Notes to Accounts of Krishanveer Forge Ltd.

Mar 31, 2018

1 Corporate information

Rajkumar Forge Ltd. is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on one recognised stock exchange in India i.e BSE.

The Company is engaged in the business of manufacturing and selling open die forgings in both domestic and international markets.

The financial statements were authorised for issue in accordance with a resolution of the directors on May 26, 2018. All press releases, financial reports and other information are available at our investor relations section on the Company''s website: www.rkforging.com

2 Basis of preparation and compliance with Ind AS

i These Ind AS financial statements have been presented in accordance with the provisions of Division II of Schedule III to the Companies Act, 2013.

ii These Ind AS financial statements are prepared under the historical cost convention, unless required / permitted otherwise by applicable Ind AS.

iii As required by Section 128(1) of the Companies Act, 2013 (“the Act”) these financial statements are prepared in accordance with the accrual method of accounting with revenues recognized and expenses accounted on their accrual including provisions / adjustments for committed obligations and amounts determined as payable or receivable during the period.

iv Date of adoption of Ind AS: The equity shares of Rajkumar Forge Ltd. are listed on recognized stock exchanges in India and the net worth of the Company as per the audited balance sheet as at March 31, 2014 & as at March 31, 2015 was less than '' 500 crores. Hence as per Rule 4(1)(iii)(a) of the Companies (Indian Accounting Standards) Rules, 2015, the Company shall comply with the Indian Accounting Standards (Ind AS) for the accounting periods beginning on April 1, 2017, with the comparatives for the periods ending on March 31, 2018. Hence, the date of adoption of IND AS for the Company is April 1, 2017.

v Date of transition to Ind AS: Since the date of adoption of Ind AS is April 1, 2017, the date of transition to Ind AS is April 1, 2016. Hence, the notes to the First Ind AS compliant Financial Statements must include -

a Reconciliation of the IGAAP compliant Balance Sheet as at March 31, 2016 with the Ind AS compliant Balance Sheet as at April 1, 2016;

b Reconciliation of the IGAAP compliant Balance Sheet as at March 31, 2017 with the Ind AS compliant Balance Sheet as at March 31, 2017;

c Reconciliation of the IGAAP compliant P/L Statement for FY 2016-17 with the Ind AS compliant P/L Statement for FY 2016-17.

vi For the financial years ended March 31, 2018. and March 31, 2017, the Company prepared its financial statements in accordance with the accounting standards notified u/s 133 of the Act, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These IGAAP financial statements were approved by the Board of Directors of the Company on May 13, 2016 and May 29, 2017 respectively. The Ind AS financial statements of the Company for the year ended March 31, 2018. are the first financial statements the Company has to prepare in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

vii Accordingly, the Company has prepared financial statements which comply in all material respects with the relevant provisions of the Act and with the Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017. In preparing these financial statements, the Company''s opening balance sheet has been prepared as at April 1, 2016 which is the Company''s date of transition to Ind AS.

viii The Company has followed the provisions of Ind AS 101-“First Time adoption of Indian Accounting Standards” (Ind AS 101), in preparing its opening Ind AS Balance Sheet as of the date of transition, i.e. April 1, 2016. In accordance with Ind AS 101, the Company has presented reconciliations of Shareholders'' equity under Previous GAAP and Ind ASs as at March 31, 2017 and April 1, 2016 and of the Profit/ (Loss) after Tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31, 2017.

ix The preparation of financial statements in conformity with Indian AS requires the management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the end of the reporting periods and the reported amounts of revenues and expenses for the reporting periods. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised.

x Ind AS Financial Statements for FY 2017-18: Ind AS 101 requires that an entity''s first Ind AS financial statements shall include at least three balance sheets, two statements of profit and loss, two statements of cash flows and two statements of changes in equity and related notes, including comparative information for all statements presented. Accordingly, the first Ind AS financial statements of the Company will be as follows:

a Balance sheet as at March 31, 2018;

b Balance sheet as at March 31, 2017;

c Balance sheet as at April 1, 2016;

d Profit and Loss Statement for the year ended March 31, 2018;

e Profit and Loss Statement for the year ended March 31, 2017;

f Cash Flow Statement for the year ended March 31, 2018;

g Cash Flow Statement for the year ended March 31, 2017;

h Statement of changes in equity for the year ended March 31, 2018;

i . Statement of changes in equity for the year ended March 31, 2017;

j Statement of changes in equity as at April 1, 2016;

k Notes to Financial Statements.

Notes

3.1 The Company has not, during all the years, acquired any intangible assets under a financial lease.

3.2 The Company has not, during all the years, acquired any intangible assets through business combinations.

3.3 The Company has not, during all the years, impaired any intangible assets nor reversed any past impairment.

3.4 There are no additions to intangible assets, during all years, on account of exchange differences.

3.5 There are no additions to intangible assets, during all years, on account of revaluation.

3.6 There are no disposals of intangible assets, during all years, on account of discontinued operations.

3.7 None of the intangible assets have indefinite life.

4.1 Loans are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.

5.1 Loans and receivables are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.

5.2 Trade receivables are non-interest-bearing.

Total cash and cash equivalents

Notes

6.1 Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

6.2 The Company has pledged a part of its short-term deposits to fulfil collateral requirements.

7.1 Loans are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.

8.1 Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares 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.

The Company does not have any shares reserved for issue under options.

During the year under review, the Company has transferred 534,300 equity shares to the Investor Education & Protection Fund.

9.1 The Company has not made any cash / non-cash distribution to its shares holders during all the years.

9.2 Short term borrowings for working capital requirments availed by the company in the nature of cash credit facility, post shipment demand loan and buyers credit are secured by way of hypothecation of the company''s stocks and book debts, both present and future and also secured by charge on company''s immovable properties, both present and future, and personal guarantee by the promoters of the company Mr. A.K. Jindal and of Mr. K.B. Jindal and corporate guarantee of the holding company Western India Forgings Private Limited. The cash credit is repayable on demand and carries interest rate ranging from 9.50% to 10%.

10. Disclosure for assets taken on lease as per Ind AS 17:

The Company had entered into a commercial lease agreement for taking office space on lease. The lease agreement was for a period of 33 months with renewal option and escalation clauses. There were no restrictions placed upon the Company by entering into this lease. The Company had not given any sub-lease during the year. The lease arrangement did not include a non-cancellable period. Accordingly the lease was terminated during the year FY 2016-17.

---

Mar 31, 2016

1. Short term borrowings

Short term borrowings for working capital requirements availed by the Company in the nature of cash credit facility, post shipment demand loan and buyer’s credit are secured by way of hypothecation of the Company’s stocks and book debts, both present and future and also secured by charge on Company’s immovable properties, both present and future, and personal guarantee by the Managing Director of the Company Mr. R. S. Kothavale.

The cash credit is repayable on demand & carries interest rate ranging from 12.9% to 13.25%

PSDL is repayable on due date and carries interest @ 11.15%

2. Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 28,500/- (March 31, 2015: Rs. 2,261,501/-).

3. Based on the available information with the Company, no vendor is identified as MSME, as defined under “The Micro, Small and Medium Enterprises Development Act, 2006”.

4. Disclosure pursuant to Accounting Standard - 15 ‘Employee Benefits''

5. General description

i). Contribution to Provident Fund /Superannuation Fund (Defined Contribution)

The Company’s Provident Fund scheme (including pension fund scheme for eligible employees) and superannuation fund scheme are defined contribution plans. The expenses debited to the Statement of Profit and loss in respect of Provident fund and Superannuation fund is Rs. 868,395 (March 31, 2015: Rs 914,230) and Rs. 286,699 (March 31, 2015: Rs 357,795) respectively.

ii). Gratuity (Defined benefit)

The Company operates a gratuity scheme plan for its employees. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each completed year of service. The Company has recognized Rs. 248,737 (March 31, 2015: Rs. 1,054,638) as expenses towards gratuity scheme during the year

6. The following tables set out disclosures prescribed by AS 15 in respect of Company’s unfunded gratuity plan.

i) Changes in the present value of obligation representing reconciliation of opening and closing balances thereof:

7. Operating Lease

The company has entered into a commercial lease agreement for taking office space on lease. The lease agreement is for a period of thirty three months with renewal option and escalation clauses. There are no restrictions placed upon the Company by entering into this lease. The Company has not given any sub lease during the year. The lease arrangement does not include a non cancellable period. Lease rental debited to the Statement of Profit and Loss for the period is Rs. 1,483,994 (March 31, 2015: Rs. 1,799,292).

8. Segment Reporting Disclosure

i) Primary (Business) Segment

In accordance with the requirements of the Accounting Standard 17 “Segment Reporting”, the Company’s business consists of one reportable business segment i.e., “ Open Die Forgings” hence no separate disclosures pertaining to attributable Revenue, Profits, Assets, Liability, Capital Employed are given.

ii) Secondary (Geographical) Segment:

Secondary segment reporting is performed on the basis of geographical location of the customers. The operation of the Company comprises local sales and export sales. The management views the Indian market and export market as distinct geographical segments. The geographical segments considered for disclosure are as follows:

9. In the previous year, the Company had sold an un-used portion of land which was not required for future expansion, for a consideration of Rs 8,000,000, resulting into a profit of Rs 7,848,382 which has been disclosed as “Exceptional Item”.

10. Previous year’s figures are regrouped wherever necessary to make them comparable.

---

Mar 31, 2015

(i) The Cash Flow Statement reflects the combined cash flows pertaining to continuing and discounting operations.

(ii) These earmarked account balances with banks can be utilised only for the specific identified purposes.

31.03.20151 31.03.2014

A) Banks:

1) Counter Guarantee issued by Bank 15,00,000 15,00,000

2) Letter of Credit issued by Bank on behalf of the Company 1,21,26,305 1,72,50,000

3) Foreign Letter of Credit (Euro) 57,800.60)( P.Y. NIL) 39,42,579 Nil 2. Capital Commitment :

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs 22,61,501/- (Previous Year Rs 84,39,669/-).

3. During the year the, Company has sold land of 3645 SQ.Mtrs for Rs 80,00,000/-.This was as un-used portion of land which was not required for further expansion of the capacity. This has resulted into Long Team Capital Gain of Rs 78,48,382/-.The Company has made this provision for Income tax payable on this gain also paid Advance Income Tax accordingly. In the Financial statement, this amount is shown as Exceptional Income.

4. Based on the available information with the Company, no vendor is identified as MSME, as defined under "The Micro, Small and Medium Enterprises Development Act, 2006 and accordingly no disclosure has been considered necessary.

5. The year end foreign currency (FC) exposures that has been hedged by a derivative instrument or otherwise :Nil

6. The year end foreign currency (FC) exposures that are un hedged by a derivative instrument or otherwise are as follows:

7. Disclosure pursuant to Accounting Standard - 15 'Employee Benefits'

a. General Description

i) . Contribution to Provident Fund (Defined Contribution)

The Company's provident fund scheme (including pension fund scheme for eligible employees) is a defined contribution plan. The expenses charged to the Statement of Profit and Loss under the head Contribution to Provident Fund is Rs 9,14,230/- (PY Rs 8,17,447/-)

ii) . Gratuity

The Company has a gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each completed year of service. The Company during the year provided Rs 10,54,638/- (PY: Rs 5,89,189/-) towards gratuity.

b. The following tables set out disclosures prescribed by AS 15.

i) Changes in the present value of obligation representing reconciliation of opening and closing balances thereof: (Rs.)

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

8. Related Party Disclosures:

Names of Related Parties and description of relationship

Key Management Personnel Others

Mr. R. S. Kothavale

Mrs. R. R. Kothavale

Mr. S. R. Kothavale

Mr. R. S Kothavale (HUF)

Ms. Sonal R Kothavale

Orient Precision Engineering Pvt Ltd

Note: Related party relationships are as identified by the Company and relied upon by the Auditors.

9. Segment information for the year ended March 31,2015 as required by AS-17 "Segment Reporting"

As the Company's business activity falls within a single primary business segment viz "Forgings" the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable.

10. Previous year's figures are regrouped wherever necessary to make them comparable.

Additional Statements forming the part of Financial Statements

---

Mar 31, 2013

1. Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of substantial completion of the activities necessary to prepare the relevant asset for its intended use.

2. Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till the date they are put to use.

3. Contingent liabilities not provided for in respect of :

31.03.2013 31.03.2012 Rupees Rupees

A) Banks

1). Counter Guarantee issued by Bank 95,25,035 95,25,035

2). Letter of Credit issued by Bank on behalf of the Company 13,00,000 1,49,50,000

3) Foreign Letter of Credit (Euro) 29000)( P.Y. Euro 1,11,451) 21,23,380 76,71,172l

4) Foreign Bank Guarantee Issued( P.Y.US $ 3,80,000) NIL 1,95,01,600

B) Guarantees Given by the Company on behalf of other Companies NIL 2,35,00,000

Maximum Outstanding during the year Rs. Nil (previous Year 80,50,000/- C) Estimated value of Contracts remaining to be executed on Capital 77,46,081 1,81,96,750 Accounts and not provided for (net of advances)

4) A) In the opinion of the management current assets, loans and advances are approximately of the value stated, if realized, in the ordinary course of business.

B) Sales Tax Refund, Sales Tax Payable, Cenvat Credit and Service Tax Credit figures are taken as per the companies returns filed and are subject to Government Assessment

C) Repayment of Sales Tax Deferral Loan due on 31st March 2013 was Rs. NIL (Previous year Rs. 17.14 lacs).

D) Provision for Sales Ta x liability is made based on pending Sales Tax cases & pending liabilities which are taken as per Book balance . Excess/ Shortage is adjusted against Other Expenses.

5) During the year The Company has sold land of 8002.226 SQ Mtrs for Rs. 1,30,00,000/- This was an un-used portion of land which was not required for further expansion of the capacity .This has resulted into Long Term Capital Gain of Rs. 1,28,31,960/-The Company has made this provision for Income Ta x payable on this gain and also paid Advance Income Tax accordingly. In the Financial Statement this amount is shown as Exceptional Income.

6) The Information with regards to vendors under "The Micro, Small and Medium Enterprises Development Act, 2006 "is not available and hence no disclosures have been made in this regard.

7) Details of Forward Contracts Outstanding as on 31st March 2013.

The Company has entered in to forward contracts to cover the expected receivables against Foreign Exchange Rate Fluctuations. The Forward Contracts outstanding as on 31st March 2013 were as under.

8) Segment information for the year ended 31.03.2012 as required by AS-17 "Segment Reporting”

As the Company''s business activity falls within a single primary business segment viz "Forgings” the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

9) Information required as per Schedule – VI to the Companies Act, 1956 has been given only to the extent applicable.

10) Previous year''s figures are regrouped wherever necessary to make them comparable.

---

Mar 31, 2012

1. Contingent liabilities not provided for in respect of :

31.03.2012 31.03.2011 Rupees Rupees

A) Banks:

1) Counter Guarantee issued by Bank 95,25,035 95,25,035

2) Letter of Credit issued by Bank on behalf of the Company 1,49,50,000 4,01,278

3) Foreign Letter of Credit (Euro) 1,11,451) 76,71,172 Nil

4) Foreign Bank Guarantee Issued (USD 3,80,000) 1,95,01,600 Nil

B) Guarantees Given by the Company on behalf of other Companies 2,35,00,000 2,35,00,000 Maximum Outstanding during the year Rs. 49,07,987 (previous Year 1,22,50,000 )

C) Estimated value of Contracts remaining to be executed on Capital 1,81,96,750 1,85,37,848 Accounts and not provided for (net of advances)

2) A) In the opinion of the management current assets, loans and advances are approximately of the value stated, if realized, in the ordinary course of business.

B) Sales Tax Refund, Sales Tax Payable, Cenvat Credit and Service Tax Credit figures are taken as per the companies returns fled and are subject to Government Assessment.

C) Repayment of Sales Tax Deferral Loan due up to 31st March 2012 was Rs. 17.14 lacs (Previous year Rs. 50.12 lacs).

D) Provision for Sales Tax liability is made based on pending Sales Tax cases & pending liabilities which are taken as per Certificate issued by the company's sales tax consultant. Excess/Short provision is considered as an exceptional item.

E) Cenvat Credit with regards to Customs Duty paid of Rs 48.05 Lacs on 14th Feb'2012 has not been accounted for as the exact breakup of Counter Veiling Duty (CVD) component was not available with the company.

3) The Company has sold Land of 8002.226 Sq Mtrs on 24.04.2012 for Rs 1,30,00,000. This was an un-used portion of land which was not required for the operations of the company.

4) The Information with regards to vendors under "The Micro, Small and Medium Enterprises Development Act, 2006 "is pending and hence no disclosures have been made in this regard.

(*) As certified by the management and being technical matter accepted by auditors.

i) The Licensed & Installed Capacity is expressed in 'as forge', condition. Actual production & sales quantity is 'as sold' condition. The

Machining capacity is not set-up by the Company.

ii) Quantity of Outside Job Works produced and sold for the current year is 98.615 tons: Rs. 28.21 Lakhs (Previous year 208.474 tons: Rs. 51.21 lakhs) is not included in the above figures.

Note: Related party relationships are as identified by the Company and relied upon by the Auditors.

5) Details of Forward Contracts Outstanding as on 31st March 2012.

The Company has entered in to forward contracts to cover the expected receivables against Foreign Exchange Rate Fluctuations. The Forward Contracts outstanding as on 31st March 2012 were as under.

6) Liability for employee benefit has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Accounting Standard - 15 (revised) the details of which are as hereunder

7) Segment information for the year ended 31.03.2012 as required by AS-17 "Segment Reporting"

As the Company's business activity falls within a single primary business segment viz "Forgings" the disclosure requirements of Accounting Standard (AS- 17) "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable.

8) Information required as per Schedule – VI to the Companies Act, 1956 has been given only to the extent applicable.

9) Previous year's figures are regrouped wherever necessary to make them comparable.

---

Mar 31, 2010

31.03.2010 31.03.2009

1. Contingent liabilities not provided for in respect of: Rupees Rupees

A) Banks:

1) Counter Guarantee issued by Bank 92,69.119 1.88,892

2) Letter of Credit issued by Bank on behalf of the Company 2,63,94,904 1,63,55,580

B) Guarantees Given by the C ompany on behalf of other Companies 2,35,00,000 2,35,00,000

Maximum Outstanding during the year Rs.164,50,000 (previous Year 2,06,50,000)

C) Claims against the company not acknowledged as debt NIL NIL

D) Estimated value of Contracts remaining to be executed on Capital 1,86,09,000 196,02,652

Accounts and not provided for (net of advances)

E) Income Tax Case for AY. 2002-2003 pending before 54,07,000 54,07,000 ITAT (Pune bench)

2) In order to follow prudent disclosure and reporting norms the Company has made provision for entire disputed liability of pending demands towards excise duty and sales tax amounting to Rs. 2,96,23,444 during the F.Y. 2005-06.

3) Working Capital Facilities from Bank of Baroda Ltd are:

Secured by way of hypothecation of the Companys Stocks and Book Debts, both present and future and also secured by charge on Companys immovable properties, both present and future, Personal Guarantees by the Directors of the Company Mr. R. S. Kothavale, Mr. S. R. Kothavale and Mr. P. B. Kore.

4) A) In the opinion of the management current assets, loans and advances are approximately of the value stated, if realized, in the ordinary course of business.

B) Balances of Sundry Debtors and Sundry Creditors are taken as per ledger and are subject to confirmations / reconciliations.

C) Sales Tax Refund, Sales Tax Payable, Cenvat Credit and Service Tax Credit figures are taken as per the companies returns filed and are subject to Government Assessment.

D) Repayment of Sales Tax Deferral Loan due up to 31st March 2010 was Rs. 82.91 lacs (Previous year Rs. 35.82 lacs).

5) The Information with regards to vendors under "The Micro, Small and Medium Enterprises Development Act, 2006 " is pending and hence no disclosures have been made in this regard.

6) As per the Companys policy, Sale of Goods is being recognized at the point of dispatch to the Customer. The Sales for the current year includes Sales to a Customer amounting to Rs. 255.51 lacs, where dispatch has been made but actual title has not been transferred.

7) Segment information for the year ended 31.03.2010 as required by AS-17 "Segment Reporting"

As the Companys business activity falls within a single primary business segment viz "Forgings" the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable.

8) Information required as per Schedule-VI to the Companies Act, 1956 has been given only to the extent applicable.