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Notes to Accounts of Elgi Equipments Ltd.

Mar 31, 2017

1. Financial risk management

The Company''s activities expose it to market risk, liquidity risk and credit risk.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements

The Company''s risk management is carried out by a central treasury department under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(A) Credit risk

Credit risk arises from cash and cash equivalents, investments carried at fair value and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

Credit risk is managed on a Company basis. For banks and financial institutions, only high rated banks/institutions are accepted.

For other financial assets, the Company assesses and manages credit risk based on internal credit rating system. The finance function consists of a separate team who assess and maintain an internal credit rating system. Internal credit rating is performed on a Company basis for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.

C1 : High-quality assets, negligible credit risk

C2 : Doubtful assets, credit-impaired

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information. Especially the following indicators are included -

- Internal credit rating

- External credit rating (as far as available)

- Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower''s ability to meet its obligations

- Actual or expected significant changes in the operating results of the borrower

- Significant increase in credit risk on other financial instruments of the same borrower

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

- Significant changes in the expected performance and behavior of the borrower, including changes in the payment status of borrowers in the Company and changes in the operating results of the borrower.

Macroeconomic information (such as regulatory changes, market interest rate or growth rates) is incorporated as part of the internal rating model.

Year ended March 31, 2017:

(a) The estimated gross carrying amount at default is '' 538.34 million (March 31, 2016: 485.43 million, April 1, 2015: Nil) for Investments and loans and deposits. Consequently expected credit loss of an amount of '' 52.91 million for the year ended March 31, 2017 (March 31, 2016 - '' 485.43 million) has been recognized.

(b) Expected credit loss for trade receivables under simplified approach

Customer credit risk is managed by the Company based on the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an on an internal credit rating system. Outstanding customer receivables are regularly monitored and assessed for its recoverability.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 10. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers has sufficient capacity to meet the obligations and the risk of default is negligible.

(B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements

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

The credit facility sanctioned by the banks are subject to renewal every year.

Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and can be renewed for further period of 1 year.

(ii) Maturities of financial liabilities

The tables below analyses the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

a) all non-derivative financial liabilities, and

b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

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

(ii) Price risk

The Company''s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet as fair value through OCI.

To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

Sensitivity

The table below summarizes the impact of increases/decreases of the index on the Company''s equity and profit for the period. The analysis is based on the assumption that the equity index had increased by 5% or decreased by 5% with all other variables held constant, and that all the Company''s equity instruments moved in line with the index.

Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as fair value though other comprehensive income.

40 Capital management

(a) Risk management

The Company''s objectives when managing capital are to

- provide returns for shareholders and benefits for other stakeholders, and

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

Consistent with others in the industry, The company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by

Total ''equity'' (as shown in the balance sheet).

The current gearing ratio of the Company is as

(ii) Dividends not recognized at the end of the reporting period

In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of '' 1 per fully paid equity share (March 31, 2016 - Rs, 1). This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.

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

Joint venture Elgi Sauer Compressors Limited

Industrial Air Solutions LLP

Key management personnel Mr. Jairam Varadaraj, Managing Director

Mr. Sriram S, Chief Financial Officer

Relatives of Key Mr. Anvar Jay Varadaraj, son of Mr. Jairam Varadaraj

Management Personnel Mr. Varun Jay Varadaraj, son of Mr. Jairam Varadaraj

Other companies / firms in L.G. Balakrishnan & Bros Limited

which directors or their Elgi Ultra Industries Limited

relatives are interested Ellargi & Co

Elgi Rubber Company Limited

LGB Forge Limited

Pricol Travels Limited

Festo Controls Private Limited

Magna Electro Castings Limited

LGB Fuel Systems Private Limited

Elgi Automotive Services Private Limited

Details of Joint Ventures

The Company has 26% interest in Joint venture called Elgi Sauer Compressors Limited which was set up as company together with JP Sauer & Sohn Maschinenbau GMBH to sell compressors and their parts along with rendering engineering services.

Industrial Air Solutions LLP is engaged in the distribution of products of ELGi Equipments Limited.

Details of Joint Operations

The Company has 98% interest in a joint arrangement called L.G. Balakrishnan & Bros (Firm) which was set up as partnership together with Elgi Ultra Industries Limited to earn rental income from Investment Property.

The Company has 80% interest in a joint arrangement called Elgi Services which was set up as partnership together with Elgi Ultra Industries Limited.

2. Events occurring after the reporting period

Refer Note 40 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.

The information has been given in respect of vendors to the extent they could be identified as "Micro and Small enterprises" on the basis of information available with the Company.

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the November 8, 2016.

3. Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet at April 1, 2015 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions A.1.1 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date or the specific date prior to the transition date so chosen. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in joint ventures.

A.1.2 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value adjusted for the impact of outstanding government grant relating to purchase of property plant and equipment and use the value so arrived as the deemed cost of the property, plant and equipment, intangible assets and investment property.

A.1.3 Designation of previously recognized financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investments in equity investments.

A.1.4 Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts / arrangements.

A.1.5 Investments in subsidiaries and joint ventures

If a first-time adopter measures investments in subsidiary, joint venture or associate at cost in accordance with Ind AS 27, Ind AS 101 allows the entity to measure such investments at one of the following amounts in its separate opening Ind AS Balance Sheet.

(a) Cost determined in accordance with Ind AS 27 or

(b) Deemed cost.

The deemed cost of such an investment shall be its

(i) fair value at the entity''s date of transition to Ind AS in its separate financial statements or

(ii) previous GAAP carrying amount at that date.

The above options can be selected for each investment. Accordingly the Company has elected to measure all investments in subsidiary and joint venture at their previous GAAP carrying value, except for investments in its subsidiary SAS Belair (France) and Elgi Compressors Do Brazil Imp. E. Exp. LTDA which have been measured at fair value on the date of transition.

A.1.6 Joint Operations

Ind AS 101 provides an exemption for changing from equity method to accounting for share of assets and liabilities. As per the exemption, when changing from the equity method to accounting for share of assets and liabilities in respect of its interest in a joint operation, an entity shall, at the date of transition to Ind AS, derecognize the investment that was previously accounted for using the equity method and any other items that formed part of the entity''s net investment in the arrangement and recognize its share of each of the assets and the liabilities in respect of its interest in the joint operations.

The Company has elected to apply this exemption for its joint operation.

A.2 Ind AS mandatory exceptions A.2.1 Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

-Investment in equity instruments carried at FVPL or FVOCI;

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

-Provision for constructive obligations.

A.2.2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

A.2.3 Impairment of financial assets

Ind AS 101 provides that if at the date of transition the determination of increase in credit risk since initial recognition is difficult, loss allowance to be provided at an amount equal to lifetime expected credit losses at each reporting date until de-recognition.

*The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.

C. Notes to first-time adoption

4. Joint Operations

Under previous GAAP, L.G. Balakrishnan & Bros. and Elgi Services were accounted for using the equity method. Under Ind AS, L.G. Balakrishnan & Bros. and Elgi Services have been classified as jointly controlled entities and accounted for using the proportionate consolidation method since the partnership does not have a separate legal form.

The Company has determined its interest in the assets and liabilities relating to the joint operation on the basis of its rights and obligations in a specified proportion in accordance with the contractual arrangement. The Company has measured the initial carrying amounts of the assets and liabilities by disaggregating them from the carrying amount of the investment of Rs, 124 million and Rs, 0.4 million in L.G. Balakrishnan & Bros. and Elgi Services respectively at the date of transition to Ind AS on the basis of the information used by the entity in applying the equity method.

5. Classification - Debt vs. Equity and corresponding impact of changes in foreign exchange rate

Under the previous GAAP there was no separate standard on financial instruments and classification of financial instrument into debt or equity was based on the legal form of the instrument. Under Ind AS the accounting and classification of Financial Instruments are governed by Ind AS 109 and Ind AS 32. These standards provide for classification and measurement of instruments based on substance rather than legal form.

The Company has assessed the amounts previously classified as loan under the earlier GAAP and has determined the same to be in the nature of equity per the requirements of Ind AS. Accordingly a sum of

Rs. 934.75 million as at March 31, 2016 (April 1, 2015 -Rs. 701.65 million) has been reclassified from loans to investment in subsidiaries.

Consequent to above reclassification, the said amounts no longer satisfy the definition of monetary item under Ind AS 21. Accordingly the Company has reversed foreign exchange gain amounting to Rs. 55.51 million with corresponding decrease in profit for the year ended March 31, 2016.

6. Deemed Cost for Investment in Subsidiaries

As detailed in Note A.1.5 above, the Company has elected to measure all investments in subsidiaries and joint venture at their previous GAAP carrying value, except for investments in its subsidiary SAS Belair (France) and Elgi Compressores Do Brazil Imp. E. Exp.

LTDA which have been measured at fair value on the date of transition. Accordingly the Company has accounted for a loss of of Rs. 546.80 million in its opening retained earnings as at April 1, 2015, being the difference between the fair value of the investments and their carrying amount under previous GAAP.

7. Fair valuation of investments

Under the previous GAAP, long-term investments in equity instruments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments (other than interests in subsidiaries, associates and joint ventures) are required to be measured at fair value.

Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognized in FVOCI - Investment Fair valuation reserve as at the date of transition and subsequently in the statement of other comprehensive income for the year ended March 31, 2016. Consequent to the above, the total equity as at March 31, 2016 has increased by Rs. 42.41 million (April 1, 2015 - Rs. 40.83 million) and other comprehensive income for the year ended March 31, 2016 increased by Rs. 1.58 million.

8. Investment property

Under the previous GAAP, investment properties were presented as part of non-current investments. Under Ind AS, investment properties are required to be separately presented on the face of the balance sheet. Accordingly a sum of Rs. 57.95 million as at March 31, 2016 (April 1, 2015 - Rs. 58.78 million) has been reclassified from non-current investments to investment property. There is no impact on the total equity or profit as a result of this adjustment.

9. Expected Credit Loss

Under the previous GAAP, allowance for financial assets were recognized upon the occurence of the loss event. As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowances for financial assets. As a result, the allowance for trade receivables has increased by Rs. 33.75 million and allowance for impairment of investment has increased by Rs. 19.66 million as at March 31, 2016 (April 1, 2015 - Rs. 21.62 million and nil respectively ). Consequently, the total equity as at March 31, 2016 has decreased by Rs. 53.41 million (April 1, 2015 - Rs. 21.62 million) and profit for the year ended March 31, 2016 has decreased by Rs. 31.79 million.

10. Provisions for constructive obligations

Under the previous GAAP, provisions were not recognized for constructive obligations. Under Ind AS, provisions are measured for present obligations (both legal and constructive) as a result of a past event where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. Accordingly the Company has recognized a provision for certain after sales expenses resulting from a constructive obligation amounting to Rs. 65.53 million as at March 31, 2016 (April 1, 2015 -Rs. 45.65 million). Consequently, the total equity as at March 31, 2016 has decreased by Rs. 65.53 million (April 1, 2015 - Rs. 45.65 million) and profit for the year ended March 31, 2016 has decreased by Rs. 19.88 mil I ion.

8. Proposed dividend

Under the previous GAAP, dividend proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as an adjusting event. Accordingly, provision for proposed dividend including dividend distribution tax was recognized as a liability. Under Ind AS, such dividend is recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 190.71 Million as at March 31, 2016 (April 1, 2015 - Rs. 190.71 Million) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently the amount approved by the shareholders amounting to Rs. 190.71 million for the period 2014-15 has been recognized as a liability in the year ended March 31, 2016.

9. Forward Contracts not designated as hedging instruments

Under the previous GAAP, the Company applied the requirements of Accounting Standard 11, ''The effects of changes in foreign exchange rates'' to account for forward exchange contract for hedging foreign exchange risk related to recognized trade payables. At the inception of the contract, the forward premium was separated and amortized as expense over the tenure of the contract. The underlying trade payables and the forward contract were restated at the closing spot exchange rate. Under Ind AS, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognized in Statement of profit and loss. The above transition resulted in a net loss of Rs. 0.82 Million for the year ended March 31, 2016.

10. Revenue

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of products is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2016 by Rs. 551.58 Million. There is no impact on the total equity and profit.

Under the previous GAAP, discounts in the nature of cash and volume discount have presented as item of expense in the statement of profit and loss account. However under Ind AS revenue is to be recognized at the fair value of consideration received or receivable after considering such discounts. Consequently, revenue from operations for the year ended March 31, 2016 has decreased by Rs. 35.14 million with a corresponding decrease in other expenses. There is no impact on the total equity and profit.

Consequent to the above adjustments, net impact on revenue for the year ended March 31, 2016 is an increase of Rs. 516.44 million with no impact on total equity and profit.

11. Remeasurements of post-employment benefit obligations

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 the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 increased by Rs. 28.16 Million. There is no impact on the total equity as at March 31, 2016.

12. Provision for Financial Guarantee

The Company has provided financial guarantee to lenders of money to its subsidiary Elgi Equipments (Zhejiang) Limited and its erstwhile subsidiary Belair SAS. Under the previous GAAP financial guarantees so provided were disclosed as contingent liability. Under Ind AS, such guarantees are to be recorded initially at fair value and subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognized less cumulative amortization, where appropriate. Accordingly the management has recognized a provision for these guarantees based on its best estimate of the outflow expected to be paid in the event such guarantees are invoked by the respective lenders amounting to Rs. 68.86 million for the year ended March 31, 2016 (April 1, 2015 - Rs. nil).

13. Government Grant

Under the previous GAAP, the Company had reduced the Government grants related to procurement of assets from the carrying amount of fixed asset. Under Ind AS, asset related government grants shall not be reduced from the carrying amount of asset but are required to be presented as deferred income and amortized over the useful life of the asset. Consequently the Company has recognized the outstanding government grant as at the transition date amounting to Rs. 64.78 million (Non current portion - Rs.55.85 million and current portion -Rs. 8.93 million) pertaining to capital goods imported under EPCG Scheme and recognized the same as deferred income with the corresponding impact in property, plant and equipment. As a result of the above recognition, there has been an increase in depreciation expense amounting to Rs. 8.94 million with a corresponding increase in other income for the year ended March 31, 2016. There is no impact on the total equity as at March 31, 2016 and April 1, 2015 as a result of the above transition.

14. Deferred tax

Deferred tax has been recognized on the adjustments made on transition to Ind AS.

15. Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

16. Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

17. The annual accounts of the below listed Subsidiary Companies and the related detailed

information will be made available on the website of the company viz. www.elgi.com. Also, the accounts will be made available for inspection at the Registered Office of the Holding Company.

1 ATS Elgi Limited, Coimbatore, India

2 Adisons Precision Instruments Mfg.Co. Limited, Coimbatore, India

3 Elgi Equipments (Zhejiang) Limited, Jiaxing, China

4 Elgi Gulf (FZE), Sharjah, U.A.E

5 Elgi Compressors Trading (Shanghai) Co. Ltd, China

6 Elgi Compressor Do BRASIL IMP.E.EXP.Ltda- Brazil

7 Elgi Australia Pty Ltd, Australia

8 Elgi Compressors Italy S.r.l.

9 Elgi Compressors USA Inc

10 Ergo Design Private Limited, Bangalore, India

11 Patton''s Inc, USA

12 Patton''s Medical LLC., USA

13 PT Elgi Equipments Indonesia

14 Rotair Spa, Italy

18. DISCLOSURES PURSUANT TO SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATION AND DISCLOSURES AND DISCLOSURES REQUIREMENTS) REGULATIONS, 2015 AND SECTION 186 OF THE COMPANIES ACT, 2013


Mar 31, 2016

1 Investment in SAS Belair

The Company in its letter to Bombay Stock Exchange Limited ("BSE'') and National Stock Exchange Limited (''NSE'') has intimated that business operations of SAS Belair, France are not smooth and the cost structures are challenging. The subsidiary has filed for protective action with the Commercial Court in Anncy, France. Pursuant to this the court has appointed an Administrator on April 26, 2016. Hence, the subsidiary is no longer under the control of the company and the company is under Legal redress as per the French Laws.

The Management is of the view that there will be no further liabilities on account of such restructuring. No provision has been considered for the carrying value of the investments, advances and receivables aggregating to Rs. 526.51 Million, as the same would be evaluated and provided depending upon the progress of the above said legal proceedings in France.

2 The annual accounts of the below listed Subsidiary Companies and the related detailed information will be made available on the website of the Company viz. www.elgi.com. Also, the accounts will be made available for inspection at the Registered Office of the Holding Company.

1 ATS Elgi Limited, Coimbatore, India

2 Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

3 Elgi Equipments (Zhejiang) Limited, Jiaxing, China

4 Elgi Gulf (FZE), Sharjah, U.A.E.

5 Elgi Compressors Trading(Shanghai) Co.Ltd, China

6 SAS Belair, France

7 Elgi Compressores Do BRASIL IMP. E.EXP. Ltda, Brazil

8 Elgi Australia Pty Ltd, Australia

9 Elgi Compressors Italy S.r.l.

10 Elgi Compressors USA Inc

11 Rotair Spa, Italy

12 Patton''s Inc., USA

13 Patton''s Medical LLC., USA

14 PT Elgi Equipments Indonesia

15 Ergo Design Private Limited, from Jan 2016

3 Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

4 Previous year figures have been regrouped and re-classified wherever necessary to make them comparable.


Mar 31, 2015

1 CONTINGENT LIABILITIES AND COMMITMENTS

a) Claims against the Company not acknowledged as debts:

Name of the Statute Nature of the Demand dues Amount [Rs. In Million]

Sales Tax LST& Penalty 8.49 LST& Penalty 59.79 CST & Penalty 29.87 CST 3.28

Central Excise Excise Duty & Penalty 0.29 Excise Duty & Penalty 5.46

Name of the Statute Amount Forum where disputes are Paid/Adj Pending [Rs. In Million]

Sales Tax 8.51 STAT (AB)-Cbe - The High Court of Madras 22.40 STAT (AB)-Cbe 2.28 JC (APPEALS)-Cbe Central Excise 0.01 Dy. Commnr.Appeals 0.34 CESTAT

The Company has filed appeals with the appropriate authorities of Central Excise and Sales Tax Department against their claims.

i) Guarantees and Letter of credit 298.80 334.08

ii) Estimated amount of contracts remaining to be executed on capital account 10.93 1066.97

In addition to the above, the Company has given SBLCs/ LOCs of USD 2 Million, USD 23.8 Million and Euro 8.95 Million in favour of its Subsidiaries Elgi Equipments (Zhejiang) Limited, Elgi Compressors USA Inc. and Elgi Compressors Italy S.r.l, respectively and Corporate Guarantee of USD 3 Million has been given in favour of Elgi Compressors USA Inc.

2 Details of security given for borrowings:

Borrowing from Banks Details of Security

Fund Based and Non-Fund Based Limits Pari-Passu charge on specified Fixed Assets and the Currrent Assets of the Company from Banks

The information has been given in respect of vendors to the extent they could be identified as "Micro and Small enterprises" on the basis of information available with the Company.

Name of related parties and description of relationship

1 Holding Company Elgi Equipments Limited

2 Subsidiaries including step down subsidiaries

Elgi Equipments Limited

a. Adisons Precision Instruments Manufacturing Company Limited

b. ATS Elgi Limited

c. Elgi Gulf (FZE)

d. Elgi Equipments (Zhejiang) Limited (China)

e. Elgi Compressors Trading (Shanghai) Co. Ltd (China)

f. SAS Belair (France)

g. Elgi Compressors Do Brasil Imp.E.Exp. Ltda. h

ElgiEquipmentsAustraliaPtyLtd.

i. Elgi Compressors Italy S.r.l.

j. ElgiCompressorsUSAInc.

k. Rotair Spa. (Italy)

l. Patton''s Inc. (USA)

m. Patton''s Medical LLC.(USA)

n. PT.ElgiEquipmentsIndonesia

3 Joint Venture Elgi Sauer Compressors Limited

4 Other Companies / Firms in which Directors or their relatives are interested

a. Elgi Ultra Industries Limited

b. Elgi Rubber Company Limited

c. LG.Balakrishman&BrosUmited

d. Ellargi&Co

e. LGB Forge Limited

f. Ergo Designs Private Limited

g. Pricol Travels Limited

h. Festo Controls Pvt Limited

i. LGB Fuel Systems Pvt Ltd

j. Magna Electro Castings Limited

5 Firms in which the Company is a partner a. Elgi Services

b. LG.Balakrishnan&Bros

6 Key Managerial Personnel

Mr. Jairam Varadaraj, Managing Director

Mr. S. Sriram, Chief Financial Officer

Ms.Vaishnavi PM, Company Secretary from 1st August 2014

Mr. R. Syam Kumar, Company Secretary till 29th May 2014


Mar 31, 2014

[ Rs.. In Million]

1 CONTINGENT LIABILITIES AND COMMITMENTS a) Claims against the company not acknowledged as debts:

Name of the Statute Nature of the Demand Amount Forum where disputes is dues Amount Paid / Adj Pending [In Million][In Million]

Sales Tax LST & Penalty 8.49 8.51 STAT (AB) -Cbe LST & Penalty 574.36 - High Court, Madras CST & Penalty 29.87 20.66 STAT (AB) -Cbe CST 3.28 3.28 JC (APPEALS) -Cbe Central Excise Excise Duty & Penalty 11.60 0.00 Dy. Commnr. Appeals Excise Duty & Penalty 3.01 0.10 CESTAT

The Company has filed appeals with the appropriate authorities of Central Excise and Sales Tax Department against their claims.

2.0 There was no forfeiture of shares during the year ended 31/03/2014.

2.1 Purchases include machining charges of Rs..63.66 Million (Previous year Rs..62.66 Million)

3 As required by Ministry of Corporate Affairs General Circular No.2/2011 dated 8th February 2011, the Board of Directors has given its consent for not attaching the Balance Sheet of the Subsidiary Companies listed below:

1) Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2) Elgi Equipments (Zhejiang) Limited, Jiaxing, China

3) Elgi Gulf (FZE), Sharjah, U.A.E.

4) Elgi Compressors Trading(Shanghai) Co.Ltd, China

5) SAS Belair, France

6) Elgi Compressores Do BRASIL IMP. E.EXP. Ltda, Brazil

7) Elgi Australia Pty Ltd, Australia

8) Elgi Compressors Italy S.r.l.

9) Elgi Compressors USA Inc

10) Rotair Spa, Italy

11) Patton''s Inc., USA

12) Patton''s Medical LLC, USA

13) PT Elgi Equipments Indonesia

However, the Company undertakes that the annual accounts of the Subsidiary Companies and the related detailed information will be made available to the Company''s investors seeking such information at any point of time. The annual accounts of the subsidiary companies are kept open for inspection by any investor at the registered office of the Holding and Subsidiary Companies.

4 Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

Name of related parties and description of relationship

1 Subsidiaries including step down subsidiaries :

a. Adisons Precision Instruments Manufacturing Company Limited

b. ATS Elgi Limited

c. Elgi-Gulf (FZE)

d. Elgi Equipments (Zhejiang) Limited (China)

e. Elgi Compressors Trading (Shanghai) Co. Ltd. (China)

f. SAS Belair (France)

g. Elgi Compressores DO BRASIL IMP. E.EXP. Ltda h. Elgi Australia Pty Ltd.

i. Elgi Compressors Italy S.r.l.

j. Elgi Compressors USA Inc

k. RotairSpa (Italy)

l. Patton''s Inc (USA)

m. Patton''s Medical LLC. (USA)

n. PT Elgi Equipments Indonesia

2 Joint Venture : Elgi Sauer Compressors Limited

3. Other Companies / Firms in which Directors are interested

a. Elgi Ultra Industries Limited

b. Elgi Rubber Company Limited

c. L.G. Balakrishnan & Bros Limited

d. Ellargi &Co

e. LGB Forge Limited

f. Magna Electro Castings Limited

g. LGB Fuel Systems (P) Ltd.

h. Festo Controls (P) Ltd.

i. Mape Advisory Group (P) Ltd.

j. Mape Securities (P) Ltd.

4. Firms in which the Company is a partner a. Elgi Services

b. LG. Balakrishnan & Bros

5 Key Managerial Personnel : Mr. Jairam Varadaraj, Managing Director

5 Previous year figures have been regrouped and re-classified wherever necessary to make them comparable.


Mar 31, 2013

1 As required by Ministry of Corporate Affairs General Circular No.2/2011 dated 8th February 2011, the Board of Directors has given its consent for not attaching the Balance Sheet of the Subsidiary Companies listed below:

1 Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2 Elgi Equipments (Zhejiang) Limited, Jiaxing, China

3 Elgi Gulf (FZE), Sharjah, U.A.E.

4 Elgi Compressors Trading(Shanghai) Co.Ltd, China

5 SAS Belair, France

6 Elgi Compressores Do BRASIL IMP. E.EXP. Ltda, Brazil

7 Elgi Australia Pty Ltd, Australia

8 Elgi Compressors Italy S.r.l.

9 Elgi Compressors USA Inc

10 Rotair Spa, Italy

11 Patton''s Inc., USA

12 Patton''s Medical LLC., USA

However, the Company undertakes that the annual accounts of the Subsidiary Companies and the related detailed information will be made available to the Company''s investors seeking such information at any point of time. The annual accounts of the subsidiary companies are kept open for inspection by any investor at the registered office of the Holding and Subsidiary Companies.

2 Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

Name of related parties and description of relationship

1 Holding Company : Elgi Equipments Limited

2 Subsidiaries including step down subsidiaries : a. Adisons Precision Instruments Manufacturing Company Limited

b. ATS Elgi Limited

c. Elgi-Gulf (FZE)

d. Elgi Equipments (Zhejiang) Limited (China)

e. Elgi Compressors Trading (Shanghai) Co. Ltd. (China)

f. SAS Belair (France)

g. Elgi Compressores DO BRASIL IMP. E.EXP. Ltda

h. Elgi Australia Pty Ltd.

i. Elgi Compressors Italy S.r.l.

j. Elgi Compressors USA Inc

k. Rotair Spa (Italy)

l. Patton''s Inc (USA)

m. Patton''s Medical LLC. (USA)

3 Fellow Subsidiaries : Nil

4 Joint Venture : Elgi Sauer Compressors Limited

5. Other Companies / Firms in which Directors : a. Elgi Ultra Industries Limited are interested b. Elgi Rubber Company Limited

c. L.G. Balakrishnan & Bros Limited

d. Ellargi & Co

e. LGB Forge Limited

6. Firms in which the Company is a partner a. Elgi Services

b. L.G. Balakrishnan & Bros.

7 Key Management Personnel : Dr. Jairam Varadaraj, Managing Director

3 Previous year figures have been regrouped and re-classified wherever necessary to make them comparable.


Mar 31, 2012

1 As required by Ministry of Corporate Affairs General Circular No. 2/2011 dated 8th February, 2011, the Board of Directors has given its consent for not attaching the Balance Sheet of the Subsidiary companies listed below :

1. Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2. Elgi Equipments (Zhejiang) Limited, Jiaxing,China

3. Elgi Gulf (FZE), Sharjah, UAE.

4. Elgi Compressors Trading (Shanghai ) Co. Ltd.

5. SAS Belair (France)

6. Elgi Compressors DO BRAZIL IMPD.E.EXP, Brazil

7. Elgi Australia Pty Ltd. Australia

However, the Company undertakes that the annual accounts of the Subsidiary Companies and the related detailed information will be made available to the Holding and Subsidiary Companies investors seeking such information at any point of time. The annual accounts of the Subsidiary Companies are kept open for inspection by any investor at the registered office of the Holding and Subsidiary Companies.

2 Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

Name of related parties and description of relationship:

1 Holding company Elgi Equipments Limited

2 Subsidiaries

a. Adisons Precision Instruments Manufacturing Company Limite

b. ATS Elgi Limited

c. Elgi-Gulf(FZE)

d. Elgi Equipments Zhejiang Limited (China)

e. Elgi Compressors Trading (Shanghai) Co.Ltd.(China)

f. SAS Belair (France)

g. Elgi Compressors DO BRAZIL IMPD.E.EXP h. Elgi Australia Pty Ltd.

3 Fellow Subsidiaries Nil

4 Associates

a. Elgi Ultra Industries Limited.

b. Elgi Rubber Company Limited

c. LG.Balakrishnan & Bros Limited.

d. Ellargi & co

e. Elgi Services.

f. L.G. Balakrishnan & Bros.

g. LGB Forge Limited

5. Joint Venture Elgi Sauer Compressors Limited.

6 Key Management Personnel Dr. Jairam Varadaraj, Managing Director

3 Previous year figures have been regrouped and re-classified where ever necessary to make them comparable.


Mar 31, 2011

1) Estimated amount of contracts remaining to be executed on capital account is Rs.214.06 million (Previous year Rs.116.86 million).

2) Contingent Liabilities not provided for

Particulars 31/03/2011 31/03/2010 (Rs. In Million)(Rs. In Million)

a) Guarantees and Letter of Credit 192.16 86.14

b) Uncalled liability in respect of Partly paid shares 0.39 0.39

3) During the year, the Company issued 78935454 nos. of Bonus Shares at the ratio of 1:1, by capitalization of Share Premium. Further, 583600 nos of shares at Re.1 each were issued under Employees Stock Purchase Scheme to the eligible employees.

4) Rent includes Rs.0.12 million paid to Subsidiary Company, M/s. Adisons Precision Instruments Manufacturing Company Limited. (Previous year Rs.0.12 million)

5) As required by Ministry of Corporate Affairs General Circular No. 2/2011 dated 8th February 2011, the Board of Directors has given its consent for not attaching the Balance Sheet of the Subsidiary companies listed below :

1. Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2. Elgi Equipments (Zhejiang) Limited, Jiaxing,China

3. Elgi Gulf (FZE), Sharjah, UAE.

4. Elgi Compressors Trading (Shanghai ) Co. Ltd.

5 SAS Belair (France)

However, the Company undertakes that the annual accounts of the Subsidiary Companies and the related detailed information will be made available to the Holding and Subsidiary Companies investors seeking such information at any point of time. The annual accounts of the Subsidiary Companies are kept open for inspection by any investor at the registered office of the Holding and Subsidiary Companies.

6) Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and Other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

Names of related parties and description of relationship:

1. Holding Company Elgi Equipments Limited

2. Subsidiaries Adisons Precision Instruments Manufacturing Company Limited

ATS Elgi Limited

Elgi-Gulf (FZE).

Elgi Equipments Zhejiang Limited (China)

Elgi Compressors Trading (Shanghai) Co. Ltd. (China)

SAS Belair (France)

3. Fellow Subsidiaries Nil

4. Associates a. Elgi Ultra Industries Limited.

b. Elgi Rubber International Limited

c. L.G.Balakrishnan & Bros Limited.

d. Ellargi & Co.

e. Elgi Services.

f. L.G.Balakrishnan & Bros .

5. Joint Venture Elgi Sauer Compressors Limited.

6. Key Management Personnel Dr.Jairam Varadaraj , Managing Director

20) The under noted companies constitute the "Group" in terms of Regulation 3(1) (e)( i ) of SEBI Substantial (Acquisition of Shares & Takeovers) Regulation,1997,as amended, with effect from 09.09.2002.

a) Elgi Ultra Industries Limited

b) Elgi Rubber International Limited.

c) L.G.Balakrishnan & Bros.Limited

d) Elgi Securities Limited

e) Dark Horse Portfolio Investments Limited

f) Madura Public Conveyance Private Limited

g) Premier Industrial Drives Private Limited

h) Elgi Sauer Compressors Limited.

i) Salem Services Private Limited

7) Previous year Figures have been regrouped and re-classified wherever necessary to make them comparable.


Mar 31, 2010

1) Amalgamation of Elgi Industrial Products Ltd. with the company

a) In accordance with the scheme of amalgamation approved by the Honorable High Court of Madras vide its order dated 24th Sep 2010 the entire undertaking of Elgi Industrial Products Ltd. (EIPL) with all its assets liabilities and reserves stand transferred to and vested in the company as a going concern with effect from 01/04/2009. The Amalgamation has been accounted under the "Pooling of Interest Method" as per accounting standards 14 -Accounting for Amalgamation issued by Institute of Chartered Accountants of India

b) Consequent to the above 7,62,600 Equity shares are proposed to be issued to the shareholders of EIPL as per the Scheme of Amalgamation.

c) In view of this amalgamation of the company by the High Court Order, the figures for the current year are not comparable with that of the previous year

2) Estimated amount of contracts remaining to be executed on capital account is Rs.1.16 million (previous year Rs.8.80 million).

3) Contingent Liabilities not provided for

Particulars 31.03.2010 31.03.2009

Particulars (Rs.in Million) Rs. In Millionn)

a) Guarantees and Letter of Credit 86.14 108.34

b) Uncalled liability in respect of Partly paid shares 0.39 0.39

4) As per the profit share scheme effective from 01.04.05 which is available to employees below the level of officers, a sum of Rs 22.10 million has been provided under head of Salaries, wages, bonus and gratuity (previous year Rs 28.20 million)

5) Rent includes Rs.0.12 million paid to Subsidiary Company, M/s.Adisons Precision Instruments Manufacturing Company Limited. (Previous year Rs.0.12 million)

6) The Company has been exempted by the Ministry of Corporate Affairs under section 211 (4) vide letter No. 46/40/2010-CL-l 11 Dt. 12/3/2010 from furnishing information under para 3(i) (a) and 3 (ii) (a) (1) & (2) of part II of Schedule VI to the Companies Act,1956 for the year ended 31/03/10.

7) a) The Company has been exempted by the Ministry of Corporate affairs vide letter No, 47/79/2010-CL-I 11 Dt.

24/02/2010 from publishing annual accounts of its following Subsidiary Companies as required under Section 212(8) of the Companies Act,1956.

1. Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2. Elgi Equipments Zhejiang Limited, China

3. Elgi Gulf (FZE), Sharjah, UAE.

4. Elgi Compressors Trading (Shanghai) Co. Ltd. (China)

b) The Company has been exempted by the Ministry of Corporate affairs vide letter No, 47/79/2010-CL-l 11 Dt. 07/05/2010 from publishing annual accounts of its following Subsidiary Company as required under Section 212(8) of the Companies Act,1956.

1. SABelair-France

However the Company undertakes that the annual accounts of the Subsidiary Companies and the related detailed information will be made available to the Holding and Subsidiary Companies investors seeking such information at any point of time. The annual accounts of the Subsidiary Companies are kept open for inspection by any investor at the registered office of the Holding and Subsidiary Companies.

8) Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and Other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

Note:

Names of related parties and description of relationship:

1. Holding Company Elgi Equipments Limited

2. Subsidiaries Adisions Precision Instruments Manufacturing Company Limited

ATS Elgi Limited

ELGI-GULF (FZE).

Elgi Equipments Zhejiang Limited (China).

Elgi Compressors Trading (Shanghai) Co.Ltd (China).

SA Belair- France

3. Fellow Subsidiaries Nil

4. Associates a. Elgi Ultra Industries Limited.

b. Treadsdirect Limited.

c. Elgi Rubber Company Ltd.

d. L.G.Balakrishnan & Bros Limited.

e. Ellargi & Co.

f. Elgi Services.

g. L.G.Balakrishnan & Bros .

5. Joint Venture Elgi Sauer Compressors Limited.

6. Key Management Personnel Dr.Jairam Varadaraj , Managing Director

9) The under noted companies constitute the "Group" in terms of Regulation 3(1) (e)( i ) of SEBI Substantial (Acquisition of Shares & Takeovers) Regulation, 1997,as amended.with effect from 09.09.2002.

a) Elgi Ultra Industries Limited

b) Treadsdirect Limited

c) Elgi Rubber Company Limited.

d) L.G.Balakrishnan & Bros.Limited

e) Elgi Securities Limited

f) Dark Horse Portfolio Investments Limited

g) Madura Public Conveyance Private Limited h) Premier Industrial Drives Private Limited

i) Elgi Sauer Compressors Limited.

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