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Notes to Accounts of Elecon Engineering Company Ltd.

Mar 31, 2023

Estimation of fair value

As at March 31, 2023 and March 31, 2022 the fair values of the property are based on valuations performed by Registered Valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules 2017.

A valuation model used in determination of investment property fair values is in accordance with the recommended valuation techniques by the International Valuation Standards Committee.

The Company obtains independent valuations for its investment property at least annually. The best evidence of fair value is current prices in an active market for similar properties.

The valuation of investment property as at March 31, 2023 and March 31, 2022 is done based on market feedback on values of similar properties and hence considered under âââLevel 2ââ of fair value measurement.

16.2 Rights, preferences and restrictions attached to the equity shares

The Company has only one class of Equity Shares having a par value of INR 2 per share. Each shareholder is eligible for one vote per share held. 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, which is approved by Board of Directors. 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.

Notes:-

(a) * The Composite Scheme of Merger and Arrangement (âSchemeâ) consisting Demerger of Demerged Undertakings of Emtici Engineering Limited, Akaaish Mechatronics Limited, Wizard Fincap Limited, Speciality Wood Pack Private Limited, Prayas Engineering Limited, Elecon Information Technology Limited and Elecon Peripherals Limited (collectively referred to as âDemerged Companiesâ); and Merger of Devkishan Investments Private Limited and Bipra Investments and Trusts Private Limited (collectively referred to as âTransferor Companiesâ) into/with Aakaaish Investments Private Limited (collectively referred to as âResulting Companyâ or âTransferee Companyâ) is approved by the National Company Law Tribunal, Ahmedabad Bench vide by an order dated 2^nd November, 2022 (certified copy of said Order dated 4^thNovember, 2022) in accordance with Sections 230 to 232 and other applicable provisions of the Companies Act, 2013.

(b) # Devkishan Investments Private Limited and Bipra Investments and Trusts Private Limited are merged into Akaaish Investments Private Limited vide above said NCLT Order and hence as on 31^st December, 2022; there is no existance of these two merged companies.

17.3 Description of Reserves

General Reserve

General Reserve represents appropriation of retained earnings and are available for distribution to shareholders. Debenture Redemption Reserve

The Company had created Debenture Redemption Reserve out of the profits of the Company @ 25% of non-convertible redeemable debentures. On redemption of debentures during the previous year the said Reserve had been transferred to Retained Earnings.

Securities Premium

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

Capital Reserve

a) Capital reserve amounting to INR 4,258.41 lakhs is recorded in bargain purchase transaction of business combination in which the fair value of acquired net assets exceeded the purchase consideration. Capital reserve is not available for dividend distribution.

b) Capital Reserve amounting to INR 683.43 lakhs represent difference between book value of the net assets and reserves of Elecon Transmission International Limited (âETIL'') and investment in equity shares of Elecon Transmission International Limited.

Retained Earnings

Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.

Under the Micro, Small and Medium Enterprises Development Act, 2006 (âMSMED Actâ), certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the Company''s management, dues to MSME have been determined to the extent such parties have been identified on the basis of information collected till the reporting date and has been relied upon by the Statutory Auditors. The Management has not provided for interest due (if any) to these MSME parties basis, no claim being made for the same and management representation that the same would be waived. The disclosures as required by Section 22 of the MSMED Act are given above.

Refer 2.5 (k) of significant accounting policies.

Provision for contract liabilities - It includes provision for possible levy of liquidated damages and other estimated costs expected to be incurred by the Company on account of potential delays in meeting the contractual obligations of the Company with regard to agreed deliveries/commissioning.

Provision for warranties - A provision for warranties relates mainly to standard warranty on sale of the products manufactured by the Company. The provision is based on technical evaluation, historical warranty data and a weighting of all possible outcomes by their associated probabilities. The timing of the outflows is expected to be within a period of one year from the date of balance sheet.

Provision for onerous contracts - The Company has entered into various contracts primarily into material handling. Provision for onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. The movement of onerous contracts is recognised in cost of material consumed (Refer note 29).

38. Financial instruments risk management objectives and policies

The Company''s financial liabilities comprise mainly of borrowings, trade and other payables. The Company''s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The said committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. It also covers policies on specific risk areas such as currency risk, interest rate risk, credit risk and investment of surplus funds.

The following disclosures summarize the Company''s exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

(a) 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 risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables and loans. 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. The Company seeks to mitigate such risk by maintaining an adequate proportion of floating and fixed interest rate borrowings. As at March 31, 2023, approximately 100% of the Company''s borrowings are at fixed rate (March 31, 2022 : 99%). Summary of financial assets and financial liabilities has been provided below:

Equity price risk

The Company''s investment consists of investments in equity shares of publicly traded companies held for purposes other than trading as well as investments in quoted mutual funds. Since these investments are insignificant, the exposure to equity price changes is minimal.

(b) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk primarily trade receivables and other financial assets including deposits with banks. The Company''s exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties. Security deposits mainly includes rental deposits, earnest money deposits which are given as per contractual agreement. Unbilled revenue pertains to one government contract where there has been no delay or default in the past periods.

Other financial assets

This comprises mainly of deposits with banks, investments in mutual funds and other group receivables. Credit risk arising from these financial assets is limited and there is no collateral held against these because the counterparties are group companies, banks and recognised financial institutions. Banks and recognised financial institutions have high credit ratings assigned by the credit rating agencies.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy and procedures. Trade receivables are non-interest bearing and generally have a credit period not exceeding 90 days. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt and overdraft from both banks and financial institutions at an optimised cost.

(d) Commodity price risk

Commodity price risk arises due to fluctuation in prices of steel. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in the commodity prices and freight costs. The Company''s commodity risk is managed through well-established control processes.

(e) Capital management

For the purpose of the Company''s capital management, capital includes paid-up equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as level of dividends to equity share holders.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using Debt-Equity ratio, which is net debt divided by total equity. The Company''s policy is to keep the net debt to equity ratio below 2. The Company includes within net debt, interest bearing loans and borrowings, less cash and short-term deposits.

39. Fair Value Measurements

A. Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Note 1 Investments in associates and subsidiaries have been accounted at historical cost. Since these are scoped out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above. Investments in unquoted equity shares of entities other than subsidiaries and associates have been designated as FVTPL. However, investments in equity shares other than those of Eimco Elecon Electricals Limited (EEEL) on disposal will fetch only the principal amount invested and hence the company considers cost and fair value to be the same.

Fair value of financial assets and liabilities measured at amortised cost is not materially different from the amortised cost. Further, impact of time value of money is not significant for the financial classified as current. Accordingly, the fair value has not been disclosed separately.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

The carrying amounts of financial assets and liabilities other than those valued at Level 1 and Level 2 are considered to be the same as their fair values due to the current and short term nature of such balances and no material differences in the values. Fair value of borrowing is computed using the market comparison technique where information for the interest rate at which a borrowing can availed by company is used to arrive at fair value of borrowing. Further management measurement of fair value is not materially different from the amortised cost in these case significant unobservable inputs and inter relationship between significant unobservable inputs and fair value measurement is not applicable.

On account of materiality and in absence of sufficient information for determination of fair value of investments in equity shares of INR 0.15 lakhs (March 31, 2022: INR 0.15 lakhs), the Company has not fair valued the same.

ii) Levels 1, 2 and 3

Level 1 : It includes Investment in equity shares and mutual funds that have a quoted price and which are actively traded on the stock exchanges. It has been valued using the closing price as at the reporting period on the stock exchanges.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

C. Fair value through profit and loss - in unquoted equity shares:

Investments in equity shares of Eimco Elecon Electricals Limited (EEEL) have been designated as FVTPL. Based on EEEL''s future projections of 5 years, Discounted Cash Flow (DCF) valuation methodology has been used to determine the fair value as on March 31, 2023.

42. Contingent liabilities and commitments				('' in Lakhs)
				('' in Lakhs)
Particulars		March 31, 2023		March 31, 2022
(a)	Contingent liabilities: Claims against the Holding Company not acknowledged as debt *
(i)	Disputed with Excise and Service tax authority [FY 22-23 : Amount deposited : 342.22 Lakhs, Net 5,743.46 Lakhs] [FY 21-22 : Amount deposited : 250.88 Lakhs, Net 5,943.29 Lakhs]		6,085.67	6,194.17
(ii)	Disputed with Sales tax authority [FY 22-23 : Amount deposited : 9.75 Lakhs, Net 337.30 Lakhs] [FY 21-22 : Amount deposited : 9.75 Lakhs, Net 337.30 Lakhs]		347.05	347.05
(iii)	Disputed with GST tax Authority [FY 22-23 : Amount deposited : 0.48 Lakhs, Net 8.79 Lakhs] [FY 21-22 : Amount deposited : NIL , Net NIL]		9.27
(iv)	Disputed with Income tax authority [FY 22-23 : Amount deposited : 1,174.13 Lakhs, Net 2,875.47 Lakhs] [FY 21-22 : Amount deposited : 2,158.89 Lakhs, Net 3,733.79 Lakhs]		4,049.60	5,892.69
(v)	Sales bills discounted under letter of credit with Banks		244.39	165.28
(vi)	Arbitration Proceedings of K.B. Mehta against the Company under direction of the Honourable Gujarat High Court.		-	172.32
Guarantees
(i)	Corporate Guarantee provided to Swedish Pension Authority to the tune of SEK 30.00 Million (March 31, 2022: SEK 53.00 Million) as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, a step-down subsidiary of Radicon Transmission UK Limited, Uk, a Wholly-owned Subsidiary of the Company.		2,375.48	4,285.65
	* Future cash outflows are determinable only on receipt of judgements/ decisions pending with various forums/
	authorities. It is not practicable to disclose possibility of any reimbursement.
(b)	Commitments:
	Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance).		4,334.98	493.42

43. Segment reporting

The Company publishes these Standalone financial statements along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

d. Unsatisfied performance obligations

The Company applies the practical expedient in Paragraph 121 of Ind AS 115 and does not disclose information about remaining performance obligations where the Company has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the Company''s performance completed to date. Accordingly, the Company recognises revenue by an amount to which the Company has a right to invoice.

45. Lease Transactions

The Company has elected below practical expedients while applying Ind AS 116:

1. Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

2. Applied the exemption not to recognise right of use assets and lease liabilities with less than 12 months of lease term on the date of initial application.

3. Excluded the initial direct costs from the measurement of right of use asset at the date of initial application. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified assets for a period of time in exchange for consideration.

The Company has elected not to apply the requirements of Ind AS 116 to short term leases of all the assets that have a lease term of twelve months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight line basis over the lease term.

The incremental borrowing rate applied to lease liabilities as at 1^st April, 2022 is 14.50% and 8.00% for Lease Arrangeents of current year.

47. Other Disclosures with respect to Schedule III

1. The company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.

2. The company is not declared as wilful defaulter by any bank or financial Institution or other lender.

3. There is no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237of the Companies Act, 2013.

4. The company has no 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.

5. The company have not traded or invested in Crypto currency or Virtual Currency during the year.

7. The company does not have any charges or satisfaction which is yet to be registered with Registrars of Companies beyond the statutory period.

8. The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

9. The company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall:

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

48. The Standalone financial statements were authorised for issue by board of director at their meetings held on April 25, 2023

Mar 31, 2022

Estimation of fair value

As at 31^st March, 2022 and 31^st March, 2021 the fair values of the property are based on valuations performed by Registered Valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules 2017.

A valuation model used in determination of investment property fair values is in accordance with the recommended valuation techniques by the International Valuation Standards Committee.

The Company obtains independent valuations for its investment property at least annually. The best evidence of fair value is current prices in an active market for similar properties.

The valuation of investment property as at 31^st March, 2022 and 31^st March, 2021 is done based on market feedback on values of similar properties and hence considered under âââLevel 2ââ of fair value measurement.â

15.2 Rights, preferences and restrictions attached to the equity shares

The Company has only one class of Equity Shares having a par value of ''2 per share. Each shareholder is eligible for one vote per share held. 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, which is approved by Board of Directors.

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.

16.3 Description of Reserves Securities Premium

General Reserve represents appropriation of retained earnings and are available for distribution to shareholders.

Debenture Redemption Reserve

The Company has created Debenture Redemption Reserve out of the profits of the Company @ 25% of non-convertible redeemable debentures. On redemption of debentures during the year the said Reserve has been transferred to Retained Earnings.

Securities Premium

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

Capital Reserve

a) Capital reserve amounting to '' 4,258.41 lakhs is recorded in bargain purchase transaction of business combination in which the fair value of acquired net assets exceeded the purchase consideration. Capital reserve is not available for dividend distribution.

b) Capital Reserve amounting to '' 683.43 lakhs represent difference between book value of the net assets and reserves of Elecon Transmission International Limited (âETILâ) and investment in equity shares of Elecon Transmission International Limited.

Retained Earnings

Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.

17.1 Nature of Securities for non-convertible redeemable debentures

a) Non-convertible redeemable debentures are secured by way of :-

1. Exclusive charge over Madhubhan resort owned by Emtici Engineering Limited at Vallabh Vidyanagar, Gujarat.

2. Corporate Guarantee of Emtici Engineering Limited to the extent of '' 15,000 Lakhs.

3. Residual charge over current asset and property, plant and equipment of the Company.

4. First exclusive charge over Debt Service Reserve Account.

5. Post dated cheques for interest and principal payments from the Company and Undated cheques from Emtici Engineering Limited.

6. Exclusive charge over certain land parcels of the Company at Vallabh Vidyanagar.

17.2 Nature of Securities for Term Loans

a) Term Loans from financial institution - Loan from IFCI Limited is secured by way of:-

1. Exclusive charge by way of hypothecation on specific plant and machineries.

2. Exclusive mortgage of commercial property of Emtici Engineering Limited located at office No. 21, Yashwant Apartment, Pune -411004 and Corporate Guarantee of Emtici Engineering Limited to the extent of '' 9,500 Lakhs.

3. Pledge of shares of the Company owned by Emtici Engineering Limited of 0.7 times of outstanding loan amount.

4. Post dated cheques for interest and principal payments.

b) Term Loans from financial institution - Loan from Bajaj Finance Limited is secured by way of:-

1. Exclusive charge by way of hypothecation on specific plant and machineries.

2. Exclusive mortgage to be executed of commercial property of Emtici Engineering Limited (EEL), Related party located at office No. 21, Yashwant Apartment, Pune - 411004 and Corporate Guarantee of Emtici Engineering Limited to the extent of '' 3,500 Lakhs.

3. Pledge of 7500 Lakhs shares of the Company owned by EEL.

4. Debt Service Reserve Account of '' 80 Lakhs in form of Fixed Deposit.

c) Nature of Securities {Loans repayable on demand}

i) Working Capital Loans from banks granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Axis Bank, IDBI Bank & HDFC Bank (Including guarantees issued by them in favour of various clients of the Company) are secured by:-

a) First pari passu hypothecation charge over all the current assets of the Company, present and future.

b) Extension of first pari passu mortgage / hypothecation charge over property, plant and equipment (movable and immovable) present and future, excluding certain assets specifically / exclusively charged to other banks/ financial institutions.

c) Registered mortgage, on first pari passu basis, of land bearing Survey No.365 & 366 in the name of Prayas Engineering Limited (PEL), a related party.

d) Pledge of 200,000 shares of Eimco Elecon (India) Limited, an associate Company held by the Company.

e) Undertaking for non disposal of various land parcels of the Company as per loan sanction letter.

f) Corporate guarantees of PEL and EEL to the extent of '' 96,450 Lakhs respectively.

g) Rate of Interest for Loan from banks

Under the Micro, Small and Medium Enterprises Development Act, 2006 (âMSMED Actâ), which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. On the basis of the information and records available with the Companyâs management, dues to Micro, Small and Medium Enterprises (MSME) have been determined to the extent such parties have been identified on the basis of information collected till the reporting date and has been relied upon by the Statutory Auditors, basis the underlying information and records available as at the reporting date, identified MSME parties provided their written consent to the Company for waiver of interest due to them (if any) under the provisions of the MSMED Act. Consequently, the Management has not provided for interest due (if any) to these MSME parties. The disclosures as required by Section 22 of the MSMED Act are given above.

Provision for warranty - A provision for warranties relates mainly to standard warranty on sale of the products manufactured by the Company. The provision is based on technical evaluation, historical warranty data and a weighting of all possible outcomes by their associated probabilities. The timing of the outflows is expected to be within a period of one year from the date of balance sheet.

36. Financial instruments risk management objectives and policies

The Companyâs financial liabilities comprise mainly of borrowings, trade and other payables. The Companyâs financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

The following disclosures summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

(a) Market 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. The Company seeks to mitigate such risk by maintaining an adequate proportion of floating and fixed interest rate borrowings. As at 31^st March, 2022, approximately 99% of the Companyâs borrowings are at fixed rate (31^st March, 2021 : 85%). Summary of financial assets and financial liabilities has been provided below:

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in foreign currencies (primarily USD, EUR and GBP). Consequently, the Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. The Company manages its foreign currency risk by following policies approved by board as per established risk management policy. The carrying amounts of the Companyâs foreign currency denominated monetary items are as follows:

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP rates to the functional currency of respective entity, with all other variables held constant. The Companyâs exposure to foreign currency changes for all other currencies is not material. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities.

Equity price risk

The Companyâs investment consists of investments in equity shares of publicly traded companies held for purposes other than trading as well as investments in quoted mutual funds. Since these investments are insignificant, the exposure to equity price changes is minimal.

(b) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk primarily trade receivables and other financial assets including deposits with banks. The Companyâs exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties. Security deposits mainly includes rental deposits, earnest money deposits which are given as per contractual agreement. Unbilled revenue pertains to one government contract where there has been no delay or default in the past periods.

Other financial assets

Trade receivables

Customer credit risk is managed by each business unit subject to the Companyâs established policy and procedures. Trade receivables are non-interest bearing and generally have a credit period not exceeding 90 days. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the receivables are categorised into groups based on types of receivables. Each group is then assessed for impairment using the Expected Credit Loss (ECL) model as per the provisions of Ind AS 109 - Financial instruments. The calculation is based on provision matrix which considers actual historical data adjusted appropriately for the future expectations and probabilities. Receivables from group companies and secured receivables are excluded for the purposes of this analysis since no credit risk is perceived on them. Proportion of expected credit loss provided for across the ageing

The loss rates are based on actual credit loss experience over past years. These loss rates are then adjusted appropriately to reflect differences between current and historical economic conditions and the Companyâs view of economic conditions over the expected lives of the receivables.

The following significant change in the carrying amounts of trade receivables contributed to change in the impairment loss allowance during year ended 31^st March, 2022:

- decrease in credit impaired balances due to write-offs taken by the management during current year resulted in decrease in trade receivables and decrease in impairment loss allowance.

Movement in provision of expected credit loss has been provided in note no. 12.

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt and overdraft from both banks and financial institutions at an optimised cost.

(d) Commodity price risk

Commodity price risk arises due to fluctuation in prices of steel. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in the commodity prices and freight costs. The Companyâs commodity risk is managed through well-established control processes.

(e) Capital management

For the purpose of the Companyâs capital management, capital includes paid-up equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as level of dividends to equity share holders.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31^st March, 2022 and 31^st March, 2021.

In order to achieve this overall objective, the companyâs capital management amongst other things, aim to ensure that it meets financial covenants attached to the interest bearing loan and borrowing that define capital structure requirement. The management periodically reviews compliance with terms and condition of existing loan agreement to identify any non-adherence at each reporting date and obtain confirmation from the respective lenders on existing terms and conditions basis which borrowing are disclosed as current and non-current at each reporting date.Pursuant to such periodical review during the year,the management had identified non-adherence to certain debt covenants and had obtained confirmations from the concerned lender on continuance of existing terms and conditions. However at year end the Company was in compliance with the terms and conditions of existing loan agreements.

Note 1 - Investments in associates and subsidiaries have been accounted at historical cost. Since these are scoped out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above. Investments in unquoted equity shares of entities other than subsidiaries and associates have been designated as FVTPL. However, investments in equity shares other than those of Eimco Elecon Electricals Limited (EECL) on disposal will fetch only the principal amount invested and hence the company considers cost and fair value to be the same.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

Fair value of borrowing is computed using the market comparision technique where information for the interest rate at which a borrowing can availed by company is used to arrive at fair value of borrowing. Further management measurment of fair value is not materially diffrent from the amortised cost in these case significant unobservable inputs and inter relationship between significant unobservable inputs and fair value measurement is not applicable.

On account of materiality and in absence of sufficient information for determination of fair value of investments in equity shares of '' 0.15 lakhs (31^st March, 2021: '' 0.15 lakhs), the Company has not fair valued the same.

ii) Levels 1, 2 and 3

Level 1 : It includes Investment in equity shares and mutual funds that have a quoted price and which are actively traded on the stock exchanges. It is been valued using the closing price as at the reporting period on the stock exchanges.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

C. Fair value through profit and loss - in unquoted equity shares:

Investments in equity shares of Eimco Elecon Electricals Limited (EEEL) have been designated as FVTPL. Based on EEELâs future projections of 5 years, Discounted Cash Flow (DCF) valuation methodology has been used to determine the fair value as on 31^st March, 2022.

(b) Leave obligations - unfunded

The actuarial liability towards leave obligations as at 31^st March, 2022 is '' 166.66 Lakhs (31^st March, 2021 is '' 236.82 Lakhs). Current year charge is included in Employee benefit expense (Refer Note 30).

(c) Effect of Plan on Entityâs Future Cash Flows

(i) Funding arrangements and Funding Policy

The Company has purchase an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

(ii) Expected Contibution during the next annual reporting period

The Companyâs best estimate of contribution during the next year is '' 85.14 Lakhs (As at 31^st March, 2021 is '' 61.43 Lakhs).

40.	Contigent liabilities and commitments			('' in Lakhs)
	Particulars		March 31, 2022	March 31, 2021
	(a)	Contingent liabilities: Claims against the Company not acknowledged as debt*
	(i)	Disputed with Excise and Service tax authority	6,194.17	6,058.68
	(ii)	Disputed with Sales tax authority	347.05	286.25
	(iii)	Disputed with Income tax authority	5,892.69	5,291.22
	(iv)	Sales bills discounted under letter of credit with Banks	165.28	346.64
	(v)	Arbitration Proceedings against the Company under direction of the Honourable Gujarat High Court. There is also a counter claim by the Company of '' 200.00 Lakhs (March 31, 2021: '' 200 Lakhs).	172.32	154.19
	(vi)	In respect of a commercial civil suit filed by a customer against the Company with the Commercial Civil Court, Ahmedabad amounting to '' 4,933 lakhs (March 31, 2021: 4,933 Lakhs). Against this, the Company has filed a counter claim of '' 549 lakhs (March 31, 2021: 549 lakhs) against the Customer for the default made by the customer.		4,933.00
	Guarantees
	(i)	The Company has provided Corporate Guarantee to Bank of Baroda, London to the tune of GBP 0 (March 31, 2021: GBP 6,000,000) as a security for repayment of Financial facility availed by Radicon Transmission UK Limited, United Kingdom, a subsidiary of the Company. During the year, company has repaid the financial facility and consequently the Corporate Guarantee given as security has been withdrawn.		6,057.05
	(ii)	The Company has provided Corporate Guarantee to Bank of Baroda, London to the tune of GBP 0 and US$ 0 (March 31, 2021: GBP 8,299,000 and US$ 22,098,000) as a security for repayment of Financial facility availed by Radicon Transmission UK Limited, UK, a subsidiary of the Company. During the year, company has repaid the financial facility and consequently the Corporate Guarantee given as security has been withdrawn.		24,620.98
	(iii)	Corporate Guarantee provided to Swedish Pension Authority to the tune of SEK 53.00 Million (March 31, 2021: SEK 53.00 Million) as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, a step-down subsidiary of Radicon Transmission UK Limited, Uk, a Wholly-owned Subsidiary of the Company.	4,285.65	4,442.82
		* Future cash outflows are determinable only on receipt of judgements/ decisions pending with		various forums/
		authorities. It is not practicable to disclose possibility of any reimbursement.
(b)	Commitments:
	(i)	Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance)	493.42	340.37
	(ii)	Liability for Export Obligation under Advance Licence	-	135.49

41. Segment reporting

The Company publishes this financial statement along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

42. Subsequent Event

A fire incidence took place at one of the machines situated at one of the factory sheds of the company located at its registered office & works located at Anand-Sojitra Road, Vallabh Vidyanagar, Gujarat - 388120 on 14^th April 2022. Loss due to the said fire is estimated approximately of '' 300 Lakhs. The company has adequate insurance coverage and the insurance claim is under process.

d. Unsatisfied performance obligations

The Company applies the practical expedient in Paragraph 121 of Ind AS 115 and does not disclose information about remaining performance obligations where the Company has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the Companyâs performance completed to date. Accordingly, the Company recognises revenue by an amount to which the Company has a right to invoice.

44. Lease Transactions

The Company has elected below practical expedients while applying Ind AS 116:

1. Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

2. Applied the exemption not to recognise right of use assets and lease liabilities with less than 12 months of lease term on the date of initial application.

3. Excluded the initial direct costs from the measurement of right of use asset at the date of initial application.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified assets for a period of time in exchange for consideration.

The incremental borrowing rate applied to lease liabilities as at 1^st April, 2021 is 14.50%.

46. Other Amendments with respect to Schedule III

1. The company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.

2. The company is not declared as wilful defaulter by any bank or financial Institution or other lender.

3. There is no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237of the Companies Act, 2013.

5. The company have not traded or invested in Crypto currency or Virtual Currency during the year.

6. The company does not have any transactions with companies struck off.

7. The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

8. The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

47 The Standalone financial statements were authorised for issue by board of director at their meetings held on 3^rd May, 2022.

Mar 31, 2018

1. Reporting entity

Elecon Engineering Company Limited (âthe Companyâ) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its equity shares are listed on the Bombay Stock Exchange (âBSEâ) and National Stock Exchange (âNSEâ) in India. The registered office of the Company is located at Anand-Sojitra Road, Vallabh Vidyanager, Gujarat.

The Company is primarily involved in the manufacturing and executing projects on material handling equipment and manufacturing of transmission equipment (see Note 42).

2. Basis of preparation

2.1 Statement of compliance

These standalone financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.

The standalone financial statements were authorised for issue by the Companyâs Board of Directors on May 4, 2018. Details of the Companyâs accounting policies are included in Note 2.3.

2.2 Basis of measurement

The standalone financial statements have been prepared on the historical cost basis except for the following items:

2.3 Use of estimates and judgments

In preparing these standalone financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgments

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:

- Note 6 - identification of whether the Company has significant influence over an investee where the shareholding is below 20% of the issued share capital.

- Note 4 - identification of the land &/or building is an investment property.

- Note 36 - determining the amount of expected credit loss on financial assets (including trade receivables)

- Note 45 - lease classification; and

- Note 42 - identification of reportable operating segments Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31, 2018 is included in the following notes:

- Note 3-5 - estimate of useful life used for the purposes of depreciation and amortisation on property plant and equipment, investment properties and intangible assets.

- Note 35 - recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;

- Note 39 - measurement of defined benefit obligations: key actuarial assumptions;

- Notes 18, 23 and 40 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 36 - impairment of financial assets;

- Note 24 and 43.4 - Revenue recognition based on percentage of completion and provision for onerous contracts

2.4 Measurement of fair values

Some of the Companyâs accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. This includes a financial reporting team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the chief financial officer.

The financial reporting team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as pricing services, is used to measure fair values, then the financial reporting team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 4 - investment property;

- Note 36 - financial instruments.

3.1 Rights, preferences and restrictions attached to the equity shares

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.

4.1 Description of Reserves Securities Premium

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

Capital Reserve

Capital Reserve represents difference between fair value of the net assets of Elecon EPC Projects Limited and consideration issued.

Share Suspense Account

Share Suspense Account represents shares to be issued for merger of Elecon EPC Projects Limited.

(a) Nature of Securities For Term Loans & Corporate Loans

i) Term Loans from financial institution - Loan from IFCI Limited is secured by way of:-

1. Exclusive charge by way of hypothecation on specific plant & machineries.

2. Exclusive charge over commercial property of Emtici Engineering Limited at Pune, Maharashtra & Corporate Guarantee of Emtici Engineering Limited to the tune of Value of Property.

3. Exclusive charge by way of pledge of shares of Company owned by Emtici Engineering Limited of 0.7 times of loan amount

4. Post dated cheques for interest & principal payments.

The rate of interest is 11.45% p.a.

ii) Term Loans from financial institution - Loan from Aditya Birla Finance Limited is secured by exclusive charge by way of:

1. Exclusive charge by way of registered Mortgage on Commercial Property at Bangalore of the Company,

2. Exclusive charge by way of registered Mortgage on Commercial Property at Rajkot of the Company,

3. Exclusive charge by way of hypothecation on specific list of plant & machineries of the Company,

4. Exclusive charge by way of Pledge of shares of Company owned by Emtici Engineering Limited,

5. Corporate guarantee of Emtici Engineering Limited,

6. Debt Service Reserve Account equivalent of 2 immediate installment plus interest.

The rate of Interest is 11.50%.

iii) Term Loans from financial institution - Loan from Tata Capital Financial Services Limited is secured by way of: Exclusive charge by way of pledge of shares of Company owned by Prayas Engineering Limited.

The rate of Interest is 10.70%.

iv) Term Loans granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), and IDBI Bank are secured by:-

1) First Pari passu charge with all corporate loan lenders, over property, plant and equipment of the Company (movable and immovable) present and future, but excluding assets specifically charged to other Term Lenders.

2) Second pari passu hypothecation charge over the current assets of the Company, present and future.

3) Corporate guarantee of Prayas Engineering Limited and Emtici Engineering Limited.

4) Undertaking for non disposal of various land parcels as per loan sanction letter.

v) Loan from bank - Loan from HDFC Bank Limited is secured by way of:-1. Exclusive charge by way of Hypothecation on specific vehicles. The rate of Interest is 11.86% p.a.

* excluding accrued interest and amortised cost. Including current maturity of non-current borrowings.

The Management periodically reviews compliance with terms and conditions of the loan agreements to identify any non-adherence. Basis the aforesaid compliance review during the year, the Company agreed to accelerate repayment to a lender as per renegotiated terms.

(c) Nature of Securities {(a) Loans repayable on demand}

i) Working Capital Loans from banks granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, HDFC Bank, IDBI Bank, Axis Bank & IndusInd Bank (Including guarantees issued by them in favour of various clients of the Company) are secured by:-

a) First pari passu hypothecation charge over all the current assets of the Company, present & future.

b) Extension of first pari passu mortgage / hypothecation charge over property, plant and equipment (movable & immovable) present & future, excluding certain assets specifically / exclusively charged to other banks/ financial institutions.

c) Registered mortgage, on first pari passu basis, of land bearing Survey No.365 & 366 in the name of Prayas Engineering Limited.

d) Pledge of 100,000 shares of Eimco Elecon (India) Limited owned by the Company.

e) Undertaking for non disposal of various land parcels as per loan sanction letter.

f) Corporate guarantees of Prayas Engineering Limited and Emtici Engineering Limited.

(d) Nature of Securities {(a) Loans repayable on demand}

i) Working Capital Loans from Financial Institution granted by Bajaj Finance Limited is secured by:-

1. Exclusive charge by way of Pledge of shares of a company owned by K. B. Investments Private Limited.

The rate of interest is 10.75%.

Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management of the Company, dues to Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management till date and relied upon by the auditors. The disclosures as required by Section 22 of the MSMED Act are given above.

Provision for warranty - A provision for warranties relates mainly to standard warranty on sale of the products manufactured by the company. The provision is based on technical evaluation, historical warranty data and a weighting of all possible outcomes by their associated probabilities.

Provision for onerous contracts - The Company has entered into various contracts primarily into material handling. It is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

The Government of India introduced the Goods and Services Tax (GST) with effect from July 1, 2017, consequently revenue from operations for the period from July 1, 2018 to March 31, 2018 is net of GST. However revenue for quarter ended June 30, 2017 included in the figures presented for the year ended March 31, 2018 is inclusive of excise duty.

5. Corporate social responsibility expenditure

As per Section 135 of the Companies Act, 2013, the Company was required to spend INR 84.03 Lakhs (2016-17: INR 88.62 lakhs), however, the Company has spent INR 63.00 Lakhs (2016-17: INR 90.94 lakhs) during the current financial year. The Company has spent following amounts during the year :

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

During the year ended March 31, 2018 and March 31, 2017, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to taxation authority on behalf of the shareholders. Hence dividend distribution tax paid is charged to equity.

6. Financial instruments risk management objectives and policies

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The said Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee/Board of Director has additional oversight in the area of financial risks and controls. It also covers policies on specific risk areas such as currency risk, interest rate risk, credit risk and investment of surplus funds.

(a) Market risk

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. The Company seeks to mitigate such risk by maintaining an adequate proportion of floating and fixed interest rate borrowings. As at March 31, 2018, approximately 25% of the Companyâs borrowings are at fixed rate (March 31, 2017 : 36%). Summary of financial assets and financial liabilities has been provided below:

Interest rate sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates. The following table demonstrates the sensitivity of floating rate financial instruments to a reasonably possible change in interest rates. The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in foreign currencies (primarily USD, EUR and GBP). Consenquently, the Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. The Company manages its foreign currency risk by following policies approved by board as per established risk management policy. The carrying amounts of the Companyâs foreign currency denominated monetary items are as follows:

The Company does not have significant exposure to foreign currency risk. Accordingly, the management does not hedge any foreign currency receipts or payments.

The following significant exchange rates have been applied during the year.

Foreign currency sensitivity

Equity price risk

(b) Credit risk

Other financial assets

Trade receivables

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the receivables are categorised into groups based on types of receivables. Each group is then assessed for impairment using the Expected Credit Loss (ECL) model as per the provisions of Ind AS 109 -Financial instruments. The calculation is based provision matrix which considers actual historical data adjusted appropriately for the future expectations and probabilities. Receivables from group companies and secured receivables are excluded for the purposes of this analysis since no credit risk is perceived on them. Proportion of expected credit loss provided for across the ageing buckets is summarised below:

Movement in provision of expected credit loss has been provided in note no. 12.

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt and overdraft from both banks and financial institutions at an optimised cost.

The table below analysis non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed under the ageing buckets are the contractual undiscounted cash flows and includes contractual interest payments.

Despite reduction in profitability and operating cash flows, management is confident of meeting its short term liabilities as and when they become due. Further management is also in process of discussing with several financial institution on funding requirments of the Company.

(d) Commodity price risk

Commodity price risk arises due to fluctuation in prices of steel. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in the commodity prices and freight costs. The Companyâs commodity risk is managed through well-established control processes.

(e) Capital management

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using Debt-Equity ratio, which is net debt divided by total equity. The Companyâs policy is to keep the net debt to equity ratio below 2. The Company includes within net debt, interest bearing loans and borrowings, less cash and short-term deposits.

Note 1 Investments in associate, joint venture and subsidiaries have been accounted at historical cost. Since these are scoped out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above. Investments in unquoted equity shares of enitities other than subsidiaries, associates and joint ventures have been designated as FVTPL. However, investments in equity shares other than those of Eimco Elecon Electricals Limited (EECL) are not considered material and hence have not been fair valued.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

On account of materiality and in absence of sufficient information for determination of fair value of investments in equity shares of INR 0.17 lakhs (March 31, 2017: 0.17 lakhs), the Company has not fair valued the same.

ii) Levels 1, 2 and 3

Level 1 : It includes Investment in equity shares and mutual fund that have a quoted price and which are actively traded on the stock exchanges. It is been valued using the closing price as at the reporting period on the stock exchanges.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

C. Fair value through profit and loss - in unquoted equity shares:

Investments in equity shares of Eimco Elecon Electricals Limited (EECL) have been designated as FVTPL. Based on EEECLâs future projections of 5 years, Discounted Cash Flow (DCF) valuation methodology has been used to determine the fair value as on March 31, 2018.

Significant unobservable inputs

The free cash flows have been discounted using weighted average cost of capital (WACC) and cost of equity which is based on the capital asset pricing model. The model considered data from comarable companies to obtain the dicounted free cash flows based on latest available data prior to date of valuation. These assumptions have been adjusted appropriately at each reporting date. Key assumptions have been summarised below:

i) Transfers between Levels 1 and 2

There have been no transfers between Level 1 and Level 2 during the reporting periods.

ii) Level 3 fair values

Movements in the values of unquoted equity instruments for the period ended March 31, 2018 and March 31, 2017 is as below:

Transfer out of Level 3

There were no movement in level 3 in either directions during March 2018 and March 17.

7. Related party disclosure

As per the Ind AS - 24 Related Party Disclosures, the related parties of the Company are as follows :

A) Name of the related parties and nature of relationships :

a) Wholly Owned Subsidiary Companies

(i) Elecon Transmission International Limited, Mauritius

(ii) Elecon Singapore Pte. Limited, Singapore

(iii) Elecon Middle East FZE, Middle East

b) Wholly Owned Step down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Radicon Drive Systems, Inc., USA (formerly known as Elecon USA Transmission Limited, USA) (wef September 27, 2016)

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) OY Benzlers AB, Finland

(ix) Benzlers Italia s.r.l.

c) Associates

(i) Eimco Elecon (India) Limited

(ii) Elecon Australia Pty. Limited

(iii) Elecon Africa Pty. Limited

(iv) Elecon Engineering (Suzhou) Co. Limited, China

d) Key managerial personnel

(i) Mr. Prayasvin B. Patel - Chariman and Managing Director

(ii) Mr. Prashant C. Amin - Executive Director

(iii) Mr. Rajat Jain (upto December 31, 2017) - Chief Financial Officer

(iv) Mr. Pradip M. Patel - Director

(v) Mr. Jal Patel - Independent Director

(vi) Mr. Chirayu R. Amin - Independent Director

(vii) Mr. Jai S. Diwanji - Independent Director

(viii) Dr. Sonal V. Ambani - Independent Director

e) Enterprises over which (d) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investment Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Tech Elecon Private Limited

(vi) Emtici Engineering Limited

(vii) Prayas Engineering Limited

(viii) Specialty Wood Pack Private Limited

(ix) Power Build Private Limited

(x) Elecon Hydraulics Private Limited

(xi) Akaaish Mechatronics Limited

(xii) Madhubhan Prayas Resorts Limited

(xiii) Wizard Fincap Limited

(xiv) Eimco Elecon Electricals Limited

(xv) Elecon Peripherals Limited

(xvi) Packme Industries Private Limited

(xvii) Darshan Chemicals

(xviii) WRC Engineering Company Private Limited

(xix) Radicon Transmission FZE

(xx) Radicon Transmission (Thailand) Limited

(xxi) Radicon Transmission (Australia) Pty Limited

(xxii) Vijay M. Mistry Construction Private Limited

f) Other related party

Post employment benefit plan

(i) Elecon Engineering Company Limited Employees Group Gratuity Fund

(ii) Elecon Engineering Company Limited Employees Superannuation scheme

B) Terms and conditions of transactions with related parties

1) Transaction entered into with related party are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances other than loan given and taken, at the year-end are unsecured and interest free and settlement occurs in cash other than for advance.

2) Loans in USD and GBP given to the related party carries interest rate at 4.05% to 5.17% (March 31, 2017 : 4.62%)

Key Managerial Personnel who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognised as per Ind AS 19 - Employee Benefits in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.

8. Disclosure pursuant to employee benefits

A. Defined contribution plans:

Amount of INR 330.79 lakhs (March 31, 2017: INR 386.91 Lakhs) is recognised as expenses and included in Note No. 29 âEmployee benefits expenseâ

(b) Leave obligations - unfunded

The acturial Liability towards leave obligations as at March 31, 2018 is INR 529.55 Lakhs (March 31, 2017 is INR 621.15 Lakhs). Current year charge is included in Employee benefit expense (refer note 29).

9. Disclosure on Specified Bank Notes

During the previous year, the Company had disclosed specified bank notes or other denomination notes as defined in the MCA Notification GSR 308 (E) dated March 30, 2017 on the details of Specified bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 as follows :

* For the purpose of this clause, the term âSpecified Bank Notesâ 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 November 8, 2016.

The aforesaid disclosures regarding details of specified bank notes held and transacted during November 8, 2016 to December 30, 2016 has not been made for the financial year 2017-18 since the requirement does not pertain to financial year ended March 31, 2018.

10. Segment reporting Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Companyâs other components, and for which discrete financial information is available. All operating segmentsâ operating results are reviewed regularly by the Companyâs Chairman and Managing Director (CMD) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Companyâs strategic business units. These business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the business units, the Companyâs Chairman & Managing Director reviews internal management reports periodically. The CMD is designated as a Chief Operating Decision Maker (CODM).

Information about reportable segments

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the CODM. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

11. Lease Transactions

The operating lease arrangements are cancellable subject to the stipulated notice period which generally does not exceed 12 months. Thus, management is of the view that there is no right to receive or obligation to pay the agreed lease rentals in case of termination. Thus, the disclosure of minimum lease rentals payable or receivable has not been provided.

12. Disclosure as per Section 186 of the Companies Act, 2013:

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

(i) Details of Investments made are given in Note 6.

(ii) Details of loans and guarantees given by the Company are as follows:

13. Impact of merger of Elecon EPC Projects Limited with the Company.

During the previous year Elecon EPC Projects Limited (Elecon EPC), a subsidiary of the company was merged with the company with an apointed date of March 30, 2015 vide the scheme of amalgamation approved by the Honourble Hight Court of Gujarat on October 19, 2016. As provided the scheme, the effect of the merger has been incorporated in the financial statements from the appointed date wherein the assets and liabilities of Elecon EPC have been accounted at their respective fair values on the the appointed date. Difference between fair value of net assets and equity share capital credited and cancellation of intercompany balances (including investments) has been accounted as a capital reserve.This is different from the accounting provided in Appendix C to Ind AS 103 on Business combinations of entities under common control

On account of the merger being accounted from the appointed date of March 20, 2015, the equity reported under the Previous Indian GAAP had been increased by INR 4,444.91 lakhs and INR 2,968.11 lakhs on April 1, 2015 and March 31, 2016 respectively. The difference between the two has reduced the comprehensive income for 2015-16 by INR 1,487.49 lakhs. Summary of relevant quantitative information as at the appointed date has been provided below:

14. Managerial remuneration

During the year, the Company filed an application before the Central Government for approval of remuneration to be paid for the period July 1, 2017 to March 31, 2018, which is still awaited by the Company. For the year ended March 31, 2018, the Company has reported inadequate profits as per these standalone financial statements. Accordingly, eligible remuneration was required to be recomputed as per Schedule V of the Companies Act, 2013 (âthe Actâ) which resulted in excess remuneration paid / accrued to one managerial person of the Company. Total remuneration paid / accrued by the Company was INR 231.63 Lakhs against eligible remuneration of INR 186.63 Lakhs as per Schedule V of the Act. Pending necessary approvals from the Central Government, as a matter of abundant precaution, the Company has recovered excess remuneration amounting to INR 45.00 Lakhs from the concerned managerial person.

15. The Companyâs wholetime Company Secretary resigned during the year and the Company is in process of appointing another wholetime Company Secretary within the time limit prescribed as per provisions of the Companies Act, 2013. Accordingly, these standalone financial statements are not signed by wholetime Company Secretary of the Company.

16. The Standalone financial statements are approved for issue by the Audit Committee and Board of Directors held on May 4, 2018.

Mar 31, 2017

Notes:

The Company has opted to fair value Land, Building and Plant & Machinery on the date of transition to Ind AS and consider the same as deemed cost under Ind AS. Carrying values of other items of property, plant and equipment are in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment. Refer Note 43.

As at the date of revaluation April 1,2015, the properties'' fair values are based on valuations performed by an accredited independent valuer who has relevant valuation experience for similar properties in India. The market value of the freehold interest in the property in its current physical condition is the basis of valuation. Valuation has been made on the assumption that the asset or liability is sold in the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to alter the cash flow from the property.

The title deeds of immovable properties as disclosed in Note 3 and Note 4 to the standalone Ind AS financial statements, are held in the name of the Company, except in respect for two land parcels for which, the Company is in process of registering the title deeds in its name (gross block: INR 2,440.92 lakhs included in Land)

Refer to note 17 for information on property, plant and equipment pledged as security by the Company.

For capital commitments, refer note 40 (b).

* On the transition date, the Company has elected to use previous GAAP carrying values of the investment properties as the deemed cost. Since deemed cost is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortization, the net carrying value as at the transition date i.e. April 1, 2015 has been disclosed as the cost under Ind AS.

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

As at March 31, 2017, March 31, 2016 and April 1, 2015, the fair values of the properties are based on valuations performed by accredited independent valuer, who specializes in valuing investment properties.

A valuation model used in determination of investment properties'' fair values is in accordance with the recommended valuation techniques by the International Valuation Standards Committee.

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company consider information from a variety of sources including discounted cash flow projections based on reliable estimates of future cash flows.

For the valuation as on April 1, 2015, the main inputs used are the rental growth rates, expected vacancy rates, discount rate based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3. The valuation of investment properties as on March 31, 2017 and March 31, 2016 is done based on market feedback on values of similar properties and hence included in level 2.

* On the transition date, the Company has elected to use previous GAAP carrying values of the intangible assets as the deemed cost. Since deemed cost is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortization, the net carrying value as at the transition date i.e. April 1, 2015 has been disclosed as the cost under Ind AS.

Computer software consists of capitalized development costs of enterprise resource planning software being internally generated intangible assets.

1. Rights, preferences and restrictions attached to the equity shares

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.

2. Description of Reserves Securities Premium

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

Capital Reserve

Capital Reserve represents difference between fair value of the net assets of Elecon EPC Projects Limited and consideration issued. Refer Note 43.1

Share Suspense Account

Share Suspense Account represents shares to be issued for merger of Elecon EPC Projects Limited.

(a) Nature of Securities For Term Loans & Corporate Loans

i) Term Loans from financial institution - Loan from CLIX Capital India Unlimited formerly known as GE Capital Services India are secured by exclusive charge by way of Hypothecation on specific Plant & Machineries. The same is further, secured by exclusive charge over commercial property of Emtici Engineering Limited at Pune, Maharashtra & Corporate Guarantee of Emtici Engineering Limited. The rate of Interest is in the range of 11.55% to 11.60%..

ii) Term Loans from financial institution - Loan from Aditya Birla Finance Limited is secured by exclusive charge by way of:

1. Exclusive charge by way of registered Mortgage on Commercial Property at Banglore,

2. Exclusive charge by way of registered Mortgage on Commercial Property at Rajkot,

3. Exclusive charge by way of Hypothecation on specific list of Plant & Machineries of the Company,

4. Exclusive charge by way of Pledge of shares of Company owned by Emtici Engineering Limited,

5. Corporate guarantee of Emtici Engineering Limited,

6. Debt Service Reserve Account equivalent of 2 immediate installment plus interest.

The rate of Interest is 11.50%.

iii) Term Loans granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Export Import Bank of India and IDBI Bank are secured by:-

2) Second pari passu hypothecation charge over the Current Assets of the Company, present and future.

3) Corporate guarantee of Prayas Engineering Limited and Emtici Engineering Limited.

4) Non disposal undertaking for certain land parcels.

Name of the Bank Interest Rate %

State Bank of India 9.45% to 11.90%

Bank of Baroda 11.25% to 11.90%

IDBI Bank Limited 11.55% to 11.90%

Axis Bank Limited 11.60% to 11.90%

Export Import Bank of India 13.40% to 13.50%

Indusind Bank Limited 11.60% to 11.85%

HDFC Bank 10.00% to 10.35%

Working Capital Loans from banks granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, HDFC Bank, IDBI Bank, Axis Bank Limited & Indusind Bank Limited (Including guarantees issued by them in favour of various clients of the Company) are secured by:-

1) First pari passu hypothecation charge over all the Current Assets of the Company, present & future,

2) Extension of first pari passu mortgage / hypothecation charge over property, plant and equipment (movable & immovable) present & future, excluding certain assets specifically / exclusively charged to other banks/ financial institutions,

3) Registered mortgage, on first pari passu basis, of land bearing survey No.365 & 366 of Prayas Engineering Limited,

4) Pledge of 100,000 shares of Eimco Elecon (India) Limited owned by the Company.

5) Non disposal undertaking for certain land parcels.

6) Corporate guarantee of Prayas Engineering Limited and Emtici Engineering Limited.

Name of the Bank Interest Rate %

State Bank of India 9.45% to 11.90%

Bank of Baroda 11.25% to 11.90%

IDBI Bank Limited 11.55% to 11.90%

Axis Bank Limited 11.60% to 11.90%

Indusind Bank Limited 11.60% to 11.85%

HDFC Bank 10.00% to 10.35%

The disclosure in respect of the amount payable to enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 has been made in the Financial statement as at March 31, 2017 based on the information received and available with the Company. On the basis of such information, no interest is payable to any micro, small and medium enterprises. Auditors have relied upon the information provided by the Company.

Provision for onerous contracts - The Company has entered into various contracts across the segments. It is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

3. Corporate social responsibility expenditure

As per Section 135 of the Companies Act, 2013, the Company was required to spend INR 88.62 Lakhs (2015-16: INR 123.91 lakhs), however, the Company has spent INR 90.94 Lakhs (2015-16: INR 97.37 lakhs) during the current financial year. The Company has spent following amounts during the year :

During the year ended March 31, 2016 and March 31, 2015, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to taxation authority on behalf of the shareholders. Hence dividend distribution tax paid is charged to equity.

4. Financial instruments risk management objectives and policies

(a) Market 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. The Company seeks to mitigate such risk by maintaining an adequate proportion of floating and fixed interest rate borrowings. As at March 31, 2017, approximately 36% of the Company''s borrowings are at fixed rate (March 31, 2016 : 57% and April 1, 2015 : 38%). Summary of financial assets and financial liabilities has been provided below:

Interest rate sensitivity

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in foreign currencies (primarily USD, EUR and GBP). Consequently, the Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. The Company manages its foreign currency risk by following policies approved by board as per established risk management policy. The carrying amounts of the Company''s foreign currency denominated monetary items are as follows:

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP rates to the functional currency of respective entity, with all other variables held constant. The Company''s exposure to foreign currency changes for all other currencies is not material. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities.

Equity price risk

(b) Credit risk

Other financial assets

This comprises mainly of deposits with banks, investments in mutual funds and other intercompany receivables. Credit risk arising from these financial assets is limited and there is no collateral held against these because the counterparties are group companies, banks and recognized financial institutions. Banks and recognized financial institutions have high credit ratings assigned by the international credit rating agencies.

Trade receivables

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the receivables are categorized into groups based on types of receivables. Each group is then assessed for impairment using the Expected Credit Loss (ECL) model as per the provisions of Ind AS 109 - Financial instruments. The calculation is based provision matrix which considers actual historical data adjusted appropriately for the future expectations and probabilities. Receivables from group companies and secured receivables are excluded for the purposes of this analysis since no credit risk is perceived on them. Proportion of expected credit loss provided for across the ageing buckets is summarized below:

The loss rates are based on actual credit loss experience over past years. These loss rates are then adjusted appropriately to reflect differences between current and historical economic conditions and the Company''s view of economic conditions over the expected lives of the receivables.

Movement in provision of expected credit loss has been provided in note no. 12.

Note 11nvestments in associate, joint venture and subsidiaries have been accounted at historical cost. Since these are scope out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above. Investments in unquoted equity shares of entities other than subsidiaries, associates and joint ventures have been designated as FVTPL. However, investments in equity shares other than those of Eimco Elecon Electricals Limited (EECL) and Wizard Fincap Limited (WFL) are not considered material and hence have not been fair valued.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

On account of materiality and in absence of sufficient information for determination of fair value of investments in equity shares of INR 0.17 lakhs, the Company has not fair valued the same.

ii) Levels 1, 2 and 3

Level 1 : It includes Investment in equity shares and mutual fund that has a quoted price and which are actively traded on the stock exchanges. It is been valued using the closing price as at the reporting period on the stock exchanges.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

C. Fair value through profit and loss - in unquoted equity shares:

Investments in equity shares of Eimco Elecon Electricals Limited (EECL) have been designated as FVTPL. Based on EECL''s future projections of 5 years, Discounted Cash Flow (DCF) valuation methodology has been used to determine the fair value as on April 1, 2015. Demerger effect in 2016-17 has been duly considered in the fair valuation on December 28, 2016, which being close to the end of the current reporting period, has been used for the purposes of accounting.

Significant unobservable inputs

The free cash flows have been discounted using weighted average cost of capital (WACC) and cost of equity which is based on the capital asset pricing model. The model considered data from comarable companies to obtain the discounted free cash flows based on latest available data prior to date of valuation. These assumptions have been adjusted appropriately at each reporting date. Key assumptions have been summarized below:

Investments in equity shares of Wizard Fincap Limited (WFL) have been designated as fair value through profit and loss. For fair valuation, Enterprise Value method has been used. Under this method, operating income (EBITDA, EBIT and Revenue) has been computed. Multiples applicable for comparable transactions have been applied after appropriate adjustments as relevant to determine the gross enterprise value. Market value of non-operating assets has then been added to obtain the enterprise value from which debt has been deducted.

i) Transfers between Levels 1 and 2

There have been no transfers between Level 1 and Level 2 during the reporting periods.

5. Related party disclosure

As per the Ind AS - 24 Related Party Disclosures, the related parties of the Company are as follows :

A) Name of the related parties and nature of relationships :

a) Wholly owned Subsidiary Companies

(i) Elecon Transmission International Limited, Mauritius

(ii) Elecon Singapore Pte. Limited, Singapore

(iii) Elecon Middle East FZE, Middle East

b) Wholly owned Step down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Radicon Drive Systems, Inc., USA (formerly known as Elecon USA Transmission Limited, USA) (wef September 27, 2016)

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) OY Benzlers AB, Finland

(ix) Benzlers Italia s.r.l.

c) Associates

(i) Eimco Elecon (India) Limited

(ii) Elecon Australia Pty. Limited

(iii) Elecon Africa Pty. Limited

(iv) Elecon Engineering (Suzhou) Co. Limited, China

(v) Elecon Peripherals Limited (Associate upto October, 2015)

d) Individual having control/ significant influence

(i) Shri Prayasvin B. Patel

e) Key managerial personnel

(i) Shri Prayasvin B. Patel

(ii) Shri Prashant C. Amin

(iii) Shri Rajat Jain

(iv) Shri Pradip M. Patel

(v) Shri Jal Patel

(vi) Shri Chirayu R. Amin

(vii) Shri Jai S. Diwanji

(viii) Dr. Sonal V. Ambani

f) Enterprises over which (d) or (e) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investment Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Tech Elecon Private Limited

(vi) Emtici Engineering Limited

(vii) Prayas Engineering Limited

(viii) Specialty Wood Pack Private Limited

(ix) Power Build Private Limited

(x) Elecon Hydraulics Private Limited

(xi) Akaaish Mechatronics Limited

(xii) Madhubhan Prayas Resorts Limited

(xiii) Wizard Fincap Limited

(xiv) Eimco Elecon Electricals Limited

(xv) Elecon Peripherals Limited

(xvi) Packme Industries Private Limited

(xvii) Darshan Chemicals

(xviii) WRC Engineering Company Private Limited

(xix) Radicon Transmission FZE

(xx) Radicon Transmission (Thailand) Limited

(xxi) Radicon Transmission (Australia) Pty Limited

g) Other related party

Post employment benefit plan

(i) Elecon Engineering Company Limited Employees Group Gratuity Fund

(ii) Elecon Engineering Company Limited Employees Superannuation scheme

B) Terms and conditions of transactions with related parties

1) Transaction entered into with related party are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances other than loan given and taken, at the year-end are unsecured and interest free and settlement occurs in cash other than for advance.

2) Loans taken INR from the related party carries interest rate of 11% (March 31, 2016 : 11%). Loans in USD and GBP given to the related party carries interest rate at average of 4.62% (March 31, 2016 : 4.5%)

Transactions with key management personnel

Compensation of key management personnel of the Company.

Key Managerial Personnel and Relatives of Promoters who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognized as per Ind AS 19 - Employee Benefits in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.

Disclosure as per Regulation 53(F) of SEBI (Listing Obligations And Disclosure Requirements) Regulations

Loans and advances in the nature of loans given to subsidiaries and taken from the firms/companies in which directors are interested:

6. Disclosure pursuant to employee benefits

A. Defined contribution plans:

Amount of INR 386.91 lakhs (March 31, 2016: INR 389.64 Lakhs) is recognized as expenses and included in Note No. 29 "Employee benefits expenseâ

B. Defined benefit plans:

The Company has following post employment benefits which are in the nature of defined benefit plans:

(a) Gratuity

The Company operates gratuity plan wherein every employee is entitled to the benefit as per scheme of the Company, for each completed year of service. The same is payable on retirement or termination whichever is earlier. The benefit vests only after five years of continuous service.

(b) Leave obligations - unfunded

The actual liability towards leave obligations as at March 31, 2017 is INR 621.15 Lakhs (March 31, 2016 is INR 512.49 Lakhs and April 1, 2015 is INR 459.29 Lakhs) current year change is included in Employee Benefit Expense (Refer note - 29).

7. Disclosure on Specified Bank Notes

During the year, the Company had specific Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308 (E), dated March 31, 2017. The details of SBNs held and transacted during the period November 8, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification are as follows:

* For the purpose 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 November 8, 2016.

8. Segment reporting

Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chief Managing Director (CMD) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Company''s strategic business units. These business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the business units, the Company''s Chairman & Managing Director reviews internal management reports periodically.

Information about reportable segments

9. First- time adoption of Ind AS

As stated in Note 2, these are the Company''s first standalone financial statements prepared in accordance with Ind AS. For the year ended March 31, 2016, the Company had prepared these financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (''Previous GAAP'').

The accounting policies set out in Note 2 have been applied in preparing these financials statements for the year ended March 31, 2017 including the Comparative information for the year ended March 31, 2016 and the opening Ind AS balance sheet on the date of transition i.e. April 1, 2015.

In preparing the standalone Ind AS balance sheet as at April 1, 2015 and in presenting the comparative information for the year ended March 31, 2016, the Company has adjusted amounts reported previously in financials statements prepared in accordance with the Previous GAAP. An explanation of how the transition from Previous GAAP to Ind AS has affected the standalone financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables:

Exemptions applied

Ind AS 101 First-time Adoption of Indian Accounting Standards allows first-time adopter certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Mandatory exceptions

10. Estimates

An entity''s estimates in accordance with Ind ASs at the transition date to Ind AS and end of the comparative period shall be consistent with estimates made Under the Previous GAAP unless there is objective evidence that those estimates were in error.

Accordingly, the Company''s Ind AS estimates as on the transition date as well as end of the comparative period are consistent with the estimates made Under the Previous GAAP on the respective dates. The Company made estimates for following items in accordance with Ind AS at the transition date as these were not required Under the Previous GAAP:

- Fair valuation of financial instruments carried at FVTPL.

- Impairment of financial assets based on the expected credit loss model.

- Fair valuation of certain items of property, plant and equipment.

11. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

Optional exemptions

12. Deemed cost for property, plant and equipment (PPE), intangible assets and investment properties

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date

(ii) use a Previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:

- fair value;

- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index. The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with Previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.

The Company has opted to fair value Land, Building and Plant & Machinery on the date of transition to Ind AS and consider the same deemed cost under Ind AS. Carrying values of other items of property, plant and equipment are in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment. For intangible assets and investment properties, the Previous GAAP carrying values on the transition date has been carried forward as the deemed cost on transition to Ind AS.

13. Investments in certain equity shares

On the date of transition to Ind AS, a first time adopter can designate investments in certain equity shares of certain entities i.e. other than subsidiaries, associates and joint arrangements, as instruments fair valued through the other comprehensive income (FVOCI) or Fair value through Profit and loss (FVTPL).

Accordingly, the Company has opted to designate such equity investments as FVTPL.

14. Deemed cost for investments in equity shares of subsidiaries, associates and joint arrangements

Under, Ind AS 101 an entity can determine the value of investment in a subsidiary, associate or joint arrangement as either of the below:

- Cost determined in accordance with Ind AS 27 (i.e. retrospective application of Ind AS 27)

- Fair value at the entity''s date of transition to Ind AS

- Previous GAAP carrying amount

Accordingly, if an entity chooses to measure its investment at fair value at the date of transition then that is deemed to be cost of such investment for the company and, therefore, it shall carry its investment at that amount (i.e. fair value at the date of transition) after the date of transition.

The Company has elected to carry forward the Previous GAAP amounts as the deemed cost for investment in equity shares of subsidiaries, associates and joint ventures in the standalone financial statements.

15. Business combinations

Ind AS 101 permits an entity to apply the requirements of Ind AS 103 - Business combinations (Ind AS 103) prospectively from the transition date or opt for retrospective application of Ind AS 103. Retrospective application could be either done since inception or from a date determined by the management. The exemption for past business combinations also applies to past acquisitions of investments in associates, interests in joint ventures and interests in joint operations in which the activity of the joint operation constitutes a business, as defined in Ind AS 103.

Accordingly, the Company has elected not to restate past business combinations with an acquisition date prior to the transition date. However, any consequential deferred tax adjustments as required by Ind AS have been duly considered. An explanation of the same has been provided in the note no. 43.8 subsequently.

16. Determining whether an arrangement contains a lease

Ind AS 101 permits an entity to assess whether a contract or an arrangement contains a lease on the basis of facts and circumstances existing at the transition date to Ind AS.

Based on the exemption, the Company has assessed whether an arrangement contains a lease or not, based on the facts and circumstances as on the date of transition to Ind AS. However, the lease classification i.e. operating or finance lease, has been made based on the facts and circumstances at the inception of arrangement.

Reconciliations between Previous GAAP and Ind AS

Ind AS 101 requires a first time adopter to present reconciliations of equity, total comprehensive income and cash flows as reported under the Previous GAAP and the ones reported under Ind AS. Below are the reconciliations along with the relevant explanatory notes:

Notes to reconciliations 43.1 Impact of merger of Elecon EPC Projects Limited with the company

Elecon EPC Projects Limited (Elecon EPC), a subsidiary of the company was merged with the company with an appointed date of March 30, 2015 vide the scheme of amalgamation approved by the Honourble Hight Court of Gujarat on October 19, 2016. As provided the scheme, the effect of the merger has been incorporated in the financial statements from the appointed date wherein the assets and liabilities of Elecon EPC have been accounted at their respective fair values on the appointed date. Difference between fair value of net assets and equity share capital credited and cancellation of intercompany balances (including investments) has been accounted as a capital reserve. This is different from the accounting provided in Appendix C to Ind AS 103 on Business combinations of entities under common control.

On account of the merger being accounted from the appointed date of March 30, 2015, the equity reported under the Previous GAAP has increased by INR 4,444,91 lakhs and 2,968.11 lakhs on April 1, 2015 and March 31, 2016 respectively. The difference between the two has reduced the comprehensive income for 2015-16 by INR 1,487.49 lakhs. Summary of relevant quantitative information as at the appointed date has been provided below:

17. Fair valuation of property plant and equipment

As mentioned under the optional exemptions, the Company has elected to fair value land, building and plant &machinery on the date of transition to Ind AS and to use the fair value as deemed cost on the date of transition. The consequential impact of INR 38,911.50 has been accounted through retained earnings on the date of transition. This has led to a reduction in the comprehensive income for 2015-16 on account of increase in the depreciation charge by INR 197.42 lakhs.

18. Provision of impairment on receivables based on expected credit loss model

Under the Previous GAAP, the Company provided for impairment on receivables as and when losses were incurred on the specific receivables. Under Ind AS, based on the requirements of Ind AS 109, expected credit loss model has been applied to the receivables. The Company has applied the simplified model based on provision matrix derived using historical trends and adjusted the same to reflect estimated credit losses as on the transition date. This has resulted in a reduction of receivables by INR 15,880.65 lakhs and INR 15,884.04 lakhs on April 1, 2015 and March 31, 2016 respectively.

19. Adjustment for revenue recognition from milestone basis under Previous GAAP to percentage of completion basis

Under the Previous GAAP, the management had a practice to recognize revenue from EPC contracts as and when the contractual milestones were achieved. Ind AS 101 permits a first time adopter to adjust accounting practices followed under Previous GAAP if it becomes aware of an error as part of its Ind AS transition. Accordingly, on transition to Ind AS, the management has realigned accounting of such contracts using percentage of completion method based on requirements of Ind AS 11 except onerous contracts on which loss has been provided for in full irrespective of the stage of completion. This has resulted in a reduction in equity by INR 8,005.36 lakhs and INR 6,018.76 lakhs on April 1, 2015 and March 31, 2016 respectively.

20. Reversal of proposed dividend including dividend distribution tax

Under the Previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are to be recognized only on approval by the shareholders in the general meeting. Accordingly the liability proposed dividend of INR 1,449 lakhs and INR 1,442.24 lakhs as at April 1, 2015 and March 31, 2016 respectively included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

21. Actuarial gains and losses accounted through OCI

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under IGAAP, these remeasurements were forming part of the profit or loss for the year. Accordingly, INR 44.37 lakhs has been reclassified from the statement of profit and loss to statement of comprehensive income in 2015-16. However, this adjustment has no impact on the total equity on the transition date as well as March 31, 2016.

22. Other adjustments (including adjustments as per Previous GAAP)

Other adjustments comprise of the below:

Fair valuation of investments in certain financial assets

Under the Previous GAAP, investments in equity shares of entities not consolidated and mutual funds were classified as long-term investments measured at cost less provision for other than temporary diminution in the value. Under Ind AS, these investments have been fair valued through the statement of profit or loss. This has increased the equity by INR 281.99 lakhs and INR 307.78 lakhs on April 1, 2015 and March 31, 2016 respectively.

Transaction cost for loans and borrowings

Under the Previous GAAP, transaction costs incurred in connection with interest bearing loans and borrowings were charged to profit or loss when incurred. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest rate method. Accordingly the total equity increased by INR 88.17 lakhs and INR 20.50 lakhs on April 1, 2015 and March 31, 2016.

Other miscellaneous adjustments having an impact on equity - adjustments under Previous GAAP

As per previous practice, revenue from duty drawback was accounted on cash basis. Further, no provision was created for sick leave balances accrued. Ind AS 101 permits a first time adopter to adjust accounting practices followed under Previous GAAP if it becomes aware of an error as part of its Ind AS transition. Accordingly, on transition to Ind AS, the Company has realigned accounting for revenue from duty drawback to accrual basis and provided for sick leave on accrual basis. This has resulted in a reduction in equity by INR 102 lakhs and INR 255.19 lakhs on April 1, 2015 and March 31, 2016 respectively. Other miscellaneous adjustments not having an impact on equity

Land and building in the nature of investment property as defined under Ind AS 40 - Investment Property has been disclosed separately in the Standalone Balance Sheet (Refer note 4). Further, revenue has been accounted gross of the excise duty with the excise duty expense being presented as an expense in Standalone Statement of Profit and Loss.

23. Deferred tax on Ind AS adjustments

Under the Previous GAAP deferred tax was accounted using the income statement approach, which was based on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which based on the temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on certain temporary differences which was not required under Previous GAAP as discussed below.

24.. Lease Transactions

The operating lease arrangements are cancellable subject to the stipulated notice period which generally does not exceed 3 months. Thus, management is of the view that there is no right to receive or obligation to pay the agreed lease rentals in case of termination. Thus, the disclosure of minimum lease rentals payable or receivable has not been provided.

25. Disclosure as per Section 186 of the Companies Act, 2013:

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

(i) Details of Investments made are given in Note 6

(ii) Details of loans and guarantees given by the Company are as follows:

26. The financial statements are approved for issue by the Audit Committee and Board of Directors held on May 19, 2017. As per our report of even date attached.

Mar 31, 2016

i) Rights, Preferences and Restrictions attached to Equity Shares :

The Company has only one class of Equity Shares having a par value of Rs. 2/- per share. Each shareholder is eligible for one vote per share held. 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.

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.

(a) Nature of Securities For Term Loans & Corporate Loans

i) Term Loans [(a) above] from others obtained GE Capital Limited is secured by exclusive charge by way of Hypothecation on specific assets. The same is further, secured by exclusive charge over commercial property of Emtici Engineering Limited at Pune, Maharashtra & Corporate Guarantee of Emtici Engineering Limited.

ii) Term Loans [(a) above] obtained from Aditya Birla Finance Limited is secured by exclusive charge by way of:

1. Exclusive Charge by way of registered Mortgage on Commercial Property at Banglore,

2. Exclusive Charge by way of registered Mortgage on Commercial Property at Rajkot.

3. Exclusive Charge by way of Hypothecation on specific list of Assets of Elecon Engineering Company Limited & Elecon EPC Projects Limited.

4. Exclusive Charge by way of Pledge of shares of Elecon Engineering Company Limited.

5. Corporate Guarantee of Elecon EPC Projects Limited & Emtici Engineering Limited.

6. DSRA equivalent of 2 immidiate installment plus interest.

iii) Corporate Loans [(b) above] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Export Import Bank of India and IDBI Bank are secured by:-

1. First Pari passu charge with all corporate loan lenders, over fixed assets of the Company including Plant & machinery but excluding assets specifically charged to other Term Lenders.

2. First pari passu charge Registered Mortgage over land of the Company.

3. Second pari passu hypothecation charge over the Current Assets of the Company.

4. The same is, secured by Corporate Guarantee of Elecon EPC Projects Limited and Prayas Engineering Limited. Also, Corporate Guarantee of Emtici Engineering Limited was provided as security, however the same is waived by some of the consortium members including Lead Bank, SBI and other member banks are in the process of necessary approval for the waiver.

5. Non Disposal Undertaking for 13 land parcels situated at village Mogri bearing Survey No.114,153,154,155/P and land situated at Village Karamsad bearing Survey No.344,345,346/2,347/2,348/3, 368/P and 371/2.

(i) Nature of Securities {(a) Loans repayable on demand}

Working Capital Loans from banks granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Export Import Bank of India, HDFC Bank, IDBI Bank, Axis Bank Limited, Standard Chartered Bank & Indusind Bank Limited (Including guarantees issued by them in favour of various clients of the Company) are secured by:-

1) First Pari Passu hypothecation charge over all the Current Assets of the Company,

2) First Pari Passu hypothecation charge over Fixed Assets of the Company including Plant & Machinery excluding certain assets specifically/ exclusively charged to other banks/ financial institutions,

3) Registered Mortgage on the immovable properties,

4) Registered Mortgage, on first pari passu basis, of land bearing Survey No.365 &366 of Prayas Engineering Limited.

5) Pledge of 100,000 shares of Eimco Elecon (I) Limited owned by the Company.

6) Non Disposal Undertaking for 13 land parcels situated at village Mogri bearing Survey No.114, 153, 154, 155/P and land situated at Village Karamsad bearing Survey No. 344, 345, 346/2, 347/2, 348/3, 368/P and 371/2.

7) Corporate Guarantee of Elecon EPC Projects Limited. Also, Corporate Guarantee of Prayas Engineering Limited and Emtici Engineering Limited was provided as security, however the same is waived by some of the consortium members including Lead Bank, SBI and other member banks are in the process of necessary approval for the waiver.

a. The Rate of Escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the Gratuity Rs. 77.76 Lacs (Previous Year Rs. 137.82 Lacs.) as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2016 of Rs. 696.55 Lacs (Previous Year Rs. 564.66 Lacs.

ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees subject to Maximum of Rs. 1.00 Lac. The Company is providing for the outstanding Liability amount allocable to the broken period beyond Annual Renewal date of the Scheme.

iii) The Companyâs contributions paid/payable for the year to Provident Fund is charged to the Statement of Profit and Loss for the year of Rs. 70.61 Lacs ( Previous Year Rs. 71.01 Lacs).

8. SEGMENT INFORMATION

a) W.e.f. 1^st April, 2012, after giving effect of the Scheme, the Company operates in a solitary business segment i.e. âTransmission Equipmentâ. AS 17 requires Segment information to be prepared on the basis of Consolidated Financial Statements. Accordingly, segment information is disclosed in Consolidated Financial Statements.

9. PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs. 1.10 (Previous Year Rs. 1.10) per equity share of Rs. 2.00 each. The aggregate amount of equity dividend proposed to be distributed is Rs. 1,442.23 Lacs (Previous Year Rs. 1,449.03 Lacs) Including Dividend Distribution Tax of Rs. 243.94 Lacs (Previous Year Rs. 250.74 Lacs).

10. Figures of previous year are regrouped and recast wherever necessary.

11. Note 1 to 40 form an integral part of the Financial Statements

Mar 31, 2014

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP"] except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

2. CONTIGENT LIABILITIES AND COMMITMENTS (to the extent not provided for) (Rs. in Lacs)

As at As at 31st March, 2014 31st March, 2013

(a) Contingent Liabilities:

Claims against the Company not acknowledged as debt

(i) Disputed Excise Duty & Service Tax against Demand Notices received 329.83 407.97

(ii) Disputed Income Tax Demand-Disputed by Company 333.44 638.26

(iii) Disputed Income Tax Demand-Disputed by Income Tax Authorities 320.10 15.99

(iv) Sales Bills Discounted under LC with Banks 283.55 1,209.26

(v) NexGen Energy Partners, LLC of USA has fled a case bearing no. 2011 Unascer -tained Unascer -tained

CV 0066, against Reflecting Blue Technologies (RBT) of USA and the Company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Reflecting Blue Technologies (RBT). The matter is pending in the court of Ohio, USA and amount of claim is unascertainable.

(vi) The Company has provided Corporate Guarantee to Bank of Baroda, 24,134.26 21,322.41 Dubai to the tune of GBP 7,216,000 and US$ 282,99,876 as a security for repayment of Financial facility availed by Elecon Transmission International Limited, Mauritius, a wholly owned subsidiary of the Company.

(vii) The Company has received assessment order for the year 2008-09 under the 90.93 90.93 Central Sales (Gujarat) Tax Act with a demand of Rs.90.93 Lacs. The Company has deposited Rs. 90.93 Lacs and the Company has preferred to go for appeal against the said order.

(viii) The Company has received assessment order for the year 2009-10 under the 109.17 - central sales (Gujarat) act with a demand of Rs. 293.54 Lacs. The Company has deposited Rs. 184.37 Lacs and Company has preferred to go for appeal against this order. However Company has not provided for the differential amount.

(ix) The Company has provided Corporate Guarantee to SBI, Consortium 90,000.00 - to the tune of Rs. 90,000.00 Lacs as a security for repayment of Financial facilities availed by Elecon EPC Projects Ltd., a subsidiary of the Company.

Guarantees

(i) Guarantees issued by Company''s Bankers 5,241.76 7,321.96

(ii) Corporate Guarantee provided to Swedish Pension Authority to the tune of 1,380.00 1,246.91 SEK 15.00 Million as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, step-down subsidiary of Elecon Transmission International Limited, Mauritius, a Wholly -owned Subsidiary of the Company.

(b) Commitments:

(i) Estimated amount of contracts remaining to be executed on capital account 1,436.57 - and not provided for

(ii) Liability for Export Obligation under Export Promotion Credit Guarantee 7,556.95 9,239.51

a. The rate of escalation in Salary (P.A.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the gratuity Rs. 176.81 Lacs (Previous year Rs. 168.27 Lacs). as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2014 of Rs. 448.72 Lacs (Previous year Rs. 717.07 Lacs).

ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees subject to Maximum of Rs. 1.00 Lac. The Company is providing for the outstanding Liability amount allocable to the broken period beyond Annual Renewal date of the Scheme.

iii) The Company''s contributions paid/payable for the year to Provident Fund is charged to the Statement of Profit and Loss for the year of Rs. 202.63 Lacs (Previous year Rs. 152.78 Lacs).

3. SEGMENT INFORMATION

a) W.e.f. 1st April, 2012, after giving effect of the Scheme, the Company operates in a solitary business segment i.e. "Transmission Equipment". AS 17 requires Segment information to be prepared on the basis of Consolidated Financial Statements. Accordingly, segment information is disclosed in Consolidated Financial Statements.

4. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below:

A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon EPC Projects Limited

(ii) Elecon Transmission International Limited, Mauritius

(iii) Elecon Singapore Pte. Limited

(iv) Elecon Middle East FZCO

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) Oy Benzlers AB, Finland

(x) Benzlers SDN BDH Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited (Joint Venture)

(ii) Elecon Australia Pty. Limited (Associate)

(iii) Elecon Africa Pty. Limited (Associate)

(iv) Elecon Engineering (Suzhou) Co. Ltd., China (Associate)

(v) Elecon Peripherals Limited (Associate)

d) Individual having control/signification fence

(i) Shri Prayasvin B. Patel

e) key Management Personnel

(i) Shri Prayasvin B. Patel

(ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investments Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Specialty Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhubhan Prayas Resorts Limited

(xii) Wizard Fincap Limited

(xiii) Eimco Elecon Electricals Limited

(xiv) Excel EPC Projects Private Limited

5. DISCLOSURES SPECIFIED BY THE MSMED ACT

The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

6. The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7. PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs. 1/- (Previous year Rs. 1/-) per equity share of Rs. 2/- each.

The aggregate amount of equity dividend proposed to be distributed is Rs. 1,187.27 Lacs (Previous year Rs. 1,274.50 Lacs) Including Dividend

Distribution Tax of Rs. 97.91 Lacs (Previous year Rs. 185.14 Lacs)

8. Figures of previous year are regrouped and recast wherever necessary.

9. Note 1 to 40 form an integral part of the financial statements.

Mar 31, 2013

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles [''GAAP''] except for the revaluation of certain fxed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specifed in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of fnancial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that afect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the fnancial statements. Examples of such estimates include the useful life of tangible and intangible fxed assets, provision for doubtful debts/ advances, future obligations in respect of retirement beneft plans, etc. Diference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

2 Scheme of Arrangement

As per Order dated 21st December, 2012, the Hon''ble High Court of Gujarat has approved the Scheme of Arrangement ("the Scheme") between the Company, Prayas Engineering Ltd. (PEL) and Emtici Engineering Ltd. (EMTICI), Elecon EPC Projects Ltd. and their respective Shareholders and Credito''

The Appointed Date of the Scheme was 1st April, 2012.

The Scheme became efective from 1st April, 2013. This fnancial statements have been prepared after giving efect of the Scheme from its Appointed Date i.e. 1st April, 2012.

Scheme of Arrangement included the follolwing : i) Slump Sale of MHE Undertaking :

Pursuant to "the Scheme", MHE Business undertaking of the Company comprising the business activity of manufacture of Material Handling Equipment along with all related assets (excluding Land, Building, Investment)., liabilities, employees has been transferred by way of slump sale to Elecon EPC Projects Ltd. for consideration of Rs. 12,732.44 Lacs.

The exceptional item of Rs. 2,668.29 Lacs shown in Statement of Proft & Loss represents the Loss on account of this arrangement which has been computed as under :-

iii) Merger of EMTICI Gear Undertaking into Company:

Pursuant to "the Scheme", EMTICI Gear Undertaking (Marketing & Servicing business related to Company & EMTICI Gear business) along with all related assets (excluding Land & Building), liabilities was merged into the Company on going concern basis.

(a) Pursuant to the said Scheme the Company on 12th April, 2013 has allotted 39 (Thirty nine) Equity Shares of the face value of Rs. 2/- each against 4(Four) Equity Shares having face value of Rs. 10/- each held by shareholders of Emtici Engineering Ltd.

iv) In view of the above Scheme of Arrangement, the current year fgures are not comparable with previous year fgures.

3. SEGMENT INFORMATION

a) W.e.f. 1st April, 2012, after giving efect of the Scheme, the Company operates in a solitary business segment i.e. "Transmission Equipment". AS 17 requires Segment information to be prepared on the basis of Consolidated Financial Statements. Accordingly, segment information is disclosed in Consolidated Financial Statements.

4. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below:

A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon EPC Projects Limited (1st April, 2012) (ii) Elecon Transmission International Limited, Mauritius (iii) Elecon Singapore Pte. Limited (1st April, 2012) (iv) Elecon Middle East FZCO (1st April, 2012)

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) OY Benzlers AB, Finland

(x) Benzlers SDN BDH Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited (Joint Venture)

(ii) Elecon Australia Pty. Limited (Associate)

(iii) Elecon Africa Pty. Limited (Associate)

(iv) Elecon Engineering (Suzhou) Co. Ltd., China (Associate)

(v) Elecon Peripherals Limited (Associate)

d) Individual having control/ signifcant infuence

(i) Shri Prayasvin B. Patel

e) key management Personnel

(i) Shri Prayasvin B. Patel (ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have signifcant infuence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investments Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Speciality Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhuban Prayas Resorts Limited

(xii) Wizard Fincap Limited

(xiii) Eimco Elecon Electricals Limited

(xiv) Excel EPC Projects Private Limited

5. DISCLOSURES SPECIFIED BY THE MSMED ACT

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

6. The Ministry of Corporate Afairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfllment of conditions stipulated in the circular. The Company has satisfed the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7 PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs. 1/- (Previous Year Rs. 1.80) per equity share of Rs. 2/- each. The aggregate amount of equity dividend proposed to be distributed is Rs. 1274.50 Lacs (Previous Year Rs. 1942.67 Lacs) Including Dividend Distribution Tax of Rs. 185.14 Lacs (Previous Year Rs. 271.16 Lacs).

8 In view of the Scheme of Arrangement as stated in Note 3, the current year fgures are not comparable with previous year fgures.

9 Note 1 to 41 form an integral part of the fnancial statements.

Mar 31, 2012

1. BASIS OF PREPARATION

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP'] except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

(ii) Rights preferences and restrictions attached to equity shares :

The company has only one class of Equity Shares having a par value of Rs 2/- per share. Each shareholder is eligible for one vote per share held. 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.

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.

(a) Nature of Securities

i) Term Loans [(a) above] obtained from Bank of Baroda, Axis Bank Ltd., ICICI Bank Ltd., Citi Bank N.A., Vijaya Bank, Inducing Bank Limited & DBS Bank Limited is secured by exclusive charge by way of Hypothecation on specific assets for which payments were made out of the term loan.

(ii) Corporate Loans [(b) above] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank and Axis Bank Ltd. are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Company's Currents Assets, Inventories, Receivables and Book Debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

(iii) Capital assets acquired on HP Loans from Banks [(c) above] are secured by exclusive charge on respective assets purchased through those loans.

(i) Nature of Securities {(a) Loans repayable on demand}

Working Capital Loans from banks (secured) granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, HDFC Bank Ltd., IDBI Bank Ltd., Axis Bank Limited and Standard Chartered Bank are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Company's Currents Assets, Inventories, Receivables and Book Debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

2. CONTIGENT LIABILITIES AND COMMITMENTS (Rs.in Lacs)

(to the extent not provided for)

As at As at

31 st March 2012 31st March 2011

(a) Contingent Liabilities:

Claims against the Company not acknowledged as debt

(i) Disputed Excise Duty & Service Tax against Demand Notices received 233.20 269.38

(ii) Disputed Sales Tax/Works Contract Tax 347.55 347.55

(iii) Disputed Income Tax Demand-Disputed by Company 928.54 1,079.65

(iv) Disputed Income Tax Demand- Disputed by Income Tax Authorities 14.89 22.47

(v) Service Tax disputed & paid under Protest 191.92 -

(vi) Sales Bills Discounted under LC with Banks 6,151.32 3,713.74

(vii) NexGen Energy Partners, LLC of USA has filed a case bearing no. 2011 Unascertained Unascertained CV 0066, against Reflecting Blue Technologies (RBT) of USA and the company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Relfec ting Blue Technologies (RBT). The matter is pending in the court of Ohio, USA and amount of claim is unascertainable.

(viii) The Company has provided Corporate Guarantee to Bank of Baroda, 20,280.74 - Dubai to the tune of GBP 7,216,000 and US$ 282,99,876 as a security for repayment of financial facility availed by Elecon Transmission International Limited, Mauritius, a Wholly-Owned Subsidiary of the Company.

a. The rate of escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the gratuity Rs 396.60 Lacs (Previous Year Rs 516.20 Lacs) as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2012 of Rs 756.37 Lacs (Previous Year Rs 590.80 Lacs).

ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees subject to Maximum of Rs 1.00 Lac. The Company is providing for the outstanding Liability amount allocable to the broken period beyond Annual Renewal date of the Scheme.

iii) The Company's contributions paid/payable for the year to Provident Fund is charged to the Statement of Profit and Loss for the year of Rs 157.80 Lacs (Previous Year Rs 126.37 Lacs).

a) Since, the figures of Alternate Energy Division (AED) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b) The Company has disclosed Business Segment as primary segment.

c) Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d) The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e) Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

3. RELATED PARTY TRANSACTIONS

Related Party Disclosures as required by Accounting Standard (AS) 18 are given below: A) Name of the related parties and nature of relationships :

a) Subsidiary Company

(i) Elecon Transmission International Limited, Mauritius

b) Step Down Subsidiaries

(i) Benzlers Systems AB, Sweden

(ii) Radicon Transmission UK Limited, U.K.

(iii) AB Benzlers, Sweden

(iv) Elecon USA Transmission Limited, USA

(v) Benzlers Transmission A.S., Denmark

(vi) Benzlers Antriebstechnik GmbH, Germany

(vii) Benzlers TBA B.V., Netherlands

(viii) Benzlers Antriebstechnik Gesmbh, Austria

(ix) OY Benzlers AB, Finland

(x) Benzlers Malaysia

(xi) Benzlers Italia s.r.l.

c) Associates and Joint Ventures

(i) Eimco Elecon (India) Limited

(ii) Elecon Australia Pty. Limited

(iii) Elecon Africa Pty. Limited

(iv) Elecon Singapore Pte. Limited

(v) Elecon Middle East FZCO

(vi) Elecon Engineering (Suzhou) Co. Ltd., China

(vii) Elecon Peripharals Limited

d) Individual having control/ significant influence

(i) Shri Prayasvin B. Patel

e) Key management Personnel

(i) Shri Prayasvin B. Patel

(ii) Shri Prashant C. Amin

f) Enterprises over which (d) or (e) above have significant influence

(i) Bipra Investments & Trusts Private Limited

(ii) Devkishan Investment Private Limited

(iii) K. B. Investments Private Limited

(iv) Elecon Information Technology Limited

(v) Emtici Engineering Limited

(vi) Prayas Engineering Limited

(vii) Specialty Wood Pack Private Limited

(viii) Power Build Limited

(ix) Kirloskar Power Build Gears Limited

(x) Akaaish Mechatronics Limited

(xi) Madhuban Prayas Resorts Limited

(xii) Narmada Travels Limited

(xiii) Wizard Fincap Limited

4. DISCLOSURES SPECIFIED BY THE MSMED ACT

The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence, disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

5. PROPOSED DIVIDEND

The Board of Directors have proposed equity dividend of Rs 1.80 (Previous Year Rs 1.80) per equity share of Rs 2.00 each.

The aggregate amount of equity dividend proposed to be distributed is 1942.67 (Previous Year Rs 1942.67) Including Dividend distribution tax of Rs 271.16 (Previous Year Rs 271.16 Lacs).

6. The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

7. PREVIOUS YEAR FIGURES

During the year ended 31st March, 2012, the Revised Schedule VI notified under The Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statement. The adoption of Revised Schedule VI does not impact recombination and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statement. The Company has also reclassified the previous year's figures in accordance with the requirements applicable in the current year. In view of this reclassification, certain figures of current year are not strictly comparable with those of the previous year.

8. Note 1 to 40 form an integral part of the financial statements.

Mar 31, 2011

1. The loans referred to in Schedule 3 are secured as under

i) Fund Based and Non Fund Based Working Capital Facilities [3A(a) & (b)(ii)] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, Axis Bank Ltd., HDFC Bank Ltd., IDB1 Bank Ltd.,

and Standard Chartered Bank are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Company's Materials Handling Equipment Division and Gear Division excluding certain assets specifically/ exclusively charged to other barks/ financial institutions but including the whole of the Company's Currents Assets, inventories, receivables and book debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company. Standard Chartered Bank was inducted in consortium on 28-09-2010 and documentation was made on 30-04-2011.

ii) Term Loans (3A(b)(i)] obtained from Bank of Baroda, Exim Bank, Axis Bank Ltd., 1C1C1 Bank Ltd., Citi Bank N.A. and Vijaya Bank is secured by exclusive charge by way of Hypothecation on specific assets for which payments were made out of the term loan.

iii) Capital Assets acquired on HP Loans from Banks [3B(a)| are secured by exclusive charge on respective assets purchase through those loans.

2. Contingnet Liabilities

No provision has been made in the accounts in respect of the following:

a) Disputed Excise Duty Rs. 269.38 Lacs (Previous Year Rs. 159.36 Lacs), against demand notices received so far.

b) Disputed Sales Tax/ Works Contract Tax Rs. 347.55 Lacs (Previous Year Rs. 347.55 Lacs).

c) In respect of disputed Income Tax demands:

(i) Disputed by CompanyRs. 1079.65 Lacs (Previous Year Rs. 1254.61 Lacs)

(ii) Disputed by Income Tax Authorities Rs. 22.47 Lacs (Previous Year Rs. 52.62 Lacs)

d) Guarantees issued by the Company's Bankers Rs. 45,082.46 Lacs (Previous Year Rs. 42,854.59 Lacs)

e) Liability for export obligation under Export Promotion Credit Guarantee Rs. 11,544.10 Lacs (Previous Year Rs. 11,759.25 Lacs).

f) Sales Bills discounted under LC with Banks Rs. 3,713.74 Lacs (Previous Year Rs. 2,961.27 Lacs).

g) Corporate Guarantees given on account of advance received from customers Rs. 257.06 Lacs (Previous Year Rs. 641.72 Lacs) and on account of performance Rs. 357.74 Lacs (Previous Year Rs. 573.59 Lacs)

h) Unascertained amount in respect of a suit filed against the Company by a foreign collaborator for royalty and other allied matters.

i) NexGen Energy Partners, LLC of USA has filed a case bearing no. 2011 CV 0066, against Reflecting blue Technologies (RBT) of USA and the Company, in the court of Ohio, USA on account of non performing of Wind Mill supplied through Relfecting blue Technologies (RBT). The Company is in the process of filing the reply suitably in consultation with the lawyer. Since the matter is in preliminary stage, amount of claim is unascertainable.

3. The Company has provided Corporate Guarantee to Swedish Pension Authority to the tune of SEK 15.00 Million (Rs. 1,057.73 Lacs) as a security, in replacement of earlier guarantee given by erstwhile owner, for the purchase of pension insurances relating to the pension commitments on behalf of AB Benzlers Sweden, a step-down subsidiary of Elecon Transmission International Limited, Mauritius, a Wholly-owned Subsidiary of the Company.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 11,897.12 Lacs (Previous Year Rs. 2,275.82 Lacs).

5. Technical Know how fees paid to Overseas Collaborators in pursuance of different Technology Know How Agreements during earlier years including current year has been treated as Miscellaneous Expenditure, and to be written off over a period of 6 years. In this account there was an opening balance ofRs. 260.48 Lacs (Previous Year Rs. 168.88 Lacs). During the year Rs. 176.57 Lacs have been paid and have been treated as Deferred. Out of total Rs. 437.05 Lacs, Rs. 92.58 Lacs (Previous Year Rs. 66.15 Lacs) has been charged to Profit & Loss Account.

6. Profit on sale of investment shown under the head of other income in Profit & Loss Account includes an amount of Rs. 2,069.60 Lacs (Previous Year Rs. 1,595.81 Lacs) pertaining to profit on sale of long term investment.

7. Sundry Debtors includes retention money not due amounting to Rs. 15,738.40 Lacs retained by various customers against big turnkey contracts as per the terms of agreement, and are receivable after satisfactory completion of the respective contracts.

8. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

9. a) The sales are shown net of VAT/CST amounting to Rs. 2,525.61 Lacs (Previous Year Rs. 2,062.54 Lacs).

b) The Sales figure includes Deemed Export Sales of ^ 7,900.67 Lacs (Previous Year Rs. 3,888.07 Lacs). The Gross Export Sales for the year is Rs. 5,578.45 Lacs (Previous Year Rs. 6,364.92 Lacs).

Notes

a. Since, the figures of Alternate Energy Division (AF.D) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b. The Company has disclosed Business Segment as primary segment.

c. Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d. The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e. Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

10. Deferred Taxation

Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India.

11. Related Party Disclosure

Related Party Disclosure as required by AS-18, are given below:

i) Relationship:

a-1) Subsidiary of the Company:

- Elecon Transmission International Limited, Mauritius

a-2) Step down Subsidiaries

- David Brown Systems Sweden AB, Sweden

- Radicon Transmission UK Limited, U.K.

- AB Benzlers, Sweden

- Elecon USA Transmission Limited, USA

- Benzlers Transmission A.S., Denmark

- Benzlers Antriebstechnik GmbH, Germany

- Benzlers TBA B.V, Netherlands

- Benzlers Antriebstechnik Gesmbh, Austria

- OY Benzlers AB, Finland

- Benzlers Malaysia

b) Associates and Joint Ventures

- Ringspann Elecon (I) Limited

- Eimco Elecon (India) Limited

- DRA (India) Limited

- Elecon Australia Pty. Limited

- Elecon Africa Pty. Limited

- Elecon Singapore Pte. Limited

- Elecon Middle East FZCO

- Elecon Engineering (Suzhou) Co. Ltd., China

- Elecon Windfarm Developers (Motagunda-Vinzalpur) Limited

c) Individual having control / significant influence

- Shri Prayasvin B. Patel

d) Key Management Personnel

- Shri Prayasvin B. Patel

e) Enterprises over which (c) or (d) above have significant influence

- Bipra Investments & Trusts Private Limited

- Devkishan Investment Private Limited

- K. B. Investments Private Limited

- Elecon Information Technology Limited

- Emtici Engineering Limited

- Prayas Engineering Ltd.

- Speciality Wood Pack Private Limited

- Power Build Limited

- Kirloskar Power Build Gears Limited

- Akaaish Mechatronics Limited

- Madhuban Prayas Resorts Limited

- Narmada Travels Limited

- Wizard Fincap Limited

12. Figures of previous year are regrouped and recast wherever necessary.

13. Schedules 1 to 17 form an integral part of Balance Sheet and Profit & Loss Account.

Mar 31, 2010

1. The loans referred to in Schedule 3 are secured as under

i) Fund Based and Non Fund Based Working Capital Facilities [3A(a)] granted by Consortium of Banks consisting of State Bank of India (As Lead Bank), Bank of Baroda, Exim Bank, Axis Bank Ltd., Citi Bank N.A., HDFC Bank Ltd. and IDBI Bank Ltd. are secured by an equitable mortgage on the immovable properties and hypothecation of movable plant and machinery and assets of the Companys Materials Handling Equipment Division and Gear

Division excluding certain assets specifically/ exclusively charged to other banks/ financial institutions but including the whole of the Companys currents assets, inventories, receivables and book debts ranking pari passu inter se in respect of working capital facilities and guarantees issued by them in favour of various clients of the Company.

ii) Term Loans [3A(b)] obtained from State Bank of India, Bank of Baroda, Exim Bank, Axis Bank Ltd., ICICI Bank Ltd. & Citi Bank N.A. is secured by exclusive charge by way of hypothecation on specific assets for which payments were made out of the term loan.

iii) Capital assets acquired on HP Loans from Banks [3B(c)] are secured by exclusive charge on respective assets purchased through those loans.

2. Contingnet Liabilities

No provision has been made in the accounts in respect of the following:

a) Disputed Excise Duty Rs. 159.36 Lacs (Previous Year Rs. 229.70 Lacs), against demand notices received so far.

b) Disputed Sales Tax/ Works Contract Tax Rs. 347.55 Lacs (Previous Year Rs. 347.55 Lacs).

c) In respect of disputed Income Tax demands:

(i) Disputed by Company Rs. 1254.61 Lacs (Previous Year Rs. 87.67 Lacs) (ii) Disputed by Income Tax Authorities Rs. 52.62 Lacs (Previous Year NIL)

d) Guarantees issued by the Companys Bankers Rs. 42,854.59 Lacs (Previous Year Rs. 41,730.85 Lacs)

e) Liability for export obligation under Export Promotion Credit Guarantee Rs. 11,759.25 Lacs (Previous Year Rs. 12,985.21 Lacs).

f) Sales Bills discounted under LC with Banks Rs. 2,961.27 Lacs (Previous Year Rs. 2,435.66 Lacs).

g) Corporate Guarantees given on account of advance received from customers Rs. 4,747.54 Lacs (Previous Year Rs. 656.14 Lacs) and on account of performance Rs. 2,200.93 Lacs (Previous Year Rs. 2,342.83 Lacs).

h) Unascertained amount in respect of a suit filed against the Company by a foreign collaborator for royalty and other allied matters.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 2,275.82 Lacs (Previous Year Rs. 7,225.70 Lacs).

4. Technical Know How fees paid to Overseas Collaborators in pursuance of different Technology Know How Agreements during earlier years including current year has been treated as Deferred Revenue Expenditure and to be written off over a period of 6 years. In this account there was an opening balance of Rs. 168.88 Lacs (Previous Year Rs. 97.12 Lacs). During the year Rs. 157.75 Lacs have been paid and have been treated as Deferred. Out of total Rs. 326.63 Lacs, Rs 66.15 Lacs (Previous Year Rs. 39.86 Lacs) has been charged to Profit & Loss Account.

5. Profit on sale of investments shown under the head of other income in Profit & Loss Account includes an amount of Rs. 1,595.81 Lacs pertaining to profit on sale of long term investments.

6. Sundry Debtors more than six months includes retention money amounting to Rs. 11,663.72 Lacs retained by various customers against big turnkey contracts as per the terms of agreement and are receivable after satisfactory completion of the respective contracts.

7. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act could not been given.

8. The Company has received only a few Income Tax orders based on Supreme Court judgment going against the Company. However the aforesaid Income Tax orders are erroneous and incomplete. In view of above the Company has filed objections before the Income Tax authorities and has also preferred an appeal to Income*Tax department to issue fresh orders in place of above orders as advised by Company counsel with all information required as per law and for the full period covered in the aforesaid Supreme Court judgment. Therefore the exact liability on account of Income Tax could not be quantified and hence no provision in the books has been made.

The above figures do not include Service Tax of Rs. 2.24 Lacs (Previous Year Rs. 2.22 Lacs)

Over & above the aforesaid payments an amount of Rs. 3.31 Lacs (Previous Year Rs. 1.83 Lacs) has been paid to a firm in which one of the partners of auditors firm is interested.

9. a) The sales are shown net of Sales Tax amounting to Rs. 2,062.54 Lacs.

b) The sales figure includes Deemed Export Sales of Rs. 274.80 Lacs (Previous Year Rs. 527.93 Lacs). The Gross Export Sales for the year is Rs. 6,364.92 Lacs (Previous Year Rs. 4,064.98 Lacs).

Notes

a. Since, the figures of Alternate Energy Division (AED) are not reportable segment, as per the requirements of AS - 17, they are not shown separately.

b. The Company has disclosed Business Segment as primary segment.

c. Segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organization structure and the internal financial reporting systems.

d. The Segment Revenue, Results, Assets and Liability include the respective amounts identifiable to each of the segment and amounts allocated on a reasonable basis.

e. Inter Segment Transfer Pricing Policy - the Gear supplied to Material Handling Equipment Division is based on cost.

10. Deferred Taxation

Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India.

11. Related Party Disclosure

Related Party Disclosure as required by AS-18, are given below:

i) Relationship:

a) Subsidiary of the Company:

- NIL

b) Associates and Joint Ventures

- PWH Materials Handling Limited - Ringspann Elecon (India) Limited - Eimco Elecon (India) Limited - DRA (India) Limited

c) Individual having control/ significant influence

- Shri Prayasvin B. Patel

d) Key Management Personnel

- Shri Prayasvin B. Patel

e) Enterprises over which (c) or (d) above have significant influence

- Bipra Investments & Trusts Private Limited - Devkishan Investment Private Limited - K. B. Investments Private Limited - Elecon Information Technology Limited - Emtici Engineering Limited - Prayas Engineering Ltd. - Speciality Wood Pack Private Limited - Power Build Limited - Kirloskar Power Build Gears Limited - Akaaish Mechatronics Limited - Madhuban Prayas Resorts Limited - Narmada Travels Limited - Elecon Australia Pty. Limited - Elecon Africa Pty. Limited - Elecon Singapore Pte. Limited - Elecon Middle East FZCO - Elecon Engineering (Suzhou) Co. Ltd., China - Wizard FincaD Limited

12. Figures of previous year are regrouped and recast wherever necessary.

13. Schedules 1 to 17 form an integral part of Balance Sheet and Profit & Loss Account.

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