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Notes to Accounts of Crompton Greaves Ltd.

Mar 31, 2016

1. Non-current assets held for sale and discontinued operations:

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit and loss.

Assets and liabilities classified as held for distribution are presented separately from other assets and liabilities in the balance sheet.

A disposal group qualifies as discontinued operation if it is a component of the Company that either has been disposed of, or is classified as held for sale, and:

- represents a separate major line of business or geographical area of operations.

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations. Or

- is a subsidiary acquired exclusively with a view to resale.

An entity shall not depreciate (or amortise) a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale.

3.21 Financial instruments: (i) Financial assets:

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortised cost.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in two broad categories:

- Financial assets at fair value

- Financial assets at amortised cost

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).

A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.

- Business model test: The objective of the Company''s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).

- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option.

- Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ''accounting mismatch'') that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

All other financial asset is measured at fair value through profit or loss.

All equity investments are measured at fair value in the balance sheet, with value changes recognised in the statement of profit and loss, except for those equity investments for which the entity has elected to present value changes in ''other comprehensive income''.

If an equity investment is not held for trading, an irrevocable election is made at initial recognition to measure it at fair value through other comprehensive income with only dividend income recognised in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:

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

- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either;

(a) the Company has transferred substantially all the risks and rewards of the asset, or

(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement. it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Investment in associates, joint venture and subsidiaries

The Company has accounted for its investment in subsidiaries and associates, joint venture at cost. Impairment of financial assets

The Company assesses impairment based on expected credit losses (ECL) model to the following:

- Financial assets measured at amortised cost;

- Financial assets measured at fair value through other comprehensive income (FVTOCI); Expected credit losses are measured through a loss allowance at an amount equal to:

- the 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

- full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

The Company follows ''simplified approach'' for recognition of impairment loss allowance on:

- Trade receivables or contract revenue receivables; and

- All lease receivables

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

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

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-months ECL.

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

(ii) Financial liabilities:

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition. and only if the criteria in Ind AS 109 are satisfied.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

(iii) Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously

(iv) Derivative financial instruments and hedge accounting:

The Company enters into derivative contracts to hedge foreign currency / price risk on unexecuted firm commitments and highly probable forecast transactions. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently premeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income and presented as a separate component of equity which is later reclassified to statement of profit and loss when the hedge item affects profit or loss.

2. Business combinations under common control:

Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.

Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method. Under pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies.

The financial information in the financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information is restated only from that date.

The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and presented separately from other capital reserves with disclosure of its nature and purpose in the notes.

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

Judgements

Service concession arrangements:

Management has assessed applicability of Appendix A of Ind AS 11: Service Concession Arrangements to power distribution arrangements entered into by the Company. In assessing the applicability, management has exercised significant judgment in relation to the underlying ownership of the assets, terms of the power distribution arrangements entered with the grantor, ability to determine prices, fair value of construction service, assessment of right to guaranteed cash etc. Based on detailed evaluation, management has determined that this arrangement meet the criteria for recognition as service concession arrangements.

Discontinued operations:

Consumer products segment

In pursuant to the demerger of the Consumer products business unit, the Board considered the consumer product business unit to meet the criteria to be classified as held for distribution at that date for the following reasons:

- The actions to complete the distribution were initiated and expected to be completed within one year from the date of commitment to demerger the business i.e.,19th February, 2015.

- Consumer products represents a separate major line of business of operations.

- The shareholders approved the distribution in August 2015.

- The Scheme of demerger was approved by the Honourable High court judicature at Bombay, 20th November, 2015 (the Appointed date).

Power distribution business

In Pursuant to the certain unresolved disputes arising out of the Distribution Franchisee Agreement (DFA) of the Company with Maharashtra State Electricity Distribution Company Limited (MSEDCL) at Jalgoan in Maharashtra, MSEDCL has exercised its step in rights and taken over the Distribution Franchisee in Jalgoan from the Company with effect from 12th August, 2015. The operations were terminated with immediate effect and the final claim settlement between the Company and MSEDCL is in progress. The Company have classified the Power distribution business as held for disposal from 12th August, 2015 for the following reasons:

- Power distribution business represents a separate major line of operations

- The operations were abandoned with immediate effect from 12th August, 2015 and hence the carrying amount will not be recovered principally through continuing use.

Lease of equipment not in legal form of lease

Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17: determining whether an Arrangement contains a Lease. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying assets, substance of the transaction including legally enforced arrangements and other significant terms and conditions of the arrangement to conclude whether the arrangements meet the criteria under Appendix C to Ind AS 17.

Estimates and assumptions

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

Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. 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.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements 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.

Development costs

The Company capitalises development costs for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management''s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

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 judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(b) Defined benefit plans:

Gratuity

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to 15 to 30 days'' salary for each completed year of service subject to a maximum of Rs, 0.10 crore. Vesting occurs upon completion of five continuous years of service in accordance with Indian law.

The Company makes annual contributions to the Crompton Greaves Limited Gratuity Trust, which is funded defined benefit plan for qualifying employees.

Post-retirement medical benefit

Post-retirement medical benefit includes hospitalization cover & benefits on Cessation of Employment for the Policy. This cover is applicable only to employee and spouse as per the limits specified for the last grade while in employment. This coverage does not form part of essential terms and condition of employment, and is a benefit extended by the company as a part of its social benefit policies.

The policies of Medical, Health and Hospitalization insurance are subject to change based on contemporary market trends and practices. The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans:

(iv) Key Management Personnel:

1 Gautam Thapar - Chairman and Promoter Director

2 Laurent Demortier - CEO & Managing Director (resigned w.e.f. 3rd February, 2016)

3 K. N. Neelkant - CEO & Managing Director (appointed w.e.f. 3rd February, 2016)

4 Madhav Acharya - Executive Director - Finance & CFO

5 Minal Bhosale - Company Secretary (resigned w.e.f. 31st May, 2015)

6 Manoj Koul - Company Secretary (appointed w.e.f. 3rd August, 2015)

(v) Other Related Parties in which directors are interested:

1 Ballarpur Industries Limited

2 Solaris ChemTech Industries Limited

3 BILT Graphic Paper Products Limited

4 Avantha Holdings Limited

5 Avantha Business Solutions Limited (formerly Salient Business Solutions Limited)

6 Avantha Realty Limited

7 Sabah Forest Industries Sdn. Bhd.

8 Malanpur Captive Power Limited

9 Corella Investments Limited

10 Lustre International Limited

11 Ambuja Cements Limited

12 Asahi India Glass Limited

13 Avantha Foundation

14 Thermax Limited

15 Infosys Limited

16 Varun Prakashan Private Limited

17 Korba West Power Company Limited

18 KEC International Limited

19 Jhabua Power Limited

20 Avantha Power & Infrastructure Limited

Consequent to the certain unresolved disputes arising out of the Distribution Franchisee Agreement (DFA) of the Company with Maharashtra State Electricity Distribution Company Limited (MSEDCL) at Jalgoan in Maharashtra, MSEDCL had exercised its step in rights and taken over the Distribution Franchisee in Jalgoan from the Company with effect from August 12, 2015. Accordingly, the Company has classified Power Distribution Segment as discontinued operations.

The Company and MSEDCL have raised demand on each other and the matter is under dispute. The Company and MSEDCL are in process of constituting the Permanent Dispute Resolution Body (PDRB). The financial impact of the dispute will be known after the final outcome from PDRB.

Consumer Products

On 19th February, 2015 the Company announced the decision of its Board for the vertical demerger of Consumer Products Business unit of CG into its wholly owned subsidiary, Crompton Greaves Consumer Electricals Limited (''CGCEL'') with effect from 1st October, 2015. The Business of Consumer Products consists of Fans, Appliances, Luminaires, Light Sources and Pumps. For the year ended 31st March, 2015, the Consumer Product segment was shown as discontinued operations.

The decision to demerge the Consumer Products business unit was done with the intent of creation of two industry leading independent entities and unlocking shareholder value. The demerger is expected to complete within 12 months from the date of classification as discontinued operations.

The Discontinued operations have been disclosed as ''Consumer Products'' segment separately.

Power Distribution

On 1st June 2011, the Company had entered into Power Distribution Franchise Agreement (DFA) with Maharashtra State Electricity Distribution Company Limited (''MSEDCL'') for distribution of power in Jalgaon region of Maharashtra, India.

As per the terms of the arrangements, the Company had obtained the right (''franchise'') to distribute the electricity for the period of 10 years to the public at large.

MSEDCL shall supply / sale electricity to the Company at rate prescribed under regulatory guidelines (MERC directives on load shedding). The Company shall distribute and supply the electricity at the tariff determined by the regulatory authorities.

The Company shall conduct normal maintenance activities of network and other assets to maintain uninterrupted service. The Company is a private operator and MSEDCL is a Government body. The Company undertakes obligation of public service granted by MSEDCL. Thus, the arrangement is a public-to-private service concession. The electricity distribution service is totally regulated by the MSEDCL or other Government regulatory authorities.

MSEDCL had given right to the Company to use its distribution assets which will always belong to MSEDCL. During the tenure of the arrangement, if the Company incurs any capital expenditure, the same shall vest with MSEDCL at the end of the contract. MSEDCL shall reimburse the Company for the capital expenditure incurred at the then value calculated based on pre-determined depreciation rate. Thus, MSEDCL controls significant residual interest in the concession assets. Accordingly, the Company had a contractual right to receive cash from MSEDCL for the capital expenditure incurred.

Therefore, the arrangement is a Service concession arrangements under Appendix A to Ind AS 11. The Company had a contractual right to receive the residual value of the capital expenditure done under the arrangement and accordingly, will recognise financial asset. Further, the Company had right to charge the consumers for the services and therefore, there was an intangible asset.

(c) Out of the above, the Company has paid Rs, 6.00 crore (Previous Year Rs, 4.78 crore) to Avantha Foundation towards CSR activities.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to the short-term maturities of these instruments.

2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

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

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

During the reporting period ending 31 st March, 2016 and 31 st March, 2015, there were no transfers between Level 1 and Level 2 fair value measurements.

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by the Managing Board.

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

The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

The Company is not exposed to significant interest rate risk as at the respective reporting dates.

Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in overseas and purchases from overseas suppliers in various foreign currencies.

Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as :

(i) Actual or expected significant adverse changes in business,

(ii) Actual or expected significant changes in the operating results of the counterparty,

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations,

(iv) Significant increases in credit risk on other financial instruments of the same counterparty,

(v) Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than 2 years past due. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

During the year the Company has recognised loss allowance of Rs,1359.14 crore under 12 months expected credit loss model. No significant changes in estimation techniques or assumptions were made during the reporting period.

Exemptions and exceptions availed

These financial statements, for the year ended 31st March, 2016, are the first, the Company has prepared in accordance with Ind AS. For the periods up to and including the year ended 31st March, 2015, the Company prepared its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with Paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the company has prepared its financial statements to comply with Ind AS for the year ending 31 st March, 2016, together with comparative date as at and for the year ended 31st March, 2015, as described in the summary of significant accounting policies. In preparing these financial statements, the company''s opening balance sheet was prepared as at 1st April, 2014, the company''s date of transition to Ind AS. This note explains the principal adjustments made by the company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April, 2014 and the financial statements as at and for the year ended 31st March, 2015.

Exemptions:

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

- Certain items of Land and buildings (other than investment properties) have been measured at fair value at the date of transition to Ind AS.

- Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has done the assessment of lease in contracts based on conditions in prevailing as at the date of transition.

- The Company has elected to apply previous GAAP carrying amount of its investment in subsidiaries, associates and Joint venture as deemed cost as on the date of transition to Ind AS.

- The Company has recognised financial assets and intangible assets as per Appendix A to Ind AS 11 on Service Concession Arrangements, based on the previous GAAP carrying amounts as at the date of transition.

Exceptions:

The following mandatory exceptions have been applied in accordance with Ind AS 101 in preparing the financial statements.

(a) Estimates

The estimates at 1st April, 2014 and at 31st March, 2015 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences if any, in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

- Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at the transition date and as of 31st March, 2015.

(b) Derecognition of financial assets and financial liabilities

The Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

(c) Classification and measurement of financial assets

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

xNotes to the reconciliation of equity as at 1st April, 2014 and 31st March, 2015 and total comprehensive income for the year ended 31st March, 2015

A. Fair Value as deemed cost - Property Plant and Equipment (PP&E)

The Company has elected the option of fair value as deemed cost for Land and Building as on the date of transition to Ind AS. This has resulted in increase ofRs, 1108.25 crore in the value of land and buildings with corresponding increase in retained earnings of Rs, 804.48 crore and deferred tax liability of Rs, 303.77 crore. Further, the company has also recognised the revision in useful life as on date of transition to Ind AS to retained earnings and deferred tax liability.

During the year ended 31st March, 2015, the Company has sold some of the land and building which was fair valued as on the transition date. Under Ind AS, such sale has resulted into reduction of profit on sale of land and building by Rs, 157.99 crore, (Rs, 47.63 crore and Rs, 110.36 crore has been reduced from other income and exceptional items respectively).

B. Arrangement containing the lease

The Company has entered into subcontracting arrangement with one of the vendor which contains the lease. The arrangements have been classified as finance lease based on the terms of the agreement. Leased assets ofRs, 14.39 crore, Accumulated depreciation ofRs, 4.80 crore and finance lease obligation of Rs, 13.63 crore have been recognised as on the date of transition to Ind AS.

During the year ended 31st March, 2015, the depreciation of Rs, 2.40 crore has charged on the leased assets, interest expense of Rs, 1.15 crore has been recognised on the finance lease obligations and subcontracting charges of Rs, 3.58 crore, to the extent of lease portion, recognised under Indian GAAP have been reversed.

C. Service concession arrangements

The Company has entered into Power Distribution Franchise Agreement (''DFA'') with Maharashtra State Electricity Distribution Company Ltd (''MSEDCL). The arrangement has been classified as service concession arrangement (SCA). On the transition date, the Company has reclassified the PP&E of Rs, 9.85 crore and capital work in progress ofRs, 19.57 crore at the existing carrying value as at the transition date to the financial asset of Rs, 5.32 crore and intangible asset ofRs, 24.10 crore.

In respect of capital expenditure incurred under SCA during the F.Y2014-15, the Company has derecognised the PP&E and recognised the financial assets and intangible assets in line with the accounting policy on SCA.

The depreciation of Rs, 2.09 crore on PP&E under Indian GAAP has been reversed as the financial assets and intangible assets are recognised under Ind AS. Further the amortisation of Rs, 3.93 crore on intangible assets have been provided and the financial assets are carried at amortised cost by accretion of interest income ofRs, 0.63 crore at effective interest rate during the year ended 31st March, 2015.

The SCA is considered as discontinued operation w.e.f 12th August, 2015 and accordingly, the profit or loss on discontinued operations have been presented separately (Refer Note 51 for further discussion on SCA).

D. Recognition of investment property

The investment properties are reclassified from PP&E and presented separately amounting to Rs, 5.64 crore (WDV as on 1-04-2014) as on date of transition to Ind AS by reclassifying from PP&E.

The depreciation ofRs, 0.08 crore have been provided for the year ended 31st March, 2015.

E. Loan considered as equity contribution

The Company had given loan to one of the erstwhile subsidiary in earlier years, having outstanding amount of Rs, 11.20 crore as on transition date. In 2008, the investment in subsidiary was sold to third party. As per the terms and conditions of the loan, the loan given was in the nature of equity contribution and hence under Ind AS, the same would have been accounted for as equity investment. As the original investment in subsidiary has been disposed of, the loan outstanding as on transition date has been adjusted in opening retained earnings.

F. Financial guarantee

The Company has issued the financial guarantee on behalf of its subsidiaries for the borrowings taken by them. As on date of transition to Ind AS, the Company has recognised financial guarantee obligation at fair value amounting to Rs, 98.57 crore (31st March, 2015: Rs, 81.55 crore) with corresponding recognition of financial guarantee receivable.

The guarantee fee income recognised under Indian GAAP has been reclassified as interest income on guarantee fee receivable and other income being amortisation of financial guarantee obligation. Thus, Rs, 8.29 crore has been reclassified from guarantee fee to interest income during the year ended 31st March, 2015.

G. Bills discounted with recourse

Under Indian GAAP, trade receivables derecognised by way of bills of exchange have been shown as contingent liability since there is recourse clause. Under Ind AS, the trade receivables have been restated with corresponding recognition of short term borrowings of Rs, 34.72 crore as on 31 st March, 2015.

H. Expected credit loss

Under Indian GAAP, the Company has created provision for impairment of trade receivables consist only in respect of specific amount for incurred loss. Under Ind AS, impairment allowance has been determined based on expected credit loss model (ECL). Due to this model, the Company impaired its trade receivables by Rs, 60.61 crore as on the transition date which has been recognised in retained earnings (net of deferred tax) of Rs, 40.00 crore. The impairment of Rs, 10.40 crore for the year ended 31 st March, 2015 has been recognised in the statement of profit and loss.

The interest income of Rs, 4.47 crore is accrued during the year ended 31st March, 2015 on trade receivables discounted to present value as on transition date on account of expected delay under ECL.

I. Revaluation surplus under Indian GAAP

The Company has elected cost model for its PP&E and thus, the revaluation surplus existing as on the transition date under Indian GAAP amounting to Rs, 13.62 crore has been derecognised in the retained earnings on the date of transition.

Accordingly, the transfer of proportionate share of revaluation surplus of Rs, 2.84 crore to profit & loss on sale of land under Indian GAAP have been reversed under Ind AS during the year ended 31st March, 2015.

J. Proposed dividend

Under Indian GAAP, proposed dividend including dividend distribution tax (DDT), are recognised as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the Company, usually when approved by shareholders in a general meeting, or paid.

Therefore, the dividend liability (proposed dividend) including dividend distribution tax liability amounting to Rs, 29.33 crore has been derecognised in the retained earnings as on the date of transition.

Proposed dividend including dividend distribution tax liability amounting to Rs, 29.33 crore which was derecognised as on the transition date, has been recognised in retained earnings during the year ended 31st March, 2015 as declared and paid.

K. Discontinued operations - Consumer products

The Company has classified its Consumer products segment as discontinued operations w.e.f 19th February, 2015. Under Indian GAAP, the statement of profit and loss includes the revenue, expense of discontinued operations with separate disclosure of profit and income tax on the statement of profit and loss.

Under Ind AS, the Company has excluded the revenue, expense of discontinued operations and presented profit and tax expenses related to discontinued operation as single line items.

Under Ind AS, assets, liabilities and other comprehensive income related to discontinued operations have been separately presented on the balance sheet (Refer Note 51).

L. Defined benefit obligation

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised in balance sheet through other comprehensive income. Thus, employee benefits expense is reduced by Rs, 9.67 crore and is recognised in other comprehensive income during the year ended 31st March, 2015.

M. Discontinued Operations - Power distribution

The Company has classified its Power distribution business as discontinued operations w.e.f 12th August, 2015.

Under Ind AS, the company has excluded the revenue, expense of discontinued operations and presented profit and tax expenses related to discontinued operation as single line items.

Under Ind AS, assets, liabilities and other comprehensive income related to discontinued operations have been separately presented on the balance sheet (Refer Note 51).

N. Cash discount

Under Indian GAAP, cash discount ofRs, 7.29 crore was recognised as part of other expenses which has been adjusted against the revenue under Ind AS during the year ended 31st March, 2015.

O. Excise duty

Excise duty of Rs, 293.43 crore on account of sale of goods have been included in revenue as it is on own account because it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not.

4. Standards issued but not yet effective

The standard issued, but not yet effective up to the date of issuance of the Company financial statements is disclosed below. The Company intends to adopt this standard when it becomes effective.

Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was issued in February 2015 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This standard will come into force from accounting period commencing on or after 1st April, 2018. The Company will adopt the new standard on the required effective date. During the current year, the Company performed a preliminary assessment of Ind AS 115, which is subject to changes arising from a more detailed ongoing analysis.

5. Figures for the previous year have been regrouped wherever necessary.


Mar 31, 2013

1. During the year, the Company has entered into a definite agreement dated 11 th January, 2013 for acquisition of Compact Fluorescent Lamps (CFL) business of Karma Industries located at Baddi, Himachal Pradesh.

(c) The Company makes contribution towards superannuation fund as a defined contribution''retirement benefit plan for qualifying employees. To fund the benefits, the Company is required to contribute a specified percentage of salary to the respective TrustSrwhich administer the retirement benefit schemes.

(d) The Company makes annual contributions to the Crompton Greaves Limited Gratuity Trust, which is funded defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Company''s Gratuity Scheme. Vesting occurs upon completion of five years of service.

(e) The Company provides post retirement medical benefits to qualifying employees.

(f) The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at 31st March, 2013. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

(g) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

(h) Expected rate of return on the plan assets is based on the average long-term rate of return expected on investments of the Fund during the estimated term of the obligations.

(i) The salary escalation rate is arrived after taking into consideration the seniority, the promotion and other relevant factors, such as, demand and supply in employment market.

Ill Segment Identification, Reportable Segment and definition of each Reportable Segment:

(a) Primary segment:

In the opinion of the management, the business segment comprises the following :

(i) Power Systems : Transformer, Switchgear, Turnkey Projects and Power SCADA (Supervisory control and data acquisition systems)

(ii) Consumer Products : Fans, Appliances, Luminaires, Light Sources and Pumps

(iii) Industrial Systems : Electric Motors, Alternators, Drives, Traction Electronics/and SCADA

(iv) Other : Power Distribution

(b) Primary / Secondary segment reporting format:

(d) Reportable segments:

Reportable segments have been identified as per the quantitative criteria specified in the Accounting Standard.

(e) Segment revenue and results:

The expenses and incomes which are not directly attributable to any business segment are shown as unallocable expenditure (net of unallocated income).

(f) Segment assets and liabilities:

Segment assets include all operating assets used by the business segment and mainly consist of fixed assets,

(g) Inter segment transfer:

2. (a) The Company has not entered into any finance lease as specified in Accounting Standard (AS) 19 Leases. The Company has, however taken various residential / commercial premises and plant and equipments under cancellable operating lease. These lease agreements are normally renewed on expiry, wherever required.

(b) There are no exceptional / restrictive covenants in the lease agreements.

3. Amounts shown as - 0.00 represent amounts below 150,000 (Rupees Fifty Thousand).

4. Figures for the previous year have been re-grouped / re-classified whenever necessary.


Mar 31, 2012

1. Depreciation

(a) owned assets:

(1) Revalued Assets

Depreciation is provided on straight line method on the values and at the rates specified in schedule Xiv to the companies act, 1956. the difference between depreciation provided on revalued amount and on historical cost is recouped out of revalution reserve.

(2) Assets carried at historical cost

Depreciation on the fixed assets carried at historical cost is provided at the rates and in the manner specified in schedule Xiv to the companies act, 1956, on written down value method other than on buildings and Plant and equipments, which are depreciated on a straight line method.

(b) Leased Assets:

(1) Leasehold land are amortised over the period of lease.

(2) Buildings constructed on leasehold land are depreciated at normal rate as prescribed in schedule Xiv to the companies act, 1956, where the lease period of land is beyond the life of the building.

(3) In other cases, buildings constructed on leasehold land are amortised over the lease period of the land.

2. Borrowing costs

(a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use or sale. a qualifying asset is an asset that necessarily requires a substantial period of time (generally over tweLVe months) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

3. Segment accounting

(a) Segment accounting policies segment accounting policies are in line with the accounting policies of the company. in addition, the following specific accounting policies have been followed for segment reporting:

(1) segment revenue includes Sales and other income directly identifable with / allocable to the segment including inter-segment revenue.

(2) expenses that are directly identifable with / allocable to segments are considered for determining the segment result. expenses which relate to the company as a whole and not allocable to segments are included under unallocable expenditure.

(3) income which relates to the company as a whole and not allocable to segments is included in unallocable income.

(4) segment result includes margins on inter-segment and Sales which are reduced in arriving at the profit before tax of the company.

(5) segment assets and liabilities include those directly identifable with the respective segments. unallocable assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any segment.

(b) inter-segment transfer pricing segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

4. Taxes on Income

(a) Tax on Income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the income tax act, 1961 and based on the expected outcome of assessments / appeals.

(b) deferred tax is recognised on timing differences between the accounted income and the taxable income for the year and quantifed using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.

(c) deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

5. provisions, Contingent liabilities, Contingent assets and Commitments

(a) provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if:

(1) the company has a present obligation as a result of a past event;

(2) a probable outflow of resources is expected to settle the obligation; and

(3) the amount of the obligation can be reliably estimated.

(b) Reimbursement by another party, expected in respect of expenditure required to settle a provision, is recognised when it is virtually certain that reimbursement will be received if, obligation is settled.

(c) contingent liability is disclosed in the case of:

(1) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

(2) a present obligation when no reliable estimate is possible;

(3) a possible obligation arising from past events, unless the probability of outflow of resources is remote.

(d) contingent assets are neither recognised nor disclosed.

(e) commitments include the amount of purchase order (net of advance) issued to parties for completion of asset.

(f) provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.

(b) disclosures as required by Accounting standard (As) 14 Accounting for Amalgamations:

scheme of amalgamation of cg capital and investments limited with the company

(1) in accordance with the scheme of amalgamation (the 'scheme') of the cg capital and investments limited (the 'cgcil') with the company, as sanctioned by the Honourable High court of Judicature at Bombay, vide their order dated 20th august, 2011, the undertaking of cgcil, being all its assets and properties, both movable and immovable, industrial and other licences, all rights and obligations under the contracts, trademarks, all other interests, rights and powers of every kind, etc., and all it's debts, liabilities including contingent liabilities, duties and obligations, has been transferred to and vested in the company retrospectively with effect from 1st april, 2010 (the 'appointed date'). the scheme has, accordingly, been given effect to in the Financial statements. the effective date of amalgamation is 20th september, 2011.

(2) cgcil was engaged in the business of investments activities.

(3) the amalgamation had been accounted for under the 'pooling of interest method' as prescribed by accounting standard (as) 14 accounting for amalgamations, specified by the companies (accounting standards) Rules, 2006. accordingly, the assets, liabilities and reserves of cgcil as at 31st March, 2010 have been taken over at their book values. (as stipulated in the said scheme, the reserves of the transferor company have been transferred to the respective reserves.)

(4) cgcil, being a wholly owned subsidiary of the company, the entire paid-up share capital had been cancelled and the company stands dissolved without winding-up.

Rs. crore

2011-12 2010-11

6. Contingent Liabilities And Commitments

i) Contingent liabilities: (to the extent not provided for)

(a) Claims against the company not acknowledged as debts 9.26 1.35

(b) Sales tax liability that may arise in respect of matters in appeal 8.11 5.45

(c) Excise duty/service tax liability that may arise in respect of matters in appeal 7.07 10.40

(d) Income tax liability that may arise in respect of matters in appeal 0.38 8.47

(e) Guarantees/securities given on behalf of subsidiary companies 175.30 123.70

(f) Bills discounted 87.17 100.87

ii) Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 38.79 28.50

7. The Company, during the year, has been awarded a contract as franchisee of Maharashtra State Electricity Distribution Company Limited (MSEDCL) for power distribution in Jalgaon Circle in Maharashtra for a period of 10 years and an agreement has since been executed between the Company and MSEDCL on 1st June, 2011.

8. Disclousre as Required by Accounting Standard (as) 15 Employee Benefits:

(a) Defined contribution plans [Refer policy Note 12(b)(i), supra]

Amount of Rs. 15.17 crore (previous year Rs. 15.32 crore) is recognised as an expense and included in Employee benefits [Refer Note 26, supra]

(c) The Company makes contribution towards provident fund and superannuation fund as a defined contribution retirement benefit plan for qualifying employees. To fund the benefits, the Company is required to contribute a specified percentage of salary to the respective Trusts, which administer the retirement benefit schemes.

(d) The Guidance issued by the Accounting Standard Board (ASB) on implementing the Accounting Standard states that the provident funds set up by employers, which require interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The Fund does not have any existing deflcit or interest shortfall. As per the Company's Actuary, any future obligation arising due to interest shortfall cannot be measured reliably. However, having regard to the assets of the Fund and return on the investments, the Company does not expect any deficiency in the foreseeable future.

(e) The Company makes annual contributions to the Crompton Greaves Limited Gratuity Trust, which is funded defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Company's Gratuity Scheme. Vesting occurs upon completion of five years of service.

(f) The Company provides post retirement medical benefits to qualifying employees.

(g) The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at 31st March, 2012. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

(h) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

(i) Expected rate of return on the plan assets is based on the average long-term rate of return expected on investments of the Fund during the estimated term of the obligations.

(j) The salary escalation rate is arrived after taking into consideration the seniority, the promotion and other relevant factors, such as, demand and supply in employment market.

III segment Identification, Reportable segment and defnition of each Reportable segment:

(a) Primary segment

In the opinion of the management, the business segment comprises the following :

(i) Power Systems : Transformer, Switchgear, Turnkey Projects, Power Distribution and Power SCADA (Supervisory control and data acquisition Systems) (ii) Consumer Products : Fans, Appliances, Luminaires, Light Sources and Pumps (iii) Industrial Systems : Electric Motors, Alternators, Drives, Traction Electronics and SCADA

(b) Primary / Secondary segment reporting format:

(i) The risk-return profile of the Company's business is determined predominantly by the nature of its Products and services. Accordingly, the business segment constitutes the primary segment for disclosure of segment information. (ii) In respect of secondary segment information, the management has identified its geographical segments as (a) Domestic and (b) Overseas. The secondary segment information has been disclosed accordingly.

(c) Segment identification:

Business segments have been identified on the basis of the nature of Products / services, the risk-return profile of individual businesses, the organizational structure and the internal reporting system of the Company.

(d) Reportable segments:

Reportable segments have been identified as per the quantitative criteria specified in the Accounting Standard.

(e) Segment revenue and results:

The expenses and incomes which are not directly attributable to any business segment are shown as unallocable expenditure (net of unallocated income).

(f) Segment assets and liabilities:

Segment assets include all operating assets used by the business segment and mainly consist of fixed assets, trade receivables and inventories. Segment liabilities primarily include trade payables and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets / liabilities.

(g) Inter segment transfer:

Inter segment prices are normally negotiated amongst segments with reference to the costs, market price and business risks. Profit or loss on inter segment transfers are eliminated at the Company level.

9. (a) The Company has not entered into any finance lease as specified in Accounting Standard (AS) 19 Leases. The Company has, however taken various residential / commercial premises and Plant and equipments under cancellable operating lease. These lease agreements are normally renewed on expiry, wherever required. (b) There are no exceptional/restrictive covenants in the lease agreements.

10. Amounts shown as 0.00 represents amount below Rs. 50,000 (Rupees fifty thousand).

11. During the year, the revised Schedule VI to the Companies Act, 1956 was notified by the Ministry of Corporate Affairs. The Company has reclassified the figures of the previous year to confirm to the current year's classification, and the adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financial statements.


Mar 31, 2010

1 The Company has, in its extra ordinary general meeting held on 24th February, 2010, increased its authorised share capital from Rs.125 crore to Rs. 260 crore comprising of 130,00,00,000 number of equity shares of Rs. 2 each and declared bonus shares in the ratio of three shares for every four shares held by utilising securities premium account.

2 The Company has, on 27th August, 2009, acquired balance 81,60,000 equity shares in Brook Crompton Greaves Limited (BCGL), for a consideration of Rs. 6.40 crore, making it to a wholly owned subsidiary of the Company.

3 The Board of Directors of the Company has approved the Scheme of Amalgamation of BCGL, with effect from 1 st April, 2009 at their meeting held on 28th January, 2010. Pending approval of Honourable High Court of Judicature of Bombay, no effect of the amalgamation has been given in the financial statements.

4 The Company has, during the year, divested its entire investment in Malanpur Captive Power Limited for consideration of Rs. 51.40 crore to Avantha Power & Infrastructure Limited, an associate of the Company. Profit on sale of above investment of Rs. 40.38 crore has been disclosed as an extraordinary item in the profit and loss account.

5 The Company has, during the year, entered into an arrangement for the acquisition of Power Technology Solutions Limited (PTS), based in United Kingdom (UK) at an approximate Enterprise Value of £30 million. PTS is a high voltage electrical engineering company which provides consultancy, technical and engineering support to Regional Electricity Companies (RECs).

6 Secured Loans

(a) Term loans from banks are secured by way of equitable mortgage of land and buildings and by way of hypothecation of specific movable properties at certain locations.

(b) Working Capital Demand Loans from banks are secured by hypothecation of stocks and book debts, present and future.

7 There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as at 31st March, 2010.

8 Other liabilities include Rs. 8.30 crore (Previous year Rs. 8.30 crore) received as advance against sale of immovable property of the Company. As per the agreements with the buyers, the Company is entitled to forfeit the said amounts, if the buyers do not comply with the conditions of sale within the stipulated time. Since, the buyers have failed to comply with the conditions and hence, the Company has forfeited these amounts received in accordance with the terms of the agreements. The buyers have filed suits in the Courts for recovery of the advances paid by them. The Company contends that as per the force majeure clause of the agreements, is not required to be refunded. Pending disposal of the cases by the Courts, the Company, as a measure of prudence, has not recognised the said amount in the profit and loss account.

9 Disclosures as required by Accounting Standard (AS) 15 Employee Benefits: (Contd.)

(d) The Company makes annual contributions to the Crompton Greaves Limited Gratuity Trust, which is funded defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Companys Gratuity Scheme. Vesting occurs upon completion of five years of service.

(e) The Company provides post retirement medical benefits to qualifying employees.

(f) The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at 31st March, 2010. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

(g) The salary escalation rate is arrived after taking into consideration seniority, promotion and other relevant factors such as demand and supply in employment market.

10 Disclosures as required by Accounting Standard (AS) 17 Segment Reporting (Contd.) Ill Segment Identification, Reportable Segment and definition of each Reportable Segment:

(a) Primary segment

In the opinion of the management, the business segment comprises the following :

(i) Power Systems : Transformer, Switchgear, Turnkey Projects

(ii) Consumer Products : Fans and Appliances, Luminaires, Light Sources and Pumps

(iii) Industrial Systems : Electric Motors, Alternators and Drives

(b) Primary / Secondary segment reporting format:

(i) The risk-return profile of the Companys business is determined predominantly by the nature of its products and services. Accordingly, the business segment constitutes the primary segment for disclosure of segment information.

(ii) In respect of secondary segment information, the management has identified its geographical segments as (a) Domestic and (b) Overseas. The secondary segment information has been disclosed accordingly.

(c) Segment identification:

Business segments have been identified on the basis of the nature of products / services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company.

(d) Reportable segments:

Reportable segments have been identified as per the quantitative criteria specified in the Accounting Standard.

(e) Segment revenue and results:

The expenses and incomes which are not directly attributable to any business segment are shown as unallocable expenditure (net of unallocable income).

(f) Segment assets and liabilities:

Segment assets include all operating assets used by the business segment and mainly consist of fixed assets, debtors and inventories. Segment liabilities primarily include creditors and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets / liabilities.

(g) Inter segment transfer:

Inter segment prices are normally negotiated amongst segments with reference to the costs, market price and business risks. Profit or loss on inter segment transfers are eliminated at the Company level.

11 Disclosures as required by Accounting Standard (AS) 18 Related Party Disclosures

i) List of related parties over which control exists:

Sr. Name of the Related Party Relationship

No.

1 CG Capital & Investments Limited Wholly owned Subsidiary

2 CG Energy Management Limited Wholly owned Subsidiary

3 CG PPI Adhesive Products Limited Subsidiary of CG Capital & Investments Limited

4 Brook Crompton Greaves Limited Wholly owned Subsidiary (w.e.f. 27th August, 2009)

5 Malanpur Captive Power Limited Subsidiary (upto 28th February, 2010) (Sold during the year - refer Note No. 4)

6 CG International B.V. Wholly owned Subsidiary

7 CG Holdings Belgium N.V. Wholly owned subsidiary of CG International B.V. (formerly Pauwels International N. V.)

8 CG Power Systems Belgium N.V. Subsidiary of CG Holdings Belgium N.V. (formerly Pauwels Trafo Belgium N. V.)

9 Pauwels Trafo Gent N.V. Subsidiary of CG Holdings Belgium N.V.

10 CG Power Systems Ireland Limited Wholly owned subsidiary of CG Power Systems Belgium N.V. (formerly Pauwels Trafo Ireland Limited)

11 CG Sales Networks France SA Subsidiary of CG Power Systems Belgium N.V. (formerly Pauwels France S.A)

12 CG Power Systems USA Inc. Wholly owned subsidiary of CG Power Systems Belgium N.V. (formerly Pauwels Transformers Inc.)

13 CG Sales Networks Americas Inc. Wholly owned subsidiary of CG Holdings Belgium N.V. (formerly Pauwels Americas Inc.)

14 CG Power Systems Canada Inc. Wholly owned subsidiary of CG Power Systems Belgium N.V. (formerly Pauwels Canada Inc.)

15 CG Service Systems Curacao N.V. Subsidiary of CG International B.V. (formerly Pauwels Trafo Service N. V.)

16 PT. CG Power Systems Indonesia Subsidiary of CG Power Systems Belgium N.V. (formerly PT. Pauwels Trafo Asia)

17 CG Holdings Hungary Kft. Subsidiary of CG Power Systems Belgium N.V. (formerly CG Hungary Kft.)

18 CG Electric Systems Hungary Zrt. Wholly owned subsidiary of CG Power Systems Belgium N.V. (formerly Ganz Transelektro Villamossagi Zrt.)

19 CG Power Holdings Ireland Limited Wholly owned subsidiary of CG International B.V. (formerly Microsol Holdings Limited)

20 Microsol Limited Wholly owned subsidiary of CG Power Holdings Ireland Limited

21 CG Automation Systems UK Limited Wholly owned subsidiary of CG Power Holdings Ireland Limited {formerly Microsol (UK) Limited}

22 Viserge Limited Subsidiary of CG Power Holdings Ireland Limited

23 CG Automation Systems USA Inc. Subsidiary of MSE Power Systems Inc. (formerly Microsol Inc.)

24 CG Service Systems France SAS Wholly owned subsidiary of CG International B.V. {formerly Societe Nouvelle de Maintenance de Transformateurs (Sonomatra)}

25 M.S.E. Power Systems Inc. Subsidiary of CG International B.V.

26 CG Holdings Germany GmbH Wholly owned subsidiary of CG International B.V. (formerly Crompton Greaves Germany GmbH)

During the year, Transverticum Kft., wholly owned subsidiary of CG Electric Systems Hungary Zrt. and M.S.E West LLC, wholly owned subsidiary of M.S.E Power Systems Inc. have been liquidated.

28 Disclosures as required by Accounting Standard (AS)18 Related Party Disclosures (Contd.)

ii) List of related parties with whom transactions were carried out during the year and description of relationship: Subsidiaries:

1 CG Capital & Investments Limited

2 CG Energy Management Limited

3 CG PPI Adhesive Products Limited

4 Malanpur Captive Power Limited (upto 28th February, 2010)

5 Brook Crompton Greaves Limited (w.e.f. 27th August, 2009)

6 CG International B.V.

7 PT. CG Power Systems Indonesia

8 CG Power Systems USA Inc.

9 CG Sales Networks Americas Inc.

10 CG Power Systems Belgium N.V.

11 CG Power Systems Canada Inc.

12 CG Holdings Belgium N.V.

13 CG Electric Systems Hungary Zrt.

14 CG Automation Systems UK Limited Associates:

1 CG Lucy Switchgear Limited

2 International Components India Limited

3 Brook Crompton Greaves Limited (upto 26th August, 2009)

4 Avantha Power & Infrastructure Limited (w.e.f. 24th November, 2009)

Key Management Personnel:

1 Gautam Thapar - Chairman and Promoter Director

2 Sudhir Trehan - Managing Director

Other Related Parties in which a director is interested:

1 Ballarpur Industries Limited

2 Solaris Chemtech Limited

3 BILT Graphic Paper Products Limited

4 Asia Aviation Limited

5 Avantha Holdings Limited (formerly NewQuest Corporation Limited)

6 Salient Business Solutions Limited

7 Avantha Technologies Limited

8 Avantha Reality Limited

9 Korba West Power Company Limited

10 Malanpur Captive Power Limited (w.e.f 1st March, 2010)

11 Corella Investments Limited

12 Lustre International Limited

13 Solaris Holdings Limited

14 Janpath Investments & Holdings Limited

15 KCT Chemicals & Electricals Limited

16 Sabah Forest Industries Sdn. Bhd.

29 (a) The Company has not entered into any finance / operating lease as specified in Accounting Standard (AS) 19 Leases. The Company has, however taken various residential / commercial premises and plant and equipments under cancellable operating lease. These lease agreements are normally renewed on expiry, wherever required. (b) There are no exceptional / restrictive covenants in the lease agreements.

32 As per the Accounting Standard (AS) 28 Impairment of Assets, the Company has reviewed potential generation of economic oenetits from tixed assets. According1/, impairment loss amounting to Rs. nil (Previous year Rs. 5.36 crore) provided in prior years have been reversed during trie year.

36 Figures for the previous year have been re-grouped / re-classified wherever necessary.



 
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