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Notes to Accounts of Escorts Kubota Ltd.

Mar 31, 2023

(i) Details of assets held for sale :

The Company has a holding company named Kubota corporation w.e.f. 11 April, 2022.

The Company has issued total 2,04,625 (31 March 2022: 5,14,538) equity shares to employees (through Escorts Employees Benefit and Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of employee services.

The Company executed an agreement to sell in an earlier year, for transfer of 25 acres of land at Plot No. 219, Sector 58, Ballabhgarh, Haryana for a consideration of C9.00 crores. Further, during the year, the Company has additionally paid C8.54 crores to Haryana Shehri Vikas Pradhikaran (HSVP) under âLast and Final Settlement Scheme, 2022â towards settlement of enhancement dues related to the aforesaid land and the same is recoverable from the buyer of which C4.00 crores has been received as at 31 March 2023. Accordingly, the aforesaid payment of C8.54 crores has been accounted for as an addition to the land held for sale.

The said transfer is subject to necessary approval from Haryana Urban Development Authority (HUDA) and accordingly the consideration amount of C9.00 crores and receipt of additional payment of C4.00 crores as aforesaid is being classified in other current liabilities. Owing to the inordinate delay in obtaining approval from HUDA, the transfer has been delayed for more than a year that was not originally envisaged. However, the Company is taking necessary action to respond to the current conditions and favourable resolution is expected. Therefore, such land continues to be classified as held for sale.

(ii) Non-recurring fair value measurements

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell at the time of re-classification. A total write down of C0.76 crores was made in earlier years on account of such measurement for land.

(b) Rights/preferences/restrictions attached to equity shares

The Company has only one class of shares, i.e., equity shares having a face value of C10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of reserves:

(i) Securities premium

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

(ii) Employee''s stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.

(iii) Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(iv) Capital reserve

This reserve represents the excess of net assets taken, over the cost of consideration paid at the time of amalgamation done in earlier years. This reserve is not available for distribution to the shareholders.

(v) Treasury shares

Treasury shares represents Company''s own equity shares held by Escorts Employees Benefit and Welfare Trust, which is created for the purpose of issuing equity shares to employees under Company''s stock option plan.

(vi) General reserve

The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. This reserve is available for distribution to shareholders in accordance with provisions of Companies Act, 2013.

(vii) Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

(viii) Other comprehensive income (OCI)

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

1 Information about individual provisions:

Provision for claims

crores had been kept under Escrow as fixed deposit by the Company, which after renewal(s) along with interest cumulatively amounts to C171.78 crores as on 31 March 2023 (31 March 2022: C164.87 crores). In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser against the aforesaid tax demands arising on EHIRCL upon final adjudication in law, to the maximum extent of funds lying in the Escrow Account plus one-third of the remaining tax demand in excess of the balance in the Escrow Account or as may be finally settled between the parties. Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is C65.00 crores on 31 March 2023 (31 March 2022: C65.00 crores). The disputed tax demands on EHIRCL are presently reduced to Nil after the first appellate authority decided the disputed matters in the Company''s favour and the appeals filed by Income Tax Department against the orders of first appellate authority have been dismissed. The income-tax department has now filed appeal(s) before Hon''ble Delhi High Court where these are pending.

Provision for warranty

The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of outflows is expected to be within a period of five years. The provision is based on estimates made from historical warranty data associated with similar products and services. The Company expects to incur the related expenditure over the future periods.

a) Pursuant to the in-principle approval of the Board of Directors dated September 15, 2022 and the subsequent Share Purchase Agreement dated November 4, 2022 between the Company and Tadano Limited, Japan (Tadano) for sale of 7,27,65,000 equity shares held by the Company in Tadano Escorts India Private Limited (TEIPL), the Company has transferred the said equity shares to Tadano on November 9, 2022 at a consideration of C0.01 Crores and accordingly TEIPL has ceased to be a Joint Venture of the Company. The loss on sale of the aforesaid equity share amounting to C72.76 Crores, being, the excess of the carrying value over the aforesaid consideration received has been disclosed as exceptional item.

b) Represents provision for impairment in investment in Escorts Crop Solutions Limited amounting to C24.40 Crores.

32 Commitments and contingencies (H crores)
	31 March 2023	31 March 2022
A. Capital commitments
- Estimated amounts of contracts remaining to be executed on capital account and not provided for	133.83	189.11
- Letter of Credit/guarantees executed in favour of others	43.90	55.28
B. Contingencies
(i) Taxation related contingencies
Excise duty/ customs duty /service tax demands/ GST demands	466.25	464.41
Sales tax and other demands	32.21	34.13
Demand raised by income tax department, disputed by the Company and pending in appeal (refer note 1 below)	63.50	63.40
(ii) Others
Cases under litigation relating to :
- Personnel	5.19	5.22
- Others	59.56	32.02
(iii) Claims not acknowledged as debts	15.42	15.42

1. Contingencies for demand raised by income tax department, disputed by the Company and pending in appeal does not include Income tax cases pending w.r.t. Escorts Heart Institute and Research Center Limited since the amount is indeterminable (refer note 21 (ii) for details). Further the amount includes C32.17 crores ( 31 March 2022 C32.17 crores) in respect of matters which have been decided in favour of the Company, however the income tax department has preferred appeals at the next levels.

2. The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered. Penalties wherever quantified have been included.

B Fair values hierarchy

The fair value of financial instruments as referred to in note (A) above has been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements].

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

Level 3: Inputs which are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a net asset value or valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

a. Valuation process and technique used to determine fair value

(i) The fair value of quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(ii) The fair value of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in the published statements as at the Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

(iii) The derivative financial instruments are valued using forward exchange rates as at the balance sheet date.

The management assessed that fair values of other current financial assets, cash and cash equivalents, other bank balances, trade receivables, short term borrowings, trade payables and other current financial liabilities approximate their respective carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Company''s fixed interest-bearing receivables and lease liabilities are determined by applying discounted cash flows (âDCF'') method on contractual cash flows, using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2023 was assessed to be insignificant.

(iii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Company''s creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values. However, there are no long-term borrowings as at 31 March 2023 and 31 March 2022.

C Financial Risk Management

Risk Management

The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements

The Company''s risk management is carried out by a central treasury department (of the Company) under policies approved by the Board of Directors. The Board of Directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

C.1 Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and other financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed 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.

(i) Low credit risk

(ii) Moderate credit risk

(iii) High credit risk

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

* Represents carrying values of financial assets, without deduction for expected credit losses ** Represents target maturity funds at amortised cost

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit from customers where credit risk is high and taking insurance cover for receivables. The Company closely monitors the creditworthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. In case of trade receivables, default is considered to have occurred when amounts receivable become one year past due.

Trade receivables are generally extended a credit period of 0 to 90 days, except in case of sale to government, where the credit period is governed by terms of the order or the tender document and do not involve any significant financing component.

Other financial assets measured at amortised cost

Other financial assets measured at amortised cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system are in place ensure the amounts are within defined limits.

b) Expected credit losses for financial assets

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

- For cash & cash equivalents and other bank balances - Since the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low.

- For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

- For other financial assets - Credit risk is evaluated based on Company''s knowledge of the credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply

consistently to entire population. For such financial assets, the Company''s policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default (net of any recoveries from the insurance companies) relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for).Trade receivables amounting to C221.99 crores (31 March 2022: C149.18 crores) are secured by way of security deposits from customer and letter of credit issued by banks. The letter of credit are issued by reputable banks and their credit risk is assessed to be low.

The Company estimates loss allowance provision for the railway products division at 100% for the debtors (other than government) outstanding more than one year as at the reporting date and historical loss rate on the sales made during the year.

* Auto products business was discontinued and all assets & liabilities were transferred under a sale agreement executed in FY 2016-17, except certain receivables and other assets which remained with the Company.

C.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

The cash credit and other facilities may be drawn at any time and may be terminated by the bank without notice. For long term borrowings, there were no undrawn facilities as at 31 March 2023.

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities.

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

C.3 Market isk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO, GBP and JPY . Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the volume of foreign currency transactions, the Company has taken forward contracts to manage its exposure. The Company does not use forward contracts and swaps for speculative purposes.

b) Interest rate risk

i) Liabilities

The Company''s policy is to minimise interest rate cash flow risk exposures on external financing. There are no outstanding borrowings as at 31 March 2023 and 31 March 2022 and accordingly exposure to interest rate risk and sensitivity thereof is not disclosed.

ii) Assets

The Company''s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

c) Price risk

i) Exposure

The Company''s exposure to price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.

ii) Sensitivity

The table below summarises the impact of increases/decreases of the index on the Company''s equity and profit for the period :

36 Capital management

The Company'' s capital management objectives are

- to ensure the Company''s ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company''s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

37 Employee benefits

A Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employee''s last drawn basic salary per month computed proportionately for 15 days multiplied by the number of years of service.

Gratuity is payable to the employees on death or resignation or on retirement at the attainment of superannuation age. To provide for these eventualities, the Actuary has used Indian Assured Lives Mortality (2012-14) Ultimate table.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied which was applied while calculating the defined benefit obligation recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

B Compensated absences (unfunded)

The leave obligations cover the Company''s liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as non-current. Amount of C3.17 crores (previous year: C5.64 crores) has been recognised in the statement of profit and loss.

Pension liability arises on account of future payments, which are required to be made after retirement. It is a special plan in which selective retired employees are getting some fix amount of pension on quarterly and annual basis.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds and that have terms to maturity approximating to the terms of the related obligation. Pension growth rate is Company''s long term best estimate as to salary increases and takes account of inflation, on long term basis as provided in relevant accounting standard. As this is a fix pension plan so this has been assumed as nil.

Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated.

Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.

D Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to C22.21 crores (Previous year: C20.64 crores) and contribution to Employee State Insurance Scheme for the year aggregated to C0.28 crores (Previous year: C0.19 crores).

E The Company has taken an insurance policy for medical benefits in respect of its retired and working employees. The insurance policy for on-roll employees is fully funded by the Company

The Company has leases for the factory lands, marketing offices, depots and related facilities. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security against the Company''s other debts and liabilities. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Company must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.

The Company has considered automatic extension option available for land leases in lease period assessment since the Company can enforce its right to extend the lease beyond the initial lease period. The Company also has plans of setting up production facility on the land, therefore is likely to be benefited by exercising the extension option.

Lease payments not recognised as a liability

The Company has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. The Company does not have any liability to make variable lease payments for the right to use the underlying asset recognised in the financials statements. The expense relating to payments not included in the measurement of the lease liability for short term leases is C5.48 crores (previous year: 5.71 crores).

Total cash outflow for leases for the year ended 31 March 2023 was C17.09 crores (previous year:.C16.58 crores).

The above disclosure has been determined to the extent such parties have been identified on the basis of information

available with the Company. This has been relied upon by the auditors.

42 (a) Subsequent to approval of the Board of Directors on 15 July 2020 for selective reduction of share capital of the Company by cancelling and extinguishing 1,22,57,688 Equity Shares, held by the Escorts Benefit and Welfare Trust, the Company filed a Scheme for reduction of share capital ("the Scheme") between the Company and its shareholders, under Section 66 read with Section 52 and other applicable sections of the Companies Act, 2013 and National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016, with the Hon''ble NCLT of Chandigarh ("the Tribunal") on 13 March 2021. The Scheme was approved by the Hon''ble NCLT Bench, Chandigarh (âNCLTâ) vide its order dated December 23, 2021 (âOrderâ). The scheme became effective upon filing of the certified copy of the order of the Tribunal sanctioning this Scheme and the minute of reduction with the RoC on 27 December 2021.

(b) On November 1, 2021, the Company has acquired 40,500 equity shares of face value of C10/- each, of EKL CSR Foundation (Formerly, Escorts Skill Development) (ECF), a section 8 Company, consequently, effective November

I, 2021, the Company holds entire equity share capital (50,000 equity shares of face value C10/- each) of ECF and accordingly, it has become wholly owned subsidiary of the Company.

40 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 (âEntry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 (âHLADTâ). The said Act was held unconstitutional by the Hon''ble Punjab & Haryana High Court in their judgment dated 1 October 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which was disposed of by the Hon''ble Supreme Court by nine Hon''ble Judges of Constitution Bench and hence that Compensator issue is no more relevant as it does not arise out of the Constitution but imaginary. Matters are not decided by Division Bench by making an order that the interested parties may prefer writs before the High Court. Hence the matter remains pending till its decision. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

(c) Pursuant to the approval of the Board of Directors of the Company and the Share Subscription Agreement ("SSA"), Shareholders'' Agreement ("SHA") and other ancillary agreement dated November 18, 2021 in relation to issue and allotment of equity share capital through preferential issue of 93,63,726 equity shares ("preferential issue") of face value of C10 at C2,000 per share (including a premium of C1,990 for each equity share) to Kubota Corporation, Japan, a company incorporated under the laws of Japan (âInvestorâ), and the approval of the the Shareholders of the Company for the preferential issue on December 18, 2021 and requisite regulatory approvals, the Company has allotted the aforesaid equity shares on December 18, 2021, upon receipt of the requisite amount (C1,872.75 Crores) from the Investor.

(d) Pursuant to the Public Announcement ("PA") dated November 18, 2021 in relation to the open offer to the Public Shareholders of the Company by Kubota Corporation ("Acquirer"), Detailed public statement (DPS) dated November 25, 2021 and Letter of Offer (LoF) dated March 3, 2022, for acquisition of up to 37,491,556 fully paid-up equity shares of face value of C10 Each (âEquity Sharesâ), representing 28.42% of the equity share capital of the Company from the public shareholders, the Acquirer on April 11,2022, has completed the said acquisition of 3,74,91,556 equity shares from the public shareholders of the Company. Consequently, the acquirer currently holds 44.80% equity share capital of the Company.

(e) Post the completion of the preferential allotment and open offer as mentioned in Note 42 (c) and Note 42(d) above, the Share Subscription Agreement (âSSAâ) and Shareholders'' Agreement (âSHAâ) dated November 18, 2021 executed among the Kubota Corporation ("Investor"), the Company, certain Existing Promoters has become effective on April

II, 2022, and accordingly, Kubota Corporation has become a Joint Promoter of the Company effective April 11, 2022 along with existing promoters of the Company.

(f) The Board of the Directors of the Company on February 18, 2022 had approved a draft Scheme for Selective Capital Reduction ("Scheme"), under Section 66, Section 52 and other applicable provisions of the Companies Act, 2013, read with the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 ("NCLT Rules") for selective reduction of the share capital of the Company by cancelling and extinguishing 2,14,42,343

Equity Shares, held by the Escorts Benefit and Welfare Trust. The scheme has been cleared by the stock exchanges vide their no observation letters dated June 29, 2022 and has been approved by the shareholders on August 5, 2022. Subsequently, the Scheme was filed with the NCLT, Chandigarh, on August 14, 2022 and the approval is awaited.

(g) The Board of the Directors of the Company on September 15, 2022 had approved a Scheme for Amalgamation ("Scheme"), under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, and rules framed thereunder. The Scheme, inter alia, provides for amalgamation of Escorts Kubota India Private Limited and Kubota Agricultural Machinery India Private Limited (Amalgamating Companies) into and with Escorts Kubota Limited (Amalgamated Company). The Scheme is subject to approvals of requisite majorities of the shareholders, creditors, regulatory authorities including stock exchanges and the National Company Law Tribunal, Chandigarh bench (NCLT). The Scheme is pending with the National Stock Exchange Limited and Bombay Stock Exchange for approval, post which the same will be filed with the NCLT for approval.

(h) Pursuant to the in-principle approval of the Board of Directors dated September 15, 2022 and the subsequent Share Purchase Agreement dated November 4, 2022 between the Company and Tadano Limited, Japan (Tadano) for sale of 7,27,65,000 equity shares held by the Company in Tadano Escorts India Private Limited (TEIPL), the Company has transferred the said equity shares to Tadano on November 9, 2022 at a consideration of C0.01 Crores and accordingly TEIPL has ceased to be a Joint Venture of the Company.

(i) Pursuant to the Business Transfer Agreement dated November 4, 2022 between the Company and TEIPL, for purchase of Rough Terrain (RT) Crane Business and the associated equipment and parts (including spare parts) from TEIPL at a lumpsum cash consideration C16.59 Crores on a slump sale basis, the related assets and liabilities of the RT Crane Business including certain other assets were transferred to the Company.

(j) a) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments

under the Income Tax Act, 1961, that has not been recorded in the books of account.

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

c) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

d) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.

e) No charges or satisfaction yet to be registered with ROC beyond the statutory period.

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

43 A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Escorts Construction Equipment Limited (âECEL''), a subsidiary company and Escotrac Finance and Investments Private Limited (âEscotrac'') and Escorts Finance Investments and Leasing Private Limited (âEFILL), joint ventures of the Company (together referred to as âtransferor companies''), was sanctioned by the Hon''ble High Court of Punjab and Haryana at Chandigarh vide its order dated 9 August 2012 (hereinafter referred to as âthe Scheme''). Upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana by the Transferor Companies and Transferee Company, the Scheme became effective on 12 October 2012. In accordance with the Scheme, 3,73,00,031 equity shares of the Company comprising (a) equity shares issued in consideration of amalgamation of ECEL and (b) investments held by two amalgamating entities in the Company were transferred to Escorts Benefit and Welfare Trust (âEBWT''). The beneficiary interest of the Company in EBWT, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

Post selective reduction of share capital of the Company as detailed in Note 42(a) above, EBWT presently holds 2,14,42,343 (31 March 2022: 2,14,42,343) equity shares of the Company and 2,34,97,478 (31 March 2022: 2,34,97,478) equity shares of Escorts Finance Limited (subsidiary of the Company).Market value of outstanding shares held by Trust on 31 March 2023 is C4,068.64 crores (31 March 2022: C3,640.76 crores).

The Company provide warranties on products sold by them and majority of these are in nature of assurance that the related products will function as the parties intended because it complies with agreed-upon specifications and hence accounted for in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets. Additionally, the Company extends its services by offering extended warranty with the sale of products which is deferred over the warranty period.

(ii) The Company has 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) provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

49 The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 âOperating Segments'', no disclosures related to segments are presented in these financial statements.

Mar 31, 2022

(i) Property, plant and equipment include assets in use for in house research and development Refer note 34 for details.

(ii) Contractual obligations

Refer note 32 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) Property, plant and equipment pledged as security

Refer note 44 for information on property, plant and equipment pledged as security by the Company.

(iv) Depreciation for the year has been included in "Depreciation and amortisation expenseâ line item in statement of profit and loss.

Where such information is not available, the independent valuer considers information from a variety of sources including:

a) In case of valuation of land, current prices in an active market for similar properties of the same area and localities have been taken.

b) In case of constructed building, rates derived from CPWD/CWC PARS as on 01-10-2012 have been taken as the basis of valuation. These rates have further been modified to bring them at par with the present day price index and as per specifications found at site. Necessary depreciation for age and life of the structure has been taken into account.

Where such information is not available, the independent valuer considers information from a variety of sources such as in case of right-of-use of land, fair value is determined by discounting market lease rentals for the remaining tenure of the lease.

(ii) Depreciation for the year has been included in âDepreciation and amortisation expenseâ line item in statement of profit and loss.

(i) Contractual obligations

Refer note 32 for disclosure of contractual commitments for the acquisition of intangible assets.

(ii) Expenses incurred and assets in use for in house research and development :

During the year, expenditure of C 112.97 crores (31 March 2021: C 100.86 crores) was incurred on research and development (excluding depreciation) recognised in statement of profit and loss.

Refer note 34 for detail.

(iii) Amortisation for the year has been included in line item âDepreciation and amortisation expenseâ in statement of profit and loss.

(i) Earmarked balances with banks largely pertain to balance in unspent CSR Account (refer note 29) and unclaimed dividends.

(ii) Fixed deposits with maturity of more than 3 months but less than 12 months includes C 0.16 crores (31 March 2021: C 0.15 crores) deposits held by the entity which are not available for use by the Company, as these are lien marked.

(iii) Balance in Escrow account is not available for use by the Company, refer note 21 (ii) for details.

(iv) C 0.41 crores (31 March 2021: C 0.15 crores) represent margin money pledged with various authorities.

(v) Other than as disclosed, there are no repatriation restrictions with respect to other bank balances as at the end of the reporting year and prior year.

(vi) The carrying values are a reasonable approximation of their fair values.

Notes:

(i) Details of assets held for sale :

a. The Company executed an agreement to sell in earlier years, for transfer of 25 acres of land at Plot No. 219, Sector 58, Ballabhgarh, Haryana for a consideration of C 9.00 crores. The said transfer is subject to necessary approval from Haryana Urban Development Authority (HUDA) and accordingly the consideration amount of C 9.00 crores is being classified in other current liabilities. Owing to the inordinate delay in obtaining approval from HUDA, the transfer has been delayed for more than a year that was not originally envisaged. However, the Company is taking necessary action to respond to the current conditions and favourable resolution is expected. Therefore, such land continues to be classified as held for sale.

b. During the year ended 31 March 2019, the Company purchased 135,000 equity instruments of Hughes Communications India Limited from Escorts Employee Welfare Limited at a purchase price of C 3.25 crores. On 29 March 2019, the Company had entered into an agreement with HNS-India VSAT, Inc. for the sale of these equity shares at a consideration of C 3.25 crores. During the year, the aforesaid agreement between the Company and HNS-India VSAT, Inc was terminated with mutual consent and an agreement to sell the aforesaid shares between the Company and with Bharti Airtel Limited was executed on 31 December 2021. These shares were transferred to Bharti Airtel Limited at a consideration of C 3.25 crores during the year.

c. On 29 March 2019, the Company had entered into a agreement with HNS-India VSAT, Inc. for the sale of 1,00,000 equity shares of Escorts Motors Limited at a consideration of C 1.67 crores. During the year, the aforesaid agreement along with an agreement with HNS-India VSAT, Inc., for sale of 9,50,000 between the Company and HNS-India VSAT, Inc was terminated with mutual consent and an agreement to sell the aforesaid shares between the Company and HNS Mauritius Limited

was executed on 16 February 2022. These shares were transferred to HNS Mauritious Limited at a consideration of C 17.49 crores. The resultant profit on disposal of these investments (net of expenses towards sale of these investments) have been disclosed as gain on disposal of assets held for sale under note 24.

d. The Board of the Directors of the Company on 2 February 2021 had approved for sale of 54,60,000 shared of C 10/- each in Escorts Securities Limited, a subsidiary company. On 08 April 2021, the Company had entered into a Share Purchase Agreement, to sell the aforesaid shares to Choice Equity Broking Private Limited ("purchaserâ). In terms of the agreement, upon necessary regulatory approvals and on the closing date, the aforesaid shares will be transferred to the purchaser, at an aggregate consideration to be decided on the closing date. During the current year, these shares were transferred to the purchaser at an aggregate consideration of C 5.46 crores. Consequently, Escorts Securities Limited has ceased to be a subsidiary of the Company with effect from 14 February, 2022

e. On 5 February 2021, the Company had entered into a memorandum of understanding (MOU) with AMPP Auto Innovators, for sale of its leasehold land (ROU), Buildings and Plant and Machinery situated at Plot No. 9, Sector 1, Industrial Area, II, Pantnagar, Rudrapur at an aggregate consideration of C 13.00 Crores. During the year, the said assets had been transferred to AMPP Auto Innovators and the resultant profit on disposal of these assets have been disclosed as gain on disposal of assets held for sale under note 24.

(ii) Non-recurring fair value measurements

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell at the time of re-classification. A total write down of C 0.76 crores was made in earlier years on account of such measurement for land.

(b) Rights/preferences/restrictions attached to equity shares

The Company has only one class of shares, i.e., equity shares having a face value of C 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(d) The Company does not have a holding company or an ultimate holding company.

(e) The Company has issued total 5,14,538 (31 March 2021: 1,80,119) equity shares to employees (through Escorts Employees Benefit and Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of employee services.

(i) Securities premium

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

(ii) Employeeâs stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.

(iii) Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(iv) Capital reserve

This reserve represents the excess of net assets taken, over the cost of consideration paid at the time of amalgamation done in earlier years. This reserve is not available for the distribution to the shareholders.

(v) Treasury shares

Treasury shares represents Companyâs own equity shares held by Escorts Employees Benefit and Welfare

Trust, which is created for the purpose of issuing equity shares to employees under Companyâs stock option plan.

(vi) General reserve

(vii) Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

(viii) Other comprehensive income (OCI)

1 Information about individual provisions:

Provision for claims

During the year 2005-06, the Company sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement (SPA) dated 25 September 2005. At the time of sale, EHIRCL had certain pending income-tax demands. For this purpose and in terms of said SPA, an amount of C 64.99 crores had been kept under Escrow as fixed deposit by the Company, which after renewal(s) along with interest cumulatively amounts to C 164.81 crores as on 31 March 2022 (31 March 2021: C 159.15 crores). In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser against the aforesaid tax demands arising on EHIRCL upon final adjudication in law, to the maximum extent of funds lying in the Escrow Account plus one-third of the remaining tax demand in excess of the balance in the Escrow Account or as may be finally settled between the parties. Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is C 65.00 crores on 31 March 2022 (31 March 2021: C 65.00 crores). The disputed tax demands on EHIRCL are presently reduced to Nil after the first appellate authority decided the disputed matters in the Companyâs favour and the appeals filed by Income Tax Department against the orders of first appellate authority have been dismissed. The income-tax department has now filed appeal(s) before Honâble Delhi High Court where these are pending.

Provision for warranty

1. Contingencies for demand raised by income tax department, disputed by the Company and pending in appeal does not include Income tax cases pending w.r.t. Escorts Heart Institute and Research Center Limited since the amount is indeterminable (refer note 21(ii) for details). Further the amount includes C 32.17 crores ( 31 March 2021 C 32.17 crores) in respect of matters which have been decided in favour of the Company, however the income tax department has preferred appeals at the next levels.

3. Pursuant to order dated 11 December 2014 passed by the Honâble Supreme Court of India, Chief Administrator HUDA, Panchkula enhanced the compensation amount @ C 1,987 per square meter for the general category allottees of plots in Sector 58, Ballabhgarh, Faridabad. Being aggrieved by the arbitrary action of Chief Administrator HSVP, Panchkula, "The Faridabad Industries Associationâ filed a Civil Writ Petition before the Honâble High Court of Punjab & Haryana at Chandigarh whereby the court passed directions for recalculation of enhancement demands to be raised. In view of the directions as passed by the Honâble High Court of Punjab & Haryana at Chandigarh, an Instruction no. 58 dated 14 December 2018 had been passed by HSVP, Panchkula for recalculation of enhancement fees. Inspite of the said directions, the Company received a demand from the Estate Officer, HSVP for a sum of C 37.61 crores approximately (inclusive of penalty and interest) dated 13 June 2019 on the basis of old rate of C 1,987 per square meter. In 2019, state government transferred the files related to such plots from HSVP to HSIIDC (Haryana State Industrial and Infrastructure Development Corporation). Further, when the Company sought details of the outstanding dues from HSIIDC in February 2022, HSIIDC informed that there is a sum of C 56.26 Crores (inclusive of interest and penalty) towards payment for enhanced cost. This figure again does not take into account the recalculated rates which are yet to be notified by HSVP. The company still awaits the fresh demand after recalculation for taking further appropriate action.

Investment in subsidiaries, joint ventures and associates are measured at cost as per Ind AS 27, âSeparate financial statementsâ and hence, not presented here.

B Fair values hierarchy

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

a. Valuation process and technique used to determine fair value

(i) The fair value of quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(iii) The derivative financial instruments are valued using forward exchange rates as at the balance sheet date.

The management assessed that fair values of current loans, other current financial assets, cash and cash equivalents, other bank balances, trade receivables, short term borrowings, trade payables and other current financial liabilities approximate their respective carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Companyâs fixed interest-bearing receivables and lease liabilities are determined by applying discounted cash flows (âDCFâ) method on contractual cash flows, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2022 was assessed to be insignificant.

(iii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

C Financial Risk Management Risk Management

The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Companyâs risk management is carried out by a central treasury department (of the Company) under policies approved by the Board of Directors. The Board of Directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

C.1 Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and other financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

(i) Low credit risk

(ii) Moderate credit risk

(iii) High credit risk

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit from customers where credit risk is high and taking insurance cover for receivables. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to precalculated amounts. In case of trade receivables, default is considered to have occurred when amounts receivable become one year past due.

Other financial assets measured at amortised cost

b) Expected credit losses for financial assets i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

â¢ For cash & cash equivalents and other bank balances- Since the Company deals with only highrated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low.

â¢ For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

â¢ For other financial assets - Credit risk is evaluated based on Companyâs knowledge of the credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Companyâs policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under

simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default (net of any recoveries from the insurance companies) relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for). Trade receivables amounting to C 149.18 crores (31 March 2021: C 123.05 crores) are secured by way of security deposits from customer and letter of credit issued by banks. The letter of credit are issued by reputable banks and their credit risk is assessed to be low.

C.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

The cash credit and other facilities may be drawn at any time and may be terminated by the bank without notice. For long term borrowings, there were no undrawn facilities as at 31 March 2021.

The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

C.3 Market risk a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO, GBP and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the volume of foreign currency transactions, the Company has taken forward contracts to manage its exposure. The Company does not use forward contracts and swaps for speculative purposes.

b) Interest rate risk i) Liabilities

The Companyâs policy is to minimise interest rate cash flow risk exposures on external financing. At 31 March 2022 and 31 March 2021, the Company is exposed to changes in interest rates through bank borrowings carrying variable interest rates. The Companyâs investments in fixed deposits carry fixed interest rates.

ii) Assets

The Companyâs fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

c) Price risk

i) Exposure

The Companyâs exposure to price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.

ii) Sensitivity

The table below summarises the impact of increases/decreases of the index on the Companyâs equity and profit for the period :

36 Capital management

The Companyâ s capital management objectives are

â¢ to ensure the Companyâs ability to continue as a going concern

â¢ to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Companyâs various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

In addition to the above, dividends, if any recommended by the Board of Directors post end of relevant reporting year shall be accrued and distributed in the year of approval in annual general meeting.

37 Employee benefits A Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employeeâs last drawn basic salary per month computed proportionately for 15 days multiplied by the number of years of service.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

(x) The Company expects to contribute C 9.65 crores (previous year C 10.32 crores) to its gratuity plan for the next year.

B Compensated absences (unfunded)

The leave obligations cover the Companyâs liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as non-current. Amount of C 5.64 crores (previous year: C 14.73 crores) has been recognised in the statement of profit and loss.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds and that have terms to maturity approximating to the terms of the related obligation. Pension growth rate is Companyâs long term best estimate as to salary increases and takes account of inflation, on long term basis as provided in relevant accounting standard. As this is a fix pension plan so this has been assumed as nil.

Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated.

Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.

(viii) The Company expects to contribute D 0.36 crores (previous year D 0.37 crores) to its pension plan for the next year.

D Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to C 20.64 crores (Previous year: C 18.94 crores) and contribution to Employee State Insurance Scheme for the year aggregated to C 0.19 crores (Previous year: C 0.20 crores).

The Company has leases for the factory lands, marketing offices, depots and related facilities. With the exception of shortterm leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security against the Companyâs other debts and liabilities. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Company must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.

Lease payments not recognised as a liability

The Company has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. The Company does not have any liability to make variable lease payments for the right to use the underlying asset recognised in the financials. The expense relating to payments not included in the measurement of the lease liability for short term leases is C 5.70 crores (previous year: 4.92 crores).

Total cash outflow for leases for the year ended 31 March 2022 was C 16.58 crores (previous year:.? 14.14 crores).

(b) Information for leases where the Company is a lessor i) Finance Lease

During the year, the Company has entered into a finance lease arrangement with itâs a joint venture company for sublease of land acquired by it as a Right of Use for the remaining period of land lease arrangement.

During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADTâ). The said Act was held unconstitutional by the Honâble Punjab & Haryana High Court in their judgment dated 1 October 2008. The State Government of Haryana has preferred an appeal before the Honâble Supreme Court which was disposed of by the Honâble Supreme Court by nine Honâble Judges of Constitution Bench and hence that Compensator issue is no more relevant as it does not arise out of the Constitution but imaginary. Matters are not decided by Division Bench by making an order that the interested parties may prefer writs before the High Court. Hence the matter remains pending till its decision. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

The above disclosure has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

42 (a) The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4 March 2011.

Escorts Benefit Trust which inherited the funds and shares from Hardship Committee constituted under directions of the High Court had sufficient funds to meet the payment obligations towards Escorts Finance Limited deposits. Further, entire outstanding liability towards unclaimed fixed deposits and interest thereon of C 10.56 crores has been deposited with the Investor Education & Protection Fund by Escorts Benefit Trust on behalf of Escorts Finance Limited on 2 February 2022 and no further liability towards deposit holders remains outstanding as on 31 March 2022.

(b) During the year, the Company has further invested C 17.15 crores in its Joint Venture with Tadano Limited, Japan (Tadano), Tadano Escorts India Private Limited (formerly Optunia Power Infrastructure Private Limited) (âTEIâ). As on 31 March 2022, the Company holds 49% share in TEI.

Company, has acquired 40% equity stake in KAI at an aggregate consideration of C 90 crores. Consequently, KAI has become a Joint Venture of the Company, with effect from, 5 October 2020.

(d) The Board of Directors of the Company in their meeting held on 20 March 2020 had approved the preferential issue of 1,22,57,688 equity shares of C 10/- each at an issue price of C 850/- per equity share to Kubota Corporation, Japan, subject to approval of shareholders of the Company and other regulatory approvals. Consequently, in terms of Share Subscription Agreement and Shareholders Agreement dated 20 March 2020 and requisite approvals, the Company has allotted 1,22,57,688 equity shares of the face value of C 10/- at an issue price of C 850/- (which includes a premium of C 840/-) for each Share to Kubota Corporation, Japan on 16 July 2020.

(e) Subsequent to approval of the Board of Directors on 15 July 2020 for selective reduction of share capital of the Company by cancelling and extinguishing 1,22,57,688 Equity Shares, held by the Escorts Benefit and Welfare Trust, the Company filed a Scheme for reduction of share capital ("the Schemeâ) between the Company and its shareholders, under Section 66 read with Section 52 and other applicable sections of the Companies Act, 2013 and National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016, with the Honâble NCLT of Chandigarh ("the Tribunalâ) on 13 March 2021. During the year, the Scheme has been approved by the Honâble NCLT Bench, Chandigarh ("NCLTâ) vide its order dated December 23, 2021 ("Orderâ). The scheme became effective upon

filing of the certified copy of the order of the Tribunal sanctioning this Scheme and the minute of reduction with the RoC on 27 December 2021. Accordingly, the impact of the scheme has been considered in these financial statements.

(f) On November 1, 2021, the Company has acquired 40,500 equity shares of face value of C 10/- each, of Escorts Skill Development (ESD), a section 8 Company, consequently, effective November 1, 2021, the Company holds entire equity share capital (50,000 equity shares of face value C 10/-each) of ESD and ESD has become wholly owned subsidiary of the Company.

(g) Pursuant to the approval of the Board of Directors of the Company and the Share Subscription Agreement (âSSAâ), Shareholdersâ Agreement (âSHAâ) and other ancillary agreement dated November 18, 2021 in relation to issue and allotment of equity share capital through preferential issue of 93,63,726 equity shares (âpreferential issueâ) of face value of C 10 at C 2,000 per share (including a premium of C 1,990 for each equity share) to Kubota Corporation, Japan, a company incorporated under the laws of Japan (âInvestorâ), and the approval of the the Shareholders of the Company for the preferential issue on December 18, 2021 and requisite regulatory approvals, the Company has allotted the aforesaid equity shares on December 18, 2021, upon receipt of the requisite amount (C 1,872.75 Crores) from the Investor.

(h) Pursuant to the Public Announcement (âPAâ) dated November 18, 2021 in relation to the open offer to the Public Shareholders of the Company by Kubota Corporation (âAcquirerâ), Detailed public statement (DPS) dated November 25, 2021 and Letter of Offer (LoF) dated March 3, 2022, for acquisition of up to 37,491,556 fully paid-up equity shares of face value of C 10 Each (âEquity Sharesâ), representing 28.42% of the equity share capital of the Company from the public shareholders, the Acquirer on April 11, 2022, has completed the said acquisition of 3,74,91,556 equity shares from the public shareholders of the Company. Consequently, the acquirer currently holds 44.80% equity share capital of the Company.

(i) Post the completion of the preferential allotment and open offer as mentioned in Note 42 (g) and Note 42(h) above, the Share Subscription

Agreement (âSSAâ) and Shareholdersâ Agreement (âSHAâ) dated November 18, 2021 executed among the Kubota Corporation (âInvestorâ), the Company, certain Existing Promoters has become effective on April 11, 2022, and accordingly, Kubota Corporation has become a Joint Promoter of the Company effective April 11, 2022 along with existing promoters of the Company.

(j) The Board of the Directors of the Company on February 18, 2022 had approved a draft Scheme for Selective Capital Reduction (âSchemeâ), under Section 66, Section 52 and other applicable provisions of the Companies Act, 2013, read with the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 (âNCLT Rulesâ). The Scheme provides for selective reduction of the share capital of the Company by cancelling and extinguishing 2,14,42,343 Equity Shares, held by the Escorts Benefit and Welfare Trust. The Scheme is subject to the approval of the shareholders of the Company by way of the requisite majority, National Company Law Tribunal (âNCLTâ) and all other applicable regulatory authorities.

43 A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Escorts Construction Equipment Limited (âECELâ), a subsidiary company and Escotrac Finance and Investments Private Limited (âEscotracâ) and Escorts Finance Investments and Leasing Private Limited (âEFILLâ), joint ventures of the Company (together referred to as âtransferor companiesâ), was sanctioned by the Honâble High Court of Punjab and Haryana at Chandigarh vide its order dated 9 August 2012 (hereinafter referred to as âthe Schemeâ). Upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana by the Transferor Companies and Transferee Company, the Scheme became effective on 12 October 2012. In accordance with the Scheme, 3,73,00,031 equity shares of the Company comprising (a) equity shares issued in consideration of amalgamation of ECEL and (b) investments held by two amalgamating entities in the Company were transferred to Escorts Benefit and Welfare Trust (âEBWTâ). The beneficiary interest of the Company in EBWT, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

Post selective reduction of share capital of the Company as detailed in Note 42(e) above, EBWT presently holds 2,14,42,343 (31 March 2021: 3,37,00,031) equity shares of the Company and 2,34,97,478 (31 March

(e) The Company provide warranties on products sold by them and majority of these are in nature of assurance that the related products will function as the parties intended because it complies with agreed-upon specifications and hence accounted for in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets. Additionally, the Company extends its services by offering extended warranty with the sale of products which is deferred over the warranty period.

(ii) The Company has 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) provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(iii) The Company has 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) provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 âOperating Segmentsâ, no disclosures related to segments are presented in these financial statements.

Mar 31, 2021

(i) Details of assets held for sale:

a. The Company executed an agreement to sell in earlier years, for transfer of 25 acres of land at Plot No. 219, Sector 58, Ballabhgarh, Haryana for a consideration of '' 9.00 crores. The said transfer is subject to necessary approval from Haryana Urban Development Authority (HUDA) and accordingly the consideration amount of '' 9.00 crores is being classified in other current liabilities. Owing to the inordinate delay in obtaining approval from HUDA, the transfer has been delayed for more than a year that was not originally envisaged. However, the Company is taking necessary action to respond to the current conditions and favorable resolution is expected. Therefore, such land continues to be classified as held for sale.

b. During the year ended 31 March 2019, the Company purchased 1,35,000 equity instruments of Hughes Communications India Limited from Escorts Employee Welfare Limited at a purchase price of '' 3.25 crores. Also, on 29 March 2019, the Company had entered into an agreement with HNS-India VSAT, Inc. for the sale of these equity shares at a consideration of '' 3.25 crores. Pending requisite regulatory approvals, the transfer of the aforesaid shares to HNS-India VSAT, Inc is yet to be completed and therefore continued to be classified as âheld for saleâ.

c. On 29 March 2019, the Company had entered into a agreement with HNS-India VSAT, Inc. for the sale of equity shares of Escorts Motors Limited at a consideration of '' 1.67 crores. Pending requisite regulatory approvals, the transfer of the aforesaid shares to HNS-India VSAT, Inc is yet to be completed and therefore continued to be classified as âheld for saleâ.

(b) Rights/preferences/restrictions attached to equity shares

The Company has only one class of shares, i.e., equity shares having a face value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. The Board of the Directors of the Company on 2 February 2021 had approved for sale of 54,60,000 shared of '' 10/-each in Escorts Securities Limited, a subsidiary company. On 8 April 2021, the Company had entered into a Share Purchase Agreement, to sell the aforesaid shares to Choice Equity Broking Private Limited ("purchaserâ). In terms of the agreement, upon necessary regulatory approvals and on the closing date, the aforesaid shares will be transferred to the purchaser, at an aggregate consideration to be decided on the closing date. Pending transfer of the shares to the purchaser, the investment has been classified as held for sale.

e. On 5 February 2021, the Company had entered into a memorandum of understanding (MOU) with AMPP Auto Innovators, for sale of its leasehold land (ROU), Buildings and Plant and Machinery situated at Plot No. 9, Sector 1, Industrial Area, II, Pantnagar, Rudrapur at an aggregate consideration of '' 13.00 crores. Therefore, the aforesaid assets have been classified as held for sale.

(d) The Company does not have a holding company or an ultimate holding company.

(e) The Company has issued total 1,80,119 (31 March 2020: Nil) equity shares to employees (through Escorts Employees Benefit and Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of employee services.

f Consequent to an agreement, the Company had agreed to purchase 19% holding (9,50,000 equity shares) in Escorts Motors Limited (EML) from ICICI Bank Limited (ICICI). Pending transfer of shares in favour of the Company and final settlement with ICICI, the advance paid by the Company to ICICI against the aforesaid agreement was considered doubtful of recovery and was written off in the books of account in the previous years.

Further, pursuant to the Share Purchase Agreement dated 29 March 2019, the Company had agreed to sell the aforementioned equity shares of EML to HNS-India VSAT, Inc. U.S.A.

While ICICI has transferred the said equity shares (9,50,000 equity shares) in the Demat account of the Company, pending the aforesaid settlement and the regulatory clearances, the above mentioned transactions have not been completed yet and accordingly, not recorded in the books of account.

(ii) Non-recurring fair value measurements

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell at the time of re-classification. A total write down of '' 0.76 crores was made in earlier years on account of such measurement for land. Investments in equity shares classified as âheld for saleâ is measured at fair value through OCI at the price agreed under the sale agreement considering that the same is the fair value of the instrument.

(i) Securities premium

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

(ii) Employeeâs stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.

(iii) Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(iv) Capital reserve

(v) Treasury shares

Treasury shares represents Companyâs own equity shares held by Escorts Employees Benefit and Welfare Trust, which is created for the purpose of issuing equity shares to employees under Companyâs stock option plan.

(vi) General reserve

(vii) Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

(viii) Other comprehensive income (OCI)

(a) Security and repayment details

(i) Cash credit and other working capital facilities from banks are secured against first pari passu charge on current assets and second charge on moveable fixed assets (excluding assets specifically charged to other term loan lenders). These facilities carry an interest rate of 6.90%-8.95% per annum in year ended 31 March 2021 (31 March 2020: 5.50%.-9.65% per annum) and is repayable on demand.

(ii) Buyerâs credit from banks are secured against stand by letter of credit (SBLC) of the Company carrying an interest rate of 2.65% (12 monthâs USD Libor 58 BPS) per annum for purchase of machine.

(b) The carrying values are considered to be reasonable approximation of their fair values.

Information about individual provisions:

Provision for claims

During the year 2004-05, the Company sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement (SPA) dated 25 September 2005. At the time of sale, EHIRCL had certain pending income-tax demands. For this purpose and in terms of said SPA, an amount of '' 64.99 crores had been kept under Escrow as fixed deposit by the Company, which after renewal(s) along with interest cumulatively amounts to '' 159.15 crores as on 31 March 2020 (31 March 2020: '' 151.93 crores). In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser against the aforesaid tax demands arising on EHIRCL upon final adjudication in law, to the maximum extent of funds lying in the Escrow Account plus one-third of the remaining tax demand in excess of the balance in the Escrow Account or as may be finally settled between the parties. Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is '' 65.00 crores on 31 March 2021 (31 March 2020: '' 65.00 crores). The disputed tax demands on EHIRCL are presently reduced to Nil after the first appellate authority decided the disputed matters in the Companyâs favour and the appeals filed by Income Tax Department against the orders of first appellate authority have been dismissed. The income-tax department has now filed appeal(s) before Honâble Delhi High Court where these are pending.

Provision for warranty

Contingencies for demand raised by income tax department, disputed by the Company and pending in appeal does not include Income tax cases pending w.r.t. Escorts Heart Institute and Research Center Limited since the amount is indeterminable (refer note 22(ii) for details). Further the amount includes '' 32.17 crores (31 March 2020''32.17 crores) in respect of matters which have been decided in favour of the Company, however the income tax department has preferred appeals at the next levels.

The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered. Penalties wherever quantified have been included.

Pursuant to order dated 11 December 2014 passed by the Honâble Supreme Court of India, compensation amount for the general category allotees of plots in Sector-58, Ballabhgarh, Faridabad was enhanced @ '' 1,987 per square meter by the Chief Administrator HUDA, Panchkula and the same was intimated to Estate Officer, Haryana Urban Development Authority (HUDA), Faridabad. Accordingly, a demand was raised by HUDA on the Company for its land at Sector-58 admeasuring about 40 acres. Being aggrieved by this arbitrary action of Chief Administrator HSVP (Haryana Sahari Vikas Pradhikaran), Panchkula, "The Faridabad Industries Associationâ filed a Civil Writ Petition before the Honâble High Court of Punjab & Haryana at Chandigarh whereby the court passed direction for recalculation of enhancement

Fair values hierarchy

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

a. Valuation process and technique used to determine fair value

(i) The fair value of quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(iii) The derivative financial instruments are valued using forward exchange rates as at the balance sheet date.

a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Companyâs fixed interest-bearing receivables and lease liabilities are determined by applying discounted cash flows (âDCFâ) method, on contractual cashflows using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2021 was assessed to be insignificant.

(iii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

C Financial Risk Management Risk Management

C.1 Credit risk

a) Credit risk management

(i) Low credit risk

(ii) Moderate credit risk

(iii) High credit risk

b) Expected credit losses for financial assets

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

â¢ For cash & cash equivalents and other bank balances - Since the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low.

â¢ For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default (net of any recoveries from the insurance companies) relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for). Trade receivables amounting to '' 123.05 crores (31 March 2020: '' 56.80 crores) are secured by way of security deposits from customer and letter of credit issued by banks. The letter of credit are issued by reputable banks and their credit risk is assessed to be low.

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit from customers where credit risk is high and taking insurance cover for receivables. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. In case of trade receivables, default is considered to have occurred when amounts receivable become one year past due.

Other financial assets measured at amortised cost

C.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

C.3 Market risk a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO, GBP and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the volume of foreign currency transactions, the Company has taken forward contracts to manage its exposure. The Company does not use forward contracts and swaps for speculative purposes.

c) Price risk i) Exposure

39 Employee benefits A Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employeeâs last drawn basic salary per month computed proportionately for 15 days multiplied by the number of years of service.

38 Capital management

The Companyâ s capital management objectives are

â¢ to ensure the Companyâs ability to continue as a going concern

â¢ to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds and that have terms to maturity approximating to the terms of the related obligation. Pension growth rate is Companyâs long term best estimate as to salary increases and takes account of inflation, on long term basis as provided in relevant accounting standard. As this is a fix pension plan so this has been assumed as nil.

Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated.

Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.

D Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to '' 18.94 crores (Previous year: '' 18.61 crores) and contribution to Employee State Insurance Scheme for the year aggregated to '' 0.20 crores (Previous year: '' 0.21 crores).

E The Company has taken an insurance policy for medical benefits in respect of its retired and working employees. The insurance policy for on-roll employees is fully funded by the Company.

Also, the Company had a leasehold land at Rudrapur which was taken on a lease for a period of 90 years in the year 2004. Initial land premium of '' 1.7 crores had been paid. In addition to the land premium, the Company paid an annual rent of '' 0.01 crore every year. Also, the management had revalued the amount of land in 2009 and had created a revaluation reserve of '' 7.13 crores pertaining to the same.

During the year, the Company has entered into an agreement to sale and classified the leasehold land as âAssets held for saleâ. Refer note 16(e) for details.

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security against the Companyâs other debts and liabilities. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Company must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.

Lease payments not recognised as a liability

The expense relating to payments not included in the measurement of the lease liability for short term leases is '' 4.92 crores (previous year: 5.10 crores).

Total cash outflow for leases for the year ended 31 March 2021 was '' 14.14 crores (previous year:.'' 11.03 crores).

(b) Information for leases where the Company is a lessor (i) Finance Lease

(a) The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4 March 2011.

Escorts Benefit Trust which inherited the funds and shares from Hardship Committee constituted under directions of the High Court has sufficient funds to meet the payment obligations towards Escorts Finance Limited deposits.

(b) During the year, the Company has further invested '' 26.22 crores in its Joint Venture with Tadano Limited, Japan (Tadano), Tadano Escorts India Private Limited (formerly Optunia Power Infrastructure Private Limited) (âTEIâ). As on 31 March 2021, the Company holds 49% share in TEI.

42 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADTâ). The said Act was held unconstitutional by the Honâble Punjab & Haryana High Court in their judgement dated 1 October 2008. The State Government of Haryana has preferred an appeal before the Honâble Supreme Court which was disposed of by the Honâble Supreme Court by nine Honâble Judges of Constitution Bench and hence that Compensator issue is no more relevant as it does not arise out of the Constitution but imaginary. Matters are not decided by Division Bench by making an order that the interested parties may prefer writs before the High Court. Hence the matter remains pending till its decision. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

(c) Pursuant to Share Purchase Agreement dated 20 March 2020 and Shareholders Agreement dated 5 October 2020, between the Company, Kubota Corporation, Japan and Kubota Agricultural Machinery India Private Limited (KAI), the Company, has acquired 40% equity stake in KAI at an aggregate consideration of '' 90 crores. Consequently, KAI has become a Joint Venture of the Company, with effect from, 5 October 2020.

(d) The Board of Directors of the Company in their meeting held on 20 March 2020 had approved the preferential issue of 1,22,57,688 equity shares of '' 10/- each at an issue price of '' 850/- per equity share to Kubota Corporation, Japan, subject to approval of shareholders of the Company and other regulatory approvals. Consequently in terms of Share Subscription Agreement and Shareholders Agreement dated 20 March 2020 and requisite approvals, the Company has allotted 1,22,57,688 equity shares of the face value of '' 10/- at an issue price of '' 850/- (which includes a premium of '' 840/-) for each Share to Kubota Corporation, Japan on 16 July 2020. Further, the Board in its meeting held on 15 July 2020 has also approved selective reduction of its share capital by cancelling and extinguishing 1,22,57,688 Equity Shares, held by the Escorts Benefit and Welfare Trust.

(e) Pursuant to the approval of the Board of Directors on 15 July 2020 for selective reduction of its share capital by cancelling and extinguishing 1,22,57,688 Equity Shares, held by the Escorts Benefit and Welfare Trust, the Company has filed a Scheme for reduction of share capital ("the Schemeâ) between the Company and its shareholders, under Section 66 read with Section 52 and other applicable provisions of the Companies Act, 2013 and National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016, with the Honâble NCLT of Chandigarh ("the Tribunalâ) on 13 March 2021. The Scheme is subject to the approval of the Tribunal and other requisite approvals, as may be required and will become effective upon filing of the certified copy of the order of the Tribunal sanctioning this Scheme and the minute of reduction with the RoC by the Company.

(f) During the financial year 2014-15, Mr. Cameron Parsons ("Plaintiffâ) initiated a civil action before the Circuit Court of Tuscaloosa, Alabama against the Company and others claiming loss due to accident caused while running an Escorts made Tractor which left permanent injuries, scarring, permanent limitations, mental anguish, medical expenses and loss of income for the plaintiff. Both the parties decided to settle the matter out of court and executed a Settlement Agreement dated 12 June 2019 whereby the Company during the year ended 31 March 2020 has paid an amount of $ 13,00,000 in lieu of full and final closure of the case. The same was disclosed as exceptional item under Note 31 in the financial statements.

45 A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Escorts Construction Equipment Limited (âECELâ), a subsidiary company and Escotrac Finance and Investments Private Limited (âEscotracâ) and Escorts Finance Investments and Leasing Private Limited (âEFILLâ), joint ventures of the Company (together referred to as âtransferor companiesâ), was sanctioned by the Honâble High Court of Punjab and Haryana at Chandigarh vide its order dated 9 August 2012 (hereinafter referred to as âthe Schemeâ). Upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana by the Transferor Companies and Transferee Company, the Scheme became effective on 12 October 2012. In accordance with the Scheme, 3,73,00,031 equity shares of the Company comprising (a) equity shares issued in consideration of amalgamation of ECEL and (b) investments held by two amalgamating entities in the Company were transferred to Escorts Benefit and Welfare Trust (âEBWTâ). The beneficiary interest of the Company in EBWT, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

49 The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 âOperating Segmentsâ, no disclosures related to segments are presented in these financial statements.

Mar 31, 2019

1. Company overview

Escorts Limited (âthe Companyâ) is a public limited company incorporated and domiciled in India and having its registered office at 15/5, Mathura Road, Faridabad (Haryana). The Companyâs shares are listed with Bombay Stock Exchange, National Stock Exchange and Delhi Stock Exchange. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, construction, earth moving and material handling equipment, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork & Mcpherson struts, brake block, internal combustion engines and all types of brake used by railways. It also trades in oils & lubricants, implements, trailers, tractors, compressor accessories and spares, construction, earth moving and material handling equipment and aero business.

2. Basis of preparation, measurement and significant accounting policies

2.1 Basis of preparation and measurement

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

These financial statements are separate financial statements of the Company. The Company has also prepared consolidated financial statements for the year ended 31 March 2019 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on 07 May 2019.

The financial statements have been prepared on accrual and going concern basis. All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

The financial statements have been prepared under historical cost convention basis except for the following -

- Certain financial assets which are measured at fair value;

- Defined benefit plans - plan assets measured at fair value;

- Share based payments which are measured at fair value of the options; and

- Assets held for sale - measured at lower of carrying amount and fair value less cost to sell.

Notes:

(i) Property, plant and equipment include assets in use for in house research and development

Refer note 36 for details.

(ii) Contractual obligations

Refer note 34A for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) Property, plant and equipment pledged as security

Refer note 46 for information on property, plant and equipment pledged as security by the Company.

(iv) Finance leases

The Company has a land on finance lease. Refer note 41 for contractual commitments for lease payments in respect of leasehold land.

(v) Depreciation for the year has been included in âDepreciation and amortisation expenseâ line item in statement of profit and loss.

(ii) Leasing arrangements

Certain investment properties are leased to tenants under long-term operating leases with rentals payable monthly. However all the leases are cancellable at the option of lessee, hence there is no lease disclosure given, as required by Ind AS 17 âLeasesâ.

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

Where such information is not available, the independent valuer considers information from a variety of sources including:

a) In case of valuation of land, current prices in an active market for similar properties of the same area and localities have been taken.

b) in case of constructed building, rates derived from CPWD/CWC PARS as on 01-10-2010-12/1997 have been taken as the basis of valuation. These rates have further been modified to bring them at par with the present day price index and as per specifications found at site. Necessary depreciation for age and life of the structure has been taken into account.

Notes:

(i) Contractual obligations

Refer note 34 for disclosure of contractual commitments for the acquisition of intangible assets.

(ii) Expenses incurred and assets in use for in house research and development :

During the year, expenditure of Rs. 92.22 crores (31 March 2018: Rs. 82.72 crores) was incurred on research and development (excluding depreciation) and recognised in statement of profit and loss.

Refer note 36 for detail.

(iii) Amortisation for the year has been included in line item âDepreciation and amortisation expenseâ in statement of profit and loss.

(i) Refer note 18 and 46 for trade receivables pledged as security for liabilities.

(ii) Refer note 37 - Financial instruments for assessment of expected credit losses.

(iii) The carrying values are considered to be a reasonable approximation of their fair values.

(iv) Trade receivables include Rs. 23.35 crores (31 March 2018 Rs. 24.37 crores) due from related parties. For details refer note 47 - related party disclosures

(i) Earmarked balances with banks largely pertain to unclaimed dividends.

(ii) Rs. 0.19 crores (31 March 2018: Rs. Nil) represents deposits with original maturity for more than 3 months but less than 12 months, held by the entity and are not available for use by the Company, as these are pledged against loans.

(iii) Balance in Escrow account is not avaialble for use by the Company, refer note 21 (ii) for details.

(iv) Rs. 0.12 crores (31 March 2018: Rs. 0.12 crores) represent margin money pledged with various authorities.

(v) Other than as disclosed, there are no repatriation restrictions with respect to other bank balances as at the end of the reporting year and prior year.

(vi) The carrying values are a reasonable approximateion of their fair values.

Notes:

(i) Details of assets held for sale :

a. The Company executed an agreement to sell in earlier years, for transfer of 25 acres of land at Plot No. 219, Sector 58, Ballabhgarh, Haryana for a consideration of Rs. 9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 9.00 crores is being classified in other current liabilities. Owing to the inordinate delay in obtaining approval from HUDA, the transfer has been delayed for more than a year that was not originally envisaged. However, the Company is taking necessary action to respond to the current conditions and favorable resolution is expected. Therefore, such land continues to be classified as held for sale.

b. During the year, the Company purchased 135,000 equity instruments of Hughes Communications India Limited from Escorts Employee Welfare Limited at a purchase price of Rs. 3.25 crores. Also, the Company has entered into an agreement with HNS-India VSAT, Inc. for the sale of these equity shares at a consideration of Rs. 3.25 crores. Therefore, such equity shares have been classified as âheld for saleâ.

c. During the year, the Company has entered into a agreement with HNS-India VSAT, Inc. for the sale of equity shares of Escorts Motors Limited at a consideration of Rs. 1.67 crores. Therefore, such equity shares have been classified as âheld for saleâ.

(ii) Non-recurring fair value measurements

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell at the time of re-classification. A total write down of Rs. 0.76 crores was made in earlier years on account of such measurement for land. This is Level 3 measurement as per fair value hierarchy set out in fair value measurement disclosures (refer note 37). For other investments in equity shares classified as âheld for saleâ, expected sale value is higher or equal to the carrying value. Therefore, no write down was required.

(a) Rights/preferences/restrictions attached to equity shares

The Company has only one class of shares, i.e., equity shares having a face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) The Company has issued total 5,37,100 (31 March 2018: 5,37,100) equity shares to employees (through Escorts Employees Benefit and Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of employee services.

Nature and purpose of reserves:

(i) Securities premium

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

(ii) Employeeâs stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.

(iii) Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(iv) Capital reserve

(v) Treasury shares

(vi) General reserve

(vii)Other comprehensive income (OCI)

Notes:

a. Rate of interest - The Companyâs borrowings from banks are at an effective weighted average rate of 9.98 % (31 March 2018: 10.26%)

b. Refer note 37 - Financial instruments for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

(a) Security details

Cash Credit and other working capital facilities from banks are secured against first pari passu charge on current assets and second charge on moveable fixed assets (excluding assets specifically charged to other term loan lenders). These facilities carried interest in the range of 5.50%. - 9.65% p.a. in year ended 31 March 2019 (31 March 2018: 6.75%-10.75% p.a).

(b) The carrying values are considered to be reasonable approximation of their fair values.

Notes:

3. Information about individual provisions:

Provision for claims

a) During the year 2004-05, the Company sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement (SPA) dated 25 September 2005. At the time of sale, EHIRCL had certain pending income-tax demands. For this purpose and in terms of said SPA, an amount of Rs. 64.99 crores had been kept under Escrow as fixed deposit by the Company, which after renewal(s) along with interest cumulatively amounts to Rs. 142.68 crores as on 31 March 2019 (31 March 2018: Rs. 134.12 crores). In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser against the aforesaid tax demands arising on EHIRCL upon final adjudication in law, to the maximum extent of funds lying in the Escrow Account plus one-third of the remaining tax demand in excess of the balance in the Escrow Account or as may be finally settled between the parties. Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is Rs. 65.00 crores on 31 March 2019 (31 March 2018: Rs. 65.00 crores). The disputed tax demands on EHIRCL are presently reduced to Nil after the first appellate authority decided the appeals in their favour. The income-tax department has filed second appeal(s) before the Appellate Tribunal where these are pending.

b) Farmtrac North America, LLC (FNA), previously subsidiary of the Company had entered into a distribution agreement for distribution of tractors manufactured by M/s L S Mtron (LSC). During 2006-07, FNA however defaulted in making payments to LSC for the tractors supplied to them. LSC initiated International Arbitration conducted by ICC against the Company. FNA is currently under receivership and its assets had been disposed off by the Receiver and proceeds were distributed to secured creditors. A settlement agreement was executed between the Company and LSC during FY 2015-16 and according to such settlement agreement, out of the total amount payable Rs. 47.67 crores, 50% was paid during FY 2015-16 and balance was payable in three equal yearly installments, thereafter. In terms of the settlement agreement, the Company has made the entire payment during the year with the last installment of Rs. 7.40 crores.

Provision for warranty

The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of outflows is expected to be within a period of one to five years. The provision is based on estimates made from historical warranty data associated with similar products and services. The Company expects to incur the related expenditure over the future periods.

4. Discontinued operations (i) Description

Pursuant to approval of the Board and execution of the Asset Purchase Agreement (Agreement) dated 11 August 2016, the Company had divested its OEM and Export business of its Auto Product Division. The said divestment became effective w.e.f. 6 December 2016 upon completion of defined actions and covenants as per the Agreement. The Company shall continue to pursue its sale of auto products in after market operations.

Notes:

^Contingencies for demand raised by income tax department, disputed by the Company and pending in appeal does not include income tax cases pending w.r.t. Escorts Heart Institute and Research Center Limited. Since the amount is indeterminable (refer note 21 for details). Further the amount includes Rs. 32.17 crores (31 March 2018 Rs. 32.17 crores) in respect of matters which have been decided in favour of the Company, however the income tax department has preferred appeals at the next levels.

** The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered. Also the penalties wherever quantified have not been included, since the Company believes that there has been no concealment of income and accordingly, any liability on this account is considered remote.

The management has determined the impact of recent judgment of Honâble Supreme Court of India in relation to interpretation of definition of âbasic wagesâ under the Employeesâ Provident Fund and Miscellaneous Provisions Act, 1952 and as per its assessment, that is not significant.

5. Research and development

(i) Research and development costs on in house R&D centers amounting to Rs. 111.25 crores (31 March 2018: Rs. 100.40 crores) were incurred during the year.

6. Financial instruments A Financial assets and liabilities

Investment in subsidiaries, joint ventures and associates are measured at cost as per Ind AS 27, âSeparate financial statementsâ and hence, not presented here.

A Fair values hierarchy

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

a. Valuation process and technique used to determine fair value

(i) The fair value of quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(iii) In order to arrive at the fair value of unquoted investments, the Company obtains independent valuations. The techniques used by the valuer are as follows:

a) Asset approach - Net assets value method

b) Income approach - Discounted cash flows (âDCFâ) method

c) Market approach - Enterprise value/Sales multiple method

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Companyâs fixed interest-bearing loans and receivables are determined by applying discounted cash flows (âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2019 was assessed to be insignificant.

(iii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

The Companyâs risk management is carried out by a central treasury department (of the Company) under policies approved by the board of directors. The board of directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

A.1 Credit risk

a) Credit risk management

(i) Low credit risk

(ii) Moderate credit risk

(iii) High credit risk

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit, from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. In case of trade receivables, default is considered to have occurred when amounts receivable become one year past due.

Other financial assets measured at amortised cost

b) Expected credit losses for financial assets ijFinancial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

- For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

- For other financial assets - Credit risk is evaluated based on Companyâs knowledge of the credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Companyâs policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The details of expected credit loss recorded for all sub categories of financial assets (other than trade receivables) are disclosed below.

ii)Expected credit loss for trade receivables under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default (net of any recoveries from the insurance companies) relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for).

B.1 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

The cash credit and other facilities may be drawn at any time and may be terminated by the bank without notice. For long term borrowings, there were no undrawn facilities as at 31 March 2019.

C.1 Market risk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO, GBP and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the volume of foreign currency transactions, the Company has taken forward contracts to manage its exposure. The Company does not use forward contracts and swaps for speculative purposes.

b) Interest rate risk

i) Liabilities

The Companyâs policy is to minimise interest rate cash flow risk exposures on external financing. At 31 March 2019 and 31 March 2018, the Company is exposed to changes in interest rates through bank borrowings carrying variable interest rates. The Companyâs investments in fixed deposits carry fixed interest rates.

ii) Assets

c) Price risk

i) Exposure

7. Capital management

The Companyâ s capital management objectives are

- to ensure the Companyâs ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

8. Employee benefits

A Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employeeâs last drawn basic salary per month computed proportionately for 15 days multiplied by the number of years of service.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

(x) The Company expects to contribute Rs. 8.11 crores (previous year Rs. 6.72 crores) to its gratuity plan for the next year.

B Compensated absences (unfunded)

The leave obligations cover the Companyâs liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as non-current. Amount of Rs. 5.96 crores (previous year: Rs. 5.25 crores) has been recognised in the statement of profit and loss.

C Pension

Amount of Rs. 6.24 crores (previous year: Rs. 0.83 crores) has been recognised in the statement of profit and loss.

D Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to Rs. 16.92 crores (Previous year: Rs. 16.32 crores) and contribution to Employee State Insurance Scheme for the year aggregated to Rs. 0.22 crores (Previous year: Rs. 0.26 crores).

E The Company has taken an insurance policy for medical benefits in respect of its retired and working employees. The insurance policy for on-roll employees is fully funded by the Company.

Fair value of options granted

The fair value at grant date of options granted during the year ended 31 March 2019 was Rs. 212.42.

The value of the options has been determined by an independent valuer. The following assumptions were used for calculation of fair value of options in Black Scholes model:

a) Options vest upon completion of service over a period of four years as mentioned above. Vested options are exercisable for a period of three years after vesting.

b) Exercise price: Rs. 870.00

c) Grant date: 16 August 2018

d) Expiry date: as per the details above.

e) Share price at grant date: Rs. 870

f) Expected price volatility of the companyâs shares: 26.86%

g) Expected dividend yield: 0.29%

h) Risk free rate: 7.56% - 7.97%

The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility as per publicly available information.

9. Leases Operating leases

- Assets taken on lease

The Company has leased certain land and buildings under cancellable and non-cancellable operating lease arrangements. The leases have varying terms, escalation clauses and renewable rights. Total lease payments recognised in the statement of profit and loss is Rs. 10.55 crores (31 March 2018 : Rs. 7.61 crores).

Finance leases - Assets taken on lease

The Company has a leasehold land at Rudrapur which has been taken on a lease for a period of 90 years in the year 2004. Initial land premium of Rs. 1.7 crores has been paid. In addition to the land premium, the Company pays an annual rent of Rs. 0.02 every year. Also, the management has revalued the amount of land in 2009 and has created a revaluation reserve of Rs. 7.13 crores pertaining to the same. The said lease of land was considered to be finance lease by the Company.

10. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 (âEntry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 (âHLADTâ). The said Act was held unconstitutional by the Honâble Punjab & Haryana High Court in their judgment dated 1 October 2008.The State Government of Haryana has preferred an appeal before the Honâble Supreme Court which was disposed of by the Honâble Supreme Court by nine Honâble Judges of Constitution Bench and hence that Compensator issue is no more relevant as it does not arise out of the Constitution but imaginary. Matters are not decided by Division Bench by making an order that the interested parties may prefer writs before the High Court. Hence the matter remains pending till its decision. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

11. (a) The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4 March 2011.

(b) The Company has entered into an Investment and Shareholders Agreement dated 27 August 2018 (âAgreementâ) with Tadano Limited, Japan (Tadano) for manufacturing of rough terrain (RT) cranes in India. Under the said Agreement, joint venture company with the name Tadano Escorts India Private Limited (formerly Optunia Power Infrastructure Private Limited) (âTEIâ) has been incorporated wherein the equity capital of Rs. 60 crores have been contributed by the JV partners in the ratio of 51:49 by Tadano and Escorts respectively.

Under the Business Transfer Agreement dated 7 December 2018 executed between Escorts Limited and TEI, the Company has sold its existing RT Crane Business on a slump sale basis for a sum of Rs. 25 crores plus inventory as mutually agreed between the parties.

(c) The Company has entered into Business Collaboration Agreement dated 10 December 2018 (âAgreementâ) with Kubota Corporation, Japan (Kubota) for manufacturing of tractors in India. Under the said Agreement, A joint venture company has been incorporated under the name and style of Escorts Kubota India Private Limited wherein the equity capital of Rs. 150 crores have been contributed by the JV partners in the ratio of 60:40 by Kubota and Escorts respectively.

12. A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Escorts Construction Equipment Limited (âECELâ), a subsidiary company and Escotrac Finance and Investments Private Limited (âEscotracâ) and Escorts Finance Investments and Leasing Private Limited (âEFILLâ), joint ventures of the Company (together referred to as âtransferor companiesâ), was sanctioned by the Honâble High Court of Punjab and Haryana at Chandigarh vide its order dated 9 August 2012 (hereinafter referred to as âthe Schemeâ). Upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana by the Transferor Companies and Transferee Company, the Scheme became effective on 12 October 2012. In accordance with the Scheme, 37,300,031 equity shares of the Company comprising (a) equity shares issued in consideration of amalgamation of ECEL and (b) investments held by two amalgamating entities in the Company were transferred to Escorts Benefit and Welfare Trust (âEBWTâ). The beneficiary interest of the Company in EBWT, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

EBWT presently holds 33,700,031 (31 March 2018: 33,700,031) equity shares of the Company and 23,497,478 (31 March 2018: 23,497,478) equity shares of Escorts Finance Limited (subsidiary of the Company). The Company is the sole beneficiary of the Trust. The dividend received by the trust on the Companyâs shares is credited directly in âRetained earningsâ in note 17 - Other equity. Market value of outstanding shares held by Trust on 31 March 2019 is Rs. 2,685.39 crores (31 March 2018: Rs. 2,768.72 crores).

13. (i) New standards adopted - Revenue from Contracts with Customers

Indian Accounting Standard 115 Revenue from Contracts with Customers (âInd AS 115â), establishes a framework for determining whether, how much and when revenue is recognised and requires disclosures about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts. Under Ind AS 115, revenue is recognised through a 5-step approach:

(i) Identify the contract(s) with customer;

(ii) Identify separate performance obligations in the contract;

(iii) Determine the transaction price;

(iv) Allocate the transaction price to the performance obligations; and

(v) Recognise revenue when a performance obligation is satisfied.

The Company has adopted the standard on 1 April 2018 on a modified retrospective basis with a cumulative catch-up adjustment booked to retained earnings as at 1 April 2018 as if the standard had always been in effect. The standard is applied only to contracts that are not completed as at 1 April 2018. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new standard did not result in any material adjustments to the Companyâs net income. In case of certain contracts with customers, the Company arranges the logistics of the goods to customersâ premises and charges the freight on actual basis (actuals as levied by the transporter). In such cases, the Company acts as an agent in arranging such logistics services. Hence, revenue from such services are netted off with the expenses as levied by the transporter. Such expenses were earlier grouped under âother expensesâ upto 31 March 2018. There is no impact on the retained earnings as at 1 April 2017 and on the profit for the year ended 31 March 2018.

For the year ended 31 March 2019, the revenue from operations is lower by Rs. 35.27 crores and total expense lower by Rs. 35.27 crores, on account of the change in accounting practice outlined above.

14. (ii) Previous year figures have been re-grouped/reclassified wherever necessary, to conform to current yearâs classification.

15. The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 âOperating Segmentsâ, no disclosures related to segments are presented in these financial statements.

Mar 31, 2018

1. Company overview

2. Basis of preparation, measurement and significant accounting policies

2.1 Basis of preparation and measurement

These financial statements are separate financial statements of the Company. The Company has also prepared consolidated financial statements for the year ended 31 March 2018 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on 17 May 2018.

The financial statements have been prepared under historical cost convention basis except for the following -

Certain financial assets which are measured at fair value;

- Defined benefit plans - plan assets measured at fair value;

Share based payments which are measured at fair value of the options; and

- Assets held for sale - measured at lower of carrying amount and fair value less cost to sell.

2.2 Significant management judgements in applying accounting policies and estimation uncertainty

The following are the critical judgments and the key estimates concerning the future that management has made in the process of applying the Companyâs accounting policies and that may have the most significant effect on the amounts recognized in the financial Statements or that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Significant management estimates

Allowance for doubtful debts - The allowance for doubtful debts reflects managementâs estimate of losses inherent in its credit portfolio. This allowance is based on Companyâs estimate of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, dealer termination rates, write-offs and collections, the careful monitoring of portfolio credit quality and current and projected economic and market conditions. Should the present economic and financial situation persist or even worsen, there could be a further deterioration in the financial situation of the Companyâs debtors compared to that already taken into consideration in calculating the allowances recognized in the financial statements.

Allowance for obsolete and slow-moving inventory

- The allowance for obsolete and slow-moving inventory reflects managementâs estimate of the expected loss in value, and has been determined on the basis of past experience and historical and expected future trends in the used vehicle market. A worsening of the economic and financial situation could cause a further deterioration in conditions in the used vehicle market compared to that taken into consideration in calculating the allowances recognized in the financial statements.

Product warranties - The Company makes provisions for estimated expenses related to product warranties at the time products are sold. Management establishes these estimates based on historical information of the nature, frequency and average cost of warranty claims. The Company seeks to improve vehicle quality and minimize warranty expenses arising from claims. Warranty costs may differ from those estimated if actual claim rates are higher or lower than historical rates.

Useful lives of depreciable/amortisable assets

- Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, IT equipment and other plant and equipment.

Defined benefit obligations (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Significant management judgments

Capitalisation of internally developed intangible assets - Distinguishing the research and development phases for new products and design enhancements determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there any indicators that capitalised costs may be impaired.

Evaluation of indicators for impairment of assets

- The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.

Contingent liabilities - The Company is the subject of legal proceedings and tax issues covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In th e normal course of business management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.

2.3 Standards issued but not yet effective

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28 March 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018.

The Company has evaluated the effect of this on the fi nancial statements and the impact is not material.

Ind AS 115- Revenue from Contract with Customers:

On 28 March 2018, MCA has notified Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard being recognized at the date of initial application (Cumulative catch - up approach).

The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018. The Company is evaluating the requirements of this new standard and their impact on the financial statements.

Notes:

(i) Property, plant and equipment include assets in use for in house research and development

Refer note 36 for details.

(ii) Contractual obligations

Refer note 34 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) Property plant and equipment pledged as security

Refer note 46 for information on property, plant and equipment pledged as security by the Company.

(iv) Finance leases

The Company has a land on finance lease. Refer note 41 for contractual commitments for lease payments in respect of leasehold land.

(v) Discontinued operations

Depreciation for the current year includes depreciation for discontinued operations âNil (31 March 2017: Rs.1.41 crores).

Notes:

(i) Capitalised borrowing cost

The borrowing costs capitalised during the year ended 31 March 2018 Rs.0.15 crores (31 March 2017 ânil ).

(ii) Contractual obligations

Refer note 34 for disclosure of contractual commitments for the acquisition of property, plat and equipment.

(ii) Leasing arrangements

(iii) Fair value of investment property

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

Where such information is not available, the independent valuer considers information from a variety of sources including:

a) In case of valuation of land, current prices in an active market for similar properties of the same area and localities have been taken.

(iii) Discontinued operations

Amortisation for the current year includes amortisation for discontinued operations ânil (31 March 2017: Rs.0.03 crores).

(iv) Amortisation for the year has been included in line item âDepreciation and amortisation expenseâ in statement of profit and loss.

(b) Unutilised tax losses and credits

Minimum alternate tax

The Company had unutilised MAT credit amounting to Rs.11.38 crores as at 31 March 2018 (31 March 2017: Rs.63.43 crores).Revised returns for assessment years 2016-17 and 2017-18 have resulted in additional MAT entitlement of Rs.9.65 crores and Rs.6.93 crores respectively, not considered in accounts. The same shall be accounted for on completion of assessments.

Tax credits have been recognised on the basis that recovery is probable in the foreseeable future. This recognised MAT credit expires, if unutilized, based on the year of origination as follows:

Capital losses

The Company has not recognised deferred tax asset of Rs.13.23 crores on unutilised losses under the head Capital Gains as the Company is not likely to generate taxable capital gain income under the same head in foreseeable future. The significant portion of these losses will expire in financial year ending 31 March 2019.

Notes:

(i) Details of assets held for sale :

a. The Company executed an agreement to sell in earlier years, for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs.9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs.9.00 crores is being classified in other current liabilities. Owing to the inordinate delay in obtaining approval from HUDA , the transfer has been delayed beyond one year that was not originally envisaged. However, the Company is taking necessary action to respond to the current conditions and favorable resolution is expected. Therefore, such land continues to be classified as held for sale.

b. During the previous year, the Company had executed an aircraft purchase and sale agreement for transfer of its Bell 407 helicopter for a consideration of Rs.8.75 crores. The said transfer was subject to deregistration from Indian Civil Aviation Authority and an advance of Rs.2.5 crores was classified in other current liabilities. This asset has been transferred during the year ended 31 March 2018.

c. During the previous year, the Company had executed a sale agreement for transfer of a vehicle for a consideration of Rs.0.29 crores. This asset has been transferred during the period ended 31 March 2018.

(ii) Non-recurring fair value measurements

Asset classified as held for sale are measured at the lower of its carrying amount and fair value less costs to sell at the time of reclassification. A total write down of Rs.0.76 crores was made in retained earnings and statement of profit and loss on account of such measurement. This is Level 3 measurement as per fair value hierarchy set out in fair value measurement disclosures (refer note 37).

(b) Rights/preferences/restrictions attached to equity shares

The Company has only one class of shares, i.e., equity shares having a face value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of reserves:

(i) Securities premium reserve

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

(ii) Employeeâs stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.

(iii) Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(iv) Capital reserve

(v) Treasury shares

Treasury shares represents Companyâs own equity shares held by Escorts Employees Benefit and Welfare Trust, which is created under the Employee Stock Option Plan.

(vi) General reserve

(vii) Other comprehensive income (OCI)

(a) The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

(b) The Company has recognised remeasurement of defined benefits plans through other comprehensive income.

(a) Security details

(i) Cash Credit and other working capital facilities from banks are secured against first pari passu charge on current assets and second charge on moveable fixed assets (excluding assets specifically charged to other term loan lenders) . These facilities carried interest in the range of 6.75%.- 10.75% p.a. in year ended 31 March 2018 (31 March 2017: 7.66%-10.80% p.a).

(ii) Loan against factored receivables is secured by first charge on trade receivables subject to factoring arrangement. This facility carried a rate of interest of 10.45% p.a in year ended 31 March 2017.

Notes:

1 Information about individual provisions:

Provision for claims

a) During the year 2004-05, the Company sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement (SPA) dated 25 September 2005. At the time of sale, EHIRCL had certain pending disputed income tax demands of Rs.52.33 crores and interest thereon amounting to Rs.29.16 crores. In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser to the extent of Rs.64.99 crores plus one-third of any amount in excess of Rs.64.99 crores, upon the fi nal adjudication of the demand in law or its final settlement. For this purpose and in terms of said SPA, an amount of Rs.64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal(s) along with interest amounts to Rs.134.12 crores as on 31 March 2018 (31 March 2017: Rs.127.76 crores). Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is Rs.65.00 crores on 31 March 2018 (31 March 2017: Rs.65.00 crores).

b) Farmtrac North America, LLC (FNA), previously subsidiary of the Company had entered into a distribution agreement for distribution of tractors manufactured by M/s L S Mtron (LSC). During 2006-07. FNA however defaulted in making payments to LSC for the tractors supplied to them. LSC initiated International Arbitration conducted by ICC against the Company. FNA is currently under receivership and its assets had been disposed off by the Receiver and proceeds were distributed to secured creditors. A settlement agreement was executed between the Company and LSC during FY 2015-16 and according to such settlement agreement, out of the total amount payable Rs.47.67 crores, 50% was paid during FY 2015-16 and balance is payable in three equal yearly installments, there after. In terms of the settlement agreement, the Company has paid three installments and the remaining installment is payable in FY2018-1 9. The carrying balance of provision for such amount payable to LSC is Rs.7.40 crores on 31 March 2018 (31 March 2017: Rs.13.93 crores).

Provision for warranty

The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/ replacement. The timing of outflows is expected to be within a period of one to five years. The provision is based on estimates made from historical warranty data associated with similar products and services. The Company expects to incur the related expenditure over the next year.

3 Discontinued operations

(i) Description

(ii) Financial performance and cash flow information

4 Research and development

(i) Research and development costs on in house R&D centers amounting to Rs.100.39 crores (31 March 2017: Rs.83.98 crores) were incurred during the year.

(ii) Assets purchased/capitalised for research and development centers*:

(iii) Expenses on research and development as percentage to gross turnover is:

5 Financial Instruments

A Financial assets and liabilities

The carrying amounts of financial instruments by category are as follows:

Investment in subsidiaries, joint ventures and associates are measured at cost as per Ind AS 27, âSeparate financial statementsâ and hence, not presented here.

B Fair values hierarchy

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Di rectly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and Level 3: Inputs which are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a net asset value or valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

B.1 Financial assets and liabilities measured at fair value - recurring fair value measurements

a. Valuation process and technique used to determine fair value

(i) The fair value of investments in government securities and quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(iii) In order to arrive at the fair value of unquoted investments, the Company obtains independent valuations. The techniques used by the valuer are as follows:

a) Asset approach - Net assets value method

b) Income approach - Discounted cash flows (âDCFâ) method

c) Market approach - Enterprise value/Sales multiple method

b. Significant unobservable inputs used in Level 3 fair values and sensitivity of the closing values as at end of reporting period to such inputs is as below :

Unquoted equity shares

c. The following table presents the changes in level 3 items for the periods ended 31 March 2018 and 31 March 2017:

B.2 Fair value of instruments measured at amortised cost

Fair value of instruments measured at amortised cost for which fair value is disclosed is as follows, these fair values are calculated using Level 3 inputs:

The management assessed that fair values of current loans, current financial assets, cash and cash equivalents, other bank balances, trade receivables, other receivables, short term borrowings, trade payables and other current financial liabilities approximate their respective carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Companyâs fixed interest-bearing loans and receivables are determined by applying discounted cash flows (âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own nonperformance risk as at 31 March 2018 was assessed to be insignificant.

(iii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

C Financial Risk Management Risk Management

The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Companyâs 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 related impact in the financial statements.

C.1 Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

(i) Low credit risk

(ii) Moderate credit risk

(iii) High credit risk

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit, from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become one year past due.

Other financial assets measured at amortised cost

Other financial assets measured at amortized cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.

b) Expected credit losses for financial assets

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

- For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

- For other financial assets - Credit risk is evaluated based on Companyâs knowledge of the credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population For such financial assets, the Companyâs policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The reconciliation of expected credit loss recorded for all sub categories of financial assets (other than trade receivables) are disclosed below.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met in which case the full expected loss against the amount recoverable is provided for).

C.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

a) Financing arrangements

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

The cash credit and other facilities may be drawn at any time and may be terminated by the bank without notice. For long term borrowings, the Company in previous year ended 31 March 2017 had certain facilities which could be drawn till 31 December 2017 for Rs.99 crores (subject to the continuance of satisfactory credit ratings) and have an average maturity of 2.5 years as at 31 March 2017. There were no undrawn facilities as at 31 March 2018.

b) Maturities of financial liabilities

The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

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

C.3 Market risk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the low volume of foreign currency transactions, the Companyâs exposure to foreign currency risk is limited and the Company hence does not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative purposes.

(i) Foreign currency risk exposure in USD:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in â, are as follows

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

(ii) Foreign currency risk exposure in EURO:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in â, are as follows:

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

(iii) Foreign currency risk exposure in JPY:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in â, are as follows

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

b) Interest rate risk

i) Liabilities

The Companyâs policy is to minimise interest rate cash flow risk exposures on external financing. At 31 March 2018 and 31 March 2017, the Company is exposed to changes in interest rates through bank borrowings carrying variable interest rates. The Companyâs investments in fixed deposits carry fixed interest rates.

Interest rate risk exposure

Below is the overall exposure of the Company to interest rate risk:

ii) Assets

c) Price risk

i) Exposure

ii) Sensitivity

The table below summarises the impact of increases/decreases of the index on the Companyâs equity and profit for the period :

6 Capital management

The Companyâ s capital management objectives are

- to ensure the Companyâs ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

(ii) Dividends proposed

I n addition to the above dividends, the dividends, if any recommended by the Board of Directors post end of relevant reporting year shall be accrued and distributed in the year of approval in annual general meeting.

7 Employee benefits

A Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employeeâs last drawn basic salary per month computed proportionately for 15 days multiplied by the number of years of service.

(i) Amount recognised in the balance sheet is as under:

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

(x) The Company expects to contribute Rs.6.72 crores (previous year Rs.7.66) to its gratuity plan for the next year.

B Compensated absences (unfunded)

The leave obligations cover the Companyâs liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as non-current. Amount of Rs.5.25 crores (previous year: Rs.4.24 crores) has been recognised in the statement of profit and loss.

C Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to Rs.16.32 crores (Previous year: Rs.15.84 crores) and contribution to Employee State Insurance Scheme for the year aggregated to Rs.0.26 crores (Previous year: Rs.0.33 crores).

D The Company has taken an Insurance policy for medical benefits in respect of its retired and working employees. The Insurance policy for on-roll employees is fully funded by the Company.

8 Share-based payments

The option plan is designed to provide incentives to employees of the Company. Under the plan, participants have been granted options which will vest as follows:

Options are granted under the plan for the consideration of Rs.85 per share and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share.

9 Leases

Operating leases - Assets taken on lease

The Company has leased certain land and buildings under operating lease arrangements. The leases are renewable on periodical basis and cancellable at Companyâs option. Total lease payments recognised in the statement of profit and loss is Rs.7.61 crores (31 March 2017: Rs.7.01 crores).

Finance leases - Assets taken on lease

The Company has a leasehold land at Rudrapur which has been taken on a lease for a period of 90 years in the year 2004. Initial land premium of Rs.1.7 crores has been paid. In addition to the land premium, the Company pays an annual rent of Rs.0.02 every year. Also, the management has revalued the amount of land in 2009 and has created a revaluation reserve of Rs.7.13 crores pertaining to the same. The said lease of land was considered to be finance lease by the Company.

10 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 (âEntry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 (âHLADTâ). The said Act was held unconstitutional by the Honâble Punjab & Haryana High Court in their judgment dated 1 October 2008.The State Government of Haryana has preferred an appeal before the Honâble Supreme Court which was disposed of by the Honâble Supreme Court by nine Honâble Judges of Constitution Bench and hence that Compensator issue is no more relevant as it does not arise out of the Constitution but imaginary. Matters are not decided by Division Bench by making an order that the interested parties may prefer writs before the High Court. Hence the matter remains pending till its decision. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

11 Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 (âMSMED Act, 2006â) is as under:

The above disclosure has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

12 (a) The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4 March 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit and balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Honâble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

In the year ended 31 March 2017, Escorts Benefit Trust has realised the investments held by it and remitted the surplus of Rs. 15.00 crores to the Company (beneficiary) after retaining sufficient funds for meeting its liability towards Escorts Finance Limited deposits.

(b) Contractual manpower cost during year ended 31 March 2017 amounting to Rs.48.84 crores have been regrouped from employee benefits expense to other expenses to provide relevant information.

13 A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation of Escorts Construction Equipment Limited (âECELâ), a subsidiary company and Escotrac Finance and Investments Private Limited (âEscotracâ) and Escorts Finance Investments and Leasing Private Limited (âEFILLâ), joint ventures of the Company (together referred to as âtransferor companiesâ), was sanctioned by the Honâble High Court of Punjab and Haryana at Chandigarh vide its order dated 9 August 2012 (hereinafter referred to as âthe Schemeâ). Upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana by the Transferor Companies and Transferee Company, the Scheme became effective on 12 October 2012. In accordance with the Scheme, 37,300,031 equity shares of the Company comprising (a) equity shares issued in consideration of amalgamation of ECEL and (b) investments held by two amalgamating entities in the Company were transferred to Escorts Benefit and Welfare Trust (âEBWTâ). The beneficiary interest of the Company in EBWT, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

Consequently, EBWT holds 33,700,031 (31 March 2017: 37,300,031) equity shares of the Company and 23,497,478 (31 March 2017: 23,497,478) equity shares of Escorts Finance Limited (subsidiary of the Company). The Company is the sole beneficiary of the Trust. The dividend received by the trust on the Companyâs shares are credited directly in âRetained earningsâ in note 17 - Other equity. Further, during the year ended 31 March 2018, EBWT sold 3,600,000 shares of the Company and remitted Rs.250.34 crores to the Company as distribution. Consistent with the accounting for the Scheme, whereby the difference between the net assets of the Transferor Companies and the purchase consideration issued by the Company to EBWT was adjusted in Equity of the Company, the aforementioned distribution from EBWT (net of cost of investment) amounting to Rs.217.09 crores has been credited to Equity in the General Reserve. Market value of outstanding shares held by Trust on 31 March 2018 is Rs.2768.72 crores (31 March 2017: Rs.2038.70 crores).

14 Related party transactions

The Companyâs related party transactions and outstanding balances are with its subsidiaries, associates and joint venture, key management and others as described below.

List of other related parties

Mrs. Ritu Nanda

Escorts Limited Employeesâ Group Gratuity Fund Trust (refer note 39 for transaction) Key management personnel remuneration includes the following expenses:

Mar 31, 2017

1. Company overview

Escorts Limited (âthe Companyâ) is a public limited company incorporated and domiciled in India and having its registered office at 15/5, Mathura Road, Faridabad (Haryana). The Companyâs shares are listed with Bombay Stock Exchange, National Stock Exchange and Delhi Stock Exchange. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, construction, earth moving and material handling equipment, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, centre buffer couplers, automobile shock absorbers, telescopic front fork & Mcpherson struts, brake block, internal combustion engines and all types of brake used by railwayâs. It also trades in oils & lubricants, implements, trailers, tractors, compressor accessories and spares, construction, earth moving and material handling equipment and aero business.

2. Basis of preparation, measurement and significant accounting policies

2.1 Basis of preparation and measurement

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 155 of the Companies Act, 2015 read with Rule 5 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

These financial statements are separate financial statements of the Company. The Company has also prepared consolidated financial statements for the year ended 51 March 2017 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on 29 May 2017.

These financial statements for the year ended 51 March 2017 are the first financial statements prepared by the Company under Ind AS. For all periods upto and including the year ended 51 March 2016, the Company prepared its financial statements in accordance with the accounting standards notified under the section 155 of the Companies Act 2015, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as âPrevious GAAPâ) used for its statutory reporting requirement in India immediately before adopting Ind AS. The financial statements for the comparative year ended 51 March 2016 and opening balance sheet at the beginning of the comparative year as at 1 April, 2015 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Companyâs Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 49

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April 2015 being the date of transition to Ind AS. All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2015. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

The financial statements have been prepared under the historical cost convention basis except for the following -

- Certain financial assets and liabilities which are measured at fair value;

- Defined benefit plans - plan assets measured at fair value; and

- Share based payments which are measured at fair value of the options; and

- Assets held for sale - measured at lower of carrying amount and fair value less cost to sell

3.1 Significant management judgement in applying accounting policies and estimation uncertainty

Allowance for obsolete and slow-moving inventory-The allowance for obsolete and slow-moving inventory reflects managementâs estimate of the expected loss in value, and has been determined on the basis of past experience and historical and expected future trends in the used vehicle market. A worsening of the economic and financial situation could cause a further deterioration in conditions in the used vehicle market compared to that taken into consideration in calculating the allowances recognized in the financial statements.

Product warranties - The Company makes provisions for estimated expenses related to product warranties at the time products are sold. Management establishes these estimates based on historical information of the nature, frequency and average cost of warranty claims. The Company seeks to improve vehicle quality and minimise warranty expenses arising from claims. Warranty costs may differ from those estimated if actual claim rates are higher or lower than historical rates.

Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, IT equipment and other plant and equipment.

Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Contingent liabilities - The Company is the subject of legal proceedings and tax issues covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the normal course of business management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.

3.2 Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of cash flowsâ, and IFRS 2, âShare-based paymentâ, respectively The amendments are applicable to the Company from 1 April 2017.

Amendment to Ind AS 7:

The amendments to Ind AS 7 inter-alia require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

Amendment to Ind AS 102:

The amendments to Ind AS 102 inter-alia provide specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the âfair valuesâ, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company is evaluating the requirements of the amendment and the impact on the financial statements is being evaluated.

Property, plant and equipment include assets in use for in house research and development centres

Refer note 36 for disclosure of property, plant and equipment in use for in house research and development centres.

Contractual obligations

Refer note 34 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

Property plant and equipment pledged as security

Refer note 47 for information on property, plant and equipment pledged as security by the Company.

Finance leases

The Company had taken land and certain IT equipments on finance lease. Out of which, all of the leased IT equipments having a net block of Rs.2.72 crores as at 1 April 2015 (date of expiry of the lease term) are owned by the Company now. Refer note 41 for contractual commitments for lease payments in respect to these assets.

Discontinued operations

Depreciation for the current year includes depreciation for discontinued operations Rs.1.41 crores (31 March 2016: Rs.2.56 crores).

(i) Amount recognised in profit and loss for investment property

(ii) Leasing arrangements

Certain investment properties are [eased to tenants under long-term operating [eases with rentals payable monthly However all the leases are cancellable at the option of lessee, hence there is no lease disclosure as required by Ind AS 17 âLeasesâ.

(iii) Fair value of investment property

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

Where such information is not available, the independent valuer consider information from a variety of sources including:

a) In case of valuation of land, current prices in an active market for similar properties of the same area and localities have been taken. The rates of which are based on verbal enquiries from the property dealers of the areas and localities;

b) In case of constructed building, rates derived from CPWD/CWC PARS as on 01-10-2010-12/1997 have been taken as the basis of valuation.

These rates have further been modified to bring them at par with the present day price index and as per specifications found at site. Necessary depreciation for age and life of the structure has been taken into account. Where the work is not covered under any of the standard specifications the rates have been assessed as on the date of valuations.

Contractual obligations

Refer note 34 for disclosure of contractual commitments for the acquisition of intangible assets.

Intangible assets include assets in use for in house Research and Development Centers

Refer note 36 for disclosure of intangible assets in use for in house Research and Development Centers.

Discontinued operations

Amortisation for the current year includes amortisation for discontinued operations Rs.0.03 crores (31 March 2016: Rs.0.05 crores).

4 Other bank balances

(i) Earmarked balances with banks significantly pertains to unclaimed dividends.

(ii) Rs.17.80 crores (31 March 2016: Rs.27 crores), (1 April 2015: Rs. Nil) representing deposits with original maturity for more than 3 months but less than 12 months, held by the entity that are not available for use by the Company, as these are pledged against loans.

(iii) Rs.0.10 crores (31 March 2016: Rs.0.13 crores), (1 April 2015: Rs.0.11 crore) representing margin money pledged with various authorities.

(iv) There are no repatriation restrictions with respect to cash and bank balances as at the end of the reporting period and prior periods

5 Assets held for sale

(i) The Company has executed an agreement to sell, for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs.9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs.9.00 crores is being classified in other current liabilities.

(ii) The Company has executed an aircraft purchase and sale agreement for transfer of its Bell 407 helicopter for a consideration of Rs.8.75 crores. The said transfer is subject to deregistration from Indian Civil Aviation Authority. An advance of Rs.2.5 crores is being classified in other current liabilities.

(iii) The Company has executed a sale agreement for transfer of a vehicle for a consideration of Rs.0.29 crores.

Non-recurring fair value measurements

Asset classified as held for sale during the reporting period was measured at the lower of its carrying amount and fair value less costs to sell at the time of re-classification, resulting in the recognition of a total write down of Rs.0.76 crores as impairment loss in retained earnings and statement of profit and loss . This is Level 3 measurement as per fair value hierarchy set out in fair value measurement disclosure (refer note 37).

Nature and purpose of other reserves Securities premium reserve

Securities premium reserve represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act.

Employeeâs stock options outstanding account

The account is used to recognise the grant date value of options issued to employees under Employee stock option plan.

Capital redemption reserve

This reserve represents reserve created on redemption of preference shares. The reserve is utilised in accordance with the provisions of the Companies Act.

Capital reserve

This reserve represents the excess of net assets taken, over the cost of consideration paid at the time of amalgamation done previously. This reserve is not available for the distribution to the shareholders.

Treasury shares

This reserve represents Companyâs own equity shares held by the Escorts Employee Benefit and Welfare Trust which is created under the Employee Stock Option Plan.

General reserve

Other comprehensive income (OCI) reserve

(i) The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

(ii) The Company has recognised remeasurements benefits on defined benefits plans through other comprehensive income.

Security details

(i) Cash credit and other working capital facilities from banks are secured against first charge on current assets and second charge on moveable fixed assets (excluding assets specifically charged to other term lenders) and specific fixed deposits. These facilities carried interest in the range of 7.66%.-10.80% p.a. in 31 March 2017 (31 March 2016: 7.75%-12% p.a) (1 April 2015: 10.5%-12.5% p.a).

(ii) Loan against factored receivables is secured by first charge on trade receivables subject to factoring arrangement. This facility carry a rate of interest of 10.45% p.a as on 31 March 2017 (interest rate on this loan is broadly consistent for all periods presented).

Refer note 37 - Financial instruments for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

(iii) Information about individual provisions:

Provision for contingencies

a) During the year 2004-05, the Company sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement (SPA) dated 25 September 2005. At the time of sale, EHIRCL had certain pending disputed income tax demands of Rs.52.33 crores and interest thereon amounting to Rs.29.16 crores. In accordance with the terms of said SPA, the Company has undertaken to indemnify the purchaser to the extent of Rs.64.99 crores plus one-third of any amount in excess of Rs.64.99 crores, upon the final adjudication of the demand in law or its final settlement. For this purpose and in terms of said SPA, an amount of Rs.64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal(s) along with interest amounts to Rs.127.76 crores as on 31 March 2017 (31 March 2016: Rs.120.14 crores) (1 April 2015: Rs.111.64 crores). Correspondingly, a provision was created earlier on prudent basis to meet this liability, if and when the same arises, whose carrying value is Rs.65.00 crores on 31 March 2017 (31 March 2016: Rs.60.45 crores) (1 April 2015: Rs.56.23 crores).

b) Farmtrac North America, LLC (FNA), previously subsidiary of the Company had entered into a distribution agreement for distribution of tractors manufactured by M/s L S Mtron (LSC). FNA however defaulted in making payments to LSC for the tractors supplied to them. LSC initiated International Arbitration conducted by ICC against the Company. FNA is currently under receivership and its assets had been disposed off by the Receiver and proceeds were distributed to secured creditors. A settlement agreement was executed between EL and LSC during FY 2015-16 and according to such settlement agreement, out of the total amount payable Rs.47.67 crores, 50% was paid during FY 2015-16 and balance is payable in three equal yearly installments, there after. In terms of the settlement agreement, the Company has paid first two installments and the remaining installments are payable in FY2017-18 and FY 2018-19. The carrying balance of provision for such amount payable to LSC is Rs.13.93 crores on 31 March 2017 (31 March 2016: Rs.20.30 crores) (1 April 2015: Rs.27.56 crores).

Provision for warranty

The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one to two years. The provision is based on estimates made from historical warranty data associated with similar products and services. The Company expects to incurthe related expenditure over the next year.

6 Discontinued operations

(i) Description

Pursuant to approval of the Board of Directors and execution of the Asset Purchase Agreement (Agreement) dated 11 August 2016, the Company had divested its OEM and Export business of its Auto Product Division. The said divestment become effective w.e.f. 6 December 2016 upon completion of defined actions and covenants as per the Agreement. The Company shall continue to persue its sale of auto products in after market operations.

(ii) Financial performance and cash flow information

*This includes expenses on providing/writing off various unrecoverable amounts in respect to various items of inventories, trade receivables and other assets.

7 Research and development

(i) Research and development costs on inhouse R&D centres amounting to Rs.83.98 crores (31 March 2016: Rs.71.23 crores) were incurred during the year.

(ii) Assets purchased/capitalised for research and development centers*:

(iii) Expenses on research and development as percentage to Gross Turnover is:

8 Financial instruments

A Financial assets and liabilities

The carrying amounts and fair values of financial instruments by category are as follows:

Investment in subsidiaries, joint ventures and associates are measured at cost as per Ind AS 27, âSeparate financial statementsâ and hence, not presented here.

B Fair values hierarchy

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and

Level 3: Inputs which are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a net asset value or valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Valuation process and technique used to determine fair value

(i) The fair value of investments in government securities and quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.

(iii) In order to arrive at the fair value of unquoted investments, the company obtains independent valuations. The techniques used by the valuer are as follows:

a) Asset approach - Net assets value method

b) Income approach - Discounted cash flows (âDCFâ) method

c) Market approach - Enterprise value/Sales multiple method

B.2 Fair value of instruments measured at amortised cost

Fair value of instruments measured at amortised cost for which fair value is disclosed is as follows, these fair values are calculated using Level 3 inputs:

The management assessed that fair values of cash and cash equivalents, trade receivables, other receivables, short term borrowings, trade payables and other current financial liabilities approximate their respective carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors.

(ii) The fair values of the Companyâs fixed interest-bearing, loans and receivables are determined by applying discounted cash flows (âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2017 was assessed to be insignificant.

(iii) All the long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

C Financial Risk Management Risk Management

The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

C.l Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

(i) Low credit risk on financial reporting date

(ii) Moderate credit risk

(iii) High credit risk

The Company provides for expected credit loss based on the following:

In respect of trade receivables, the company recognises a provision for lifetime expected credit loss.

Assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company or debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit, from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become one year past due.

Other financial assets measured at amortised cost

b) Expected credit losses for financial assets other than trade receivables

i) Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses. Since, the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low. In respect of loans, comprising of security deposits, credit risk is considered low because the Company is in possession of the underlying asset. In respect of other financial assets, credit risk is evaluated based on Companyâs knowledge of the credit worthiness of those parties and loss allowance is measured as lifetime expected credit losses. The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each sub-category of such financial assets.

ii) Expected credit loss for trade receivables under simplified approach

The company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by analysing historical trend of default relevant to each business segment based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met).

C.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

(a) Financing arrangements

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

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities can be drawn till 31 December 2017 in Rs. and have an average maturity of 6.5 years (31 March 2016: 7.5 years).

(b) Maturities of financial liabilities

The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

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.

C.3 Market risk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO and JPY . Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company Considering the low volume of foreign currency transactions, the Companyâs exposure to foreign currency risk is limited and the Company hence does not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative purposes.

(i) Foreign currency risk exposure in USD:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in Rs., are as follows

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainiy from foreign currency denominated financial instruments.

(ii) Foreign currency risk exposure in EURO:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in Rs., are as follows:

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

(iii) Foreign currency risk exposure in JPY:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in Rs., are as follows

b) Interest rate risk

i) Liabilities

The Companyâs policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2017, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Companyâs investments in fixed deposits all pay fixed interest rates.

Interest rate risk exposure

Below is the overall exposure of the Company to interest rate risk:

ii) Assets

c) Price risk

i) Exposure

The Companyâs exposure price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.

ii) Sensitivity

The table below summarises the impact of increases/decreases of the index on the Companyâs equity and profit for the period :

9 Capital management

The Companyâs capital management objectives are

- to ensure the Companyâs ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

10 Employee benefits Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employeesâ last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on managementâs historical experience.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

(I) The Company expects to contribute Rs.7.66 crores (previous year Rs.8.83) to its gratuity plan for the next year.

A Compensated absences (unfunded)

The leave obligations cover the Companyâs liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However based on past experience, the Company does not expect a ii employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as non-current. Amount of Rs.4.24 crores ( Previous year: Rs.5.17 crores) has been recognised in the statement of profit and loss.

B Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employee State Insurance Scheme which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to Rs.16.37 crores (Previous year: Rs.17.05 crores) and contribution to Employee State Insurance Scheme for the year aggregated to Rs.0.35 crores (Previous year: Rs.0.45 crores).

C The Company has taken an Insurance policy for medical benefits in respect of its retired and working employees. The Insurance policy for on-roll employees is fully funded by the Company.

11 Share-based payments

The option plan is designed to provide incentives to employees of the Company. Under the plan, participants have been granted options which will vest as follows:

Options are granted under the plan for the consideration of Rs.85 per share and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share. For the options which were vested before 31 March 2015, using the Ind AS transition exemption (as explained in the accounting policies) the expense related to options is arrived at using intrinsic value of the shares on the date of grant.

* The weighted average share price at the date of exercise of options during the year ended 31 March 2017 was Rs.260 (31 March 2016 Rs.153.30).

Weighted average remaining contractual life of options as at 31 March 2017 was 1.5 years (31 March 2016 : 0.99 years and 1 April 2015 : 1.5 years).

12 Share-based payments

The value of the options has been determined by an independent valuer. The following assumptions were used for calculation of fair value of options in accordance with Black Scholes model:

The risk free interest rates are determined based on the âZero Coupon Yield Curveâ with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

13 Leases - Assets taken on lease Operating leases

Finance leases

Also, the management has revalued the amount of land in 2009 and has created a revaluation reserve of Rs.7.13 crores pertaining to the same. The said lease of land was considered to be finance lease by the company.

14 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 (âEntry Taxâ) by repealing the Haryana Local Area Development Tax Act, 2000 (âHLADTâ). The said Act was held unconstitutional by the Honâble Punjab & Haryana High Court in their judgment dated 1 October 2008. The State Government of Haryana has preferred an appeal before the Honâble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after 31 March 2008.

15 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 have not been given.

16 The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4 March 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Honâble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

Escorts Benefit Trust has realised the investments held by it and remitted the surplus of Rs.15.00 crores to the Company (beneficiary) after retaining sufficient funds for meeting its liability towards Escorts Finance Limited deposits.

17 Escorts Benefit and Welfare Trust (the Trust) holds 37,300,031 equity shares of the Company and 23,497,478 equity shares of Escorts Finance Limited. The Company is the sole beneficiary of the Trust. The dividend received by the trust on the Companyâs shares is credited directly in âRetained earningsâ in note 17 - Other equity. Market value of these shares held by Trust on 31 March 2017 is Rs.2038.70 crores (31 March 2016: Rs.528.64 crores) (1 April 2015: Rs.483.32 crores).

18 The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108â0perating Segmentsâ, no disclosures related to segments are presented in these financial statements.

A Transactions with related party

(i) Transactions with joint ventures

During 2016-17, Adico Escorts Agri Equipment Private Limited provided rental services valued at Rs.0.01 crores (2015-16: Rs.0.01 crores) and sold tractors to Escorts Limited valued at Rs.16.94 crores (2015-16: Rs.13.14 crores). There is a recoverable outstanding on account of transactions as at 31 March 2017 of Rs.0.02 crores (31 March 2016: Nil) (1 April 2015: Nil).

(ii) Transactions with associates

There is a payable outstanding on account of transactions as at 31 March 2017 of Rs.2.09 crores (31 March 2016: Rs.2.09 crores) (1 April 2015: Nil) against Escorts Consumer Credit Limited.

*Numbers in brackets represents financial year ending 31 March 2016

** The Company receives the same dividend back from Escorts Benefit and Welfare Trust in the same year as the Company is the sole beneficiary of this trust (refer note 45)

19 First time adoption of Ind AS

These are the Companyâs first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 2.2 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2015 (the Companyâs date of transition). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.

A Ind AS optional exemptions

1 Deemed cost for property, plant and equipment, investment property and intangible assets

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 recognised 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.

2 Designation of previously recognised 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 investment in equity investments.

3 Share based payments

Ind AS 102 Share based payments requires an entity to recognise the equity settled share based payment plans based on fair value of the stock options granted to employees instead of intrinsic value. Ind AS 101 permits a first time adopter to ignore such requirement for the options already vested as on transition date that is 01 April 2015. The Company has elected to apply this exemptions for such vested options.

4 Assets held for sale

The company has elected to measure non-current assets held for sale at the lower of carrying value and fair value less cost to sell at the date of transition and recognize directly in retained earnings any difference between that amount and the carrying amount of those assets at the date of transition.

5 Deemed cost for investments in subsidiaries, associates and joint ventures

The Company has elected to continue with the carrying value of all of its investments in subsidiaries, joint ventures and associates recognised as of 1 April 2015 (transition date) measured as per the Previous GAAP as its deemed cost as at the date of transition.

B Ind AS mandatory exceptions

1 Estimates

An entityâs estimates in accordance with Ind ASs 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 1 April 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:

a) Investment in equity instruments carried at FVTPL or FVOCI

b) Impairment of financial assets based on expected credit loss model.

2 Classification and measurement of financial assets and liabilities

The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 are met based on facts and circumstances existing at the date of transition.

Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well.

3 Impairment of financial assets

At the date of transition to Ind AS, determine whether there has been a significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised.

C Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from Previous GAAP to Ind AS.

1 Reconciliation of total equity as at 31 March 2016 and 1 April 2015

2 Reconciliation of total comprehensive income for the year ended 31 March 2016

3 Reconciliation of the assets and liabilities presented in the balance sheet prepared as per Previous GAAP and as per Ind AS as at 31 March 2016 is as follows:

5 Impact of Ind AS on the adoption in the statement of Cash Flows for the year ended 31 March 2016

There are no material adjustments of transition to the statement of Cash Flows to conform to Ind AS presentation for the year ended 31 March 2016.

Note - 1

Adjustment for proposed dividend

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 recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings.

Note - 2 Measurement of financial assets and financial liabilities at amortised cost

Under Previous GAAP, all financial assets and financial liabilities were carried at cost.

Under Ind AS, certain financial assets and financial liabilities are subsequently measured at amortised cost which involves the application of effective interest method. In applying the effective interest method, an entity identifies fees that are an integral part of the effective interest rate of a financial instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of the financial asset or financial liability.

For certain financial liabilities, the fair value of the financial liability at the date of transition to Ind AS has been considered as the new amortised cost of that financial liability at the date of transition to Ind AS.

Note - 3

Measurement of investments at fair value through Profit or Loss (FVTPL)

Under Previous GAAP, current investments were stated at lower of cost and fair value.

Under Ind AS, these financial assets have been classified as FVTPL on the date of transition and changes in fair value after the date of transition has been recognised in profit or loss.

Note - 4

Recognition of loss allowance for expected credit losses on financial assets measured at amortised cost

Under Previous GAAP, provision for doubtful debts was recognised based on the estimates of the outcome and of the financial effect of contingencies determined by the management of the Company. This judgement was based on consideration of information available up to the date on which the financial statements were approved and included a review of events occurring after the balance sheet date.

Under Ind AS, a loss allowance for expected credit losses is recognised on financial assets carried at amortised cost. Expected loss on individually significant receivables is assessed when they are past due and based on companyâs historical counterparty default rates and forecast of macro-economic factors. Other receivables have been segmented by reference to the industry of the counterparty and other shared credit risk characteristics to evaluate the expected credit loss. The expected credit loss estimate is then based on recent historical counterparty default rates for each identified segment.

Note - 5

Deferral of revenue for after sale services and extended warranties being separately identifiable components of assets

Under Previous GAAP, the amount of revenue was usually determined at consideration received or receivable for the product or service explicitly specified in the contract between the parties.

Under Ind AS, where the sale transaction of the Company includes separately identifiable components, such as after sales services and extended warranties, it is necessary to apply the recognition criteria to those separately identifiable components in order to reflect the substance of the transaction. Revenue from each component so identified is only recognized when such goods are sold or services are rendered. Accordingly, revenue attributable to specifically identifiable components where services are pending to be rendered has been deferred.

Note - 6

Adjustments for consolidation of Escorts Employees Benefit and Welfare Trust CESOP Trustâ)

ESOP Trust, financed through interest free loan by the Company and warehousing the shares which have not vested yet, for distribution to employees of the Company, has been consolidated on line by line basis by reducing from Other equity of the Company the value of such shares held by the trust as treasury shares.

Note - 7

Other adjustments

Other adjustments comprise of the following :

a) Employee stockoption plan - Under Previous GAAP, the intrinsic value of the employee stock option plan was recognised as an expense over the vesting period. Under Ind AS, the compensation cost of employee stock option plan is recognised based on the fair value of the options determined using an appropriate pricing model at the date of grant.

b) Assets held for sale - Under Previous GAAP, non-current asset held for sale were carried at historical cost. Under Ind AS, non-current assets held for sale is to be carried at lower of carrying amount and fair value less costs to sell. The company has classified some of its non-current assets as held for sale and the resulting loss has been transferred to retained earnings.

c) Other miscellaneous adjustments

Note - 8

Deferred tax impact on above Ind AS and other transition adjustments

Under Previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also led to recognition of deferred taxes on new temporary differences.

Note - 9

Measurement of investments designated at fair value through Other Comprehensive Income (OCI)

Investments in equity instruments have been measured at fair value through profit or loss as against cost less diminution of other than temporary nature, if any, under the Previous GAAP.

Certain equity investments (other than investments in subsidiaries, joint ventures and associates) have been measured at fair value through other comprehensive income (FVTOCI).

The difference between the fair value and Previous GAAP carrying value on transition date has been recognized as an adjustment to separate component of other equity

Note - 10

Re-measurement gains on defined benefit plans

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 liability, are recognized in other comprehensive income instead of profit or loss in Previous GAAP.

Note - 11

Excise duty

Under Previous GAAP, revenue from sale of goods was presented net of excise duty whereas under Ind AS the revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of profit and loss as part of expenses.

Note - 12

Investment property

Under the Previous GAAP, investment properties were presented as part of property, plant and equipment. Under Ind AS, investment properties are required to be separately presented on the face of the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

Note - 13

Minimum Alternate Tax (âMATâ)

Ind AS 12 requires classification of MAT credit as deferred tax asset. Accordingly, the Company has reclassified MAT credit from loans and advances to deferred tax asset on each reporting date. There is no impact on the total equity or profit as a result of this adjustment.

Note - 14

Componentisation

The Company had realigned the remaining useful life of a component of a item of its plant and machinery in accordance with the provisions of component accounting prescribed under Schedule II to the Companies Act, 2013. Consequently, the carrying value of the item of plant and machinery which has completed its useful life amounting to Rs.1.16 crores (net of deferred tax Rs.0.62 crores) has been adjusted in opening retained earnings.

Mar 31, 2016

1. Corporate Information

"Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, construction, earth moving and material handling equipments, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork & Mcpherson struts, brake block, internal combustion engine and all types of brake used by railway''s. It also trades in oils & lubricants, implements, trailers, Tractors, compressor accessories and spares, construction, earth moving and material handling equipments and aero business."

2. Basis of Preparation

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis (except for certain plant & machinery, land and building which are carried at revalued amounts). GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

3a. During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of Rs.52.33 crores and interest thereon amounting to Rs.29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs.64.99 crores plus one-third of any amount in excess of Rs.64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of Rs.64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs.118.20 crores as on March 31, 2016. A provision of Rs.65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

NOTE 4: INVESTMENT IN JOINT VENTURE

During the year, the Company subscribed 60,00,000 (Previous Year - Nil) equity shares for total consideration of Rs.6.00 crores (Previous Year - Nil) in Adico Escorts Agri Equiments Private Limited, which is a jointly controlled entity with an 40:60 equity participation with Rajkot based Amul Group for manufacturing speciality tractors.

NOTE 5:

The Company has realigned the remaining useful life of its helicopter engine in accordance with the provisions of component accounting prescribed under Schedule II to the Companies Act, 2013. Consequently, the carrying value of the helicopter engine which has completed its useful life amounting to Rs.1.16 crores (net of deferred tax Rs.0.62 crores) has been adjusted to General Reserve.

NOTE 6:

During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab & Haryana High Court in their judgment dated October 1, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

NOTE 7:

The Company has executed an agreement to sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs.9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs.9.00 crores is being treated as advance.

NOTE 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 have not been given.

NOTE 9:

The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 4, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Hon''ble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

NOTE 10:

Escorts Benefit & Welfare Trust (the Trust) holds 37,300,031 lacs equity share of Escorts Limited. Escorts Limited is the sole beneficiary of the Trust. The Dividend received by the Trust on Escorts Limited shares is recognised as income in "Surplus in the Statement of Profit & Loss" in Note No. 4 - Reserves & Surplus.

NOTE 11:

Accounting for Leases (AS-19). Details as per Annexure - II

NOTE 12:

Figures have been rounded off to the nearest lakh rupees. Previous period figures regrouped/rearranged wherever necessary

Mar 31, 2015

1. CORPORATE INFORMATION

Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, round and flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork and Mcpherson struts, brake block, internal combustion engine and all types of brake used by railway''s, construction, earth moving and material handling equipments.

It also trades in oils and lubricants, implements, trailers, tractors, compressor accessories and spares, construction, earth moving and material handling equipments and aero business.

2. BASIS OF PREPARATION

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis (except for certain plant and machinery, land and building which are carried at revalued amounts). GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013(Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

3. Terms/Rights Attached to Equity Shares

The Company has only one class of shares, i.e., equity shares having a face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend is paid in Indian Rupees. The final dividend @ Rs. 1.20 per share, recommended by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4. DISCLOSURE REQUIRED BY ACCOUNTING STANDARD (AS) 29 ''PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS'':

Contingent Liabilities*

Rs. Crores

As At As At 31.03.2015 31.03.2014

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 32.52 33.85

II) Claims not acknowledged as debts 0.55 0.55

III) There is a contingent liability of :

(a) Excise Duty/ Customs Duty/Service 15.94 15.04 Tax demands not acknowledged as liability

(b) ESI additional demand not 5.55 4.14 acknowledged as liability

(c) Sales Tax and other demands 35.94 10.90 not acknowledged as liability

(d) Pending legal cases - Personnel 4.33 3.79 - Others 89.58 89.91

(e) Demand raised by Faridabad Municipal Corporation for external development charges where the company channel finance program and bill discounting

(g) LC/Guarantees executed in 47.41 22.38 favour of others

(h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal (Against demand the Company has deposited a sum of Rs. 0.28 crores (Previous period Rs. 25.89 crores) under protest) 0.81 136.94

(i) Eiability towards surety bond in favour of Governor of Haryana for sales tax registration under VAT 4.46 3.50

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

5. During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 64.99 crores plus one-third of any amount in excess of Rs. 64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs. 109.57 crores as on March 31, 2015. A provision of Rs. 65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of Provision:

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

6. The Company has revised its policy of providing depreciation on fixed assets effective April 1, 2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis for some assets and straight line basis for others. As a result of these changes, the differential depreciation effect relating to the period prior to April 1, 2014 has been included in ''Exceptional Item'' in the statement of profit and loss.

Had the Company continued to use the earlier methods of depreciation, the profit after tax for the current year would have been lower by the like amount.

Further the Company has also realigned the remaining useful life of its fixed assets in accordance with the provisions prescribed under Schedule II to the Companies Act, 2013. Consequently, the carrying value of those assets which have completed their useful life in accordance with the life prescribed under Schedule II to the Act, as on April 1, 2014 amounting to Rs. 94.48 crores (net after deferred tax Rs. 21.75 Crores) has been adjusted to the retained earnings and in case of the other assets the carrying value is being depreciated over the revised remaining useful life.

7. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab and Haryana High Court in their judgment dated October 1, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

8. The Company has executed an agreement to sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 9.00 crores . The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 9.00 crores is being treated as advance.

9. 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 have not been given.

10. The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 4, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs. 130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Hon''ble High Court has confirmed that Escorts Limited has no outstanding liability towards payment to Escorts Finance Limited deposit holders.

11. Escorts Benefit and Welfare Trust holds 37,300,031 equity share of Escorts Limited, the sole beneficiary of which is the company. The Dividend received by the Trust on these shares is recognised in the statement of profit and loss account in Notes No: 4 - Reserves and Surplus

12. RELATED PARTY DISCLOSURES (as identified and certified by the management)

Related party disclosures as required under Accounting Standard - 18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given hereunder:

(i) Subsidiary Companies Domestic

Escorts Securities Limited Escorts Asset Management Limited EDDAL Credit Limited

Overseas

Beaver Creeks Holdings LLC, USA Farmtrac Tractors Europe Sp. Z.o.o, Poland Farmtrac North America LLC, USA (formerly Long Agri Business LLC, USA)

(ii) Joint Ventures and Associates

Hughes Communications India Limited

Escorts Motors Limited

Escorts Consumer Credit Limited

(iii) Key Management personnel and their relatives

Mr. Rajan Nanda Mrs. Ritu Nanda Mr. Nikhil Nanda Ms. Nitasha Nanda Mrs. Shweta Nanda

(iv) Others

Rimari India Private Limited

Tashaka India Private Limited AAA Portfolios Private Limited

Niky Tasha Energies Private Limited

Rimari IT Solutions Private Limited

Breeze Trading Private Limited Niky Tasha Electronics Limited

Escorts Investment Trust Limited Sun & Moon Travels (India) Private Limited

Sharak Healthcare Private Limited

Raksha TPA Private Limited

Ritu Nanda Insurance Service Private Limited

Sun & Moon Advisory Services Private Limited Big Apple Clothing Private Limited

Escolife IT Services Private Limited Academy of Management and Financial Planing Private Limited Escorts Employees Welfare Limited Escorts Benefit and Welfare Trust

Charak Ayurvedic Treatments Private Limited

Crystal Care Advisors Private Limited Momento Communications Private Limited

Rakshak Health Service Private Limited

Har Parshad And Company Private Limited Sietz Technologies India Private Limited Niky Tasha Communications Private Limited Escorts Skill Development

(v) Related Party Transactions - Refer Annexure - I

13. Accounting for Leases (AS-19). Details as per Annexure - II

14. Figures have been rounded off to the nearest lakh rupees. Previous period figures regrouped/rearranged wherever necessary.

15. The previous accounting period is for 18 months (from October 1,2012 to March 31,2014) and is not comparable with the current year.

Mar 31, 2014

NOTE 1 : THE OUTSTANDING DERIVATIVE INSTRUMENTS AS AT MARCH 31, 2014.

The Export Receivables of the Company as at period end have not been Hedged by Forward Contract (Previous Year Nil) The foreign currency exposure not hedged by a derivative instrument or otherwise as on March 31, 2014 are as follows:

NOTE 1 : DISCLOSURE REQUIRED BY ACCOUNTING STANDARD (AS) 29 ''PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS'':

1a Contingent Liabilities*

Rs Crores

As At As At 31.03.2014 30.09.2012

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 33.85 48.30

II) Claims not acknowledged as debts 0.55 0.55

III) There is a contingent liability of :

(a) Excise Duty/ Customs Duty /Service Tax demands not acknowledged as liability 15.04 12.66

(b) ESI additional demand not acknowledged as liability 4.14 4.14

(c) Sales Tax and other demands not acknowledged as liability 10.90 13.50

(d) Pending legal cases - Personnel 3.79 4.06

- Others 89.91 23.41

(e) Demand raised by Faridabad Municipal Corporation for external development charges where the Company is in litigation 2.38 2.38

f) Guarantees given to banks under channel finance program and billis counting 32.70 26.98

(g) LC/Guarantees executed in favour of others 22.38 19.54 (h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal (Against demand the Company has deposited a sum of Rs25.89 crores (Previous year H25.89 crores) under protest) 136.94 136.94

(i) Liability towards surety bond in favour of Governor of Haryana for sales tax registration under VAT 3.50 3.50

*The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

34b During the period 2004-05, Escorts Limited (EL) sold its entire shareholding in Escorts Heart Institute and Research Center Limited (EHIRCL) vide Share Purchase Agreement dated September 25, 2005. There were certain pending disputed Income Tax Demands of H52.33 crores and interest thereon amounting to H29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of H64.99 crores plus one-third of any amount in excess of H64.99 crores, upon the final adjudication of the demand in law or finally settled in terms of the provisions of the said Share Purchase Agreement. For this purpose and in terms of said Share Purchase Agreement an amount of H64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to H101.13 crores as on March 31, 2014. A provision of H65.00 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of Provision:

Product Warranties :The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

NOTE 2 :

The Company revalued its freehold land and buildings as on April 01, 2009 and amount added on revaluation is H672.72 crores, the revaluations was carried out by reputed independent valuer.

Note 3 :

During 2008 the Haryana State Government introduced Haryana Tax On Entry Of Goods InTo Local Areas Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab and Haryana High Court in their judgment dated October 01, 2008. The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary after March 31, 2008.

Note 4 :

The Company has executed an Agreement to Sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of H9.00 crores . The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of H9.00 crores is being treated as advance.

Note 5 :

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 period end together with interest paid / payable under this Act and as required by Schedule VI of Companies Act, 1956 have not been given.

Note 6 :

The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated March 04, 2011. On the interim directions of the said High Court, fixed deposit liability of H130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court for discharging the unclaimed deposit, balance 24,01,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The Trust shall, in due course and in terms of the directions of the High Court, discharge the unclaimed deposits. No further instructions have received from the Court during the period.

Note 7 :

Escorts Benefit and Welfare Trust holds 3,73,00,031 Lacs equity shares of Escorts Limited, the sole beneficiary of which is the Company. The Dividend received by the Trust on these shares is recognised in the Statement of Profit and Loss Account in Note No: 4 - Reserves and Surplus.

Note 8 : RELATED PARTY DISCLOSURES (as identified and certified by the management)

Related party disclosures as required under Accounting Standard - 18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given hereunder:

(i) Subsidiary Companies

Domestic Overseas

Escorts Securities Limited Beaver Creeks Holdings LLC, USA

Escorts Asset Management Limited Farmtrac Tractors Europe Sp. Z.o.o, Poland

EDDAL Credit Limited Farmtrac North America LLC, USA (formerly Long Agri Business LLC, USA)

(ii) Joint Ventures and Associates

Hughes Communications India Limited Escorts Motors Limited

(iii) Key Management Personnel (whole-time directors) and their relatives Mr. Rajan Nanda (Chairman and Managing Director) Mr. Nikhil Nanda (Managing Director) Mrs. Ritu Nanda Mrs. Shweta Nanda Ms. Nitasha Nanda

(iv) Others

Har Parshad and Company Private Limited Big Apple Clothing Private Limited

Raksha TPA Private Limited Niky Tasha Communications Private Limited

Rimari India Private Limited Niky Tasha Energies Private Limited

Momento Communications Private Limited Sun and Moon Travels (India) Private Limited

AAA Portfolios Private Limited Sharak Health Care Private Limited(Previously named Raksha MedicarePrivate Limited)

(v) Related Party Transactions - Refer Annexure - I

Note 8

Accounting for Leases (AS-19). Details as per Annexure - II

Note 9

Figures have been rounded off to the nearest lakh rupees. Previous year figures regrouped/rearranged wherever necessary.

Note 10

The accounting year of the Company has been extended by six months, i.e. upto March 31, 2014, as approved by the board of directors in their meeting held on October 02, 2013 and by registrar of the Companies vide its letter dated October 07, 2013. Therefore, current accounting period is for 18 months (from October 01, 2012 to March 31, 2014) and is not comparable with the previous year.

Note:

1. Cash and cash equivalents include cash in hand, demand deposits with banks and short term highly liquid investments.

2. Previous years figures have been regrouped wherever necessary.

3. Figures in bracket shows cash outflow

Sep 30, 2012

1. Corporate Information

Escorts Limited is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company''s shares are listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Delhi Stock Exchange Limited. The Company is engaged in the business of manufacturing of agricultural tractors, engines for agricultural tractors, round end flat tubes, heating elements, double acting hydraulic shock absorbers for railways coaches, center buffer couplers, automobile shock absorbers, telescopic front fork and Mcpherson struts, break block, internal combustion engine and all types of breaks used by railway''s, construction, earth moving and material handling equipments. It also trades in oils and lubricants, implements, trailers, compressor accessories and spares,construction, earth moving and material handling equipments and aero business.

2. Basis of Preparation

The financial statements of the Company have been prepared and presented under the historical cost convention (except for land, building and plant & machinery acquired before 1st April, 2003 which are carried at revalued amounts) on the accrual basis of accounting in accordance with generally accepted accounting principles in india (GAAP) and comply with the accounting standard notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(a) Terms/Rights Attached to Equity Shares

The Company has only one class of share, i.e., equity shares having the face value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

Dividend is paid in Indian Rupees. The dividend recomended by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

In addition, the company has issued total 298,000 (Previous Year 298,000) Equity Share to employees (through Escorts Employees Benefit & Welfare Trust) on exercise of option granted under the Employee Stock Option Scheme 2006, wherein part consideration was received in form of emplyee service.

(b) Share Reserved for Issued Under option

For details of share reserved for issue under the Employee Stock Option Plan (ESOP) of the Company - (Refer Note 36).

Nature of Security

Cash Credit/Export Packing Credit and Working Capital Demand Loans from Banks are secured against First charge on current assets and second charge on movable fixed assets excluding assets specifically charges to the term landers and repayable on demand and carries interest @ 11-13% per annum.

3. The outstanding Derivative Instruments as at 30th September, 2012

The Export receivables of the Company as at year end have not been hedged by forward contract (Previous Year: Nil)

4. Disclosure required by Accounting Standard (AS) 29 ''Provisions, Contingent Liabilities and Contingent Assets'':

Rs. Crores

Year Ended Year Ended 30.09.2012 30.09.2011

a. Contingent Liabilities

I) Estimated amounts of contracts remaining to be executed on capital account and not provided for 48.30 61.91

II) * Claims not acknowledged as debts 0.55 0.51

III) There is a Contingent liability of:

* (a) Excise duty/ Customs duty demands not acknowledged as liability 12.66 8.98

* (b) ESI additional demand not acknowledged as liability 4.14 4.14

* (c) Sales Tax & Other demands not acknowledged as liability 13.50 6.73

* (d) Pending Legal Cases - Personnel 4.06 3.21

- Others 23.41 79.87

* (e) Demand raised by Faridabad Municipal Corporation for external 2.38 2.38 development charges where the Company is in litigation

(f) Guarantees given to banks under Channel Finance Program 26.98 28.18

(g) LC/Guarantees executed in favour of Others 19.54 9.59

(h) Demand raised by Income Tax Department, disputed by the Company and pending in appeal 111.05 130.52

(i) Liability towards Surety Bond in favour of Governor of Haryana for Sales Tax registration under VAT 3.50 -

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

IV) During the period 2004-05, Escorts Limited (EL) sold its entire share holding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Sale Purchase Agreement dated 25th September, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 65 crores plus one-third of any amount in excess of Rs. 65.00 crores, on final determination of such demands as a result of adjudication by assessment/appellate authorities. For this purpose and in terms of Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal (s) amounts to Rs. 82.80 crores as on 30th September, 2012. A provision of Rs. 65 crores has been made on prudent basis to meet this liability, if and when the same arises.

(ii) Nature of provision:

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

5. The Company revalued its freehold land and buildings as on 01st April, 2009 and amount added on revaluation is Rs. 672.72 crores, the revaluations was carried out by reputed independent valuer.

6. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon''ble Punjab & Haryana High Court in their judgment dated 1st October, 2008.

The State Government of Haryana has preferred an appeal before the Hon''ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary.

7. The Company has executed an Agreement to Sell for transfer of 25 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 9.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 9.00 crores is being treated as advance.

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 and as required by Schedule VI of Companies Act, 1956 have not been given.

9. Pursuant to the Scheme of Arrangement (Scheme) under Sections 391 to 394 which has been approved by the Hon''ble High Court of Punjab & Haryana vide its Order dated 17th September 2009, an amount of Rs. 369.79 crores on account of, receivables, fixed assets, inventories, loans & advances which is doubtful of recovery/ realization has been provided for/written off and adjusted through Business Reconstruction Reserve.

Had the Scheme not prescribed for the aforesaid accounting treatment as approved by the Hon''ble High Court, the balance sheet (including reserves & surplus) and the statement of profit and loss would have been impacted to that extent.

Further, the balance amount of Rs. 70.28 crores lying in Business Reconstruction Reserve has been transferred to General Reserve.

10. A Scheme of Arrangement and Amalgamation under Section 391 to 394 of the Companies Act, 1956 was approved by the shareholders and the unsecured creditors of Escorts Limited on 20th May, 2012 for the amalgamation of Escorts Construction Equipment Limited (''ECEL''), Escotrac Finance and Investments Private Limited (''Escotrac'') and Escorts Finance Investments and Leasing Private Limited (EFILL) (together ''Transferor Companies'') with Escorts Limited (''Escorts'' or Company'') (hereinafter referred to as ''the Scheme''), with effect from the Appointed Date of 1st October, 2011, The Scheme has been sanctioned by the Hon''ble High Court of Punjab and Haryana at Chandigarh vide its order dated 9th August, 2012.

Upon necessary filings with the respective Registrar of Companies by the Transferor Companies and Transferee Company, the Scheme has become effective on 12th October, 2012 and the effect thereof has been given in the financial statements from 1st October, 2011. Consequently in terms of the Scheme,

1. The entire business undertaking of the Transferor Companies including all assets and liabilities, as a going concern, stands transferred to and vested in the Company with effect from 1st October, 2011 being the merger appointed date.

2. The Transferor Companies which were engaged in the business of manufacture of construction equipment and investment activities have been dissolved without being wound up.

3. In consideration of the amalgamation, the Company has issued:

- 1,68,83,629 equity shares of Rs. 10 each aggregating to Rs. 16.88 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 27 (Twenty Seven) fully paid-up equity shares of Rs. 10/- each held in ECEL

- 44,444 equity shares of Rs. 10 each aggregating to Rs. 0.04 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 27 (Twenty Seven) fully paid up equity shares of Rs. 10/- each held in Escotrac

- 30,769 equity shares of Rs. 10 each aggregating to Rs. 0.03 crores in the ratio of 4 (four) fully paid up Equity Shares of the face value of Rs. 10/- each of the Company for every 39 (Thirty Nine) fully paid up equity shares of Rs. 10/- each held in EFILL

4. Pursuant to the above, the issued share capital of the Company increased from Rs. 105.62 crores to Rs. 122.58 crores. Further, pursuant to the Scheme, the authorized share capital of the Company stands enhanced to Rs. 1289 crores.

5. Further, equity investments held by Escotrac and by EFILL in the share capital of the Company and equity investment held by Escotrac and by EFILL in the share capital of Escorts Finance Limited, ultimately transferred to the Escorts Benefit and Welfare Trust. The beneficiary interest in the Escorts Benefit and Welfare Trust, has been accounted for as an Investment by the Company in the manner prescribed in the Scheme.

6. The amalgamation has been accounted for under the "Pooling of Interest Method" in accordance with Accounting Standard (AS) -14 on Accounting for Amalgamations. Accordingly, all the assets and liabilities of the Transferor Companies have been taken at their respective book values as appearing in the books of the Transferor Companies.

Further, as envisaged in the Scheme, all outstanding intercompany balances including inter-company investments (other than referred to in point 5 above) stands cancelled. Furthermore, pursuant to the scheme, Rs.97.40 crores, being the difference between the net assets of the transferor companies and the purchase consideration issued by the company is adjusted in reserves of the Company.

11. The Company had allotted 10,505,306 equity shares for an amount of Rs. 154.30 crores in the name of Members of Hardship Committee constituted by Hon''ble High Court of Delhi (High Court) pursuant to the Scheme of Arrangement and Compromise filed before it to Bail out FD holders of Escorts Finance Ltd. On the interim directions of the said High Court, fixed deposit liability of Rs. 130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court. For discharging the remaining unclaimed deposit, 2,401,050 shares of Escorts Limited have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved.

(ii) Assets purchased/capitalised for Research & Development Centres (as certified by the management)*

- Tractors Rs. 7.97 crores (Previous Year Rs. 7.39 crores)

- Construction Equipment Rs. 1.80 crores *Doesn''t include capital advance/capital work-in-progress

(iii) Expenses on Research & Development as percentage to gross turnover is:

- Tractors 1.45% (Previous Year 1.03%)

- Construction Equipment 1.22%

12(a). Accounting for Leases (AS-19). Details as per Annexure - II

13. The current year figures have been reported as per revised Schedule VI notified under the Companies Act, 1956. The company has reclassified the previous year figures to confirm this year''s classification. Further pursuant to scheme of amalgamation and its effect on the financial statements, current year figures are not compairable with the figures of previous year.

Figures have been rounded off to the nearest lac rupees.

Sep 30, 2011

Contingent liability is disclosed in the case of

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

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities are reviewed at each Balance Sheet date.

1 The Outstanding Derivative Instruments as at 30th September, 2011

The Exports receivables of the Company as at year end have been hedged by forward contracts USD $ 1.92 Million (Previous year : USD $ 3 Million)

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered. Iv) During the period 2004-05, Escorts Limited (EL) sold its entire share holding in Escorts Heart Institute & Research Center Limited (EHIRCL) vide Sale Purchase Agreement dated 25th September, 2005. There were certain pending disputed Income Tax Demands of Rs. 52.33 crores and interest thereon amounting to Rs. 29.16 crores on EHIRCL and in terms of the agreement EL has undertaken to indemnify the purchaser to the extent of Rs. 65 crores plus one-third of any amount in excess of Rs. 65.00 crores, in case the appeal is decided against EHIRCL. In view of the above, in terms of Share Purchase Agreement an amount of Rs. 64.99 crores has been kept in an Escrow Account as fixed deposit, which after renewal amounts to Rs. 82.80 crores as on 30th September 2011.

(ii) Nature of provision

Product Warranties: The Company gives warranties on certain products and undertakes to repair or replace them if these fail to perform satisfactorily during the free warranty period. Such provision represents the amount of expected cost of meeting the obligations of such rectification/replacement. The timing of the outflows is expected to be within a period of one year.

2 The Scheme of Compromise and Arrangement pending before the Delhi High Court to bail out the fixed deposit holders of Escorts Finance Limited stands disposed-off vide order dated 4th March, 2011. On the interim directions of the said High Court, fixed deposit liability of Rs.130.32 crores has already been discharged by the Hardship Committee constituted under the directions of the said High Court. For discharging the unclaimed deposit, balance 2,401,050 shares have been transferred to Escorts Benefit Trust (Trust) and the Hardship Committee has been dissolved. The trust shall, in due course and in terms of the directions of the High Court, discharge the unclaimed deposits.

3 The Company revalued its freehold land as on 1st September, 2006 and amount added on revaluation was Rs. 387.64 crores, further the Company has revalued it's all land & buildings as on 1st April, 2009 and amount added on revaluation is Rs. 672.72 crores. Both revaluations were carried out by reputed independent valuer.

4 The Company has issued 3,611,612 Equity Shares of Rs. 10 each fully paid up at a price of Rs. 84.50 per share (including premium of Rs. 74.50 per share) in favor of the trustees of Escorts Employees Benefit & Welfare Trust under Employee Stock Option Scheme, 2006 on 9th November, 2009. Accordingly the Company has so far granted 629,500 options to its employees, in accordance with the guidelines issued by SEBI, out of which 221,500 options have been forfeited till 30th September, 2011 and balance 298,000 options have been exercised leaving 110,000 options pending for exercise.

5 During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Hon'ble Punjab & Haryana High Court in their judgment dated 1st October, 2008. The State Government of Haryana has preferred an appeal before the Hon'ble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received by the Company no further provision on this account is considered necessary.

6 The Company has executed an Agreement to Sell for transfer of 20 acres of land at Plot No. 219, Sector 58, Balabhgarh, Haryana for a consideration of Rs. 7.00 crores. The said transfer is subject to necessary approval from HuDA and accordingly the consideration amount of Rs. 7.00 crores is being treated as advance.

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 & as required by Schedule VI of Companies Act, 1956 have not been given.

8 Pursuant to the order of the Hon'ble High Court of Punjab & Haryana dated 17th September, 2009 an amount of Rs. 32.53 crores on account of exports receivables from Farmtrac Tractors Europe Sp. Z.o.o., Poland, which is doubtful of recovery and exports incentives availed thereon to be refunded, has been provided for and adjusted through Business Reconstruction Reserve. Had the Scheme not prescribed for the aforesaid accounting treatment as approved by the Hon'ble High Court, the balance sheet (including reserve & surplus) and the profit and loss account would have been impacted to that extent.

(ii) Assets purchased/capitalised for Research & Development Rs. 7.39* crores (Previous year Rs. 2.87 crores)

(iii) Expenses on Research & Development as percentage to turnover is 1.03% (Previous year 0.83%)

*Doesn't include capital advance/capital work in progress

9 Clause 32 disclosure - Details as per Annexure - II

10 Accounting for Leases (AS-19). Details as per Annexure - III

11 Figures have been rounded off to the nearest lakh rupees. Previous year figures have been regrouped/rearranged wherever necessary.

NOTES :

*(a) As certified by the management and not verified by the auditors, being a technical matter.

(b) Sales and production pertain to finished goods only. Opening and Closing stocks include partly executed contracts but exclude stocks held by the consuming/selling divisions.

(c) In item no. 3 Installed capacities and actual production are in meters, rest are in numbers.

**(d) Opening and Closing stocks of items of Research and Development have been excluded.

(e) Opening and Closing stocks are inclusive of Work-in-Progress.

(f) Item no. 2 is not included in trading/finished stock.

NOTES :

1. Opening and Closing balances include partly executed sales contracts but do not include goods - in - transit and Job-in-Progress

NOTE : Raw Materials and components consumed include sale of raw materials and components

NOTES :

1. Cash and Cash equivalents include Cash in hand, demand deposits with banks and short term highly liquid investments.

2. Previous year's figures have been regrouped wherever necessary.

3. Figures in bracket shows Cash Outflow

Sep 30, 2010

1. Consequent to an agreement dated 31st March, 2000 between the Company and ICICI Bank Ltd (ICICI), the company sold 3,450,000 equity shares of Hughes Communication India Limited (HCIL) to Escorts Motors Limited (EML), ICICI thereafter subscribed to the equity share capital of EML to hold 49 % of its total equity share capital. Under the terms of the agreement, the Company had given an assurance to ICICI of a minimum return compounded annually for a period of four years. Subsequent to 31st March, 2004, the Company has in terms of earlier agreement agreed to puchase the 49% holding in EML from ICICI and had advanced Rs. 68 crores. The transfer of the shares in favour of the Company is awaited pending final settlement with ICICI.

2. The Scheme of Arrangement and Compromise filed before the Honble Delhi High Court to bail out the fixed deposit holders and creditors of Escorts Finance Limited (EFL) is still pending. The Honble High Court, Delhi had constituted a Hardship Committee to settle payments to fixed deposit holders of EFL who are facing hardship such as medical, marriage, education and others. On 24th May, 2010 the High Court has directed the Hardship Committee to offer maturity value of fixed deposit amount as stated in the face of fixed deposit receipt (Maturity Value) in full and final settlement of the fixed deposit liability of EFL towards the FD Holders. Accordingly Hardship Committee had sent letters to all FD Holders on 7th June, 2010 and also reminder letter on 20th July, 2010, 30th September, 2010 and also given public notice in the News paper on 23rd October, 2010 asking FD holders to submit documents so that Maturity value of their FD maybe paid. In accordance with the directions of the Honble High Court of Delhi on 24th May 2010 your Company has also allotted 6,601,050 equity shares to Hardship Committee for the purpose of selling the same in the open market, realising the proceeds thereof and its distribution to the FD holders to settle their outstanding liability (Maturity Value).

The Hardship Committee is in the process of paying the FD holders in accordance with these directions.

3. The Company revalued its freehold land as on 1st September, 2006 and amount added on revaluation was Rs.387.64 crores, further the Company has revalued its all land & buildings as on 1st April, 2009 and amount added on revaluation is Rs. 672.72 crores. Both revaluations were carried out by reputed independent valuer.

4. During 2008 the Haryana State Government introduced Haryana Tax on Entry of Goods into Local Area Act, 2008 ("Entry Tax") by repealing the Haryana Local Area Development Tax Act, 2000 ("HLADT"). The said Act was held unconstitutional by the Honble Punjab & Haryana High Court in their judgment dated 1st October, 2008. The State Government of Haryana has preferred an appeal before the Honble Supreme Court which is pending for adjudication before the Constitutional Bench. Based on the legal advice received, the Company has written-back an amount of Rs. 15.53 Crores in respect of the provisions made towards Entry Tax in earlier years and no further provision on this account is considered necessary.

5. The Company has issued 3,611,112 Equity Shares of Rs. 10 each fully paid up at a price of Rs. 84.50 per share (including premium of Rs. 74.50 per share) in favour of the trustees of Escorts Employees Benefit & Welfare Trust under Employee Stock Option Scheme, 2006 on 9th November, 2009. Accordingly the Company has so far granted 554,500 options to its employees, in accordance with the guidelines issued by SEBI, out of which 221,500 options have been forfeited till 30th September, 2010 and balance 268,000 options have been exercised leaving 65,000 options pending for exercise.

6. The Company has executed an Agreement to Sell for transfer of 20 acres of land at Plot No. 219, Sector 58, Balabgarh, Haryana for a consideration of Rs. 7.00 crores. The said transfer is subject to necessary approval from HUDA and accordingly the consideration amount of Rs. 7.00 crores is being treated as advance.

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 & as required by Schedule VI of Companies Act, 1956 have not been given.

8. Clause 32 disclosure - Details as per Annexure - II

9. Accounting for Leases (AS-19). Details as per Annexure - III

10. Figures have been rounded off to the nearest lac rupees. Previous year figures have been regrouped/rearranged wherever necessary.

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