Varroc Engineering Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2023

Note 5A - Right of use assets

The Company has lease contract for premises/building used for its operations with lease terms of 2-10 years, and for lease hold land with lease term of 95-99 years The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. The Company is restricted from assigning and subleasing the leased assets. The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (mainly Laptops) (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).

Credit period

Trade receivables are non-interest bearing and are generally on payment terms of 30 to 120 days.

No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except as disclosed in note 47

During the previous year, the Company along with VCHBV entered into a Securities Purchase Agreement (‘SPA'') dated April 28, 2022 as amended dated July 01, 2022, October 05, 2022 and May 12, 2023 with Compagnie Plastic Omnium SE, France to divest the Sellers 4-Wheeler lighting business in the Americas and Europe ("VLS Business"). The deal also includes transfer of India R&D centre for four-wheeler lighting busines which has assets of 36.37 Million as on March 31,2022.

On October 6, 2022 out of H 36.37 millions asset sold to VL Lighting Solution Pvt.Ltd. step down subsidiary Compagnie Plastic Omnium SE, France of H 6.51 million and balance assets of H 29.86 millions which were not transferred as a part of sale transaction have been reclassified to Property Plant & Equipments.

(b) Rights, preferences and restrictions attached to equity shares

Equity shares: The Company has equity shares having a par value of Re. 1 per share (previous year Re.1 per share). In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

Nature and purpose of reserves General reserve

General reserve is the retained earning of the Company which is kept aside out of the Company''s profits to meet future (known or unknown) obligations.

Capital reserve

Capital reserve is not available for distribution as dividend.

Securities premium

Securities premium is used to record the premium on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.

1) Rupee Term Loans from Banks are secured by:

(a) Kotak Mahindra Bank Limited, Rupee Term Loan 2 outstanding Balance of H 350 million Secured by Exclusive First Charge By Way Of Hypothecation On Movable Fixed Assets of the Following Plants of Company:

(1) Varroc Engineering Limited, Plant VIII PLOT NO M-191/3, MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD 431136, Maharashtra

(2) Varroc Engineering Limited, Exhaust Plant - PLOT NO. B-14, MIDC INDUSTRIAL AREA, CHAKAN, TAL. KHED, DIST. PUNE 410501 Maharashtra

(b) HSBC BANK Term Loan 1 outstanding balance of H 187.50 million secured by Exclusive Charge by way of Hypothecation on identified movable Fixed Assets of the Following Plants :

(1) Varroc Engineering Limited, Plant IV PLOT NO M 140,141, MIDC,WALUJ,AURANGABAD 431136, Maharashtra.

(2) Varroc Engineering Limited, Corporate Office , L 4, MIDC INDUSTRIAL AREA, WALUJ, DISTRICT AURANGABAD 431136 Maharashtra.

(3) Varroc Engineering Limited, Pantnagar, Plot No 20 SECTOR 9, INTEGRATED INDUSTRIAL AREA, PANTNAGAR, DISTRICT UDHAMSINGH NAGAR,UTTRAKHAND

(c ) HSBC BANK Term Loan 2 outstanding balance of H 375 million secured by Exclusive Charge by way of Hypothecation on identified movable Fixed Assets of the Following Plants :

(1) Varroc Engineering Limited, Plant V - Plot No. L-6/2, MIDC, WALUJ, AURANGABAD 431136 Maharashtra.

(2) Varroc Engineering Limited, PLant V - R&D, PLOT NO L-6/2, MIDC,WALUJ,AURANGABAD 431 136 Maharashtra.

(d) HSBC BANK Working Capital Term Loan (WCTL) of H 400 Million and INR 435 Million outstanding balance of H 300.00 Million and H 435.00 Million

respectively, by way of Guaranteed Emergency Credit Line (GECL) under ECLGS scheme of National Credit Guarantee Trustee Company Ltd. (NCGTC) are secured by way of second pari-passu charge on current assets of the Company along with other banks. Further secured by second charge on movable fixed assets of the Company situated at

(1) Varroc Engineering Limited, Plant IV - Plot No. M-140-141, MIDC Industrial Area, Waluj, Aurangabad 431 136, Maharashtra

(2) Varroc Engineering Limited, Corporate Office, Plot No. L-4, MIDC Industrial Area, Waluj, Aurangabad 431 136, Maharashtra

(3) Varroc Engineering Limited, Pantnagar - Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar, Dist. Udhamsingh Nagar, Uttrakhand

(4) Varroc Engineering Limited, Plant V - Plot No. L-6/2, MIDC Industrial Area, Waluj Aurangabad - 431136

(5) Varroc Engineering Limited,Plant V - R&D, Plot No. L-6/2, MIDC Industrial Area, Waluj Aurangabad - 431136

(e) (i) ICICI BANK Rupee Term loan of H 1000 Million is secured by way of mortgage of immovable properties situated at:

(1) Gut No. 390, Takve Bk, Tal. Maval, Dist. Pune, Maharashtra

(2) Plot No. B-14, MIDC, Chakan, Tal. Khed, Dist. Pune, Maharahtra

(3) Plot Nos. K-101-102, M-140-141 and M-191/3, MIDC Industrial Area, Waluj, Aurangabad, Maharashtra

(4) B-3010, 3rd Floor, Marvel Edge, Village Vadagaonsheri Taluka Haveli Dist Pune, Maharashtra

(5) A-7010 & 7020, B-7010, 7020, 7030 & 7040 at 7th Floor, Marvel Edge, Village Vadagaonsheri Taluka Haveli Dist Pune, Maharashtra

(ii) ICICI BANK Rupee Term Loan of of H 1250 Milion availed on March 31 2023 , security creation is in process.

(f) IDBI BANK Rupee Term loan of H 750 Million (partially availed of H 292.60 million) is secured by way of hypothecation of specific movable properties of the Borrower including its movable plant and machinery, machinery spares, tools and accessories and movables, both present and future

2) Rupee Term Loans from Financial Institution are secured by:

(a) Rupee Term loan of H 1000 Million availed from Bajaj Finance Limited outstanding balance as on March 31, 2023 H720.66 million is secured by way of mortgage on specific immovable properties on exclusive charge basis located at Plot Nos. E-4, L-6/2 and L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra State.

(b) Rupee Term loan of H 650 Million outstanding balance as on March 31, 2023 H259.52 million availed from Bajaj Finance Limited is secured by way of mortgage on specific immovable properties on exclusive charge basis located at Plot No. B-24/25, MIDC, Chakan, Pune - 410501, Maharashtra State and extension of charge on specific immovable properties located at E-4, L-6/2 and L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra State.

(c) Rupee Term loan of H 600 Million availed from Tata Capital and Financial Services Limited outstanding balance as on March 31, 2023 H 600.00 million is secured by way of mortgage on immovable properties on exclusive charge basis located at Plot No. 20, Sector 9, SIDCUL Industrial area, Pantnagar, Rudrapur, Uttarakhand 263153

3) Non Convertible Debentures are Secured by:

Non Convertible Debentures Secured by Exclusive charge by way of Hypothecation on the specific identified movable properties of the Company situated at:

(1) Varroc Engineering Limited -VEL-III - Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501, Maharashtra

(2) Varroc Engineering Limited -VEL-III (R&D) - Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501, Maharashtra

(3) Varroc Engineering Limited -VEL VII (Valves) -Plot No. L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra.

(4) Varroc Engineering Limited - VEL VII (Forging) -Plot No. L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra.

(5) Varroc Engineering Limited - VEL Chennai - Survey No. 128-1B & 129/1B, Ezhichur Village, Taluka Sriperumbudur, Dist. Kancheepuram, Chennai -603204, Tamilnadu.

(6) Varroc Engineering Limited- VEL Windmill Satara -Wind Mills 2.10 MW Wind Mills installed at village Vankusawade & Kusawade, District: Satara, Maharashtra

(7) Varroc Engineering Limited - VEL Windmill Supa- 4 MW Wind Mills installed at Village Shahajapur, Pimpalgaon & Jamner (Supa), District Ahmednagar, Maharashtra.

(8) Varroc Engineering Limited- VEL Windmill Jaisalmer- 2.25 MW Wind Mills installed at Village Badabaugh, Site: Baramsar, Dist Jaisalmer, in Rajasthan State.

(9) Varroc Engineering Limited- Lighting Plant Plot No. B-14, MIDC, Chakan, Pune - 410501, Maharashtra

(10) Varroc Engineering Limited- VEL-I - Plot No. E-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra

(11) Varroc Engineering Limited -VEL-II - Plot No. K-101-102, MIDC, Waluj, Aurangabad - 431136, Maharashtra

(12) Varroc Engineering Limited - VEL - Halol - Plot No. 103/4, Maswad, GIDC Expansion Estate, Halol-II, Dist. Panchmahal, Gujarat - 389 350

4) Covenant non-compliance

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net borrowings to EBITDA ratio and debt service coverage ratio. Some of the debt covenants in respect of non-current borrowings of H 3,033.14 million were not complied as at March 31, 2023. The Company has received waiver letter subsequent

to year-end from one lender agreeing not to demand repayment as a consequence of such breaches. For rest of the facilities, non-current loans of H 2,381.23 million have been reclassified as current. The asset cover in respect of the Non-Convertible Debentures of the Company as on March 31 , 2023 is 1.21 times of the total due amount which is greater than the requirement of 1.1 times of the said Secured Non-Convertible Debentures.

The management does not expect any material impact on the financial statements/cash flows due to the above.

Cash credit facilities availed from Standard Chartered Bank, HDFC Bank Limited, CITI Bank N.A, ICICI Bank Limited, IDBI Bank Limited, Axis Bank Limited, Kotak Mahindra Bank Limited and IDFC First Bank Ltd. are secured by first paripassu charge by way of hypothecation of stocks of raw materials, work in progress, finished goods, consumable, stores and spares, packing materials and receivables of the Company both present and future.

* The Company has obtained unsecured Buyer''s credit of Euro 3,033,187.65 on 13.07.2021 from IDFC First Bank Ltd. for a period of 1 year which is further rolled over for another 1 year against capex import LC payment. The Buyer''s credit is due for payment on 03.07.2023 and carries the interest rate of 1.75% pa.

The Company has borrowings from banks or financial institutions on the basis of security of current assets, and quarterly returns or statements of current assets filed by the Company during the current and previous year with banks or financial institutions are in agreement with the books of accounts except as mentioned in Note 22(a) & 22(b).

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of ageing more than 90 days. Further, factoring balance has been disclosed separately in the statement which is netted off in the financial statements

Note 4 The net difference is on account of incorrect adjustments.

Note 5 Mainly includes inter company creditors and provision for expenses.

Note 6 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note 7 The balance difference is on account of incorrect adjustments which majorly pertains to:

i) The creditor balance outstanding for more than 90 days has not been considered for the plants in lighting division for the purpose of reporting in stock statement.

ii) For reporting in quarterly statement to banks, incorrect capital creditors amounts were considered for exclusion from total creditors balance.

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of ageing more than 90 days. Further, factoring balance has been disclosed separately in the statement which is netted off in the financial statements

Note 4 The net difference is on account of incorrect adjustments.

Note 5 Mainly includes inter company creditors and provision for expenses.

Note 6 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note 7 The balance difference is on account of incorrect adjustments which majorly pertains to:

i) The creditor balance outstanding for more than 90 days has not been considered for the plants in lighting division for the purpose of reporting in stock statement.

ii) For reporting in quarterly statement to banks, incorrect capital creditors amounts were considered for exclusion from total creditors balance.

D Performance obligation

Revenue from contracts with customers include revenue from finished goods, tooling, engineering services and Job work.

Finished goods / tooling / engineering services

For the sale of finished goods the performance obligation is generally satisfied upon its delivery or as per the terms of the customer contract and payment is generally due within 30 to 120 days from delivery.

For sale of toolings, the performance obligation is considered satisfied on billing after approval of the part(s) by the customer. The Company generally receives advance for toolings contracts ranging from 30 % to 50% of the contracted price. The revenue is recognised at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Product development/engineering services are considered as related to sale of parts rather than a separate performance obligation. As a result, revenue from engineering services is recognised over the period of production from the date of start of production. Costs incurred in respect of providing engineering services are recognised as intangible assets and amortised over the period of production from the date of start of production. Payments received from customers in respect of product development/engineering services are presented as contract liabilities.

For supply of engineering services to group companies, performance obligation is generally satisfied on the basis of time/work completed as per the contract with the group companies and payment is generally due within 30-60 days.

The Company provides normal warranty provisions on some of its products sold, in line with the industry practice. The Company considers that the contractual promise made to the customer in the form of warranties for the parts supplied does not meet the definition of separate performance obligation as it does not give rise to additional service

Job work revenue is recognised when the work is completed and billed to customer.

B Defined benefit plan (Gratuity)

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary plus dearness allowance per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

Sensitivity for significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by 1%, keeping all other actuarial assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the projected unit credit method at the end of reporting period) has been applied while calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

RISK EXPOSURE AND ASSET LIABILITY MATCHING

Provision of a defined benefit scheme poses certain risks, some of which are detailed here under as companies take on uncertain long-term obligations to make future benefit payments.

1) Liability Risks Asset-Liability mismatch risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.

Discount rate risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

Future salary escalation and inflation risk -

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz. LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of

(ii) Valuation technique used to determine fair value

The following methods and assumptions were used to estimate the fair value of the financial instruments included in the above tables:

- The Company enters into derivative financial instruments with financial institutions with investment grade credit ratings. Foreign exchange forward contracts, interest rate swaps are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing model, using present value calculations. The models incorporate various inputs including the credit quality counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spread between the respective currencies, interest rate curves etc. The changes in counterparty credit risk had no material effect on financial instruments recognised at fair value through profit and loss.

Commentary

The carrying amounts of trade receivables, loans, other financial assets, cash and bank balances, trade payables/ acceptances and other financial liabilities are considered to be the same as their fair values due to their short-term nature. The fair values of non-current financial assets and non-current financial liabilities also approximate their carrying values. The borrowings which are at floating rate of interest, fair values as at March 31,2023 approximate their carrying values.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

Other Assets for which Fair Value is disclosed

The fair value of investment property is based on valuation performed by independent valuer as per significant observable inputs (Level 2).

Fair value of the investment property as on March 31,2023 H138.70 million.(March 31,2022 H 138.70 million) - Refer Note 4

Note 44 : Financial risk management

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as equity

price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, receivables, payables, deposits, investments and derivative financial instruments.

a) Foreign currency risk

The Company operates internationally and the business is transacted in several currencies. Consequently, the Company is exposed to foreign exchange risk through its sale and purchase of goods and services, mainly in the North America and Europe . The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are affected positively/adversely as the rupee appreciates /depreciates against these currencies. The Company evaluates exchange rate exposure arising from these transactions and enters into foreign exchange forward contracts, interest and principal swaps and options to mitigate the risk of changes in exchange rates on foreign currency exposures. The Company follows established risk management policies, to hedge forecasted cash flows denominated in foreign currency. The Company has designated certain derivative instruments as cash flow hedges to mitigate the foreign exchange exposure.

iii) Sensitivity

For the year ended March 31, 2023 and March 31, 2022, every 5% percentage point appreciation/depreciation in the exchange rate between the Indian rupee and U.S. Dollar, would have affected the Company''s incremental operating margins by approximately H 12.82 million and H 3.56 million respectively. And for Euro, every 5% percentage point appreciation/depreciation in the exchange rate would have affected the Company''s incremental operating margin by approximately H 691.11 million, previous year H 13.81 million The sensitivity for net exposure in JPY and in other currencies does not have material impact to Statement of Profit and Loss. Sensitivity analysis is computed based on the changes in the receivables and payables in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long term debt obligations with floating interest rates.

C) Other price risk

The Company does not have material investments in equity securities other than investments in its subsidiaries. Hence, equity price risk is considered to be low. Further, the Company''s operating activities require the ongoing purchase of various commodities for manufacture of automotive parts. However, the movement is commodity prices are substantially adjusted through price differences as per customer contracts and hence commodity price risk for the Company is also considered to be low.

Credit risk management

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions,

foreign exchange transactions and other financial instruments. The Company only deals with parties which have good credit rating/worthiness given by external rating agencies or based on the Company''s internal assessment.

Trade receivables

Customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Further, Company''s customers includes marquee OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2023, receivable from Company''s top 5 customers accounted for approximately 42.61 % (March 31, 2022: 43.99%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 12. The Company does not hold collateral as security.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s corporate treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties. Credit limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

The Company''s maximum exposure to credit risk for the components of the balance sheet at March 31, 2023 and March 31, 2022 is the carrying amounts as disclosed in note 13 except for financial guarantees. The Company''s maximum exposure relating to financial guarantees is disclosed in note 51 (B).

d) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows. As at March 31,2023, cash and cash equivalents are held with major banks.

The amounts disclosed in the above table are the contractual undiscounted cash flows

For financial guarantee contracts, refer note 51 (B).

Note 45 - Capital management

(a) Risk management

T he Company''s capital comprises equity share capital, securities premium, retained earnings and other equity attributable to shareholders.

The Company''s objectives when managing capital are to:

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

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital of the Company during the year.

Loan covenants

The Company''s capital management aims to ensure that it meets financial covenants attached to the interestbearing loans and borrowings that define capital structure requirements. Some of the financial covenants were not complied as at March 31,2023. Refer note 21 for details.

(b) Dividends not recognised at the end of the reporting period

The Board of Directors have not recommended any dividend during the current year.

(i) The Company is contesting excise, service tax and goods and service tax demand/notices and the management, including its tax advisors, believe that it''s position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for the tax demands/notices raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of the operations. The Company has deposited H 38.08 million (previous year H 38.08 million) with the tax authorities against the above matters to comply with the order of the tax authorities.

(ii) There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated February 28, 2019. As a matter of caution, the company has made a provision on a prospective basis from the date of the SC order. The company will update its provision, on receiving further clarity on the subject.

(C) - Code on Social Security, 2020

The Code on Social Security, 2020 (‘Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. 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.

Note 52- Loss on equity investments and loans given to VLS

The Company and VarrocCorp Holding BV, Netherlands ("VCHBV", wholly owned subsidiary of the Company) (together referred to as "Sellers") entered into a Securities Purchase Agreement dated April 29, 2022 as amended dated October 05, 2022 and May 12, 2023 (collectively referred to as "SPA") with Compagnie Plastic Omnium SE, France (referred to as "Buyer"), to divest the Sellers 4-Wheeler lighting business in the Americas and Europe ("VLS Business"). The equity value agreed under the SPA was Eur 69.5 million (subject to closing adjustments as provided under the SPA) and accordingly the loss on equity investments and loans given to VLS business of Rs 13,321.90 million was recognised during the year ended March 31,2023 as exceptional item. Summary of loss on equity and loans given to VLS business is as follows :

As per the terms of the SPA, a specific ‘Adjustment Escrow'' has been provided for the Final Closing Statement and the Final Closing Adjustment Statement to be prepared as of Closure Date i.e. Oct 6, 2022. The Buyer had a period of 90 working days from the closing date to come up with the same duly supported by requisite information/documentation.

The Buyer submitted the final adjustments in the month of February 2023 but failed to provide the necessary supporting details to enable the Sellers to understand these adjustments. Hence, Sellers sent a Dispute Notice in accordance with the SPA disputing the proposed adjustments. Pursuant to the amendment to SPA dated May 12, 2023, both parties have mutually agreed to attempt the resolution of their disagreements in accordance with the provisions of the SPA. Considering the disagreement between the parties and the negotiations with the Buyer are under progress, the effect of the proposed adjustments cannot be ascertained for recognition in the standalone financial statements as of March 31, 2023, and accordingly the loss recognised for the year ended March 31,2023 is based on the initial agreed equity value of Eur 69.5 million as explained above.

Formulae for calculation of ratios are as follows:

(i) Current ratio = [ Current Assets / Current Liabilities ]

(ii) Debt-Equity Ratio = [ Total Debt / Total Equity ]

(iii) Debt service coverage ratio = [ (Earning before Interest Tax & Depreciation & amortization and exceptional items)/ (Interest Expense Principal repayments of long term loan made during the period) ]

(iv) Return on Equity ratio = [(Net Profits after taxes - Preference Dividend/(Average Shareholder''s Equity)]

(v) Inventory Turnover ratio= [(cost of goods sold)/(Average Inventory)]

(vi) Trade Receivable Turnover Ratio = [(Revenue from Operation)/(Average Trade receivable)]

(vii) Trade Payable Turnover Ratio = [ (Purchases)/(Average Trade payable)]

(viii) Net Capital Turnover Ratio = [( Net Annual Sales )/( Average Working Capital)]

(ix) Net Profit ratio = [ (Net Profit after taxes)/ (Revenue from Operation)]

(x) Return on Capital Employed = [( Earning Before Interest and taxes (EBIT))/( Capital employed)]

(xi) Return on Investment = [(Income generated from invested funds in bank FDs and mutual funds)/ (Average invested funds in bank FDs and mutual funds)]

(xii) Capital Employed = Tangible Net worth Total Debt Deferred Tax Liability

(xiii) Working capital = (Current assets - Current liabilities)

Commentary

A) Decrease in Current ratio is due to impairment of loan receivable & gurantee commission receivable from Related Party.

B) Increase in Debt equity ratio is due to increase in borrowings raised during the year and and decrease in equity due to losses.

C) Decrease in the ratio is due to losses in the current year as compared to profit in the previous year.

D) Decrease in the ratio is mainly due to impairment provision of loan, interest & guarantee to related party and impairment of investment in subsidiaries.

E) Decrease in the return on capital employed primarily due to impairment provision on investment/loan to subsidiary during the year.

F) Increase in ratio mainly due increase in revenue as compared to previous year.

G) Decrease in Net capital turnover ratio is mainly on account of increase in current borrowings and Inter corporate deposits

Note 55 : Other Statutory Information

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

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

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

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

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

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Mar 31, 2018

Note 2A: Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the accompanying disclosures.

These judgments, estimates and assumptions are based on historical experience and other factors, including expectations of future events that may have a financial impact on the company and that are believed to be reasonable under the circumstances.

This note provides an overview of the areas that involve a higher degree of judgments or complexities and of items which are more likely to be materially adjusted due to estimates and assumptions to be different than those originally assessed. Detailed information about each of these judgments, estimates and assumptions is mentioned below. These Judgments, estimates and assumptions are continually evaluated.

Significant estimates and judgments

1 Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

2 Fair valuation of financial instruments

When the fair values of financial assets and financial liabilities cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model (DCF). The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments’ include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

3 Defined benefit plans

The liability or asset recognized in the balance sheet in respect of gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

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

The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The mortality rate is based on Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes.

Future salary increases and gratuity increases are based on expected future inflation rates.

Further details about gratuity obligation are given in Note 42.

4 Deferred tax

At each reporting date, the Company assesses whether the realization of future tax benefits is sufficiently probable to recognize deferred tax assets. This assessment requires the use of significant estimates with respect to assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of projected future taxable income or if changes in current tax regulations are enacted.

5 Customer Claims

The company has made accruals in respect of unsettled prices for some of its raw materials purchase contracts and finished goods sales contracts. These accruals are made considering the past settlement formula / communications with the vendors and customers respectively. The management has assessed and believes that the timing of cash outflow pertaining to these accruals are uncertain and hence considered the same as payable / receivable on demand and classified under current liabilities / assets respectively.

Note 2B: Standards issued but not yet effective 1 Ind AS 115 - Revenue from Contracts with Customers

The Ministry of Corporate Affairs (MCA) has notified Ind AS 115, ‘Revenue from Contracts with Customers’, on 28 March 2018, which is effective for accounting periods beginning on or after 1 April 2018. The new revenue standard is based on a transfer of control model, which fundamentally changes the basis of revenue recognition, presentation and disclosures. The core principle is described in a five-step model framework.

The Company is in the process of evaluating the impact on the financial statements in terms of the amount and timing of revenue recognition under the new standard.

2 Ind AS 21-The Effects of Changes in Foreign Exchange Rates

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from April 1, 2018. The company has evaluated the effect of this on the standalone financial statements and the impact is not material.

3 Ind AS 40- Investment property

Amendment to Ind AS 40 regarding transfers of investment property: On March 28, 2018 MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 which clarifies that to transfer to, or from, investment properties there must be change in use. A change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A change in intention, in isolation, is not enough to support a transfer. The amendment has also re-characterized the list of evidence of change in use as a non-exhaustive list of examples and scope of theses examples have been expanded to include assets under construction and development and not only transfers of completed properties. The company has decided to apply the amendment prospectively to change in use that occur after the date of initial application (i.e. April 1, 2018). Management has assessed the effect of the amendment on classification of existing property at April 1, 2018 and concluded that no reclassifications required.

4 Amendments to Ind AS 12 Income taxes regarding recognition of deferred tax assets on unrealized losses

The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets set out below:

- A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.

- The estimate of future taxable profit may include the recovery of some of an entity’s assets for more than its carrying amount if it is probable that the entity will achieve this. For example, when a fixed-rate debt instrument is measured at fair value, however, the entity expects to hold and collect the contractual cash flows and it is probable that the asset will be recovered for more than its carrying amount.

- Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.

- Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used to evaluate the recoverability of those assets. This is to avoid double counting the deductible temporary differences in such assessment.

The Company has evaluated the effect of this amendment on the standalone financial statements and the impact is not material.

(ii) Property, plant and equipment pledged as security

Refer to note 52 for information on property, plant and equipment pledged as security by the company

(iii) Contractual obligations

Refer to note 48 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iv) Office Building includes premises on ownership basis in a Co-Operative Society '' 6.3 million, including cost of shares therein of ''125/- per share.

(ii) Leasing arrangements

Certain investment properties are leased to tenants under long-term cancellable operating leases with rentals payable monthly. There is escalation of 10% in lease rentals during the lease terms.

(iii) Fair value

Fair value of the investment property as on March 31, 2017 was Rs, 364.79 million. There is no significant change in the fair value of investment property after March 31, 2017.

Estimation of fair value

The company obtains valuations for its investment properties internally. The best evidence of fair value is current prices in an active market for similar properties

Initial Public Offer expenses receivable comprise share issue expenses incurred in connection with the proposed Initial Public offer (IPO) by way of offer for sale by existing shareholders of the Company. These receivables include fees paid to stock exchanges, SEBI, lawyers, auditors etc., in connection with the IPO of the Company. As per the offer agreement between the Company and the selling shareholders, upon successful completion of the Offer, these expenses will be reimbursed by the selling shareholders in proportion to their respective Offered Shares sold pursuant to the Offer. Accordingly, the Company has classified these expenses as receivable from selling shareholders under Other Financial Assets. Initial Public Offer expenses includes receivable from related parties refer note 47.

General reserve

General reserve is the retained earning of the company which is kept aside out of the companyRs,s profits to meet future (known or unknown) obligations.

Debenture redemption reserve

The company is required to create a debenture redemption reserve out of the profits which is available for payment of dividend for the purpose of redemption of debentures.

Capital reserve

Capital reserve is not available for distribution as dividend.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Cash flow hedging reserve

The company uses hedging instruments to hedge its exposure to movements in foreign exchange rates and interest rates, which are designated as cash flow hedges. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognized in the cash flow hedge reserve. Amounts recognized in cash flow hedge reserve are reclassified to profit or loss when the hedged item affects profit or loss.

1) Rupee term loans , foreign currency loan (ECB) and Letter of Credit from Bank are secured by:

a) ECB Loan from ICICI Bank secured by First pari-passu charge by way of Joint Mortgage of immovable properties of the Company located at E-4, L-6/2, and L-4 MIDC ,Waluj, Aurangabad-431136.

b) Letter of credit (Buyers Credit) secured by First pari-passu charge on current asset of the company

2) a) Foreign currency loan (FCNR loan USD 7.27 million) from Citi Bank N.A. is secured by first pari-passu charge on movable fixed assets of Crankshaft unit both present and future located at M-191/3, MIDC, Waluj, Aurangabad - 431136.

b) Foreign currency loan (FCNR loan USD 2.25 million) from Citi Bank N.A. is secured by first pari-passu charge on movable fixed assets of solar unit both present and future located at Sakri, Dhule.

3) Rupee Term Loans from Financial Institution, From Banks and Non Convertible debentures are secured by:

a) Rupee Term loan of Rs, 500 million availed from Bajaj Finance Limited is secured by first pari-passu charge on movable fixed assets both present and future of crankshaft unit located at M-191/3 MIDC, Waluj, Aurangabad - 431136.

b) Rupee Term Loan from Kotak Mahindra Bank Limited is secured by way of first pari passu charge on movable fixed assets both present and future of unit V located at L-6/2, MIDC, Waluj, Aurangabad -431136.

c) 8.10% Non convertible debentures of Rs, 800 million is secured by way of first pari passu charge on movable fixed assets both present and future of unit III located at B-24 & 25, MIDC, Chakan, Pune - 410501 and unit VII (Valves and Forging) located at L-4, MIDC, Waluj, Aurangabad - 431136.

4) The carrying amounts of financial and non financial assets pledged as security for current and non-current borrowings are disclosed in Note 52.

Total current borrowings

Working capital facilities availed from Corporation Bank, Standard Chartered Bank, HDFC Bank Limited, CITI Bank N.A, ICICI Bank Limited, IDBI Bank Limited and Kotak Mahindra Bank Limited are secured by first pari-passu charge by way of hypothecation of stocks of raw materials, work in progress, finished goods, consumable, stores and spares, packing materials and receivables of the Company both present and future.

The carrying amounts of financial and non financial assets pledged as security for current and non-current borrowings are disclosed in Note 52

* For the purposes of this clause, the term ''Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 8, 2016.

The Shareholders at their meeting held on January 25, 2018, accorded their approval for conversion of the Company from a “Private Limited Company” to “Public 40(b) I Limited Company”. Necessary documents have been filed with the Ministry of Corporate Affairs and the same has been approved by the Register of Companies (ROC) Mumbai on February 05, 2018.

A Defined contribution plans:

The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the year towards defined contribution plan is as under

B Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary plus Dearness Allowance per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognized funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

Sensitivity for significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by 1%, keeping all other actuarial assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the projected unit credit method at the end of reporting period) has been applied while calculating the defined benefit liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

As the funds are managed wholly by the insurance company, the break-up of the plan assets is unavailable.

Actual return on assets for the year ended March 31, 2018 and year ended March 31, 2017 was Rs,10.34 million and '' 9.43 million respectively.

The Company expects to contribute '' 30.00 million to the gratuity trusts during the fiscal 2018. As at March 31, 2018 it has contributed '' 28.74 million

1) Liability Risks Asset-Liability Mismatch Risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

Discount Rate Risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

Future Salary Escalation and Inflation Risk -

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often resulting higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management’s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

(ii) Valuation technique used to determine fair value

The following methods and assumptions were used to estimate the fair value of the level 2 financial instruments included in the above tables:

- the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

- the fair value of forward foreign exchange contracts and principal swap is determined using forward exchange rates at the balance sheet date.

- the fair value of foreign currency option contracts is determined using the Black Scholes valuation model.

Commentary

The carrying amounts of trade receivables, loans, trade payables, cash and bank balances, security deposits, other financial assets, borrowings, other financial liabilities, acceptances are considered to be the same as their fair values, due to their short-term nature. The fair value of non-current financial assets and non-current liabilities also approximates its carrying value.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

Note 44: Financial risk management

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows. As of March 31, 2018, cash and cash equivalents are held with major banks.

The amount disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Note 44: Financial risk management Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts, swaps and option contracts to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk, excluding receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. The demographics of the customer including the default risk of the industry and country in which the customer operates also has an influence on credit risk assessment.

Market Risk

a) Foreign currency risk

The Company operates internationally and the business is transacted in several currencies. Consequently the Company is exposed to foreign exchange risk through its sale and purchase of goods and services, mainly in the North America and Europe and borrowings in various foreign currencies. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are affected positively/adversely as the rupee appreciates /depreciates against these currencies. The Company evaluates exchange rate exposure arising from these transactions and enters into foreign exchange forward contracts, interest and principle swaps and options to mitigate the risk of changes in exchange rates on foreign currency exposures. The Company follows established risk management policies, to hedge forecasted cash flows denominated in foreign currency. The Company has designated certain derivative instruments as cash flow hedges to mitigate the foreign exchange exposure of forecasted highly probable cash flows.

(iii) Sensitivity

For the year ended March 31, 2018 and March 31, 2017, every percentage point appreciation/depreciation in the exchange rate between the Indian rupee and U.S. Dollar, would have affected the Company’s incremental operating margins by approximately '' 12.01 million and '' 14.14 million, respectively. The sensitivity for net exposure in EURO, JPY and in other currencies does not have material impact to Statement of Profit and Loss.

Sensitivity analysis is computed based on the changes in the receivables and payables in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long term debt obligations with floating interest rates.

c) Credit Risk Management

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/ investing activities, including deposits with banks. The Company has 9 to 10 major clients (previous year 8 to 10 clients) which represents 82.77% receivables as on March 31, 2018 (March 31, 2017 : 80% )and company is receiving payments from these parties within due dates. Hence, the company has no significant credit risk related to these parties.

Trade receivables

Customer credit risk is managed by the Company’s established policy, procedures and control relating to customer credit risk management. Further, Company’s customers includes marquee OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2018, receivable from Company’s top 5 customers accounted for approximately 74.26% (March 31, 2017: 74%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 12. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Note 45: Capital Management (a) Risk management

The Company’s capital comprises equity share capital, preference share capital, security premium, retained earnings and other equity attributable to shareholders.

“The Company objectives when managing capital are to:

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

- Maintain an optimal capital structure to reduce the cost of capital.”

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares .

The company monitors capital gearing ratio, which is net debt divided by total capital. Net debt comprises of long term and short term borrowings less cash and bank balances, equity includes equity share capital, preference share capital and reserves that are managed as capital. The gearing at the end of the reporting period was as follows.

No changes were made in the objectives, policies or processes for managing capital of the company during the year

(i) Loan covenants

The Company’s capital management aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There has been no breach in the financial covenants of any interest-bearing loans and borrowing during the current period and previous year.

Note 47: Related Party Disclosure. a. Related parties and their relationships

1 Subsidiaries Varroc Polymers Private Limited

Durovalves India Private Limited

Varroc Lighting Systems (India) Private Limited

Team Concepts Private Limited (w.e.f. November 30, 2017)

Varroc European Holding B.V. Netherlands Aries Mentor Holding B.V. Netherlands Varroc Corp Holding B.V. Netherlands Varroc Japan Co. Ltd Japan (w.e.f. March 27, 2017)

Industria Meccanica E Stampaggio S.p.A., Italy Esex Forging SRL, Italy (Liquidated on March 31, 2017)

TRI.O.M., S.p.A., Italy

Electromures SA, Romania

TRI.O.M. Vietnam Co. Ltd., Vietnam

Varroc Lighting Systems SRO, Czech Republic

Varroc Lighting Systems S.de.R.L. De. C.V., Mexico

Varroc Lighting Systems GMBH, Germany

Varroc Lighting Systems Inc. USA

Varroc Lighting Systems sp. Z o.o., Poland (w.e.f. December 20,2017 )

Varroc Lighting Systems SA, Morocco (w.e.f.September 19,2017)

Varroc Do Brasil Comercio, Importapao E Exportapao De Maquinas, Equipamento E Pepas Ltda. (w.e.f. December 20, 2017)

TRI.O.M. Mexico SA De. C. V.Mexico

2 Jointly Controlled Entities Varroc TYC Corporation British Virgin Islands

Varroc TYC Auto Lamps Co. Ltd., China (Subsidiary of Varroc TYC Corporation, BVI) Varroc TYC Auto Lamps Co. Ltd. CQ, China (Subsidiary of Varroc TYC Auto Lamps Co Ltd China )

Nuova CTS S.r.L., Italy

Varroc Elastomers Private Limited (until March 15, 2017)

3 Key Management Personnel Mr. Tarang Jain - Managing Director

Whole time Directors

Mr. Arjun Jain (until February 06, 2018)

Mr. Ashwani Maheshwari

Non-executive Directors Mr. Naresh Chandra

Independent Directors

Mr. Gautam Khandelwal (w.e.f. July 20, 2017)

Mr. Marc Szulewicz (w.e.f. July 20, 2017)

Mrs. Vijaya Sampath (w.e.f. July 20, 2017)

Mr. Vinish Kathuria (w.e.f. February 06, 2018)

4 Relatives of Key Management Mrs. Suman Jain Personnel with whom Mrs. Rochana Jain

transactions are taken place Mr. Arjun Jain (w.e.f. February 07, 2018)

Mr. Dhruv Jain

5 Enterprises Owned or controlled by/or Endurance Technologies Limited over which Parties described in para 3 Tarang Jain (HUF)

& 4 or their relatives exercise significant TJ Holdings Trust

influence where transactions have Naresh Chandra Holdings Trust

taken place [Other than those included Suman Jain Holdings Trust

above] Varroc Trading Private Limited (Until October 20,2016)

* All the amounts are inclusive of taxes, if any

** Amount below rounding off norm adopted by the Company.

# As gratuity and compensated absences are computed for all the employees in aggregate, the amount relating to the key managerial personnel, cannot be individually identified

##Refer note 14 for provision made for doubtful debts.

There is no provision for doubtful debts related to outstanding balances and no expense has been recognized during the current period in respect of bad or doubtful debts due from related parties.

During the year ended March 31, 2017 the company has issued 852,359 Series B CCPS and 1,168,377 Series C CCPS as bonus shares to key managerial personnel and their relative. Subsequently during the current year Series B CCPS have been converted into equity shares based on the terms of the agreement, refer note 17.

Note: Represent sale proceeds of sale of property with a book value of Rs, 82.69 million.

For above guarantees following charge is created in favour of

1) Stand by letter of credit from Citi Bank is secured by first pari-passu charge on movable fixed assets of Crankshaft unit both present and future located at M-191/3, MIDC, Waluj, Aurangabad - 431136.

2) Stand by letter of credit from IDBI Bank is secured by first pari-passu charge by way of hypothecation of stocks of raw materials, work in progress, finished goods, consumable, stores and spares, packing materials and receivables of the Company both present and future.

3) Stand by letter of credit from Axis Bank is secured by subservient charge on the entire current assets and movable fixed assets of the Company