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Notes to Accounts of Ingersoll-Rand (India) Ltd.

Mar 31, 2017

(1) Deemed cost as at April 01, 2015 has been arrived at as follows:

The carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS has been measured as per the previous GAAP and is considered to be its deemed cost as at the date of transition.

(2) The leasehold land represents land taken on finance lease and the premium paid thereon is amortized over the period of lease.

3 Financial assets

3.1 Loans

Note: The loans advanced to fellow subsidiaries, on interest, are repayable on June 28, 2019 as per the loan agreements. These loans including any accrued interest are backed by corporate guarantees issued to the Company by the ultimate holding company that are valid up to June 28, 2019.

Transfer pricing:

The Finance Act, 2001, has introduced, with effect from assessment year 2002-03 detailed Transfer Pricing regulations for computing the taxable income and expenditure from ''international transactions'' between ''associated enterprises'' on an ''arm''s length'' basis. Further, the Finance Act, 2012, has widened the ambit of transfer pricing provisions to cover specified domestic transactions. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an Accountant within the due date of filing the Return of Income.

For the year ended March 31, 2016, the Company had undertaken a study to comply with the said transfer pricing regulations for which the prescribed certificate of the Accountant has been obtained and this did not envisage any tax liability.

For the year ended March 31, 2017, the Company is in the process of carrying out a similar study to comply with the said transfer pricing regulations. However, based on the analysis of margins and considering that the terms of agreement with associated enterprises has not changed during the year, the Company is of the view that for the year ended March 31, 2017, the transactions with the said enterprises are on an arm''s length basis.

The above includes 31,301,500 (March 31, 2016: 31,301,500) shares allotted as fully paid-up by way of bonus shares by capitalization of share premium and general reserves. The Company had last issued bonus shares during the financial year ended March 31, 1992.

(ii) Terms and rights attached to equity shares

Equity shares have a par value of Rs.10. They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held. Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(v) Shares reserved for issue under options

There are no shares of the Company reserved for issue under any option.

(vi) Aggregate number of shares allotted as fully paid up by way of bonus shares/pursuant to contract(s) without payment being received in cash:

During the period of five years immediately preceding March 31, 2017, no shares have been allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash.

Nature and purpose of other reserves Notes:

General reserve

General reserve was created when the Company declared dividend to share holders as per the provisions of Companies Act, 1956. The reserve is utilized in accordance with the provisions of the Act.

Other reserve

This reserve relates to share based compensation received by the employees from Ingersoll Rand plc, the ultimate holding company. Refer note 20(d).

Provision for Litigations/ disputes

Provision for litigations/ disputes relates to employees claiming compensation towards termination of employment and are provided for based on estimates made by the Company. Based on the past experience, Management believes that these claims will be settled beyond twelve months.

Provision for Warranties

Warranties against manufacturing and other defects, as per terms of contract(s) with the customer, are provided for based on estimates made by the Company, except where the Company has back to back arrangement with the suppliers. It is expected that this provision will be settled in the remaining unexpired warranty period ranging from twelve to eighteen months.

Provision for sales tax

Provision for sales tax relates to non-submission of statutory forms by customers to the Company and was inadvertently included under ''Trade payables'' in the prior years, which is now appropriately reclassified. It is expected that this provision will be settled beyond twelve months as and when the tax assessments are completed.

Notes:

(i) Includes provision for inventory obsolescence Rs.15.15 (March 31, 2016: write back of provision for inventory obsolescence Rs.33.70).

(ii) Purchase of traded goods was inadvertently included under "Cost of materials consumed" in the prior year and now appropriately regrouped, which, however, does not have any impact on the results of the Company.

(a) Defined benefit plan:

Gratuity: The Company operates a gratuity plan, which is a final salary defined benefit plan, through the "Ingersoll-Rand Employees Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972 subject to a maximum of Re.1. It is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. In case of employees who joined the Company prior to April 1, 2006, the benefits given by the Company are more favourable to the employees than the Payment of Gratuity Act, 1972 depending upon the length of service. The board of trustees is responsible for the administration of the plan assets and investment strategy.

Provident Fund: Provident fund for certain eligible employees is managed by the Company through the "Ingersoll-Rand Employees Provident Fund Trust". In line with the Provident Fund and Miscellaneous Provisions Act, 1952, the plan guarantees interest at the rate notified by the Provident Fund authorities. The contribution are made to the fund at the rate of 12% of basic salary by the employer and employee, and this amount together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. Interest shortfall, if any, is met by the Company. The benefits vest immediately on rendering of the services by the employee. The Board of trustees is responsible for the administration of the Plan assets and investment strategy.

The below disclosures under provident fund are restricted only to the defined benefit obligation and plan assets relating to guaranteed interest rate earning and shortfall thereof, if any, as provided by an independent actuary.

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demand and supply in the employment market.

(b) The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(c) The discount rate is based on the prevailing market yield on Government securities as at the Balance Sheet date for the estimated term of obligation.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(c) Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks. The most significant risks are:

(a) Gratuity

Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk : This is the risk of variability of results due to factors like mortality, withdrawal, disability and retirement. The effect of these on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and attrition rate.

(b) Provident fund

(i) Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

(ii) Fund return risk : Lower the return on fund, higher the expected shortfall, if Employees Provident Fund Organization (EPFO) declared return continues to be on the higher side, it will increase the defined benefit obligation.

(iii) Demographic risk : On an increase in membership, there will be an increase in the defined benefit obligation.

(iv) Investment risk: The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company''s ALM objective is to match assets to the obligations by investing in long-term interest bearing securities with maturities that match the benefit payments as they fall due. A large portion of assets consists of government and corporate bonds The Company believes that investment in government and corporate bonds offer the best returns over the long term with an acceptable level of risk.

(d) Share-based payments

Incentive Stock Option Plan of 2007 ("2007 plan")

On June 6, 2007, the shareholders of the ultimate holding company approved the Incentive Stock Plan of 2007, which authorizes the holding company to issue stock options and other share-based incentives. All the share based incentives vests equally over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

Incentive Stock Option Plan of 2013 ("2013 plan")

On June 6, 2013, the shareholders of the ultimate holding company approved the Incentive Stock Plan of 2013, which authorizes the holding company to issue stock options and other share-based incentives. All the share based incentives vests equally over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

A Employee option plan

Certain executives of the Company are eligible to participate in the employee share based payment plans of Ingersoll-Rand plc, the ultimate holding company. The share based plans are assessed, managed and administered by the ultimate holding company. Under the plan, participants are granted options which vests over three years of service from the grant date. Once vested, the options remain exercisable till ten years from the date of grant.

Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share. The exercise price of the options is based on the rate prevailing on the stock exchange on the date of exercise.

Fair value of options granted

The fair value at grant date of options granted during the year ended March 31, 2017 was USD 9.42 per option (March 31, 2016: USD 13.98). The fair value at grant date is determined using the Black Scholes model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The value of options have been translated to Rupees at the year end closing rate.

B Restricted stock units

Restricted stock units (RSU) are share equivalents that are awarded to certain employees with a promise to issue actual shares to holders of the RSU at vesting. The RSU will vest in one-third installment over three years. Once they fully vest, each unit may be converted into a share at current value over an exercisable period of ten years.

Set out below is a summary of RSU''s granted under the plan:

Note 1: The weighted average share price at the date of exercise of options exercised during the year ended March 31, 2017 was USD 78.70 (March 31, 2016: USD 49.49).

Note 2: No RSUs have expired during the periods covered in the above table.

RSU''s outstanding at the end of the year have the following expiry date and exercise price:

C Expenses arising from share-based payment transactions

4. Offsetting financial assets and financial liabilities

The following table presents the recognized financial instruments that are offset, or subject to enforceable master netting arrangements as at March 31, 2017, March 31, 2016 and April 1, 2015. The column ''net amount'' shows the impact on the Company''s balance sheet if all set-off rights were exercised.

Offsetting arrangements

Trade receivables and payables:

The Company gives volume based rebates and also issues credit notes on account of delays, defective, etc. Under the terms of the supply agreements, these amounts payable by the Company are offset against receivables from the customers and only the net amounts are settled. The relevant amounts have therefore been presented net in the balance sheet.

(ii) Valuation process

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. The significant level 3 inputs for determining the fair values of loans to fellow subsidiaries and security deposits are discount rates using a long term bank deposit rate to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

(a) The carrying amounts of trade receivables, trade payables, creditors for capital goods, cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.

(b) The fair values for loans to fellow subsidiaries and security deposits are determined based on discounted cash flows calculated using a long term bank deposit rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs.

5. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/ sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the year 2012-13 and thereafter the Company filed an application to the Department seeking refund of tax in the year 2013-14.

The Company received a recomputation statement from the Sales tax authorities confirming the excess tax paid aggregating to Rs.96.35, which was recognized as income and disclosed as an ''Exceptional Item'' in the Statement of Profit and Loss for the year ended March 31, 2015.

During the year 2015-16, the Company realized Rs.73.62 from the Department. Subsequent to March 31, 2016, the Company received a letter from the Department stating that no further amounts are due to the Company. In light of this development, the Company reassessed the recoverability of the remaining refund and provided for Rs.16.87 in the year 2015-16 and based on reassessment of the remaining balance, an amount of Rs.5.86 has been provided during the year. These amounts have been disclosed under ''Other expenses'' in the Statement of Profit and Loss.

6. Discontinued operations

At the meeting of the Board of Directors ("the Board") held on September 21, 2015, the Board decided to discontinue the operations at the Chennai Plant (i.e., Environment Solutions Business). The Company entered into a Termination Agreement with Ingersoll-Rand Climate Solutions Private Limited (IRCSPL), fellow subsidiary, with whom the Company had an arrangement to manufacture specified products. Pursuant to the termination agreement, IRCSPL agreed to reimburse all losses and expenses directly or indirectly, suffered or incurred by the Company up to the time all assets are sold and proceeds received by the Company. Accordingly, expenses reported are net of amounts recoverable from IRCSPL. During the year, the Company disposed of all the remaining assets held for sale relating to the Environment Solutions Business to an independent third party.

Notes:

Note 7: Fixed assets at the Chennai plant of the Company have been considered to be falling within the definition of an arrangement in the nature of operating lease as per "Ind-AS 17 Leases". Accordingly, revenue from such operating lease rentals has been reclassified from "Net sales (including excise duty)/ income from operations" to "Other operating income" for the year ended March 31, 2016. No such rentals were receivable in the current year.

Note 8: This amount is net of Rs.147.81 (March 31, 2016: Rs.184.63) recovered from IRCSPL.

The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s risk management is carried out by the management under the policies approved by the Board of Directors that help in identification, measurement, mitigation and reporting all risks associated with the activities of the Company. These risks are identified on a continuous basis and assessed for the impact on the financial performance. Information on risks and the response strategy is escalated in a timely manner to facilitate timely decision making. Risk response strategy is formulated for key risks by management.

The below note explains the sources of risk which the Company is exposed to and how the Company manages the risk in the financial statements.

A Credit risk

Credit risk arises from cash and cash equivalents, loans to fellow subsidiaries, security deposits carried at amortized cost and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

Credit risk is managed and assessed on an ongoing basis. Only high rated banks/ financial institutions are accepted for banking transactions and placement of deposits. For other financial assets, 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.

A : High quality assets, negligible credit risk.

B : Low quality assets, high credit risk.

C : Doubtful assets, credit-impaired.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is any significant increase in credit risk, the Company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers below indicators to assess credit risk :

1. Internal credit rating.

2. External credit rating (to extent available).

3. Any significant change in business, financial or economic conditions that are expected to cause a significant change in the payer''s ability to meet its obligations, including changes in operating results and payment status.

Macro economic information (such as regulatory changes, legal changes, interest rate changes) are incorporated as a part of the internal rating model.

Default of a financial asset is when the counterparty fails to make contractual payments within 365 days of when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

(ii) Provision for expected credit losses

B Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the availability of funding through adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying business, the Company maintains flexibility in funding by maintaining surplus cash in short-term deposits. Management monitors the rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows.

C Market risk

Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency (Rupees). The risk is measured through a forecast of highly probable foreign currency cash flows.

Sensitivity

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

9. Capital Management A Risk management

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

(i) safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and;

(ii) maintain an optimal capital structure to reduce the cost of capital.

The Company does not have any exposure towards debt. The management regularly monitors rolling forecasts of liquidity position and cash on the basis of expected cash flows. In addition, the Company projects cash flows in major currencies and considers the level of liquid assets necessary to meet these.

B Operating leases

The Company leases various offices under cancellable and non-cancellable operating leases expiring within one to nine years. These leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are re-negotiated.

Transition to Ind AS

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

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended as at March 31, 2017, the comparative information presented in these financial statements for the year ended as at March 31, 2016 and in the preparation of an opening Ind AS balance sheet as at April 1, 2015 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (Previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions

(i) Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per Previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at the Previous GAAP carrying value.

(ii) Leases

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

(iii) Share-based payments

Ind AS 101 permits a first time adopter to not consider the number of options / RSUs, that have already vested as on the date of transition, for fair valuation. Accordingly, the Company has elected to measure only those options / RSUs that have not vested as on the date of transition.

(iv) Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

A.2 Ind AS mandatory exceptions

(i) Estimates

The Company''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with the Previous GAAP.

(ii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the Company''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

(iii) Classification and measurement of financial assets

According to Ind AS 101, the Company has assessed classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

10. First-time adoption of Ind AS (Contd.)

B 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.

Reconciliation of equity as at date of transition (April 1, 2015)

Note 11 Deferred tax

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

Note 12 Trade receivables

As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing of allowance for doubtful debts. Based on the assessment, there is no material impact on the provisions for doubtful debts created under the Previous GAAP.

Note 13 Provisions

Under the Previous GAAP, discounting of provisions was not allowed. Under Ind AS, provisions are measured at discounted amounts, if the effect of time value is material. Accordingly, non-current provisions have been discounted to their present values. This change increased the non-current provisions as at March 31, 2016 by Rs.0.37 (reduction as at April 1, 2015: Rs.2.11). Consequent to the same, the profit for the year and equity decreased/ (April 1, 2015: increased) by an equivalent amount.

Note 14 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 recognized as a liability. Under Ind AS, such dividends are recognized when it is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and tax thereon of Rs.113.98 as at March 31, 2016 (April 1, 2015: Rs.113.98) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note 15 Excise duty

Under the Previous GAAP, revenue from sale of products was presented net of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty, wherever applicable. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2016 by Rs.447.33. There is no impact on the total equity and profit.

Note 16 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements, i.e., actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the Previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Rs.4.31. There is no impact on the total equity as at March 31, 2016.

Note 17 Employee stock option expense

Under the Previous GAAP, the cost of both equity-settled and cash-settled employee share-based transactions among group entities were not recognized in the statement of profit and loss, as the cost related to such share based payments was not being recharged to the Company. Under Ind AS, the cost of both equity-settled and cash-settled share-based plans are recognized based on the fair value of the options/ restricted stock units (RSU) as at the grant date. Consequently, the profit for the year ended March 31, 2016 decreased by Rs.5.12. The impact as at April 1, 2015 is Rs.2.75 and has been adjusted to equity. However, as there is no recharge to the Company, there is no impact to the equity.

Note 18 Security deposits

Under the Previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs.12.12 as at March 31, 2016 (April 1, 2015: Rs. Nil).

The prepaid rent increased by Rs.12.12 as at March 31, 2016 (April 1, 2015: Rs. Nil). Total equity decreased by Rs. Nil as on April 1, 2015. The profit for the year and total equity as at March 31, 2016 decreased by Rs.0.41 due to amortization of the prepaid rent of Rs.2.98 which is partially off-set by the notional interest income of Rs.2.57 recognized on security deposits.

Note 19 Loans to fellow subsidiaries

Under the Previous GAAP, loans to fellow subsidiaries are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these loans to fellow subsidiaries under Ind AS. Difference between the fair value and transaction value of the loans to fellow subsidiaries has been recognized as pre-paid expenses under other current assets. Consequent to this change, the amount of loans to fellow subsidiaries decreased by Rs.5.39 as at March 31, 2016 (April 1, 2015: Rs. Nil). The prepaid expenses increased by Rs.5.39 as at March 31, 2016 (April 1, 2015: Rs. Nil). Total interest received from loans to related parties decreased by Rs.5.39 for the year ended March 31, 2016. The profit for the year and total equity as at March 31, 2016 decreased by Rs.5.39 (April 1, 2015: Nil) due to amortization of the loans to fellow subsidiaries.

Note 20 Liquidated damages, etc.

Under the Previous GAAP, liquidated damages and credit notes issued on account of delays, short shipments, defectives, etc., aggregating to Rs.49.92 for the year ended March 31, 2016 has been shown under other expenses. As per "Ind-AS 18 Revenue", these expenses have been netted off against Revenue. This has no impact on the profit and the total equity.

Note 21 Retained earnings

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

Note 22 Other comprehensive income

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

23 Segment Reporting:

(a) Description of segments and principal activities

The Company''s chief operating decision maker (CODM) consists of the managing director and the chief financial officer.

They examine the Company''s performance both from a product and geographic perspective and hence, indentified two segments of its business:

(a) Air Solutions - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Environment Solutions - relating to contract manufacturing of air conditioner packages for a fellow subsidiary, which has since been discontinued (refer Note 33)

Geographical segment is considered based on sales within India and outside India (namely USA, Europe, etc.).

The CODM primarily uses a measure of profit before tax to assess the performance of the operating segments. However, they also review information about the segments'' revenue and assets on a quarterly basis.

(g) Terms and conditions

(1) Transaction relating to dividends was on the same terms and conditions that applied to other shareholders.

(2) The loans to fellow subsidiaries are for periods of 5 years repayable at the end of the term at interest rate of 1% above bank interest rate. The average interest rate on the loans to fellow subsidiaries during the year was 10.25% (March 31, 2016: 10.50%).

(3) Management services were bought from the immediate holding company on a cost to cost basis. Export of IT services to immediate holding company is on cost-plus basis.

(4) All transactions including sale of goods were made on normal commercial terms and conditions and at arm''s length price.

(5) All outstanding balances are unsecured and are repayable in cash.

24 Events occurring after the reporting period

Refer note 35 (B) with respect to final dividend recommended by the Board of Directors and subject to approval of Shareholders in the ensuing Annual General Meeting.

25 Prior Year Figures

Prior year''s figures have been regrouped/ reclassified wherever necessary to conform to current year''s classifications which also include Ind AS requirements.


Mar 31, 2016

(a) Shares reserved for issue under options

There are no shares reserved for issue under any option.

(b) Aggregate number of shares allotted as fully paid up by way of bonus shares/pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding March 31, 2016):

During the period of fve years immediately preceding March 31, 2016, no shares are allotted as fully paid up by way of bonus shares or pursuant to contract(s) without payment being received in cash.

Provision for Litigations/Disputes

Provision for litigations/disputes mainly includes employees claiming damages towards termination of employment and are provided for based on estimates made by the Company. It is expected that this provision will be settled beyond twelve months.

Provision for Warranties

Warranties against manufacturing and other defects, as per terms of contract(s) with the customer, are provided for based on estimates made by the Company, except where the Company has back to back arrangement with the suppliers. It is expected that this provision will be settled in the remaining unexpired warranty period ranging from twelve to eighteen months.

Note: There are no amounts due for payment to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 as at the year end.

* The loans advanced to fellow subsidiaries, on interest, are repayable on June 28, 2019 as per the loan agreements. These loans are backed by corporate guarantees issued to the Company by the ultimate holding company that are valid up to June 28, 2019.

(i) Considering the very nature of the disputes and the dependency on decisions pending with various forums, it is not practicable for the Company to estimate the timing of the cash outfows at this stage with respect to the above contingent liabilities.

(ii) Contingent liabilities does not include guarantees issued by banks on behalf of the Company against advances received for supply of products in connection with customer bids and guaranteeing performance of products sold or timely completion of contractual obligations by the Company of Rs.399.02 (March 31, 2015: Rs.343.62).

(*) The above amount is net of Rs.23.02 (March 31, 2015: Nil) recovered from IRCSPL

(a) Includes write back of provision for leave encashment (Net) Rs.0.25 [March 31, 2015: Rs.6.28].

(b) Defend Benefit Plan:

Gratuity: The Company operates a gratuity plan through the "Ingersoll-Rand Employees Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972 subject to a maximum of Re.1. It is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after fve years of continuous service. In case of employees who joined the Company prior to April 1, 2006, the benefits given by the Company are more favourable than the Payment of Gratuity Act, 1972 depending upon the length of service.

Provident Fund: Provident fund for certain eligible employees is managed by the Company through the "Ingersoll-Rand Employees Provident Fund Trust". In line with the Provident Fund and Miscellaneous Provisions Act, 1952, the plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the company or retirement, whichever is earlier. Interest shortfall, if any, is met by the Company. The benefits vest immediately on rendering of the services by the employee.

(*) Bargain able employees: 3% for two years and 5% thereafter, Others: 10% for next two years and 8% thereafter.

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demand and supply in the employment market.

(b) The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(c) The discount rate is based on the prevailing market yield on Government securities as at the Balance Sheet date for the estimated term of obligation.

(d) Employee Share-based Payments

Certain executives of the Company are eligible to participate in the employee share based payment plans, as detailed below, of Ingersoll-Rand Company, New Jersey, USA, the holding company. The share based plans are assessed, managed and administered by the holding company. Based on a Confirmation received from the ultimate holding company in an earlier year, the cost related to such share based payments will not be recharged to the Company, hence no liability has been recorded in the financial statements. Accordingly, details of number of options granted/ forfeited/ exercised/ outstanding has not been disclosed. Details of share based plan are as follows: (i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment. (ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest rateably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the holding company''s Class A common shares. (iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the holding company approved the Incentive Stock Plan of 2007, which authorises the holding company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007. The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment. (iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

Note: Pursuant to a technical evaluation carried out during the previous year, management had revised the estimated useful life of fixed assets, which aligns to the rates prescribed under Schedule II of the Companies Act, 2013. As per Note 7(b) to Schedule II - Part ''C'', as the remaining useful life of certain fixed assets as at April 1, 2014 was Nil, the carrying value of such assets, after retaining the residual value, was recognised in the opening balance of retained earnings aggregating to Rs.7.69.

1. Related Party Disclosures:

(a) Names of related parties and nature of relationship: (i) Where control exists

Ingersoll-Rand plc, Ireland Ultimate Holding Company

Ingersoll-Rand Company, New Jersey, USA Immediate Holding Company

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

GHH - Rand Schraubenkompressoren GmbH, Germany Ingersoll-Rand South East Asia (Pte) Ltd, Singapore

Hibon Inc.,Canada Ingersoll-Rand Technologies and Services Private Limited,

India

Ingersoll Rand (China) Investment Company Limited, China Nanjing Ingersoll-Rand Compressor Co. Ltd., China

Ingersoll Rand Italiana S.P.A., Italy Offcine Meccaniche Industriali SRL, Italy

Ingersoll Rand S.A. De C.V., Mexico Plurifter D.O.O, Slovenia

Ingersoll-Rand (Chang Zhou) Tools Co., Ltd.,China Reftrans, S.A., Spain

Ingersoll-Rand (China) Industrial Equipment Manufacturing Shanghai Ingersoll Rand Compressor Limited, China Co. Limited, China

Ingersoll-Rand Air Solutions Hibon Sarl, France Société Trane SAS, France

Ingersoll-Rand Climate Solutions Private Limited, India Thermo King European Manufacturing Limited, Ireland

Ingersoll-Rand Company South Africa (Pty) Limited, South Thermo King India Private Limited, India Africa

Ingersoll-Rand CZ s.r.o, Czech Republic Thermoking Corporation, USA

Ingersoll-Rand European Sales Limited, UK Trane Air Conditioning Systems (China) Co., Ltd., China

Ingersoll-Rand Global Holding Company Limited, USA Trane BVBA, Belgium

Ingersoll-Rand International (India) Private Limited, India Trane Exports LLC, USA

Ingersoll-Rand International Limited, Ireland Trane India Limited, USA

Ingersoll-Rand Malaysia Co. Sdn. Bhd., Malaysia Trane U.S. Inc, USA

Key Management Personnel

Amar Kaul, Vice President & General Manager G. Madhusudhan Rao, Vice President - Finance Prasad Y Naik, Vice President - IT

Note: Key Management Personnel cannot individually exercise significant infuence in the employee trust funds where they are the Trustees.

2. Leases

As a lessee: Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases (generally, for a period up to 84 months). Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

3. During the previous year, pursuant to the ultimate holding company acquiring the ''Centrifugal Compressor Division (CC Division) of Cameron International Corporation, USA, the Company had acquired the CC Division of Cameron Manufacturing (India) Private Limited by way of an ''Asset Transfer'' arrangement with effect from January 1, 2015 for a net consideration of Rs.16.69 million.

4. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/ sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the year 2012-13 and thereafter the Company had filed an application to the Department seeking refund of tax in the year 2013-14.

The Company had received a recompilation statement from the Sales tax authorities Confirming the excess tax paid aggregating to Rs.96.35 (March 31, 2015: Rs.96.35), which was recognised as income and disclosed as an ''Exceptional Item'' in the Statement of Profit and Loss for the year ended March 31, 2015.

During the year, the Company realised Rs.73.62 (March 31, 2015: Nil) from the Department. Subsequent to March 31, 2016, the Company has received a letter from the Department stating that no further amounts are due to the Company. In light of this development subsequent to the year end, the Company has reassessed the recoverability of the remaining refund and provided for Rs.16.87 (March 31, 2015: Nil), which has been disclosed under ''Exceptional item'' in the Statement of Profit and Loss.

5. Discontinued Operations

At the meeting of the Board of Directors ("the Board") held on September 21, 2015, the Board decided to discontinue the operations at the Chennai Plant (i.e., Environment Solutions Business) on account of lack of orders from Ingersoll- Rand Climate Solutions Private Limited (IRCSPL), a fellow subsidiary. The Company entered into a Termination Agreement with IRCSPL, whereby IRCSPL has agreed to reimburse all losses and expenses directly or indirectly suffered or incurred by the Company up to the time all assets are sold and proceeds received by the Company. Hence, the resulting estimated net loss has been shown as recoverable from IRCSPL and therefore, there is no impact on the results for the year. The carrying value of the assets relating to the Environment Solutions business have been stated at lower of cost and estimated net realisable value.

6. Prior Year Figures

Prior year''s figures have been regrouped/ reclassified wherever necessary to conform to current year''s classification.


Mar 31, 2015

1 General Information

Ingersoll-Rand (India) Limited (the 'Company') is a public limited company incorporated in 1921 under provisions of the Companies Act, 1913 and existing under the provisions of the Companies Act, 1956/ Companies Act, 2013. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities and related services. The Company also manufactures air conditioner package under contract manufacturing arrangement for its fellow subsidiary in India from a plant at Chennai. The Company sells air compressors primarily in India and also exports the products to North American, South American, Asian and European countries. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, the National Stock Exchange of India Limited and the Ahmedabad Stock Exchange Limited.

2. Segment Reporting:

The Company has considered business segments as the primary reporting segment on the basis that risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment. The business segments have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems. The business segments comprise of the following:

(a) Air Solutions - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Environment Solutions - relating to contract manufacturing of air conditioner packages for a fellow subsidiary.

Geographical segment is considered based on sales within India and outside India.

3. Leases

As a lessee:

Operating Lease The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

4. During the year, pursuant to the ultimate holding company acquiring the 'Centrifugal Compressor Division (CC Division) of Cameron International Corporation, USA, the Company has acquired the CC Division of Cameron Manufacturing (India) Private Limited by way of an 'Asset Transfer' arrangement with effect from January 1, 2015 for a net consideration of Rs.16.69 million.

5. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the year 2012-13. The Company had filed an application to the Department seeking a refund in the year 2013-14.

Subsequent to the balance sheet date, the Company has received a recomputation statement from the Sales tax authorities confirming the excess tax paid aggregating to Rs.96.35 (March 31, 2014: Nil), which has been recognised as income and disclosed as an 'Exceptional Item' in the Statement of Profit and Loss.

6. Prior Year Figures

Prior year's figures have been regrouped/reclassified wherever necessary to conform to current year's classification.


Mar 31, 2014

1. General Information

Ingersoll-Rand (India) Limited (the ''Company'') is a public limited company incorporated in 1921 under provisions of the Companies Act, 1913 and existing under the provisions of the Companies Act, 1956. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. The Company also manufactures air conditioner package under contract manufacturing arrangement for its fellow subsidiary in India from the new plant at Chennai, which commenced commercial production in May 2013. The Company sells air compressors primarily in India and also exports to other South Asian countries and the United States. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Ahmedabad Stock Exchange Limited.

(a) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, if any, in proportion to their shareholding.

(b) Shares reserved for issue under options

There are no shares reserved for issue under any option.

(c) Shares allotted as fully paid-up by way of bonus shares/pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding March 31, 2014):

During the period of five years immediately preceding March 31, 2014, no shares are allotted as fully paid-up by way of bonus shares or pursuant to contract(s) without payment being received in cash.

Provision for litigations/disputes:

Provision for litigations/disputes mainly includes employees claiming damages towards termination of employment and are provided for based on estimates made by the Company. It is expected that this expenditure will be incurred beyond twelve months.

Provision for Warranties:

Warranties against manufacturing and other defects, as per terms of contract(s) with the customer, are provided for based on estimates made by the Company, except where the Company has back to back arrangement with the suppliers. It is expected that this expenditure will be incurred in the remaining unexpired warranty period ranging from twelve to eighteen months.

* The loans advanced to fellow subsidiaries on interest are repayable on demand and are backed by corporate guarantees'' issued to the Company by the ultimate holding company that are valid upto July 20, 2014. These guarantees have been renewed prior to the date of expiry as per past practice. As Management does not have an intention to recover the loans in the next twelve months, these have been classified under Long-term Loans and Advances.

2. Contingent Liabilities

(a) Claims against the Company not acknowledged as debts 39.70 54.77 (Claims filed against the Company by customers/ vendors/ employees claiming damages for non-performance of contractual obligation/defective supply of products/termination of employment), which is disputed by the Company and the matters are lying under appeal with various forums.

(b) Value added tax/Central excise matters in dispute (Relates to adjustment on account of levy of additional duty and other matters made by the VAT/Excise 149.91 134.46 department, which is disputed by the Company and are lying under appeal with various forums. In connection with the disputes, the Company has: 1) Paid Rs.1.40 (March 31, 2013: Rs.3.40) "under protest"; and 2) Furnished a Bank guarantee of Rs.4.87 (March 31, 2013: Rs.4.87).

(c) Income Tax matters 119.81 150.55 [Relates to transfer pricing and other adjustments made by the Income Tax Department for the assessment years 2003-04 to 2010-11, which is disputed by the Company and the matters are lying under appeal with various forums. The Company has paid ''under protest'' Rs.98.18 (March 31, 2013: Rs.129.54) to the Income Tax Department in this regard]

Note: Considering the very nature of the disputes and the dependency on decisions pending with various forums, it is not practicable for the Company to estimate the timing of the cash outflows at this stage with respect to the above contingent liabilities.

Contingent liabilities does not include guarantees issued by Banks on behalf of the Company against advances received for supply of products and guaranteeing performance of products sold or timely completion of contractual obligations by the Company of Rs.280.50 (March 31, 2013: Rs.424.31).

(a) Includes provision for leave encashment (Net) Rs.1.05 (March 31, 2013 Provision for leave encashment written back: Rs.9.39)

(b) Defined Benefit Plan:

Gratuity: The Company operates a gratuity plan through the "Ingersoll Rand Employees Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. It is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. In case of employees who joined the Company prior to April 1, 2006, the benefits given by the Company are more favourable than the Payment of Gratuity Act, 1972 depending upon the length of service.

Provident Fund: Provident fund for certain eligible employees is managed by the Company through the "Ingersoll Rand Employees Provident Fund Trust". In line with the Provident Fund and Miscellaneous Provisions Act, 1952, the plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. Interest shortfall, if any, is met by the Company. The benefits vest immediately on rendering of the services by the employee.

The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demand and supply in the employment market.

The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

* The Guidance Note on implementation of AS15 "Employee Benefits" issued by the Institute of Chartered Accountants of India states that Provident Fund set up by employers that guarantee a specified rate of return and which require interest shortfall to be met by employer would be a Defined Benefit plan in accordance with the requirements of para (26b) of AS15. Pursuant to the Guidance Note, the liability in respect of the shortfall of interest determined on the basis of an independent actuarial valuation [carried out as per the Guidance Note (GN29) issued by Institute of Actuaries of India effective from April 1, 2011], as at March 31, 2014 is Nil.

(d) Employee Share-based Payments

Certain executives of the Company are eligible to participate in the employee share based payment plans, as detailed below, of Ingersoll-Rand Company, New Jersey, USA the holding company. Based on a confirmation received from the ultimate holding company, that the cost related to such share based payments will not be recharged to the Company, no liability has been recorded in the financial statement.

(i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest ratably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the holding company''s Class A common shares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the holding company approved the Incentive Stock Plan of 2007, which authorises the holding company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007. The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award at vesting. The RSU will vest in one-third installments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding company.

The number and weighted average exercise prices of stock options for each of the above plans are given in US $ currency as Rupee values are not available.

Expected volatility is based on the historical volatility from traded options on the Company''s stock. The risk-free rate of return is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Company''s valuation model. The Company''s expected life of the stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding.

Note: Based on a confirmation received from the ultimate holding company in the prior year, that the cost related to such share based payments will not be recharged to the Company, the liability of Rs.Nil (March 31, 2013: Rs.12.91) has been written back and disclosed as ''Provision written back''.

The above information has been compiled from the data provided by the holding company, which has been relied upon by the auditors.

3. Segment Reporting:

The Company has considered business segments as the primary reporting segment on the basis that risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment.

The business segments have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems.

The business segments comprise of the following:

(a) Air Solutions - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Environment Solutions - relating to contract manufacturing of air conditioner packages for a fellow subsidiary.

4. Leases

As a lessee:

Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into certain sub-leases and all such sub-leases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

Operating Lease

The Company has given plant and machinery and also sub-let premises on operating leases. These lease arrangements range for a period between 11 to 60 months and are cancellable by notice of 30 days by either side. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses.

Note: Vide letter dated September 29, 2012, the Department of Scientific & Industrial Research (DSIR), Ministry of Science and Technology, Government of India has accorded recognition to the Company''s In-House R&D unit, Naroda, Ahmedabad. The above disclosure is based on requirement stipulated by DSIR, Ministry of Science and Technology, Government of India.

Note: The above information has been determined based on vendors identified by the Company and to the extent these have been confirmed by such vendors, which have been relied upon by the auditors.

5. The Company had a long standing dispute with the Department of Commercial Taxes, Government of Karnataka (the "Department"), in connection with the classification of certain road construction equipment manufactured and sold by the Company (that business has since been transferred/ sold to an independent third party as a part of global divestiture). The Department disputed the classification of the products under the Karnataka Sales Tax Act, 1957, and demanded sales tax at a higher rate than what was charged by the Company to its customers. The Company had remitted the differential tax "under protest", and charged the amounts to the Statement of Profit and Loss in the financial year 2002-03. The dispute, which was lying under appeal with various appellate authorities, was ruled in favour of the Company by the High Court of Karnataka in the prior year. During the current year, the Company has filed an application to the Department seeking a refund of Rs.80.21 million. The Company has been advised by reputed indirect tax consultants that the refund process is time consuming, entails onerous procedural aspects, and requires submission of various documents and arguments at different stages. Considering the uncertainty around ultimate collection at this stage, and the risk that the Department may prefer a belated appeal with the Supreme Court of India, on prudence basis, no income has been recognised in these financial statements.

6. Previous Year Figures

Previous year''s figures have been regrouped / reclassified whereever necessary to conform to current year''s classification.


Mar 31, 2013

1 General Information

INGERSOLL-RAND (INDIA) LIMITED (the ''Company'') is a public limited company incorporated in 1921 under provisions of Companies Act, 1913 and existing under the provisions of Companies Act, 1956. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. The Company also manufactures Air Conditioner package for buses under contract manufacturing arrangement for its fellow subsidiary in India. The Company sells air compressors primarily in India and also exports to other SAARC countries and United States. The Company is in the process of constructing a new manufacturing plant at Chennai, Tamil Nadu for manufacture of Heating, Ventilation & Air Conditioning (HVAC) equipments and Transport Refrigeration products in Phase 1. The equity shares of the Company are listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Ahmedabad Stock Exchange Limited.

2 Segment Reporting:

The Company has considered the business segment as the primary reporting segment on the basis that the risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment.

The business segment have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems and amounts allocated on a reasonable basis.

The business segments comprise of the following:

(a) Air Solutions (AS) - comprising of reciprocating compressors, centrifugal compressors and system components

(b) Others - arising on account of contract manufacturing for fellow subsidiary.

The expenses, assets and liabilities relating to Chennai Plant has been grouped under Other unallocable head, since it is in the pre-production stage.

3 Leases

As a lessee:

Operating Lease

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The Company has entered into some sub-leases and all such subleases are cancellable and are for a period of 11 months, with an option of renewal on mutually agreeable terms.

4 Previous Year Figures

Previous year''s figures have been regrouped/reclassified wherever necessary to conform to current year''s classification.


Mar 31, 2012

1 General Information

Ingersoll Rand (India) Limited (the 'Company') is a public limited company incorporated in 1921 under provisions of Companies Act, 1913 and existing under the provisions of Companies Act, 1956. The Company has a manufacturing plant in Naroda, Gujarat and is primarily engaged in the business of manufacturing and sales of Industrial air compressors of various capacities. The Company also manufactures Air Conditioners package for buses under contract manufacturing arrangement for its fellow subsidiary in India. The Company sells air compressors primarily in India and also exports to other SAARC countries and United States. The Company has commenced construction of a new manufacturing plant at Chennai, Tamil Nadu for manufacture of Heating, Ventilation & Air Conditioning (HVAC) equipment and Transport Refrigeration products in Phase 1. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Ahmedabad Stock Exchange.

As at March 31, 2012 March 31, 2011

2 Contingent Liabilities

Claims against the Company not acknowledged as debts 44.10 39.71

Sales tax/ excise matters in dispute 162.88 41.39

Bank guarantees/ corporate guarantees 487.81 354.45

Income Tax matters in dispute 107.60 110.07

Out of the disputed amount Rs. 31.66 (March 31, 2011: Rs. Nil) has been paid during the year and included under Advance Income Tax in note number 14.

(c) Employee Share-based Payments

(i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998) SARs generally vest ratably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the holding company’s Class A common shares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan) On June 6, 2007, the shareholders of the holding company approved the Incentive Stock Plan of 2007, which authorises the holding company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007. The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award at vesting. The RSU will vest in one-third installments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding Company.

The number and weighted average exercise prices of stock options for each of the above plans are given in US $ currency as Rupee values are not available.

3 Segment Reporting:

The Company has considered the business segment as the primary reporting segment on the basis that the risk and returns of the Company is primarily determined by the nature of products and services. Consequently, the geographical segment has been considered as a secondary segment.

The business segment have been identified on the basis of the nature of products and services, the risks and returns, internal organisation and management structure and the internal performance reporting systems and amounts allocated on a reasonable basis.

The business segment comprise of the following:

Air Solutions (AS) - comprising of reciprocating compressors, centrifugal compressors and system components Others - arising on account of contract manufacturing for fellow subsidiary.

The expenses, assets and liabilities relating to Chennai Plant has been grouped under Other unallocable head.

Geographical segment is considered based on sales within India and outside India.

4 Previous Year Figures

The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. (a) Provision for taxation for the current year ended 31st March 2011 has been calculated and for prior years retained in the books as at that date, keeping in view the current decisions of courts/ appellate tax authorities.

(b) Transfer Pricing

The Finance Act, 2001 has introduced, with effect from Assessment Year 2002-03 (effective April 1, 2001), detailed Transfer Pricing regulations for computing the taxable income and expenditure from international transactions between associated enterprises on an arms length basis. These regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an Accountant on or before the due date for filing the return of income. For the year ended March 31, 2010, the Company had undertaken a transfer pricing study and obtained the prescribed certificate of the Accountant to comply with the said transfer pricing regulations which did not envisage any tax liability. For the tax year ended March 31, 2011, the Company will carry out a similar study to comply with the said regulations.

9. (i) Refer Schedule 14 for quantitative information regarding capacities and production in respect of each class of goods manufactured and quantitative details pursuant to paragraphs 3(i)(a), 3(ii)(a)(1) and (2) and 3(ii)(b) of Part II of Schedule VI to the Companies Act, 1956

(ii) Sales and purchases reported do not include materials sent to the sub-contractors and returned back.

2. Disclosure as required by Accounting Standard (AS) 19, "Leases" are given below:

II. Rent income represents lease rental received towards portion of the office premises sub-let. Such leases are generally for period of 60 months with options for renewal against increased rent.

(b) Where the Company is a lessee:

(i) The Companys significant leasing arrangements are in respect of godowns/ residential/ office premises (including furniture and fittings therein, as applicable). These Leases are generally for a period of 11 to 120 months and renewable by mutual consent on mutually agreeable terms. The operating leases are cancellable by the lessor / lessee with 1 to 3 months notice. However, some of the operating leases have lock in period ranging from 10 to 60 months

3. Segment Information:

The business segment has been considered as the primary segment.

Air Solutions (AS) - comprising of reciprocating compressors, centrifugal compressors and system components

Others - arising on account of contract manufacturing for associate companies Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

4. Related Party Disclosures:

4.1 Parties where control exists

Related Party Relationship

Ingersoll - Rand plc, Ireland Ultimate Holding Company

Ingersoll - Rand Company, New Jersey, U.S.A. Substantial Interest in Voting Power of the Company (holds 74% of equity share capital as at 31st March, 2011)

4.2 Other Related Parties:

Fellow Subsidiaries:

Club Car Inc., U.S.A. Ingersoll - Rand Machinery (Shanghai) Co. Ltd, China

GHH - Rand Schraubenkompressoren GmbH, Germany Ingersoll - Rand Malaysia Co. Sdn. Bhd., Malaysia

Hibon Inc.,Canada Ingersoll - Rand South-East Asia (Pte) Limited, Singapore

Ingersoll - Rand (Australia) Limited, Australia IRCR Manufacturing S.R.O., Czech Republic

Ingersoll - Rand (Chang Zhou) Tools Co. Ltd., China Nanjing Ingersoll - Rand Compressor Co. Ltd. China

Ingersoll - Rand (China) Industrial Equipment Manufacturing Officina Meccaniche Industriali SRL, Italy Co. Limited, China

Ingersoll - Rand Air Solutions Hibon Sarl, France Plurifilter D.o.o, Slovenia

Ingersoll - Rand Brasil Ltda, Brazil Schlage Lock Company LLC, USA

Ingersoll - Rand Company Limited, United Kingdom Service First Aircon Pvt. Limited, India

Ingersoll - Rand Company South Africa (Pty) Limited, South Africa Shanghai Ingersoll - Rand Compressor Limited, China

Ingersoll - Rand CZ s.r.o, Czech Republic Thermo King India Private Limited, India

Ingersoll - Rand European Sales Limited, United Kingdom Thermoking Corporation, U.S.A.

Ingersoll - Rand Industrial Products Private Limited , India Thermoking European Manufacturing Limited, Ireland

Ingersoll - Rand International (India) Limited, India Thermoking Ireland Limited, Ireland

Ingersoll - Rand International Limited, Ireland Trane BVBA, Belgium

Ingersoll - Rand Italiana, S.P.A., Italy Trane India Pvt. Limited,India

4.3 Key Management Personnel:

Venkatesh Valluri B. Jayaraman

Jaideep Wadhwa (Part of the year) Sameer Agarwal (Part of the Year)

Prasad Y. Naik

Key Management Personnel do not exercise significant influence in the employee trust funds where they are the Trustees.

5. Employee Benefits

The details of the Employee Benefit Schemes are as under: (i) Defined Benefit Plans

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to its employees. The Gratuity Plan provides for a lump sum payment to vested employees at retirement or termination of employment, whichever is earlier, based on the respective employees last drawn salary and years of employment with the Company. The employees gratuity funds are managed by an Insurance Company.

Notes:

The estimates of future increase in salary, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(ii) Defined Contribution Plans

Contribution to Provident and other funds under "Payments to and Provision for Employees" (Schedule 11) includes Rs. 26.33 million (2010: Rs. 24.94 million), being expenses debited under the defined contribution plans.

(iii) Accounting Standards Board Guidance on implementing Accounting Standard (AS) 15 on Employee Benefits, states that benefits involving employer established provident funds, which require interest shortfall to be recompensed, are to be considered as defined benefit plans. Pending the issuance of the Guidance Note from the Actuarial Society of India, the Companys actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly the company is unable to exhibit the related information.

6. Employee Share-based Payments

(a) Certain executives of the Company are eligible to participate in the employee share based payment plans of Ingersoll Rand Company Limited (the holding company), which are explained below:

(i) Incentive Stock Option Plan of 1998 (1998 plan) The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998) SARs generally vest ratably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the Companys Class A common shares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan) On June 6, 2007, the shareholders of the Company approved the Incentive stock Plan of 2007, which authorizes the Company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007.

The stock options vest ratably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the

RSU award at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding Company.

The costs related to such share based payments pertaining to the Companys employees are being recharged to the Company by the holding company at the time of exercise of the options/ rights. However, as at the year end, the Company has accrued for the expected proportionate costs of share based payments pertaining to the Companys employees.

(b) The number and weighted average exercise prices of stock options for each of the above plans are given in US $ curency as Rupee values are not available Expected volatility is based on the historical volatility from traded options on the Companys stock. The risk-free rate of return is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Companys valuation model. The Companys expected life of the stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding.

7. During the year, there have been no significant purchases of machinery spares, which are of irregular usage.

8. Previous years figures have been regrouped whereever necessary.


Mar 31, 2010

1 Employee Share-based Payments

(a) Certain executives of the Company are eligible to participate in the employee share based payment plans ot Ingersoll Rand Company Limited (the holding company), which are explained below:

(i) Incentive Stock Option Plan of 1998 (1998 plan)

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(ii) Stock Appreciation Rights Plan of 1998 (SAR 1998)

SARs generally vest rateably over a three-year period from the date of grant and expire at the end of ten years. All exercised SARs are settled with the Companys Class A common snares.

(iii) Incentive Stock Option Plan of 2007 (2007 plan)

On June 6, 2007, the shareholders of the Company approved the Incentive Stock Plan of 2007, which authorizes the Company to issue stock options and other share-based incentives. The plan replaces the 1998 plan which terminated in May 2007.

The stock options vest rateably over a period of three years and expire at the end of ten years, subject to conditions related to termination of employment.

(iv) Restricted Stock Unit (RSU)

Restricted Stock Unit (RSU) are share equivalents that are awarded to an employee with a promise to issue actual shares to holders of the RSU award- at vesting. The RSU will vest in one-third instalments over three years. Once they vest, each unit is converted into a share of stock at current value.

These Plans are assessed, managed and administered by the holding Company.

The costs related to such share based payments pertaining to the Companys employees are being recharged to the Company by the holding company at the time of exercise of the options/ rights. However, as at the year end, the Company has accrued for the expected proportionate costs of share based payments pertaining to the Companys employees.

2. During the year, there have been no significant purchases of machinery spares, which are of irregular usage.

3. Previous years figures have been regrouped whereever necessary.

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