, 2019 would approximately decrease/ increase by '' Nil (2017-18: decrease/ increase by Rs. 6.45 crores).

(4) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company''s investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit/ Bank guarantee/ Letter of credit and other forms. The Company''s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(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 has obtained fund and non-fund based working capital limits from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures, and other debt instruments. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks.

Notes:

1) There were no transfers between Level l,2and3 during the year.

2) A 5% increase/ decrease in the WACC or discount rate used would decrease/ increase the fair value of the unquoted preference shares by Rs. 20.21 crores / 12.82 crores (as at March 31, 2018: Rs. 2.33 crores / Rs. 4.21 crores).

3) A 50 basis points increase/ decrease in the WACC or discount rate used would decrease/ increase the fair value of the unquoted equity instruments by Rs. 12.29 crores (as at March 31, 2018: Rs. 13.27 crores).

4) A 5% increase/ decrease in the revenue would increase/ decrease the fair value of the unquoted equity instruments by Rs.61.64 crores (as at March 31, 2018: Rs. 69.65 crores).

5) Gain / loss recognised in profit or loss included in other income (Refer Note 2.2) arising from fair value measurement of Level 3 financial assets is Loss ofRs. 10.45 crores (2018: gain of Rs. 0.14 crores).

Trade receivables are non - interest bearing and are generally on terms of 7 to 90 days (Refer Credit risk Note 3.6.2B).

Contract assets are unbilled revenue earned from AMC and other services which are recognised upon completion of service. Upon billing as per the terms of the contract, the amounts recognised as contract assets are reclassified to trade receivables. There is no significant change in contract assets between the reporting periods.

Contract liabilities include income received in advance arising due to allocation of transaction price towards freight and insurance services on shipments not yet delivered to customer and unexpired service warranties. The increase in contract liability is due to increase in unexpired service warranties and increase in volumes/revenue.

4. Changes in accounting policy - on account of adoption of IND AS 115

The Company applied Ind AS 115 for the first time by using the modified retrospective method of adoption with the date of initial application of April 1, 2018. Underthis method, the Company recognised the cumulative effect of initially applyinglndAS115as an adjustment to the opening balance of retained earnings as at April 1, 2018. Comparative prior period has not been adjusted. The Company has applied the revenue standard only to contracts that are not completed as at the date of initial application.

The following table presents the amounts by which each financial statement line item is affected in the current year ended March 31, 2019 by the application of Ind AS 115 as compared with the previous revenue recognition requirements. Line items that were not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided. The adjustments are explained in more detail by standard below.

(i) Debentures aggregating '' Nil (2018: Rs. 150.00 Crores) are secured by a first charge on pari-passu basis on all Property, Plant and Equipment (PPE) of the Company aggregating Rs. Nil (2018: Rs. 5,088.93 Crores) excluding certain immovable properties (residential buildings and certain immovable assets) and movable PPE such as aircraft of the Company.

(ii) a. A first pari passu mortgage and charge in favor of lenders, in a form satisfactory to the lenders, on the entire LCV division immovable properties included leasehold land in Tamil nadu, present and future, b. Afirst pari passu charge by way of hypothecation in favor of the lenders, in a form satisfactory to the lenders, of all the LCV division''s movables including movable plant and machinery, machinery spares, tools and accessories, furniture, fixtures, vehicles and all other movable fixed assets, present and future located at hosur plant.

(iii) The above ECB Loans are secured by way of security over the current and future movable fixed assets of LCV Division Rs. 54.65 crores (2017-18 : Rs. 75.72 crores).

(iv) The above SIPCOT soft loan shall be secured by way of First Charge on the Fixed Assets created /proposed to be created and the same shall be on Pari passu with other First Charge Holders of LCV Division.

5. ACCOUNTING FOR LONG TERM MONETARY ITEMS IN FOREIGN CURRENCY FORWARD CONTRACTS

Exchange difference in long term monetary items in foreign currency:

The Company has elected the option under Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' and has continued the policy adopted for accounting of exchange differences arising from translation of long term foreign currency monetary items recognised in the standalone financial statements upto March 31, 2016. Accordingly, exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or as at April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences, arising effective April 1, 2011, are accumulated in "Foreign currency monetary item translation difference" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

Accordingly,

a) Foreign exchange loss relating to acquisition of depreciable assets, capitalised during the year ended March 31, 2019 aggregated Rs. 22.66 Crores [year ended March 31, 2018 Rs.6.55 Crores],

b) Amortized net exchange difference loss in respect of long term monetary items relating to other than acquisition of depreciable assets, charged to the statement of profit and loss for the year ended March 31, 2019 is Rs. 13.90 Crores [year ended March 31, 2018 Rs. 4.90 Crores],

c) The un-amortised net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss ofRs. 8.16 Crores as at March 31, 2019 [as at March 31, 2018: loss ofRs. 7.77 Crores], These amounts are reflected as part of the "Other Equity".

Notes:

(1) Capital Expenditure claimed during the year does not include:

a. Expenditure on (i) Buildings Rs. 6.31 Crores & (ii) Capital Equipment Rs. 8.67 Crores being incurred during the year but not capitalized as on March 31, 2019.

b. Expenditure claimed upon incurrence during the previous years but capitalized during the year is Rs. 0.76 Crores

(2) * includes an amount in respect of (ii)(a) - Rs. 56.11 Crores (March 2018:Rs. 28.97 Crores); (ii)(b) Rs. 146.02 Crores (March 2018: Rs.47.91 Crores) (ii)(c) Rs.0.73 Crores (March 2018: Rs. Nil) and (ii)(d) Rs. 31.43 Crores (March 2018: Rs. 16.79 Crores) and (iv) Rs. 0.52 Crores (March 2018: 0.12 Crores) capitalized in books.

6. ACCOUNTING FOR BUSINESS COMBINATION

The Scheme of amalgamation of the three wholly owned subsidiaries viz. Ashok Leyland Vehicles Limited, Ashley Powertrain Limited and Ashok Leyland Technologies Limited with the Company has been approved by the National Company Law Tribunal on December 17, 2018 and filed with registrar of companies on December 21, 2018, the Scheme has become effective from the appointed date i.e., April 1, 2018. The merger has been accounted under the ''pooling of interests'' method in accordance with Appendix C of Ind AS 103 ''Business Combinations'' and comparatives have been restated for merger from the beginning of the previous year i.e. April 1, 2017. Accordingly, results of the three wholly owned subsidiaries have been included in all the reporting periods presented. The comparative financial results of these companies for the year ended March 31, 2018 are included in the financial statements based on audited financials.

Accounting treatment

The Company has followed the accounting treatment prescribed in the said approved Scheme of Amalgamation, as follows:

i. The merger has been accounted under the ''pooling of interests'' method in accordance with Appendix Coflnd AS 103 ''Business Combinations''

Accordingly, the Company has recorded all the assets, liabilities and reserves of the amalgamating company at their respective book values (Gross of elimination) as appearing in the Consolidated financial statement of the Company as on April 1, 2017, the details of which are as follows:

Allocation of goodwill to cash-generating units

Pursuant to business combination, Light Commercial Vehicle division (LCV division) is identified as a separate cash generating unit. Goodwill has been allocated for impairment testing purposes to this cash-generating unit.

Cash-generating units to which goodwill is allocated are tested for impairment annually at each reporting date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit. The Company believes that any reasonable further change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount.

Also Refer Notes 1B.16 and 1C.

7. The figures for the previous year have been reclassified/ regrouped wherever necessary for better understanding and comparability.


Mar 31, 2018

1. Buildings include cost of service installations Rs,19,211.25 lakhs.

2. A portion of the Buildings in Bhandara valued at Rs,950 lakhs is on a land, the title for which is yet to be transferred to the Company.

3. The title of land and buildings acquired through business combination, which are in the name of the amalgamating company, are yet to be transferred in the name of the Company. Further, this includes a land, the title of which will be transferred in the Company''s name upon fulfillment of certain conditions.

4. Cost of Buildings as at March 31, 2018 includes:

a) Rs,3.42 lakhs being cost of shares in Flousing Co-operative Society representing ownership rights in residential flats and furniture and fittings thereat.

b) Rs,132.38 lakhs representing cost of residential flats including undivided interest in land.

5. Additions to PPE and Capital work-in-progress include exchange (gain) / loss aggregating to Rs,624.40 lakhs capitalised as under:

Building Rs,128.62 lakhs, Plant and equipment Rs,475.53 lakhs, Furniture and fittings Rs,4.40 lakhs, Vehicles and aircraft Rs,(0.11) lakhs, Office equipment Rs,8.06 lakhs, Capital Work-in-progress Rs,7.90 lakhs.

6. For details of assets given as security against borrowings, Refer Note 3.11(a).

7. For amount of contractual commitments for the acquisition of PPE, Refer Note 3.10(a).

8. Freehold land located at Flyderabad, which was classified as asset held for sale in the previous year is now reclassified. Refer Note 1.16.

9. Freehold land includes purchase of land from Andhra Pradesh Industrial Infrastructure Corporation Limited, the title of which will be transferred in the Company''s name upon fulfillment of certain conditions.

1. Buildings include cost of service installations Rs,17,844.72 lakhs.

2. A portion of the Buildings in Bhandara valued at Rs,950 lakhs is on a land, the title for which is yet to be transferred to the Company. Further, the title of land and buildings acquired through business combination, which are in the name of the amalgamating company, are yet to be transferred in the name of the Company.

3. Cost of Buildings as at March 31, 2017 includes:

a) Rs,3.42 lakhs being cost of shares in Flousing Co-operative Society representing ownership rights in residential flats and furniture and fittings thereat.

b) Rs,132.38 lakhs representing cost of residential flats including undivided interest in land.

4. Additions to PPE and Capital work-in-progress include exchange (gain) / loss aggregating to Rs,624.37 lakhs capitalized as under:

Building Rs,6.72 lakhs, Plant and equipment Rs,617.52 lakhs, Furniture and fittings Rs,0.47 lakhs, Vehicles and aircraft Rs,1.46 lakhs, Office equipment Rs,8.41 lakhs, Capital work-in-progress Rs,(10.21) lakhs.

5. For details of assets given as security against borrowings, Refer Note 3.11(a) & 3.12.

6. For amount of contractual commitments for the acquisition of PPE, Refer Note 3.10(a).

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs,30.15 lakhs capitalized as under:

Software Rs,24.92 lakhs, Technical Knowhow Rs,(1.57) lakhs, Intangible assets under development Rs,6.80 lakhs.

b) Expenses capitalized Rs,12,888.67 lakhs - Refer Notes 2.6, 2.7 and 2.9 to the standalone financial statements.

2. Intangible assets mainly include:

a) Vehicle technology relating to design, emission - Rs,10,173.22 lakhs

b) Software for accounting / operations purpose - Rs,8,570.76 lakhs

3. For amount of contractual commitments for the acquisition of intangible assets, Refer Note 3.10(a).

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs,(47.01) lakhs capitalised as under:

Software Rs,(60.24) lakhs, Technical Knowhow Rs,18.67 lakhs, Intangible assets under development Rs,(5.44) lakhs.

b) Expenses capitalized Rs,6,908.95 lakhs - Refer Notes 2.6 and 2.9 to the standalone financial statements.

2. Intangible assets mainly include:

a) Vehicle technology relating to design, emission - Rs,11,818.84 lakhs

b) Software for accounting / operations purpose - Rs,9,296.57 lakhs

3. For amount of contractual commitments for the acquisition of intangible assets, Refer Note 3.10(a).

2. Shares issued in preceding 5 years

a) Hinduja Foundries Limited (amalgamating company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company Law Tribunal on April 24, 2017. Consequently, 80,658,292 equity shares of Rs,1 each of the Company has been allotted on June 13, 2017 as fully paid up to the shareholders of the amalgamating company.

b) The Company allotted 569,175 equity shares pursuant to the exercise of options under Employee Stock Option Scheme. For Information relating to Employees Stock Option Plan including details of options outstanding as at March 31, 2018 - Refer Note 3.4.

3. As on March 31, 2018, there are 352,201,640 (March 2017: 352,245,640) equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 1,164,332,742 (March 2017: 1,104,646,899) Equity shares and 5,486,669 (March 2017: 5,486,669) Global Depository Receipts (GDRs) equivalent to 329,200,140 (March 2017: 329,200,140) Equity shares of Rs,1 (March 2017: Rs,1) each aggregating to 51.02% (March 2017: 50.38%) of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the equity share capital Nil

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [ March 2017: 60 equity shares] of Rs,1 each, per GDR, and their voting rights can be exercised through the Depository.

7. Cancellation of 204,675 unsubscribed equity shares of Rs,1 each was approved by the Board of Directors at the meeting held on May 25, 2017.

A. Shares pending allotment in previous year represents equity shares to be issued pursuant to business combination i.e. the scheme of amalgamation of Hinduja Foundries Limited with the Company. (Refer Note 3.18)

B. Capital reserve represents reserve created pursuant to the business combinations up to year end.

C. Securities premium reserve represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

D. Debenture redemption reserve represents reserve created out of profit / retained earnings at specified value of debentures to be redeemed.

E. Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.4)

F. General reserve is created from time to time by transferring profits from retained earnings and can be utilized for purposes such as dividend payout, bonus issue, etc.

G. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognized and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

H. Foreign currency monetary items translation difference represents exchange differences on translation of long term foreign currency monetary items at rates different from those at which they were initially recorded in so far as they do not relate to acquisition of depreciable asset. These exchange differences in respect of borrowings up to March 31, 2016 are amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

I. In respect of the year ended March 31, 2018, the Board of Directors has proposed a dividend of Rs,2.43 per equity share (March 2017: Rs,1.56 per equity share) subject to approval by the shareholders at the ensuing Annual General Meeting after which dividend would be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act. Revaluation reserve transferred to retained earnings on transition date may not be available for distribution.

J. Pursuant to the business combination during the previous year referred to above, the reserves and surplus of the amalgamating company as on October 1, 2016 have been taken over at the carrying values.

Notes :

1. These are carried at amortized cost.

2. Refer Note 1.26for current maturities of non-current borrowings.

3. Refer Note 3.11 for security and terms of the borrowings.

4. The Company has been authorized to issue 36,500,000 (March 2017: 36,500,000) Non-Cumulative Redeemable Non-Convertible Preference Shares of Rs,10 each valuing Rs,3,650 lakhs (March 2017: Rs,3,650 lakhs) and 77,000,000 (March 2017: 77,000,000) Non-Convertible Redeemable Preference Shares of Rs,100 each valuing Rs,77,000 lakhs (March 2017: Rs,77,000 lakhs). No preference shares has been issued during the year.

This provision is recognized once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 24 months.

3.2.1 Defined contribution plans

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions are made to the provident fund and pension fund set up as irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than the statutory rate of interest declared by the Central Government and there have been no shortfalls on this account. To the extent of interest rate guarantee it is classified as defined benefit plan. The Company also has a superannuation plan.

The total expense recognized in profit or loss of Rs,8,797.85 lakhs (2016-2017: Rs,7,669.25 lakhs) represents contribution paid/ payable to these plans by the Company at rates specified in the plan.

3.2.2 Defined benefit plans

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Company''s liability towards gratuity (funded), provident fund (interest guarantee), other retirement benefits and compensated absences are actuarially determined at the end of each semi-annual period using the projected unit credit method as applicable.

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

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of each reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of Rs,6,812.39 lakhs (March 2017: Rs,4,378.05 lakhs) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) is 7.4 years (March 2017: 6.7 years).

3.4 Share based payments

3.4.1 Details of employees stock option plan of the Company

The Company has Employees Stock Options Plan (ESOP) scheme granted to employees which has been approved by the shareholders of the Company. In accordance with the terms of the plan, eligible employees may be granted options to purchase equity shares of the Company. Each employee share option converts into one equity share of the Company on exercise at the exercise price as perthe scheme. The options carry neither rights to dividend nor voting rights. Options can be exercised at any time from the date of vesting to the date of their expiry.

* The vesting conditions of ESOP 2 have been modified during the year. The incremental fair value on account of the same is noted to be nil.

Note:

Under ESOP 1, ESOP 2 and ESOP 3, shares vest on varying dates within the expiry date mentioned above with an option life of 5 years after vesting.

3.4.2 Fair value of share options granted during the year

The weighted average fair value of the stock options granted during the financial year is Rs,57.42 (2016-17: Rs,68.27). Options were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on Management''s best estimate for the effects of non-transferability, exercise restrictions and behavioral considerations. Expected volatility is based on the historical share price volatility.

3.4.4 Share options vested but not exercised during the year

Under ESOP 2 - 3,727,000 options were vested on January 25, 2018. But the same was not exercised during the year.

3.4.5 Share options outstanding at the end of the year

The share options outstanding at the end of the year had a weighted average exercise price of Rs,30.40 (as at March 31, 2017: Rs,22.83) and a weighted average remaining contractual life of 6.9 years (as at March 31, 2017: 6.7 years).

3.5 Operating lease arrangements

Company as lessee Leasing arrangements

Operating leases relate to leases of land and building with lease term ranging from 1 year to 5 years.

3.6.1 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year''s corporate plan for working capital, capital outlay and long-term product and strategic involvements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The Company monitors the capital structure on the basis of total debt to equity and maturity profile of the overall debt portfolio of the Company.

The Company is required to comply with certain covenants under the Facility Agreements executed for its borrowings.

3.6.2 Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

(A) Market risk

Market risk is the risk that changes in market prices, liquidity and other factors that could have an adverse effect on realizable fair values or future cash flows to the Company. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralized treasury division and uses derivative instruments such as foreign currency forward contracts to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

Note:

Some of the derivatives reported under this column are not designated in hedging relationships but have been taken to economically hedge the foreign currency exposure.

Foreign currency sensitivity analysis:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company''s capital expenditures.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.

Included in the balance sheet under ''other financial assets'' and ''other financial liabilities''. [Refer Notes 1.14 and 1.26]

(2) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

* includes variable rate borrowings subsequently converted to fixed rate borrowings through swap contracts Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period.

For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower, the Company''s profit for the year ended March 31, 2018 would decrease/ increase by Rs,32.59 lakhs (2016-17: decrease/ increase by Rs,242.74 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

(3) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken cross currency and interest rate swap (CCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. This CCIRS contracts are composite contracts for both the foreign currency and interest rate risks and thus the mark-to-market value is determined for both the risks together. The mark-to-market loss as at March 31, 2018 is Rs,3,988.42 (March 31, 2017: Rs,15,661.03 lakhs). If the foreign currency movement is 2% higher/ lower and interest rate movement is 200 basis points higher/ lower with all other variables remaining constant, the Company''s profit for the year ended March 31, 2018 would approximately decrease/ increase by Rs,645.36 lakhs (2016-17: decrease/ increase by Rs,1,523.25 lakhs).

(4) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company''s investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit/ Bank guarantee/ Letter of credit and other forms. The Company''s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.

Expected credit loss for other than trade receivables has been assessed and based on life-time expected credit loss, loss allowance provision has been made.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(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 has obtained fund and non-fund based working capital limits from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures, and other debt instruments. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks.

The company had access to the following undrawn borrowing facilities at the end of the reporting period:

The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.

1) There were no transfers between Level 1, 2 and 3 during the year.

2) A 5% increase/ decrease in the WACC or discount rate used would decrease/ increase the fair value of the unquoted preference shares by Rs,232.78 lakhs / Rs,420.81 lakhs (as at March 31, 2017: Rs,56.68 lakhs/ Rs,60.83 lakhs).

3) A 50 basis points increase/ decrease in the WACC or discount rate used would decrease/ increase the fair value of the unquoted equity instruments by Rs,1,326.89 lakhs (as at March 31, 2017: Rs,3,051.24 lakhs). A 5% increase/ decrease in the revenue would increase/ decrease the fair value of the unquoted equity instruments by Rs,6,964.65 lakhs (as at March 31, 2017: Rs,9,074.22 lakhs).

4) Gain / loss recognized in profit or loss included in other income (Refer Note 2.2) arising from fair value measurement of Level 3 financial assets is gain of Rs,13.63 lakhs (2017: loss of Rs,1,002.72 lakhs)

3.8 Related party disclosure

a) List of parties where control exists Holding company

Hinduja Automotive Limited, United Kingdom Machen Holdings SA

(Holding Company of Hinduja Automotive Limited, United Kingdom)

Machen Development Corporation, Panama (Holding Company of Machen Holdings SA)

Amas Holdings SA

(Holding Company of Machen Development Corporation, Panama)

Subsidiaries

Albonair (India) Private Limited

Ashok Leyland Vehicles Limited (formerly Ashok Leyland Nissan Vehicles Limited)........................from November 26, 2016

Ashley Powertrain Limited (formerly Nissan Ashok Leyland Powertrain Limited)...........................from November 26, 2016

Ashok Leyland Technologies Limited (formerly Nissan Ashok Leyland Technologies Limited).........from November 26, 2016

Albonair GmbH, Germany

- Albonair (Taicang) Automotive Technology Co. Limited., China

Ashok Leyland (Nigeria) Limited

Ashok Leyland (UK) Limited (since liquidated on April 10, 2018)

Gulf Ashley Motor Limited Optare pic

- Optare UK Limited.

- Optare Group Limited.

- Jamesstan Investments Limited.

- Optare Holdings Limited.

- Optare (Leeds) Limited.

- East Lancashire Bus Builders Limited.

Ashok Leyland (Chile) S.A.

Hinduja Leyland Finance Limited

Hinduja Housing Finance Limited HLF Services Limited Global TVS Bus Body Builders Limited Ashok Leyland (UAE) LLC

- Avia Ashok Leyland Motors s.r.o....................................................................................................up to April 21, 2016

- Avia Trucks UK Limited, Great Britain............................................................................................up to April 21, 2016

- Avia Ashok Leyland Rus, Russia.....................................................................................................up to April 21, 2016

- LLC Ashok Leyland Russia

- Ashok Leyland West Africa

b) Other related parties

Fellow subsidiaries Gulf Oil Lubricants India Limited Hinduja Energy (India) Limited DA Stuart India Private Limited

Hinduja Foundries Limited....................................................................................from April 1, 2016 to September 30, 2016

Associates

Ashley Aviation Limited

Ashok Leyland Defence Systems Limited

Lanka Ashok Leyland PLC

Mangalam Retail Services Limited

Joint Ventures

Ashley Alteams India Limited

Automotive Infotronics Limited......................................................................................................liqudated on April 5, 2017

Ashok Leyland John Deere Construction Equipment Company Private Limited [Along with Gulf Ashley Motor Limited]

Ashok Leyland Vehicles Limited (formerly Ashok Leyland Nissan Vehicles Limited) .......................up to November 25, 2016

Ashley Power train Limited (formerly Nissan Ashok Leyland Power train Limited) ..........................up to November 25, 2016

Ashok Leyland Technologies Limited (formerly Nissan Ashok Leyland Technologies Limited)........up to November 25, 2016

Hinduja Tech Limited

Entities where control exist

Ashok Leyland Educational Trust

Phoenix ARC Trust

Key management personnel

Mr. Dheeraj G Hinduja, Chairman

Mr. Vinod K Dasari, CEO and Managing Director

Note:

Transaction with Rajalakshmi Wind Energy Limited (erstwhile Ashok Leyland Wind Energy Limited) has not been disclosed as being with associate since the company does not have significant influence over Rajalakshmi Wind Energy Limited, although the company holds 26% of the equity share capital of Rajalakshmi Wind Energy Limited.

3.14 Accounting for long term monetary items in foreign currency forward contracts

Exchange difference in long term monetary items in foreign currency:

The Company has elected the option under Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' and has continued the policy adopted for accounting of exchange differences arising from translation of long-term foreign currency monetary items recognized in the standalone financial statements up to March 31, 2016. Accordingly, exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or as at April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences, arising effective April 1, 2011, are accumulated in "Foreign currency monetary item translation difference" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

Accordingly,

a) Foreign exchange (gain) / loss relating to acquisition of depreciable assets, capitalized during the year ended March 31, 2018 aggregated Rs,654.55 Lakhs [ year ended March 31, 2017 Rs,577.36 Lakhs].

b) Amortized net exchange difference in respect of long-term monetary items relating to other than acquisition of depreciable assets, charged to the statement of profit and loss for the year ended March 31, 2018 is Rs,490.30 Lakhs [year ended March 31, 2017 Rs,2,029.29 Lakhs].

c) The un-amortized net exchange difference in respect of long-term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs,776.79 lakhs as at March 31, 2018 [as at March 31, 2017: loss of Rs,1,149.49 lakhs]. These amounts are reflected as part of the "Other Equity".

(1) Capital equipment claimed during the year does not include:

a. Expenditure incurred during the year but not capitalized as on March 31, 2018 is Rs,3,767.46 lakhs

b. Expenditure claimed upon incurrence during the previous years but capitalized during the year is Rs,1,499.03 lakhs

(2) Capital equipment claimed upon incurrence during previous years and continues to be in capital work-in-progress is Rs,75.86 Lakhs

(3) * includes an amount in respect of (ii)(a) - Rs,2,897.18 Lakhs (March 2017:Rs,2,322.69 Lakhs); (ii)(b) Rs,4,791.25 Lakhs (March 2017: Rs,2,855.91 Lakhs) and (ii)(d) Rs,1,678.78 Lakhs (March 2017: Rs,777.01 Lakhs) and (iv) Rs,12.21 Lakhs (March 2017: Nil) capitalized in books.

3.18 Hinduja Foundries Limited (amalgamating company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company Law Tribunal on April 24, 2017. Consequently, 80,658,292 equity shares of Rs,1 each of the Company were allotted on June 13, 2017 as fully paid up to the shareholders of the amalgamating company. Accordingly the results for the year ended March 31, 2018 includes results of Hinduja Foundries Limited for the year ended March 31, 2018 whereas the published results for the year ended March 31, 2017 includes results of Hinduja Foundries Limited only for the six months period beginning from October 1, 2016 till March 31, 2017 and hence are not comparable.

3.19 The Board of directors approved the scheme of amalgamation of the three wholly owned subsidiaries Viz. Ashok Leyland Vehicles Limited, Ashley Power train Limited and Ashok Leyland Technologies Limited with Ashok Leyland Limited with appointed date as April 1, 2018 and this is subject to clearance by National Company Law Tribunal and other regulatory approvals.

3.20 The figures for the previous year have been reclassified/ regrouped wherever necessary for better understanding and comparability.


Mar 31, 2017

2. Shares issued in preceding 5 years

a) The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares by utilization of securities premium reserve in the ratio of 1:1.

b) As on March 31, 2017, there are 35,22,45,640 equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

3. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2016: 110,46,46,899, 2015: 110,46,46,899) Equity shares and 54,86,669 (2016: 54,86,669, 2015: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2016: 32,92,00,140, 2015: 32,92,00,140) Equity shares of ''1 (2016: ''1, 2015: ''1) each aggregating to 50.38% (2016: 50.38%, 2015: 50.38%) of the total share capital.

4. Shareholders other than the Holding Company holding more than 5% of the equity share capital

Life Insurance Corporation of India holds 105,298,950 (2016: 128,308,174,2015: 18,76,02,225) Equity shares of ''1 (2016: ''1, 2015: ''1) each aggregating to 3.70% (2016: 4.51%, 2015: 6.59%).

5. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [ 2016: 60 equity shares, 2015: 60 equity shares ] of ''1 each, per GDR, and their voting rights can be exercised through the Depository.

6. Information relating to Employees Stock Option Plan including details of options outstanding as at March 31, 2017 - Refer Note 3.15.

Refer "Statement of Changes in Equity" for additions / deletions in each reserve.

Notes:

A. Share pending allotment represents equity shares to be issued pursuant to business combination during the year i.e. the scheme of amalgamation of Hinduja Foundries Limited with the Company. (Refer Note 3.21)

B. Capital reserve represents reserve created pursuant to the business combinations upto year end.

C. Securities premium reserve represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

D. Debenture redemption reserve represents reserve created out of profit / retained earnings at specified value of debentures to be redeemed.

E. Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.15)

F. General reserve is created from time to time by transferring profits from retained earnings and can be utilized for purposes such as dividend payout, bonus issue, etc.

G. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognized and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

H. Foreign currency monetary items translation difference represents exchange differences on translation of long term foreign currency monetary items at rates different from those at which they were initially recorded in so far as they do not relate to acquisition of depreciable asset. These exchange differences in respect of borrowings up to March 31, 2016 are mortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020.

I. In respect of the year ended March 31, 2017, the Board of Directors has proposed a dividend of ''1.56 per equity share (2016: ''0.95 per equity share, 2015: ''0.45 per equity share) subject to approval by the shareholders at the ensuing Annual General Meeting after which dividend would be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act. Revaluation reserve transferred to retained earnings on transition date may not be available for distribution. (Also Refer Note 3.2.A)

J. Pursuant to the business combination during the year referred to above, the reserves and surplus of the amalgamating company as on October 1, 2016 have been taken over at the carrying values.

Notes:

1. These are carried at mortised cost.

2. Refer Note 1.26 for current maturities of non-current borrowings.

3. Refer Note 3.13 for security and terms of the borrowings.

4. The Company has been authorized to issue 3,65,00,000 Redeemable Non-Cumulative Non-Convertible Preference Shares of Rs,10 each valuing Rs,3,650.00 lakhs and 7,70,00,000 (2016: 20,00,000, 2015: 20,00,000) Non-Convertible Redeemable Preference Shares of Rs,100 each valuing Rs,77,000.00 lakhs (2016: Rs,2,000.00 lakhs, 2015: Rs,2,000.00 lakhs). (Also Refer Note 3.21)

This provision is recognized once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 18 months.

This provision is recognized once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is for the balance unexpired period of the respective warranties on the various products which range from 1 to 18 months

5. Notes to the reconciliations:

A Under previous GAAP, prepayments under operating lease for land were included in Property, Plant and Equipment (PPE).

Under Ind AS, the same are specifically covered by Ind AS 17 on ''leases'' and hence reflected under other non-current/ current assets. The related foreign exchange differences and depreciation thereof and revaluation reserve has been de-recognized. The effect of these are reflected in total equity and profit or loss.

B Under previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary. Under Ind AS, non-current investments (other than investments in equity instruments of subsidiaries, associates and joint ventures) are measured at fair value through profit or loss. Consequently, , the differences, as at the transition date and as at the end of year 2015-16, respectively between carrying value as per previous GAAP and fair value, are reflected in total equity and profit or loss.

C Under previous GAAP, certain long term borrowings (for acquisition of property, plant and equipment) with associated derivative contracts (currency and interest rate swaps) were considered as integral and were accordingly accounted. Under Ind AS, borrowings and the associated derivative contracts are reckoned as separate financial liabilities and are measured at mortised cost (using effective interest method) and at fair value respectively. The effect of these (carrying values, finance costs, capitalized exchange differences and depreciation thereon) is reflected in total equity and profit or loss. Further, the effect, in case of all other borrowings measured at mortised cost, is reflected similarly in total equity and profit or loss.

D Under previous GAAP, discounting of provisions was not permitted and provisions were measured at best estimate of the expenditure required to settle the obligation at the balance sheet date without considering the effect of discounting. Under Ind AS, provisions are measured at discounted amounts. The effect of these are reflected in total equity and profit or loss.

E Under Ind AS, deferred taxes are recognized relating to Ind AS adjustments including deferred taxes measured using balance sheet approach. The effect of these are reflected in total equity and profit or loss.

F Under previous GAAP, the fixed assets of the Company were revalued and a revaluation reserve was created. Under Ind AS, the Company has adopted previous GAAP carrying value as deemed cost for PPE as on transition date and accordingly revaluation reserve has been transferred to retained earnings.

G Under previous GAAP, proposed dividends were recognized as a provision in the financial statements, even if declared after the balance sheet date. Under Ind AS, dividends are recognized when declared. This resulted in a timing difference and has been reflected in total equity of the relevant financial years.

H Under previous GAAP, patterns and dies were classified under inventories and related charge was included in cost of materials consumed. Under Ind AS, patterns and dies are classified as part of PPE and related amortization included in depreciation/ amortization charge for the year. Related supplier advances have been re-classified to capital advances.

I Under previous GAAP, minimum alternate tax entitlements were classified under other non-current assets. Under Ind AS, it is classified as unused tax credits under deferred tax.

J Under previous GAAP, short term borrowings and book overdraft forming part of a single bank consortium agreement were

reflected as net in cash and cash equivalents. Under Ind AS, they have not been so reflected in view of the offsetting criteria not being met, and therefore have been reflected separately in borrowings and other current financial liabilities respectively.

On similar principles, derivative assets have been disclosed under other current financial assets and derivative liabilities under other current financial liabilities.

K Under previous GAAP, cash discount paid, cash discount received and outward freight recoveries were recorded under other expenses, other income and packing and forwarding charges respectively. Under Ind AS, they are reflected, as adjustments, in revenue for sale of products, cost of materials consumed and other operating income respectively. Further, under Ind AS, excise duty, under previous GAAP, was adjusted in revenue from sale of products whereas under Ind AS, it is considered as a production cost and hence disclosed separately as an expense in the statement of profit and loss.

L Under previous GAAP, actuarial gains and losses on employees defined benefit obligations were recognized in profit or loss. Under Ind AS, the actuarial gains and losses on re-measurement of net defined benefit obligations are recognized in other comprehensive income. This resulted in a reclassification between profit or loss and other comprehensive income.

M Under previous GAAP, there was no separate record in the financial statements for Other Comprehensive Income (OCI). Under Ind AS, specified items of income, expense, gains and losses are presented under OCI.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, unused tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses and unused tax credits could be utilized.

Note: These will expire in various years up to 2024-25.

6. Retirement benefit plans

7. Defined contribution plans

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions are made to the provident fund and pension fund set up as irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than the statutory rate of interest declared by the Central Government and there have been no shortfalls on this account. The Company also has a superannuation plan.

The total expense recognized in profit or loss of Rs,7,669.25 lakhs (2015-2016: Rs,7,053.20 lakhs) represents contribution payable to these plans by the Company at rates specified in the rules of the plan.

8. Defined benefit plans

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death, while in employment or on termination of employment of an amount equivalent to 26 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Company''s liability towards gratuity (funded), other retirement benefits and compensated absences are actuarially determined at each reporting date using the projected unit credit method.

9. The Company funds the cost of the gratuity expected to be earned on a yearly basis to Life Insurance Corporation of India, which manages the plan assets.

The actual return on plan assets was Rs,1,705.48 lakhs (2015-16: Rs,1,026.91 lakhs).

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below has been determined based on reasonably possible changes of the respective assumption occurring at the end of the reporting period.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of each reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of Rs,1,864.25 lakhs (as at March 31, 2016: Rs,2,403.03 lakhs) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) as at March 31, 2017 is 6.7 years (as at March 31, 2016: 6.5 years).

* impact of 1,421,725 shares to be issued under employees stock option is anti-dilutive and hence these shares have been excluded.

10. Financial Instruments

11. Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year''s corporate plan for working capital, capital outlay and long-term product and strategic involvements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The Company monitors the capital structure on the basis of total debt to equity and maturity profile of the overall debt portfolio of the Company.

12. Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

(A) Market risk

Market risk is the risk that changes in market prices, liquidity and other factors that could have an adverse effect on realizable fair values or future cash flows to the Company. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralized treasury division and uses derivative instruments such as foreign currency forward contracts to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

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

Note - Some of the derivatives reported under this column are not designated in hedging relationships but have been taken to economically hedge the foreign currency exposure.

Foreign currency sensitivity analysis:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company''s capital expenditures.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financials instruments and the impact on the other components of equity arises from foreign currency forward contracts designated as cash flow hedges. The following table details the Company''s sensitivity movement in the foreign currencies:

In Management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

The following table details the forward foreign currency contracts outstanding at the end of the reporting period:

Note:

Included in the balance sheet under ''other financial assets'' and ''other financial liabilities''. [Refer Notes 1.14 and 1.26]

(13) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower, the Company''s profit for the year ended March 31, 2017 would decrease/ increase by Rs,242.74 lakhs (2015-16: decrease/ increase by Rs,376.77 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

(14) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken cross currency and interest rate swap (CCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. This CCIRS contracts are composite contracts for both the foreign currency and interest rate risks and thus the mark-to-market value is determined for both the risks together. The mark-to-market loss as at March 31, 2017 is Rs,15,661.03 lakhs (March 31, 2016: Rs,28,205.64 lakhs and April 1, 2015: Rs,34,736.15 lakhs). If the foreign currency and interest rate movement each is 2% higher/ lower, the Company''s profit for the year ended March 31, 2017 would approximately decrease/ increase by Rs,1,523.25 lakhs (2015-16: decrease/ increase by Rs,2,582.87 lakhs).

(15) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company''s investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

Equity price sensitivity analysis

The fair value of equity instruments as at March 31, 2017, March 31, 2016 and April 1, 2015 was Rs,Nil, Rs,2,205.56 lakhs and Rs,46,656.33 lakhs respectively. A 5% change in prices of equity instruments held as at March 31, 2017, March 31, 2016 and April 1, 2015 would result in an increase/ decrease of Rs,Nil, Rs,110.28 lakhs and Rs,2,332.82 lakhs in fair value of equity instruments respectively.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit/ Bank guarantee/ Letter of credit and other forms. The Company''s trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk.

The Company makes an allowance for doubtful debts using expected credit loss model and on a case to case basis.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings.

16. The other income includes Rs,20.89 lakhs being amount realised on sale of shares in Automotive Infotronics Limited, in excess of carrying value of the said investment as at April 1, 2015. The original cost of the said investment was Rs,1,575.18 lakhs.

17. Accounting for long term monetary items in foreign currency forward contracts Exchange difference in long term monetary items in foreign currency

The Company has elected the option under Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' and has continued the policy adopted for accounting of exchange differences arising from translation of long term foreign currency monetary items recognized in the financial statements up to March 31, 2016. Accordingly, exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or as at April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences, arising effective April 1, 2011, are accumulated in "Foreign currency monetary item translation difference account" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020. Accordingly,

a) Foreign exchange (gain) / loss relating to acquisition of depreciable assets, capitalized during the year ended March 31, 2017 aggregated Rs,577.36 Lakhs [ year ended March 31, 2016 Rs,10,489.96 Lakhs].

b) Amortized net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, charged to the statement of profit and loss for the year ended March 31, 2017 is Rs,2,029.29 Lakhs [year ended March 31, 2016 Rs,776.87 Lakhs].

c) The un-amortised net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs,1,149.49 lakhs as at March 31, 2017 [as at March 31, 2016: loss of Rs,2,428.53 lakhs]. These amounts are reflected as part of the "Other Equity". 3.21 Accounting for business combination

The Scheme of amalgamation for the merger of Hinduja Foundries Limited ("the amalgamating company") with the Company was approved by the Board of Directors in its meeting held on September 14, 2016 with an appointed date of October 01, 2016. The said scheme has been approved by various statutory and regulatory bodies and final order of National Company Law Tribunal ("NCLT") has been received on April 24, 2017. This common control business combination has been accounted as per the scheme and in accordance with Ind AS 103 "Business Combination" notified under the Companies Act, 2013. Further, in terms of the Scheme, 8,06,58,292 equity shares of Rs,1 each of the Company are pending to be issued and allotted as fully paid up to the shareholders of the amalgamating company. This has been included under "Other Equity" and considered in computation of earnings per share (basic and diluted).

18. Pursuant to the aforesaid Scheme of amalgamation, the authorized equity share capital of the Company stands increased by the authorized equity share capital of the amalgamating company aggregating Rs,25,000.00 Lakhs (250,00,00,000 equity shares of face value of Rs,1 each).

The company is further authorized to issue 7,50,00,000 non-convertible redeemable preference shares of Rs,100 each aggregating to Rs,75,000.00 lakhs (Refer Note 1.19)

19. Accounting treatment

The business combination has been accounted by using the Pooling of Interest method in accordance with the said approved Scheme of Amalgamation and Ind AS 103.

20. Pursuant to a settlement agreement dated September 7, 2016 between the Company and Nissan Motor Co. Ltd. Japan, the uncertainties relating to the joint venture operations were resolved. The settlement agreement resulted in continuity of LCV business by the Company and acquisition of the balance stake of Nissan in the joint venture companies. These companies became wholly owned subsidiaries of the Company post receipt of various regulatory approvals and completion of share transfer formalities in November 2016. Subsequently, the Company reformulated its business strategy for LCV business considering the growth prospects. The Company had, in the previous year, provided for an impairment loss of Rs,29,597.51 lakhs in view of the uncertainties as stated above.

Considering the above developments/ factors and business valuation by an independent valuer, the impairment loss of Rs,29,597.51 lakhs recognized in the previous year, has been reversed in the books.

21. The Company has financial involvement (Equity investment of Rs,14,989.44 lakhs and Loans of Rs,24,414.08 lakhs) in Optare Plc, U.K., a subsidiary company (Optare). The Company has also given financial guarantees aggregating Rs,19,236.88 lakhs to Optare''s lenders for loans taken by Optare.

Optare has made losses in the current year and its accumulated losses as at the yearend have substantially eroded its net worth. There have been curtailment in business due to increased competition which has affected Opatre''s ability to meet its third parties liabilities. In view of these factors and business valuation of Optare by an independent valuer, the Company has recognized, in the current year, an impairment loss of Rs,24,414.08 lakhs for loans given to Optare and has made a provision of Rs,20,000.00 lakhs for its obligations towards loans advanced to Optare by its lenders, and a provision of Rs,8,100.00 lakhs for third party claims and other potential liabilities.

In 2016, the Company had recognized an impairment loss of Rs,14,989.44 lakhs for impairment in value of its equity investment in Optare.


Mar 31, 2015

1. Shares issued in preceeding 5 years

The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares by utilisation of securities premium reserve in the ratio of 1:1.

2. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2014: 110,46,46,899) Equity shares and 54,86,669 (2014: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2014: 32,92,00,140) Equity shares of Rs. 1 (2014: Rs. 1) each aggregating to 50.38% (2014: 53.89%) of the total share capital.

3. Shareholders other than the Holding Company holding more than 5% of the total share capital

Life Insurance Corporation of India holds 18,76,02,225 (2014: 24,05,15,574) Equity shares of Rs. 1 (2014: Rs. 1) each aggregating to 6.59% (2014: 9.04%).

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [ 2014: 60 equity shares ] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

4.1 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

4.2 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as cash flow hedge

4.2.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011). The un-amortized net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 1,424.85 lakhs as at March 31, 2015 (March 31, 2014: loss of Rs. 592.89 lakhs). These amounts have now been reflected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

4.2.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year the company has recognised the following amounts in the Statement of Profit and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 1,730.30 lakhs (2014: Rs. 28.12 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,700.40 lakhs (2014:

Rs. 4,503.87 lakhs), super annuation Rs. 1,545.98 lakhs (2014: Rs.1,929.23 lakhs), gratuity Rs. 1,462.34 lakhs (2014: Rs. 1,750.07 lakhs) and other funds Rs. 561.27 lakhs (2014: Rs. 424.90 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 33.54 lakhs (2014: Rs. 25.78 lakhs), retirement benefits charged / (reversed) of Rs. 8.56 lakhs (2014: Rs. 73.96 lakhs) and other defined employee benefits Rs. 8.26 lakhs (2014: Rs. 36.01 lakhs).

5.1 The figures for the previous year have been reclassified / regrouped / amended , wherever necessary. Signatures to the Statement of Significant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2014

1. Shares issued in preceeding 5 years

The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares by utilisation of securities premium reserve in the ratio of 1:1.

2. Shares held by the Holding Company:

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2013: 102,72,37,424) Equity shares and 54,86,669 (2013: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2013: 32,92,00,140) Equity shares ofRs. 1 (2013: Rs. 1) each aggregating to 53.89% (2013: 50.98%) of the total share capital.

3. Shareholders other than the Holding Company holding more than 5% of the total share capital Life Insurance Corporation of India holds 24,05,15,574 (2013: 25,00,56,674) Equity shares of Rs. 1 (2013: Rs. 1) each aggregating to 9.04% (2013: 9.40%).

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares [2013: 60 equity shares] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

b) Depreciation for the year computed on assets revalued as on March 31, 2009 over the balance useful life on straight line method includes a net charge of Rs. 1,515.89 lakhs (2013: Rs. 1,571.27 lakhs) [Rs. 1,181.62 lakhs (2013: Rs. 1,237.00 lakhs) in Note 2.8 to the Financial Statements and Rs. 334.27 lakhs (2013: Rs. 334.27 lakhs) in Note 2.9 to the Financial Statements respectively ] being the excess over the depreciation computed by the method followed by the Company prior to revaluation / period of lease in respect of leasehold land and the same has been transferred from Revaluation Reserve to the Statement of Profi t and Loss.

c) In respect of previously revalued items of fi xed assets sold / disposed, the Company has, during the year changed its earlier accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such assets and recognized the consequent profi t / sale thereof. The impact of the said change is a higher profi t on sale / disposal of immovable properties by Rs. 10,756.56 Lakhs for the year ended March 31, 2014 (2013: NIL).

4.1. Segment information

The Company''s primary segment is identifi ed as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identifi ed based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises of income from sale of products, services and other operating revenues. [Refer Note 2.1 to the Financial Statements]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identifi ed to the respective segments. However Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) Unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work-in-progress.

4.2 The Company had given on fi nance lease, certain vehicles. The lease was for a fi xed period and was terminable with the consent of both the parties. There are no exceptional / restrictive covenants in the lease agreement. During the year, the lease agreements were terminated.

4.3 Derivatives

The Company uses derivative fi nancial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

4.4.1 Exchange diff erence in Long term monetary items in foreign currency

Exchange diff erence on translation or settlement of long term foreign currency monetary items at rates diff erent from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange diff erences are accumulated in "Foreign currency monetary item translation diff erence account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notifi ed earlier as March 31,2011). The un-amortized net exchange diff erence in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 592.89 lakhs as at March 31, 2014 (March 31, 2013: Rs. 96.35 lakhs). These amounts have now been refl ected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

4.4.2 Forward contracts and Advances designated as cash fl ow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with eff ect from April 1, 2008, in respect of forward contracts for fi rm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash fl ow hedges". The gains and losses on eff ective Cash fl ow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year, the Company has recognised the following amounts in the Statement of Profi t and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 28.12 lakhs (2013: Rs. 1,591.33 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,503.87 lakhs (2013: Rs. 4,647.48 lakhs), super annuation Rs. 1,929.23 lakhs (2013: Rs. 1,466.89 lakhs), gratuity Rs. 1,750.07 lakhs (2013: Rs. 2,024.50 lakhs) and other funds Rs. 424.90 lakhs (2013: Rs. 1,022.73 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 25.78 lakhs (2013: Rs. 65.56 lakhs), retirement benefi ts charged/ (reversed) ofRs. 73.96 lakhs (2013: Rs. 56.05 lakhs) and other defi ned employee benefi ts Rs. 36.01 lakhs (2013: Rs. 12.09 lakhs).

4.5 Accounting for Amalgamation

a. The Company had invested in certain associate companies, i.e. Ashley Investments Limited (AIL) and Ashley Holdings Limited(AHL) (both engaged in holding Strategic investments primarily in Auto and Auto Component Segment), Ashok Leyland Project Services Limited (ALPS) (engaged in consultancy services for promoting projects in thermal power,wind energy etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providing technical and management support). Under a scheme of amalgamation sanctioned by the Honourable High Court of Madras vide its order dated July 31, 2013, AHL, AIL and ALPS merged with ASL, eff ective April 1, 2013. Consequent thereto, ASL became a wholly owned subsidiary of the Company as on the Appointed date of April 1, 2013.

In a subsequent development, on March 21, 2014, the Honourable High Court of Madras approved the scheme for amalgamation of ASL (amalgamating company) with the Company from the Appointed Date of July 1, 2013. The said Scheme became eff ective on March 27, 2014 on fi ling with the Registrar of Companies.The said Scheme of Amalgamation was also approved by all the three Stock Exchanges in India with which the Company''s shares have been listed, namely, Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange vide their approvals dated December 19, 2013, January 23, 2014, and January 22, 2014 respectively.

c. Accounting treatment

The Company has followed the accounting treatment prescribed in the said approved Scheme of Amalgamation, as follows:

i. The amalgamation of ASL with the Company has been accounted by the Company in the books by using the Pooling of interests method in accordance with the said approved Scheme of Amalgamation and Accounting Standard (AS) 14 as notifi ed under the Companies Act, 1956.

4.6 Exceptional Items - Voluntary retirement scheme

The Company announced Voluntary Retirement Schemes (2013) during the year for executives who could opt for an early separation from services of the Company. VRS compensation ofRs. 4,674.94 Lakhs (2013 : Nil) represents the amount settled, in respect of those executives who exercised their option and separated from the employment upto March 31, 2014.

4.7 The fi gures for the previous year have been reclassifi ed / regrouped / amended, wherever necessary.

Signatures to the Statement of Signficant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2013

1. Shares held by the Holding Company:

Hinduja Automotive Limited, the holding company, holds 102,72,37,424 (2012: 102,72,37,424) Equity shares and 54,86,669 (2012: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2012: 32,92,00,140) equity shares of Rs. 1 (2012: Rs. 1) each aggregating to 50.98% of the total share capital.

2. Shareholders other than the Holding Company holding more than 5% of the total share capital:

Life Insurance Corporation of India holds 25,00,56,674 (2012: 25,93,11,056) Equity shares of Rs. 1 (2012: Rs. 1) each aggregating to 9.40% (2012: 9.75%).

3. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares [ 2012: 60 equity shares ] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

3.1.1 Contingent liabilities

a) Claims against the company not acknowledged as debts 3,748.55 3,114.08 (net) - Sales tax

- Others 2,793.46 2,865.19

b) Guarantees [net of Counter Guarantees Rs. 30,840.89 13,500.47 47,593.90 Lakhs (2012: Nil)]

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved.

3.2. Segment information

The Company''s primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identified based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises of income from sale of products, services and other operating revenues [Refer Note 2.1 to the Financial Statements]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identified to the respective segments. However, Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work in progress.

3.3. Related party disclosure

a) List of parties where control exists

Holding company

Hinduja Automotive Limited, united Kingdom Machen Holdings SA

(Holding Company of Hinduja Automotive Limited, United Kingdom)

Machen Development Corporation, Panama (Holding Company of Machen Holdings SA)

Amas Holdings SA

(Holding Company of Machen Development Corporation, Panama)

b) Other related parties

Fellow subsidiaries

Hinduja Foundries Limited Hinduja Auto Components Limited Hinduja Automotive (UK) Limited Associates

Albonair GmbH, Germany

Albonair (India) Private Limited

Ashley Airways Limited (under liquidation)

Ashley Aviation Limited

Ashley Holdings Limited

Ashley Investments Limited

Ashok Leyland Defence Systems Limited

Ashok Leyland (Nigeria) Limited

Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE

Ashok Leyland (UK) Limited

Automotive Coaches and Components Limited

Defiance Technologies Limited

Defiance Testing and Engineering Services, Inc. USA

Gulf Ashley Motor Limited

Irizar TVS Limited

Lanka Ashok Leyland, PLC

Mangalam Retail Services Limited

Optare plc, UK

Joint Ventures

Ashley Alteams India Limited

Automotive Infotronics Limited

Ashok Leyland John Deere Construction Equipment Company Private Limited

Ashok Leyland Nissan Vehicles Limited

Nissan Ashok Leyland Powertrain Limited

Nissan Ashok Leyland Technologies Limited

Key management personnel

Mr. R Seshasayee, Executive Vice Chairman

Mr. Vinod K Dasari, Managing Director

3.4 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

3.5 Accounting for long term monetary items in foreign currency, forward contracts and advances designated as cash flow hedge.

3.5.1 Exchange difference in Long term monetary items in foreign currency Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011). The un-amortized net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 96.35 lakhs as at March 31, 2013 (March 31, 2012: Net gain of Rs. 415.27 lakhs). These amounts have now been reflected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

3.5.2 Forward contracts and advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

3.6 Three of the companies in which the Company has investments, namely Ashley Holding Limited (AHL), Ashley Investment Limited (AIL) and Ashok Leyland Project Services Limited (ALPS) have entered into a scheme of Amalgamation (Scheme) for merger with Ashley Services Limited, an operating company joinly promoted by these three companies. The Scheme is pending sanction of the Honourable High Court of Judicature at Madras. Upon the sanction of the Scheme, the Company shall receive shares of ASL, in lieu of its holding in AHL, AIL & ALPS. The scheme was filed on April 5, 2013 with an "appointed date" proposed as 1st April 2013.

The Company has given its consent to the "Scheme" in its capacity as an Equity Shareholder (in AHL, AIL and ALPS) and a Preference Shareholder ( in AHL and AIL). The Scheme is subject to requisite approval by the Honourable High Court of Judicature at Madras and permission or approval of the Central Government or any other statutory or regulatory authorities, which by law may be necessary for the implementation of the Scheme.

3.7 The figures for the previous periods have been reclassified / regrouped / amended, wherever necessary.

Signatures to the Statement of Significant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2012

1. Shares held by the Holding Company

Hinduja Automotive Limited, the holding Company, holds 102,72,37,424 (2011: 51,36,18,712) Equity shares and 54,86,669 (2011: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2011:16,46,00,070) equity shares of Re. 1 (2011: Re.l) each aggregating to 50.98% of the total share capital.

2. Shareholders other than the Holding Company holding more than 5% of the total share capital Life Insurance Corporation of India holds 25,93,11,056 (2011: 12,59,14,895) Equity shares of Re.l each aggregating to 9.75% (2011: 9.46%).

3. Pursuant to the issue of bonus shares in the ratio of 1:1 during the year, the entitlement of GDR holders to the underlying Equity shares in the Company has increased proportionately.

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act 1956. Each GDR holder is entitled to receive 60 equity shares [ 2011: 30 equity shares ] of Re. 1 each, per GDR, and their voting rights can be exercised through the Depository.

1. investment in Optareplc, UK.

In lieu of 19,55,57,828 Ordinary Shares in Optare pic of face value of British Pence 1 each, the Company was allotted an equal number of New Ordinary Shares with face value of British Pence 0.1 each and Deferred Shares with face value of British Pence 0.9 each pursuant to a restructuring exercise by Optare pic. The value of shares received has been recorded at lower of cost and fair value.

2. The shares in the following companies can be disposed off / encumbered only with the consent of banks / financial institutions who have given loans to these companies :

a) Ashley Al teams India Limited

b) Automotive Coaches and Components Limited

c) Hinduja Foundries Limited

1.1.1 Contingent liabilities

a) Claims against the Company not acknowledged as debts(net) - Sales tax 3,114.08 3,194.78

- Others 2,865.19 2,722.75

b) Guarantees 47,593.90 37,925.49

c) Bills is counted - 243.90

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved.

b) Depreciation for the year computed on assets revalued as on March 31, 2009 over the balance useful life on straight line method includes a net charge of Rs.1,577.46 lakhs (2011: Rs. 2,685.06 lakhs) [Rs.1,243.18 lakhs (2011: Rs.1,170.35 lakhs) in Note 2.8 to the Financial Statements and Rs.334.28 lakhs (2011: Rs.1,514.71 lakhs) in Note 2.9 to the Financial Statements respectively] being the excess over the depreciation computed by the method followed by the Company prior to revaluation/period of lease in respect of leasehold land and the same has been transferred from Revaluation Reserve to the Statement of Profit and Loss.

c) The Company has, during the year, modified the method of amortization of value of leasehold land from "lower of 40 years and the period of lease", to "the period of lease", so as to provide a more appropriate presentation of the working results and financial position. The impact of the said modification is a write back of excess amortization of Rs.946.03 lakhs pertaining to earlier years. Had the earlier method been followed, the amortization charge for the year would be higher by Rs.223.82 lakhs. Further since the leasehold land had been revalued in 2009, appropriate reinstatement to Revaluation Reserve by Rs.2,505.09 lakhs has been made with corresponding reduction in accumulated amortization amount to adjust the excess transfer in earlier years.

1.2. Segment information

The Company's primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identified based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises fin come from sale of products, services and other operating revenues. [ Refer Note 2.1 to the Financial Statements ]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identified to the respective segments. However Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) Unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work in progress.

Notes:

i) Contingent liabilities, incurred in relation to interest in joint ventures as on March 31, 2012 is Rs. Nil (2011: Rs Nil).

ii) Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as at March 31, 2012 Rs. 1,654.88 lakhs (2011 : Rs. 357.68 lakhs).

iii) Capital commitments in relation to interests in joint ventures as on March 31, 2012 Rs.Nil (2011: Rs Nil).

iv) Share in Capital commitments of joint ventures themselves as on March 31,2012: Rs. 16,027.54 lakhs (2011: Rs. 2,342.20 lakhs).

v) The information furnished above with regard to the year 2012 is based on unaudited figures made available to the Company.

vi) Figures given above under expenses are excluding taxes.

1.3 The Company has given on finance lease, certain vehicles. The lease is for a fixed period and is terminable with the consent of both the parties. There are no exceptional / restrictive covenants in the lease agreement.

1.4 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materializing in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

1.5 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as cash flow hedge

1.5.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011).

Ministry of Corporate Affairs, Government of India, has issued Notification No.G.S.R 913 (E) dated December 29, 2011, amending the Companies (Accounting Standard) Rules, 2006 in respect of the exchange differences arising (effective from April 1, 2011) on reporting of long-term foreign currency monetary items, by extending the time period for the amortization of the said differences from "up to March 31, 2011" to "up to March 31, 2020". The unamortized net exchange difference on account of the above is a gain of Rs 415.25 lakhs as at March 31, 2012 (March 31, 2011: Nil)

The impact of adopting the above said Notifications on the results for the year is a net cumulative higher charge of Rs 351.95 lakhs for the year ended March 31, 2012.

1.5.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year, the Company has recognized the following amounts in the Statement of Profit and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 951.93 lakhs (2011: Rs. 1,728.36 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,175.98 lakhs (2011: Rs.4,111.61 lakhs), super animation Rs. 1,263.40 lakhs (2011: Rs.1,175.93 lakhs), gratuity Rs. 2,002.48 lakhs (2011: Rs. 2,085.39 lakhs) and other funds Rs. 1,279.50 lakhs (2011: Rs. 1,088.14 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 76.28 lakhs (2011: Rs. 76.02 lakhs), retirement benefits is a reversal of provision of Rs. 22.09 lakhs (2011: a charge of Rs. 139.27 lakhs) and other defined employee benefits Rs. 100.39 lakhs (2011: Rs. 74.85 lakhs).

1.6 The Company has during the year changed its Accounting Policy to adjust expenditure on issue of debentures against balance in Securities Premium account instead of amortizing the same over the period of the borrowing hitherto followed. The impact of the said change on the results for the year is a lower charge of Rs. 23.30 lakhs in the Statement of Profit and Loss.

1.7 During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its Financial Statements. Accordingly, the Company has reclassified / regrouped/ amended the previous year figures in accordance with the requirements applicable in the current year.


Mar 31, 2010

1. Segment information

The Company is principally engaged in a single business segment viz., Commercial vehicles and related components and operates in one geographical segment as per Accounting standard 17 on ‘Segment Reporting’.

2. Related party disclosure

a) List of parties where control exists

Holding company

Hinduja Automotive Limited, United Kingdom

Machen Holdings SA (Holding Company of Hinduja Automotive Limited)

Machen Development Corporation, Panama (Holding Company of Machen Holdings SA)

Amas Holdings SA (Holding Company of Machen Development Corporation, Panama)

b) Other related parties with whom transactions have taken place during the year

Fellow subsidiary

Hinduja Foundries Limited, a company under the same management

Hinduja Auto Components Limited

Hinduja Automotive (UK) Limited Associates

Albonair GmbH, Germany

Albonair India Private Limited

Ashley Airways Limited

Ashley Biofuels Limited

Ashley Holdings Limited

Ashley Investments Limited

Ashley Transport Services Limited

Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE

Automotive Coaches and Components Limited

Avia Ashok Leyland Motors s.r.o, Czech Republic

Defance Technologies Limited

Defance Testing and Engineering Services, Inc. USA

Gulf Ashley Motor Limited

Hinduja Leyland Finance Limited

Irizar TVS Limited

Lanka Ashok Leyland Limited, Sri Lanka Joint Ventures

Ashley Alteams India Limited

Automotive Infotronics Private Limited

Ashok Leyland John Deere Construction Equipment Company Private Limited

Ashok Leyland Nissan Vehicles Limited

Nissan Ashok Leyland Powertrain Limited

Nissan Ashok Leyland Technologies Limited Key management personnel

Mr. R Seshasayee, Managing Director

3. Accounting for long term monetary items in foreign currency and forward contracts designated as cash fow hedge

3.1 Exchange difference in Long term monetary items in foreign currency

Pursuant to the notifcation G.S.R.225 (E) dated March 31, 2009 issued by Ministry of Corporate Affairs, the Company during the earlier year, exercised its option irrevocably to account for exchange difference on long term monetary items in foreign currency (i.e. whose term of settlement exceeds twelve months from date of its origination) as directed in the said notifcation. Accordingly, all long term assets and liabilities outstanding in foreign currency are translated at closing rates.

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in “Foreign currency monetary item translation difference account” and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2011. This was different from the method followed upto March 31, 2008 where all exchange differences on long term monetary items were reckoned in the profit and Loss account. The impact of the change upto March 31, 2008 amounting to Rs.1,762.90 lakhs was adjusted to General reserve in the previous year.

3.2 Forward contracts designated as cash fow hedges

The Company had adopted the principles of Accounting Standard 30 – Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for frm commitments and highly probable forecast transactions meeting necessary criteria for designation as “Cash fow hedges”. The gains and losses on effective Cash fow hedges are recognised in Hedge Reserve Account till the underlying forecasted transaction occurs.

4. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identifed on the basis of information available with the Company. There are no overdues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

5. There is no current tax expense for the year as the Minimum Alternate Tax of Rs.9,215.46 lakhs is subject to credit under section 115 JAA(1A) of the Income Tax Act, 1961 and hence is recognised as an asset as advances in Schedule 1.10 to the Accounts.

6. profit on sale of division in Schedule 2.2 represents profit on sale of the Defance Technologies Division, Chennai, as a going concern to Defance Technologies Limited, with effect from March 1, 2010.

7. Figures for the previous year have been regrouped / amended wherever necessary.

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