Notes to Accounts of JTEKT India Ltd.

Mar 31, 2018

1. Corporate Information

JTEKT India Limited (formerly known as Sona Koyo Steering Systems Limited) (“the Company”) is a public limited company incorporated and domiciled in India and having its registered office at UGF-6, Indraprakash 21, Barakhamba Road, New Delhi, 110001. The Company’s name got changed via Certificate of Incorporation dated 7 April 2018 received from the Registrar of Companies, New Delhi. The equity shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The Company is engaged in the business of manufacturing steering systems & other auto components for the passenger car and utility vehicle manufacturers in the automobile sector.

2. Significant accounting policies and basis of preparation

2.1 Basis of preparation

(i) Statement of compliance

These Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (“the Act”), Companies (Indian Accounting Standards) (Amendment) Rules, 2016, as amended and other relevant provisions of the Act.

For all the periods up to and including 31 March 2017, these standalone financial statements were prepared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Act. As these Standalone Financial Statements for the year ended 31 March 2018 are the Company’s first standalone financial statements prepared in accordance with Ind AS, Ind AS 101, First time adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has effected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 50.

The standalone financial statements of the Company for the year ended 31 March 2018 are approved by the Company’s Audit Committee on 17 May 2018 and by the Board of Directors on 18 May 2018.

(ii) Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.

(iii) Basis of measurement

The standalone financial statements have been prepared on the historical cost basis except for the following items which have been measured at fair value amount -

(iv) Use of estimates and judgements

In preparation of these standalone financial statements, management has made judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized prospectively. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements is included in the following notes.

Judgements

- Lease classification - Note 42 Estimates

- Recognition and estimation of tax expense including deferred tax- Note 32

- Estimated impairment of financial assets and non-financial assets - Note 2.2(e) and (n)

- Assessment of useful life of property, plant and equipment and intangible asset - Note 2.2(a) and (b)

- Estimation of obligations relating to employee benefits: key actuarial assumptions - Note 40

- Valuation of Inventories - Note 2.2(f)

- Recognition and measurement of provision and contingency: Key assumption about the likelihood and magnitude of an outflow of resources - Note 39

- Fair value measurement - Note 2.1(vi)

(v) Current versus non-current classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification.

An asset is treated as current when:

- It is expected to be realised or intended to be sold or consumed in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is expected to be realised within twelve months after the reporting period; or

- ’t is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Company classifies all other assets as noncurrent.

A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle for the purpose of current-noncurrent classification of assets and liabilities.

(vi) Measurementoffairvalues

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Significant valuation issues are reported to the Company’s audit committee.

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

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

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

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

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

Further information about the assumptions made in measuring fair values is included in Note 47 - Financial instrument.

(i) Contractual obligations.

Refer note 39A for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(ii) Capitalised borrowing cost.

Borrowing costs capitalised during the year ended INR 20.05 lakhs (previous year 31 March 2017 INR 181.29 lakhs and previous year 01 April 2016 INR 264.89 lakhs).

(iii) Property, plant and equipment other than immovable property at Chennai, Malpura, Sanand and Stamping unit at Gurugram have been pledged as security for liabilities, for details refer note 46.

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets (refer note-50).

** During the previous year ended 31 March 2017, the Hon’ble Supreme Court of India has quashed the Singur land acquisition proceedings of the West Bengal Government and directed the State Government to return the land to its original owners and therefore the Company has written off the cost of the leasehold land appearing in the books amounting to INR 205.99 lakhs during the financial year ended 31 March 2017.

*** Includes factory building at Chennai given on operating lease whose cost, depreciation for the year and WDV at the end of the year is not segregated.

*** Building (Gross block) amounting to INR 1570.56 lakhs (previous year 31 March 2017 INR 1570.56 lakhs and previous year 01 April 2016 INR 1542.96 lakhs), net block INR 1270.11 lakhs (previous year 31 March 2017 INR 1322.45 lakhs and previous year 01 April 2016 INR 1346.43 lakhs) is constructed on lease hold land.

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets. (refer note 50)

In earlier years, the company has invested in Sona Skill Development Centre Ltd. with an intention of holding the same for more than one year from the date on which such investments was made. Accordingly, it classified the same as long-term investment till 01 April 2016 under Ind AS-39 Financial Instruments: Recognition and Measurement. Since the company has decided to disinvest these shares before 31 May, 2017, the company has presented its investment in equity shares as “Investment held for sale” in the financial statement for the year ended 31 March 2017.

Notes :

(i) Trade receivables have been pledged as security for liabilities, for details refer note 46.

(ii) For explanations on the company’s exposure to credit, currency and liquidity risk, refer note 48.

Notes :

(i) Cash and cash equivalents have been pledged as security for liabilities, for details refer note 46.

(ii) There are no repatriation restrictions with respect to cash and bank balances as at the end of the reporting year and comparative years.

(iii) Information pursuant to G.S.R. 308 ( E) dated 30 March 2017 issued by Ministry of Corporate Affairs.

The specified bank notes as defined under the notification issued by the Ministry of Finance, Department of Economic Affairs dated 8 November, 2016 are no longer in existence. Hence, the Company has not provided the corresponding disclosures as prescribed in Schedule III to the Companies Act, 2013. Disclosure made in the previous year ended 31 March 2017 financial statements is as below:

For the purpose of this disclosure, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated 8 November, 2016.

b) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of INR 1 per share. Each holder of equity shares is entitled to one vote per share. 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 share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

e) Others

During the year ended 31 March 2018, JTEKT Corporation, Japan acquired promoters’stake of 25.12% from Sona Autocomp Holding Limited. Further in compliance with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, JTEKT Corporation, Japan acquired additional stake of 25.23% by making an Open Offer for acquisition of shares held by Public Shareholders. Further to meet the public share holding requirements specified in Rule 19(2) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957, JTEKT Corporation, Japan sold 0.63% share to Public Shareholders via Offer For Sales (OFS) of shares by Promoters through the Stock Exchange Mechanism.

f) During the period of five years immediately preceding the date at which the Balance Sheet is prepared, the Company has not

- allotted fully paid up shares pursuant to contract without payment being received in cash;

- allotted fully paid up sahres by way of bonus shares; and

- bought back shares.

The general reserve is created from time to time on transfer of profit from retained earnings. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to Statement of Profit and Loss.

The cash flow hedging reserve represents the cumiliative effective portion of gains and losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumiliative gains or loss arising on changes in the value of designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to Statement of Profit and Loss, or included as a basis adjustment to the non-financial hedging item.

The provision for warranties relates mainly to inventories sold during the year ended 31 March 2018, 31 March 2017 and 31March 2016. The provision is based on estimates made from historical warranty data asociated with similar products. The company expects to incur the related expenditure over the next few years.

The total dues of Micro and Small Enterprises which were outstanding for more than stipulated period is INR 107.41 lakhs (31 March 2017 : INR 130.78 lakhs; 01 April 2016 : Nil) as on balance sheet date.

The company exposure to currency and liquidity risk related to payables is disclosed in note 48.

3. Merger information

The Board of Directors of JTEKT India Limited (‘JIN’) and JTEKT Sona Automotive India Limited (‘JSAI’) have approved a Scheme of Amalgamation in their respective Board meetings held on February 9, 2018, wherein, JSAI is proposed to be amalgamated with JIN, w.e.f. the appointed date i.e. April 1, 2018. The said draft Scheme of Amalgamation has been submitted with the concerned Stock Exchanges and SEBI for their approval in February 2018. SEBI has, however, returned this draft Scheme of Amalgamation vide its letter dated May 16, 2018 and has advised the Company to resubmit the same after ensuring compliance with the requirement stated in Clause No. (I)(A)(3)(b) of Annexure 1 of SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017.

4. Name change information

The Company have received approval from Registrar of Companies as on 7 April 2018, for change of its name to JTEKT India Limited from Sona Koyo Steering Systems Limited.

40. Employee benefit obligations

A. Defined Contribution Plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident Fund, Superannuation Fund, Punjab Labour Welfare Fund (PLWF) and Employee State Insurance scheme (‘ESI’) which are collectively defined as defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrued. The amount recognized as an expense includes following:

B. Defined benefit plan

The employees’gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company made annual contributions to the LIC of India of an amount advised by the LIC.

The above defined benefit plan exposes the Company to following risks:

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 unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

* Current service cost includes contribution of LIC premium amounting to INR 6.61 lakhs (previous year INR 5.90 lakhs). Further, during the year ended 31 March 2017, the current service cost excludes the contribution to gratuity fund amounting to INR 38.03 lakhs for the employees who were transferred from Sona Managements Services Limited.

(vii) Actuarial assumptions

a. Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis. Valuation assumptions are as follows which have been selected by the company :

b. Demographic assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant.

Sensevities due to mortality and withdrawals are not material and hence impact of change is not calculated. Sensivity as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy not applicable being a lump sum benefit on retirement.

(x) Enterprise best estimate of contribution during next year is INR 134.95 lakhs (previous year INR 133.98 lakhs).

C. Other long-term employee benefits

During the year ended 31 March 2018, the Company has created provision for compensated absences towards earned leave amounting to INR 209.94 lakhs (previous year expense of INR 176.06 lakhs). The Company has written back provision towards sick leave amounting to INR 4.71 lakhs (previous year INR 2.12 lakhs). The Company determines the expense for compensated absences basis the actuarial valuation of present value of the obligation, using the Projected Unit Credit Method.

5. Related party disclosures

For the purpose of these standalone financial statements, parties are considered to be related to the Company, if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

6. Leases In case of assets taken on lease

Operating Lease:

The company had taken residential properties, cars for its employees, factory and office premise under operating lease agreement having a lease term ranging from 11 months to 60 months. These leases are renewable by mutual consent on mutually agreed terms. The minimum lease payments are as follows:

7. Segment information

The Company is engaged in the business of manufacturing and assembling of automotive components. The Board of Directors being the Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by industry classes. All operating segments’ operating results are reviewed regularly by CODM to make decisions about resources to be allocated to the segments and assess their performance. CODM believes that these are governed by same set of risk and returns hence CODM reviews as one balance sheet component. Further, the economic environment in which the company operates is significantly similar and not subject to materially different risk and rewards. The revenues, total expenses and net profit as per the Statement of Profit and Loss represents the revenue, total expenses and the net profit of the sole reportable segment.

Geographical information

The Company’s revenue from operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

Major customer

Revenue from transactions of the Company with some of its OEM customers exceed 10 per cent or more of the Company’s total revenue

8. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act, 1961. Since the law requires the existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of the international transactions entered into with the associated enterprises from April 2017 and expects such records to be in existence latest by November 2018 as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. Dividend

The board of directors of the Company in its meeting held on 18 May 2018, proposed a dividend of INR 993.71 (INR 0.50 per share) to the equity shareholders. The dividend will be remitted post the approval of shareholders in the ensuing Annual General Meeting (‘AGM’).

10. Fair value disclosures

i) Fair values hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial statements that are

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into three levels prescribed under the accounting standard.

All financial instruments for which fair value is recognised or disclosed are categorised with in the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

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

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

ii) Financial instruments by category & fair value

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments.

11. Financial risk management

The Company is primarily engaged in the manufacturing steering systems and other auto componets for passenger and utlity vehicle manufactures. The Company’s principal financial liabilities, comprises loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support the Company’s operations. The Company’s principal financial assets include investments in equity, trade and other receivables, security deposits, cash and employee advances that derive directly from its operations. The Company also enters into derivative transactions viz. Cost Currency Interest Rate Swap and Principal and Interest Swaps.

The Company has exposure to the following risks arising from financial instruments

- Credit risk [see (A)];

- Liquidity risk [see (B)]; and .

- Market risk [see (C)]

Risk Management Framework

The Company’s activities makes it susceptible to various risks. The company has taken adequate measures to address such concerns by developing adequate systems and practices. The Company’s overall risk management program focuses on the unpredictability of markets and seeks to manage the impact of these risks on the Company’s financial performance.

The Company’s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The board provides assurance to the shareholders that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken.

The Company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and company’s activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

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

A) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), including foreign exchange transactions and other financial instruments

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of balance sheet position whether a financial asset or a company of financial assets is impaired. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

Company’s exposure to customers is diversified and more than 90% revenue is recognised from OEM’s. However there was no default on account of these customers in the history of Company.

Before accepting any new customer, the Company assesses the potential customer’s credit quality and defines credit limits to customer. Limits and scoring attributed to customers are reviewed on periodic basis.

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses and where receivables are due for more than six months.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Corporate finance department in accordance with the Company’s policy. Investments of surplus funds are made only in schemes of alternate investment fund/or other appropriate avenues including term and recurring deposits with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company’s Board of Directors on an annual basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company places its cash and cash equivalents and term deposits with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts ongoing evaluation of the credit worthiness of the banks with which it does business. Given the high credit ratings of these banks, the Company does not expect these banks to fail in meeting their obligations. The maximum exposure to credit risk for the components of the balance sheet at 31 March 2018, 31 March 2017 and 01 April 2016 is represented by the carrying amount of each financial asset.

B) Liquidity risk

Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, buyers credit and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments and includes contractual interest payments:

C) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risk: interest rate risk, currency risk and price risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits, advances and derivative financial instruments.

The sensitivity analyses in the following sections relate to the position as at 31 March 2018 and 31 March 2017. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of floating to fixed interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2018.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions.

The following assumptions have been made in calculating the sensitivity analyses:

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.

a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency) and borrowings in foreign currency (ECB borrowings).

The Company manages its foreign currency risk by entering into derivatives. When a derivative is entered into for the purpose of hedging, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.

Sensitivity analysis

Any changes in the exchange rate of foreign currency against INR is not expected to have significant impact on the Company’s profit due to the short credit period. Accordingly, a 1% appreciation/depreciation of the INR as indicated below, against the foreign currencies would have increased/reduced profit by the amounts shown below. This analysis is based on the foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variable remains constant.

(ii) Foreign exchange derivative contracts

The Company tries to mitigate foreign exchange risk by entering into appropriate hedging instruments as considered necessary from time to time. Depending on the future outlook on currencies, the Company may keep the exposures unhedged or hedged only as a part of the total exposure. The Company does not enter into a foreign exchange derivative transactions for speculative purposes.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with fixed interest rates.

The Company enters Cross Currency Interest Rate Swaps to manage its Forex and interest rate risk, in which it agrees to exchange, at specified intervals, the difference between floating and fixed rate interest amounts calculated by reference to an agreed-upon notional principal amount.

(i) Liabilities

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

(ii) Assets

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

c) Equity Price risk

The Company’s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

12. Capital management

i) The Company’ s capital management objectives are

The Board policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital employed, as well as the level of dividends to equity shareholders. The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary. The Company uses debt ratio as a capital management index and calculates the ratio as Net debt divided by total equity. Net debt and total equity are based on the amounts stated in the financial statements.

ii) Loan covenants

The term loan arrangements contain certain capital restrictions to be complied including debt-service coverage ratio, interest coverage ratio, current ratio, fixed asset coverage ratio, return on capital employed, net borrowings to EBITDA ratio etc. In case of any deviation from the capital restrictions as defined in the loan agreements, the Company is liable to communicate the same to respective banks, which may either be waived by the banks if not material or Company shall take necessary action to meet the requisite conditions. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period which would require the banks to recall any borrowings.

13. First time adoption of Ind AS

As stated in Note 2, 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 31 March 2018, including the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS Balance Sheet as at 01 April 2016 (the Company’s date of transition).

In preparing its Ind AS balance sheet as at 01 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous 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. Ind AS optional exemptions

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

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the Previous GAAP and use that as its deemed cost as at the date of transition. 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 their Previous GAAP carrying value.

Information relating to gross carrying amount of assets and accumulated depreciation as on the transaction dates per previous GAAP is as follows:

2. Determining whether an arrangement contains a lease

Appendix C to the Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with the 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 avail of the above exemption.

3. Deemed cost for investments in subsidiary and associates

The Company has elected to continue with the carrying value of all of its investments in subsidiary and associates recognised as of 01 April 2016 (transition date) measured as per the Previous GAAP as its deemed cost as at the date of transition.

B. Ind AS mandatory exceptions

1. Estimates

The estimates at 1 April 2016 and 31 March 2017 are consistent with those made for the same dates in accordance with previous GAAP (after adjustments to reffect any differences in accounting policies) apart from the following items where applications of Indian GAAP did not require estimation :

- Fare valuation of financial instruments carried at FVTPL and /or FVOCI.

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

- Determination of the discounted value for financial instruments carried at amortised cost.

The estimates used by the Company to present these amount in accordance with Ind-AS reflect condition at 1 April 2016, the date of transaction to Ind-AS and as of 31 March 2017.

2. Classification and measurement of financial assets and liabilities

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable

3. Hedge accounting

Ind AS 101 requires an entity, at the date of transition, to measure all derivatives at fair value and eliminate all deferred losses and gains arising on derivatives that were reported in accordance with previous GAAP as if they were assets or liabilities.

4. 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 transaction to Ind AS. However, Ind AS 101 allows a first time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from the date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financials assets and liabilities derecognised as a result of past transaction 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.

C. Reconciliations between Previous GAAP and Ind AS

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

Note - 1

Financial liabilities carried at amortised cost

Under previous GAAP financial liabilities were carried at cost. Under Ind AS, certain financial liabilities are subsequently measured at amortised cost which involves the application of effective interest method. In applying the effective interest method, an entity identifies fees that are an integral part of the effective interest rate of a financial instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of the financial asset or financial liability. Accordingly financial liabilities reduced by INR 4.82 lakhs as at 31 March 2017 (1 April 2016 : Nil) and consequently increase the retained earnings by an equivalent amount.

Note - 2

Derivative recognised at fair value

Under previous GAAP the premium or discount arising at the inception of the forward contract is amortised as expense or income over the life of the contract and the exchange differences on such a contract is recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Under Ind AS, all derivative contracts are measured at fair value through profit and loss at each reporting date resulting in recognision of mark to market loss of INR 26.04 lakhs as at 31 March 2017 and mark to market gain of INR 30.30 lakhs as at 1 April 2016.

Note - 3

Capitalisation of major spares as Property, plant and equipment

Under Previous GAAP, spares which can be used only in connection with an item of fixed asset were capitalised however under Ind AS all spares which meet the definition of property, plant and equipment are capitalised and depreciated over its useful life amounting to INR nil (previous year INR 110.22 lakhs) and depreciation of INR 28.24 lakhs as computed from the date of purchase of such spares up to 1 april 2016 was recognised in the statement of profit and loss . Note - 4

Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability and appropriation. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend has been reversed with corresponding adjustment to retained earnings. Accordingly, the liability for proposed dividend of INR 1,196.00 lakhs as at 1 April 2016 included under provisions has been reversed with corresponding adjustment to retained earnings and recognised upon approval by shareholders in the general meeting. Consequently, the total equity as at 1 April 2016 increased by an equivalent amount.

Note - 5

Discounting of long term provisions

Under the previous GAAP, provisions were recorded at their carrying value. Under Ind AS, the amount of a provision shall be the present value of the expenditures expected to be required to settle the obligation. Difference on day one between carrying value and present value is recognised as charge to the Statement of Profit and Loss. This increased the warranty provision by INR 7.32 as at 31 March 2017 and reduced by INR 18.48 lakhs as at 1 April 2016. Consequently, the total equity as at 31 March 2017 and 1 April 2016 increased and decreased by an equivalent amount.

Note - 6

Deferred tax on above adjustments

Under Previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also led to recognition of deferred taxes on new temporary differences. On the date of transition, the net impact of deferred tax liabilities is of INR 9.08 lakhs (1 April 2016 : INR 7.11 lakhs).

Note - 7

Other comprehensive income

Items of income and expense that are not recognised in profit and loss are shown in the Statement of Profit and Loss as’other comprehensive income’ includes re-measurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations etc. The concept of other comprehensive income did not exist under previous GAAP

Note - 8 Reclassification

A) Company has entered into recourse factoring. Per Ind AS 109, it’s an indication that the Company has retained substantially all risks and rewards relating to the receivables and would not be permitted to derecognise these financial assets under Ind AS 109.

Under previous GAAP, amount of trade receivable was netted off against the amount of factoring loan.

B) Under Previous GAAP, one of the security deposit given by the Company, was classified as current, has been shown as non-current under Ind AS, being long term in nature.

C) Reclassification of’Intangibles under development’ to ‘Inventory - work in progress’.

D) Cash flow reclassification of unclaimed dividend.

14. The comparative financial information of the Company for the year ended 31 March 2017 and the transition date opening balance sheet as at 01 April 2016 included in these Standalone Ind AS Financial Statements, are based on the previously issued Statutory Financial Statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the year ended 31 March 2017 and 31 March 2016 dated 24 May 2017 and 13 May 2016 respectively expressed an unmodified opinion on those Standalone Financial Statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by statutory auditors.

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Mar 31, 2017

Accordingly, the company has disclosed dividend proposed by board of directors after the balance sheet date in the notes.

Had the company continued with creation of provision for proposed dividend, its surplus in the statement profit and loss account for the year ended 31st March, 2017 would have been lower by Rs, 1196.00 Lakhs and current provision would have been higher by Rs, 1196.00 Lakhs (including dividend distribution tax of Rs, 202.29 Lakhs)

b) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Re 1 per share. Each holder of equity shares is entitled to one vote per share. 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 share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

1. Indian rupee loans from banks include:

(a) Rupee term loans of Rs, 13356.50 lakhs (Previous year Rs, 9631.35 Lakhs) are secured by first pari passu charge over the entire movable and immovable fixed assets of the company, both present and future, except the assets exclusively charged. Loans to the extent of Rs, 3619 Lakhs (Previous Year Rs, 963.74 Lakhs) are further secured by way of second charge on current assets, on pari passu basis. The rate of interest on aforesaid loans are linked to the specific bank''s base rate.

(b) Rupee term loan of Rs, 207.06 Lakhs ( Previous Year Rs, 72.84 Lakhs ) from Allahabad Bank is secured by way of exclusive charge on the vehicles financed out of the said term loan. The rate of interest on aforesaid loan is linked to bank''s base rate.

2. Foreign currency loans from banks include :

(a) Foreign currency loan of USD Nil equivalent to Rs, Nil (Previous year USD 5 Lakhs equivalent to Rs, 274 Lakhs ) from Standard Chartered Bank was secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3% and was fully hedged.

(b) Foreign currency loan of USD Nil equivalent to Rs, Nil (Previous year USD 12.50 Lakhs equivalent to Rs, 628.12 Lakhs) from Standard Chartered Bank was secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @LIBOR plus 3.5% and was fully hedged.

(c ) Foreign currency loan of USD 22.50 Lakhs equivalent to Rs, 1349.55 Lakhs (Previous year USD 37.50 Lakhs equivalent to Rs, 2249.25 Lakhs) from Standard Chartered Bank is secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @LIBOR plus 3.5% and was fully hedged.

(d) Foreign currency loan of USD 57.64 Lakhs equivalent to Rs, 3756.28 Lakhs (Previous year USD 65 Lakhs equivalent to Rs, 4235.40 Lakhs) from Standard Chartered Bank is secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks and further secured by way of second charge on current assets, on pari passu basis. The loan carries interest @LIBOR plus 2.25% and is fully hedged.

(e) FCNR loan of USD Nil equivalent to Rs, Nil (Previous year USD 67 Lakhs equivalent to Rs,4460.86 Lakhs ) from State Bank of India was secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks & Loans to the extent of Rs, Nil (Previous Year Rs, 3728.48 Lakhs ) were further secured by way of second charge on current assets, on pari passu basis. The loan carries interest @LIBOR plus 3.25% and was fully hedged.

*(In earlier years, the company has invested in Sona Skill Development Centre Ltd. with an intention of holding the same for more than one year from the date on which such investments was made. Accordingly, it classified the same as long-term investment under AS-13 Accounting For Investments. Since the company has decided to disinvest these shares before 31st May, 2017, the company has presented its investment in equity shares as "current investments" in the financial statement for the year ended 31st March 2017. However, for measurement purposes, the investment continues to be treated as long-term investments.)

Note 3 - The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Changes in inventories of finished goods, work-in-progress and stock-in-trade -excise duty on Increase/(decrease) in finished goods" under note 20 annexed and forming part of statement of profit and loss.

Note 4 - Raw Material and Components Consumed are net of Rs, 893.77 Lakhs (Previous year Rs, 1129.77 Lakhs) being the value of dispatches made to vendors for job work.

Note 5 (a) - A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past experience of the level of returns. It is expected that significant portion of these cost will be incurred in the next financial year and all will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the three year warranty period for products sold. The table below gives information about movement in warranty provisions.

* For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

Note 45 - Expenditure on Corporate Social Responsibility (CSR)

(a) Gross amount required to be spent by the Company during the year ended 31 March, 2017 '' 46.09 Lakhs (Previous Year '' 62.48 Lakhs)

(b) Amount spent during the year ended 31 March, 2017:

(c) Details of related party transactions:

(i) Contribution during the year ended 31 March, 2017 '' 21.00 Lakhs (Previous Year '' 43.00 Lakhs)

(ii) Payable as at 31 March, 2017 - Nil (Previous Year - Nil)

Note 46 - The Company has a process whereby periodically all long term contracts including derivative contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the books of accounts.

1. Figures in bracket are in respect of the previous year

2. * Remuneration includes director commission, contribution to superannuation and provident fund

Name of related party & description of relationship is as below:

1. The entity having substantial interest in the Company 1 Sona Autocomp Holdings Ltd

2 JTEKT Corporation

2. Others ( Significant Influence ) 1 Sona BLW Precision Forgings Ltd

2 Mahindra Sona Limited

3 Sona E design & Technologies Limited upto 17-May-16

4 Kapur Properties & I nvestment

5 Mandira Marketing Limited

6 Koyo Bearings India Pvt Ltd

7 Sona BLW Prazisionsschmiede GMBH

8 Sona BLW Precision Forge INC

9 Sona Koyo Steering Systems Ltd EPF Trust

10 Sona Charitable Trust

11 Sona Management Services Limited

12 Sona Autocomp Germany GMBH

13 Mrs Rani Kapur

14 Mr. Sunjay Kapur (Relative of individual having significant influence) Additional Related Party as per Companies Act 2013

15 Maruti Suzuki India Ltd

16 Avian Media Pvt Ltd

3. Subsidiaries 1 Sona Fuji Kiko Automotive Ltd

2 JTEKT Sona Automotive India Ltd

4. Key Management Personnel 1 Mr Kiyozumi Kamiki - Executive Director

2 Mr K.M. Deshmukh - Executive Director Additional Related Party as per Companies Act 2013

3 Mr Sudhir Chopra - Company Secretary

4 Mr. Rajiv Chanana - Chief Financial Officer

5 Mr. Sunder Rajan upto 31.01.2016

6 Mr. Ramesh Suri - Non Executive Director

7 Mr Ravi Bhoothalingam - Non Executive Director

8 Mr. P.K. Chadha - Non Executive Director

9 Lt Gen (Retd) S.S. Mehta - Non Executive Director

10 Mrs. Ramni Nirula - Non Executive Director

11 Mr. Prasan A. Firodia - Non Executive Director

12 Mr. Kazuhiko Ayabe - Non Executive Director

13 Mr. Hidekazu Omura - Non Executive Director

5. Associates 1 Sona Skill Development Centre Ltd

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Mar 31, 2016

a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity shares is entitled to
one vote per share. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

1. Indian rupee loans from banks include:

(a) Rupee term loans of Rs. 9631.35 lacs (previous year Rs. 14871.55 lacs) are secured by first pari passu charge over the entire
movable and immovable fixed assets of the company, both present and future, except the assets exclusively charged.
Loans to the extent of Rs. 963.74 lacs (previous year Rs. 4220.00 lacs) are further secured by way of second charge on
current assets, on pari passu basis. The rate of interest on aforesaid loans are linked to the specific bank''s base rate.

(b) Rupee term loan of Rs. 72.84 lacs (previous year Rs. 67.93 lacs ) from Allahabad Bank is secured by way of exclusive charge
on the vehicles financed out of the said term loan. The rate of interest on aforesaid loan is linked to bank''s base rate.

2. Indian rupee loan from NBFC include:

Term loan Rs. Nil (previous year Rs. 97.22 lacs) was secured by way of second charge on entire assets of the Company situated
at Sanand, Gujarat to be purchased or constructed out of said term loan. The rate of interest on aforesaid loan is linked to
NBFC''s prime lending rate (PLR).

3. Foreign currency loans from banks include :

(a) Foreign currency loan of USD 0.50 millions equivalent to Rs. 274.00 lacs (previous year USD 1.5 millions equivalent to
Rs. 822.00 lacs) from Standard Chartered Bank is secured by first pari passu charge on movable and immovable fixed
assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3% and is fully hedged.

(b) Foreign currency loan of USD 1.25 million equivalent to Rs. 628.12 lacs (previous year USD 2.5 million equivalent to
Rs. 1256.25 lacs) from Standard Chartered Bank is secured by first pari passu charge on movable and immovable fixed
assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3.5% and is fully hedged.

(c) Foreign currency loan of USD 3.75 million equivalent to Rs. 2249.25 lacs (previous year USD 5.25 million equivalent to
Rs. 3148.95 lacs) from Standard Chartered Bank is secured by first pari passu charge on movable and immovable fixed
assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3.5% and is fully hedged.

(d) Foreign currency loan of USD 6.5 million equivalent to Rs. 4235.40 lacs (previous year USD Nil & Rs. Nil) from Standard
Chartered Bank is secured by first pari passu charge on movable and immovable fixed assets except assets exclusively
charged to other banks and further secured by way of second charge on current assets, on pari passu basis. The loan
carries interest @ LIBOR plus 2.25% and is fully hedged.

(e) FCNR loan of USD 6.7 million equivalent to Rs. 4460.86 lacs (previous year USD 2.41 million equivalent to Rs. 1516.37
lacs) from State Bank of India is secured by first pari passu charge on movable and immovable fixed assets except assets
exclusively charged to other banks & loans to the extent of Rs. 3728.48 lacs (previous year Rs. Nil) are further secured by
way of second charge on current assets, on pari passu basis. The loan carries interest @ LIBOR plus 3.25% and is fully
hedged.

Cash credit / other loans repayable on demand from banks are secured by hypothecation of inventories, book debts and other receivables
both present & future and second pari-passu charge on movable and immovable fixed assets of the Company.

* Leasehold land includes X 221.50 lacs (previous year X 221.50 lacs) in respect of which lease deed is pending for execution.

** Includes factory building at Chennai given on operating lease whose cost, depreciation for the year and WDV at the end of the year is not seggregated.

** Building (Gross block) amounting to X 1542.96 lacs (previous year X 1542.96 lacs), net block X 1346.43 lacs (previous year X 1397.85 lacs) is constructed on

leasehold land.
*** Internally generated intangible assets.

# Other adjustments comprises of borrowing cost and foreign currency exchange differences.

* There is no amount due and outstanding to be credited to Investor Education & Protection Fund under Section 205C of the
Companies Act, 1956 as at the year end. Section 125 of Companies Act, 2013 which corresponds to Section 205C of Companies
Act, 1956 has not yet been enforced.

** Taxes payable includes withholding tax, excise, sales tax etc.

*** Other payables includes, payment due to employees, dues on account of capital items, contribution to PF, ESI, etc.

Define Benefit Plans:

i) a) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded. The Company through
the Trust has taken group gratuity policy of Life Insurance Corporation of India Gratuity Scheme.

b) The Company makes contribution for certain employees to the Sona Koyo Steering Systems Ltd- Employees Provident Fund
Trust ("the Trust"), which is a defined benefit plan. The Company contributed Rs. 16.69 lacs (previous year Rs. 35.21 lacs)
during the year to the Trust.

The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust
and the notified interest rate. The Company''s obligation in this regard is actuarially determined and provided for if the
circumstances indicate that the Trust may not be able to generate adequate returns to cover the interest rates notified by
the Government.

The guidance note on implementing AS 15 Employee Benefits (revised 2005), issued by Accounting Standards Board (ASB)
of The Institute of Chartered Accountants of India, states that benefits involving employer established provident fund trust,
which require interest shortfall to be compensated by the employer is required to be considered as defined benefits plans.
The actuary has provided a valuation and based on the below mentioned assumptions, determined that there is no short
fall as at March 31, 2016.

NOTE 1 - LEASES

(a) Operating lease : Company as lessee

(i) The Company has taken various residential & office premises under operating lease on lease and license agreements. These
are cancellable; have a term of 11 to 36 months. The lease arrangements are generally renewable on the expiry of lease period
subject to mutual agreement. The company has taken vehicles for its employees under operating lease agreement have a term
of 48 months. Lease payments are recognised in the statement of profit and loss in the year incurred.

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotions and
other relevant factors including supply and demand in the employment market. The above information is certified by the actuarial
valuer.

The discount rate is based on the prevailing market yield of govt. bonds as at the date of valuation.

Expected return on asset - The expected return on assets over the accounting period, based on an assumed rate of return.

(c) Details of related party transactions:

(i) Contribution during the year ended 31st March, 2016 Rs. 43.00 lacs
(ii) Payable as at 31st March, 2016 - Rs. Nil.

NOTE 2 - Executive Vice Chairman of the Company was appointed by the Board of Directors at its meeting held on 14-09-2015
with effect from 15-09-2015, and the remuneration paid is subject to the approval of shareholders by way of special resolution due
to inadequacy of profits. The Company will take the approval of shareholders by special resolution in the forthcoming Annual General
Meeting for the payment of minimum remuneration as per provision of Schedule V of the Companies Act, 2013.

NOTE 3 - The Company has a process whereby periodically all long term contracts including derivative contracts are assessed for
material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any
law/accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made
in the books of accounts.

NOTE 4 - Raw material and components consumed are net of Rs. 1129.77 lacs (previous year Rs. 1479.03 lacs) being the value of
dispatches made to vendors for job work.

NOTE 5 - (a) A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past
experience of the level of returns. It is expected that significant portion of these cost will be incurred in the next financial year and all
will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based
on current sales level and current information available about returns based on the three year warranty period for products sold. The
table below gives information about movement in warranty provisions.

1. Figures in bracket are in respect of the previous year

2. *Remuneration includes director commission, contribution to superannuation and provident fund

Name of related party & description of relationship is as below:

1. The individual/entity exercise control over the Group 1. Dr. Surinder Kapur upto 30-Jun-2015

2. The entity having substantial interest in the Group 1. Sona Autocomp Holding Ltd.

2. JTEKT Corporation

3. Others (significant influence ) 1. Sona BLW Precision Forgings
Ltd.

2. Mahindra Sona Ltd.

3. Maruti Suzuki India Ltd.

4. Sona e-design & Technologies Ltd.

5. Pune Heat Treat Pvt Ltd.

6. Kapur Properties & Investment

7. Mandira Marketing Ltd.

8. Koyo Bearings India Pvt Ltd.

9. Sona BLW Prazisionsschmiede GmbH

10. Sona BLW Precision Forge INC

11. Sona Koyo Steering Systems Ltd. EPF Trust

12. Sona Charitable Trust

13. Sona Management Services Ltd.

14. Raghuvanshi Investment Private Ltd.

15. Mandira Systems Components Ltd.

16. BRS Finance and Investment Co. Pvt. Ltd.

17. Mrs. Rani Kapur w.e.f. 05-Nov-2015

4. Subsidiaries 1. Sona Fuji Kiko Automotive Ltd.

2. JTEKT Sona Automotive India Ltd.

5. Key Management Personnel 1. Dr. Surinder Kapur - (transactions
disclosed under category (1) above) upto 30-Jun-2015

2. Mr. Sunjay Kapur upto 14-Sep-2015

3. Mr. Kiyozumi Kamiki

4. Mr. Sudhir Chopra

5. Mr. Govindrajan Sunder Rajan upto 31-Jan-2016

6. Mr. Rajiv Chanana

7. Mr. K.M. Deshmukh w.e.f. 15-Sep-2015

6. Relative to Key Management Personnel 1. Mr. J.M. Kapur upto
05-Nov-2015

7. Associates 1. Sona Skill Development Centre Ltd.

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Mar 31, 2015

NOTE 1 - SHARE CAPITAL

a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

NOTE 2 - EMPLOYEES BENEFIT

Define Benefit Plans:

i) a) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded. The Company through the Trust has taken group gratuity policy of Life Insurance Corporation of India Gratuity Scheme.

b) The Company makes contribution for certain employees to the Sona Koyo Steering Systems Ltd. - Employees Provident Fund Trust ('The Trust') which is a defined benefit plan. The Company contributed Rs. 35.21 lacs (previous year Rs. 27.84 lacs) during the year to the Trust.

The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate. The Company's obligation in this regard is actuarially determined and provided for if the circumstances indicate that the Trust may not be able to generate adequate returns to cover the interest rates notified by the Government.

The guidance note on implementing AS 15 Employee Benefits (revised 2005), issued by Accounting Standards Board (ASB) of The institute of Chartered Accountants of India, states that benefits involving employer established provident fund trust, which require interest shortfall to be compensated by the employer is required to be considered as defined benefits plans. The actuary has provided a valuation and based on the below mentioned assumptions, determined that there is no short fall as at March 31, 2015.

NOTE 3 - LEASES

(a) Operating lease : Company as lessee

(i) The Company has taken various residential premises under operating lease on lease and license agreements. These are cancellable; have a term of 11 to 36 months. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. The company has taken vehicles for its employees under operating lease agreement have a term of 48 months.Lease payments are recognised in the statement of profit & loss in the year incurred.

Period covered

NOTE 4 - CONTINGENT LIABILITIES

I) Claims against the Company not acknowledged as debt on account of :

a) Excise duty

i) Show cause notices received and 2000-01 to 2006-07 pending with adjudication authority

ii) Cases pending before appellate 2007-08 to 2011-12 authorities in respect of which the company has filed appeals

Total

b) Service Tax

i) Show cause notices received and 2004-05 to 2013-14 pending with adjudication authority

ii) Cases pending before appellate 2005-06 to 2014-15 authorities in respect of which the Company has filed appeals/ show cause notices

Total

c) VAT Haryana

i) Local area development tax (LADT) 2007-08 to 2014-15 levied by Assessing Authority Gurgaon. Writ petition civil pending with Supreme Court.

d) Customs Duty

i) Show cause notice received from 2012-13 adjudication authority (DGFT) for advance license

ii) Case of valuation of goods imported from 2013-14 to 2014-15 related party with special valuation branch under Custom Act includes penalty wherever indicated in the order and interest calculated up to 31-03-2015

e) Income Tax

i) Cases pending before appellate 2011-12 to 2013-14 authorities in respect of which the Company has filed appeal

f) Property Tax

Municipal Corporation Gurgaon Property Tax Arrears before 2010-11

Current year* Previous year (Rs./ Lacs) (Rs. / Lacs)

a) Excise duty

i) Show cause notices received and 1546.40 1608.58 pending with adjudication authority

ii) Cases pending before appellate 371.86 84.52 authorities in respect of which the company has filed appeals

1918.26 1693.10

b) Service Tax

i) Show cause notices received and 53.15 114.09 pending with adjudication authority

ii) Cases pending before appellate 290.76 228.81 authorities in respect of which the Company has filed appeals/ show cause notices

343.90 342.90

c) VAT Haryana

i) Local area development tax (LADT) 963.09 809.86 levied by Assessing Authority Gurgaon. Writ petition civil pending with Supreme Court.

d) Customs Duty

i) Show cause notice received from 6.74 6.25 adjudication authority (DGFT) for advance license

ii) Case of valuation of goods imported fro 160.24 77.20 related party with special valuation branch under Custom Act includes penalty wherever indicated in the order and interest calculated up to 31-03-2015

e) Income Tax

i) Cases pending before appellate 7.94 - authorities in respect of which the Company has filed appeal

f) Property Tax

Municipal Corporation Gurgaon Property Tax 19.00 -

The Company has been advised that the above demands are likely to be either deleted or substantially reduced and accordingly no provision is consider necessary.

II) Customer bills discounted 2430.69 300.00

III) Letter of credit opened by banks for purchase of inventory / capital goods 213.30 397.57

IV) The Government of West Bengal is in appeal in Hon'ble Supreme Court for validity of the Singur Land Rehabilitation And Development Act, 2011. Pending finalization of the case, the Company has not made any provision for the impairment of its value of land at Singur.

NOTE 5- DEFERRAL / CAPITALIZATION OF EXCHANGE DIFFERENCES

MCA vide its circular dated 29th December, 2011 and 9th August, 2012 amended AS11, The Effects of changes in foreign exchange rates, to allow companies deferral / capitalization of exchange differences arising on long term foreign currency monetary items.

NOTE 40 - The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Changes in inventories of finished goods, work-in-progress and stock-in-trade excise duty on Increase/ (decrease) in finished goods" under note 20 annexed and forming part of statement of profit & loss.

NOTE 6 - Raw material and components consumed are net of Rs. 1479.03 lacs (previous year Rs. 2184.06 lacs) being the value of dispatches made to vendors for job work.

NOTE 7(a) - A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past experience of the level of returns. It is expected that significant portion of these cost will be incurred in the next financial year and all will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the three year warranty period for products sold. The table below gives information about movement in warranty provisions.

NOTE 8 - AMALGAMATION OF WHOLLY OWNED SUBSIDIARY COMPANY

The Hon'ble High Court of Delhi and Punjab & Haryana sanctioned the scheme of amalgamation of Sona Stampings Limited with the Company with an effective date of April 1, 2013. Sona Stampings Ltd. was a wholly owned subsidiary of the Company and was engaged in manufacture and sale of sheet metal stampings, welded assemblies and moulds for automotive industry. The merger of Sona Stampings Ltd. into the Company has been accounted for under "pooling of interest" method refered to in Accounting Standard 14, Accounting for Amalgmation (AS-14).

All the assets and liabilities of Sona Stampings Ltd. on and after the appointed date and prior to the effective date have been transferred to the Company on a going concern basis. As Sona Stampings Ltd. was a wholly owned subsidiary of the Company, no shares have been alloted to the shareholders upon the scheme becoming effective.

NOTE 9 - REMUNERATION TO MANAGERIAL PERSONNEL

Remuneration paid to Vice Chairman & Managing Director during part of the financial year 2014-2015, in excess of the limit prescribed under Section 197 of the Companies Act, 2013 of Rs. 18.16 lacs, due to inadequacy of profits, was recovered from him.

After obtaining approval from its Board of Directors and Shareholders, the Company proposes to apply to Central Government as per applicable provisions of Companies Act, 2013 for payment of the aforesaid remuneration as "Minimum Remuneration" for the year 2014-2015.This remuneration will be paid and accounted in the year of the approval, if any, is granted.

NOTE 10 - The Company has a process whereby periodically all long term contracts including derivative contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the books of accounts.

1. Figures in bracket are in respect of the previous year

2. * Remuneration includes director commission, contribution to superannuation and provident fund

Name of related party & description of relationship is as below:

1. The individual/entity exercise 1. Dr. Surinder Kapur control over the Company

2. The entity having substantial 1. JTEKT Corporation interest in the Company

2. Sona Autocomp Holding Ltd.

3. Others (Significant Influence) 1. Sona BLW Precision Forgings Ltd.

2. Mahindra Sona Ltd.

3. Maruti Suzuki India Ltd.

4. Sona e-design & Technologies Ltd

5. Pune Heat Treat Pvt Ltd.

6. Kapur Properties & Investment

7. Mandira Marketing Ltd.

8. Koyo Bearings India Pvt. Ltd.

9. Sona BLW Prazisionsschmiede GmbH

10.Sona BLW Precision Forge Inc.

11.Sona Koyo Steering Systems Ltd EPF Trust

12.Sona Charitable Trust

4. Subsidiaries 1. Sona Fuji Kiko Automotive Ltd.

2. JTEKT Sona Automotive India Ltd.

5. Key Management Personnel 1. Dr. Surinder Kapur - (Transactions Disclosed Under Category (1) Above)

2. Mr. Sunjay Kapur

3. Mr. Kiyozumi Kamiki

4. Mr. Sudhir Chopra

5. Mr. Rajiv Chanana (w.e.f. 30.05.2014)

6. Relative to Key Management 1. Mr. J.M. Kapur Personnel

7. Associates 1.Sona Skill Development Centre Ltd

NOTE 11 - Previous year's figures have been regrouped/reclassified, wherever necessary.

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Mar 31, 2014

1. Indian rupee loans from financial institution include:

Working capital term loan of Rs. 132.76 lacs (previous year Nil) from financial institution is secured by way of hypothecation on all moveable fixed assets of transferor company acquired under direct credit scheme of SIDBI and whole of the current assets of transferor company both present and future of the Company.The term loan is further secured by way of equitable mortgage in favour of SIDBI of all the immovable properties of the transferor company. Further, the transferee company prior to merger has issued letter of comfort to bank for the aforesaid loan. The rate of interest on aforesaid loan is linked to prime lending rate of financial institution

2. Indian rupee loan from NBFC include:

Term loan Rs. 291.65 lacs (previous year Rs. 486.08 lacs) is secured by way of second charge on entire assets of the Company situated at Sanand, Gujarat to be purchased or constructed out of said term loan. The rate of interest on aforesaid loan is linked to NBFC''s prime lending rate (PLR).

3. Foreign currency loans from banks include :

(a) Foreign currency loan of USD 2.5 millions equivalent to Rs. 1370.00 lacs (previous year USD 3.5 millions equivalent toRs. 1918.02 lacs) from Standard Chartered Bank is secured by first pari-passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3% and is fully hedged.

(b) Foreign currency loan of USD 3.75 million equivalent toRs. 1884.38 lacs (previous year USD 5 million equivalent to Rs. 2512.50 lacs) from Standard Chartered Bank is secured by first pari-passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3.5% and is fully hedged.

(c) Foreign currency loan of USD 6 million equivalent toRs.3598.80 lacs (previous year Nil) from Standard Chartered Bank is secured by first pari-passu charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3.5% and is fully hedged.

(d) FCNR loan of USD 3.81 million equivalent to Rs. 2287.48 lacs (previous year Nil) from State Bank of India is secured by first pari passu charge on movable and immovable fixed assets except assets exclusively charged to other banks & further secured by way of second charge on current assets, on pari-passu basis. The loan carries interest @ LIBOR plus 3.25% and is fully hedged.

Define Benefit Plans:

i) a) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded. The Company through the Trust has taken group gratuity policy of Life insurance Corporation of India Gratuity Scheme.

b) The Company makes contribution for certain employees to the Sona Koyo Steering Systems Ltd. - Employees Provident Fund Trust (''The Trust'') which is a defined benefit plan.The Company contributed Rs. 27.84 lacs (previous yearRs. 38.71 lacs) during the year to the Trust.

The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate. The Company''s obligation in this regard is actuarially determined and provided for if the circumstances indicate that the Trust may not be able to generate adequate returns to cover the interest rates notified by the Government

The guidance note on implementing AS 15 Employee Benefits (revised 2005), issued by Accounting Standards Board (ASB) of The institute of Chartered Accountants of India, states that benefits involving employer established provident fund trust, which require interest shortfall to be compensated by the employer is required to be considered as defined benefits plans. The actuary has provided a valuation and based on the below mentioned assumptions, determined that there is no short fall as at March 31, 2014.

NOTE 4 - LEASES

(a) Operating jease: Company as lessee

The Company has taken various residential,office premises and vehicle under operating lease on lease and license agreements. These are cancellable; have a term of 11 months and five years The agreements for premises cannot be terminated by either party before the expiry of one year. Agreements of leasing of vehicles can generally be terminated early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of leaser period subject to mutual agreement. Lease payments are recognised in the statement of profit & loss in the year incurred.

Period covered Current year* Previous year (Rs./ Lacs) (Rs./ Lacs)

NOTE 5 - CONTINGENT LIABILITIES

I) Claims against the Company not acknowledged as debt on account of :

a) Excise duty

i) Show cause notice received and pending with 2004-05 to 2007-08 1608.58 1529.44 Adjudication Authority & 2012-13

ii) Cases pending before Appellate authorities in 2009-10 to 2010-11 84.52 3.71 respect of which the company has filed appeals

Total 1693.10 1533.15

b) Service Tax

i) Show cause notice received and pending with 2008-09 to 2013-14 114.09 30.65 Adjudication Authority

ii) Cases pending before Appellate authorities in 2009-10 to 2011-12 228.81 261.73 respect of which the company has filed appeals/ show cause notices

Total 342.90 292.38

c) VAT Haryana

i) Local area development tax (LADT) levied by 2007-08 to 2013-14 809.86 636.15

Assessing Authority Gurgaon. Writ petition civil pending with Supreme Court.

NOTE 6 - The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Changes in inventories of finished goods, work-in-progress and stock-in-trade- excise duty on Increase/(decrease) in finished goods" under note 20 annexed and forming part of statement of profit & loss.

NOTE 7 - Raw material and components consumed are net ofRs. 2184.06 lacs (previous yearRs. 2559.19 lacs) being the value of dispatches made to vendors for job work.

NOTE 8 - A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past experience of the level of returns. It is expected that significant portion of these costs will be incurred in the next financial year and all will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the three year warranty period for products sold. The table below gives information about movement in warranty provisions.

NOTE 9 - AMALGAMATION OF WHOLLY OWNED SUBSIDIARY COMPANY

a) Pursuant to the Scheme of Amalgamation(''the Scheme'') of erstwhile Sona Stampings Limited with the Company under Sections 391 to 394 of the Companies Act, 1956 sanctioned by Hon''ble High Courts of Delhi and Punjab & Haryana on 16th April, 2014 and 28th April, 2014 respectively, entire business and all assets and liabilities of Sona Stampings Limited were transferred and vested in the Company effective from April 01, 2013. Accordingly the Scheme has been given effect to in these financial statements.

Sona Stampings Limited was engaged in manufature and sale of sheet metal stampings, welded assemblies and modules for automotive industry.

b) The amalgamation has been accounted for under the "Pooling of Interest" method as precribed by the Accounting Standard 14 "Accounting for Amalgamations" notified under the Companies (Accounting Standard) Rules, 2006 (as amended under Section 211(3C) of Companies Act, 1956. Accordingly, the accounting treatment has been given as under:-

i) The assets and liabilities as at April 01, 2013 were incorporated in the financial statement of the Company at its book value.

ii) Debit balance in the statement of profit & loss of Sona Stampings Limited as at April 01, 2013 amounting to Rs. 978.90 lacs was adjusted in capital redemption reserve account forRs. 120.66 lacs and the balance Rs. 858.24 lacs in securities premium account.

iii) 2,02,778 equity shares ofRs. 100/- each fully paid in Sona Stampings Limited, held as investment by the Company stands cancelled and difference between the book value and face value of such shares amounting to Rs. 434.38 lacs was adjusted against the securities premium account of the Company.

NOTE 10 - REMUNERATION TO MANAGERIAL PERSONNEL

Remuneration paid to the managerial personnel consisting of Chairman, Vice Chairman & Managing Director and Deputy Managing Director, during the financial year 2013-2014, though approved by the shareholders, due to inadequacy of profits has exceeded the limits prescribed under Section 198 and 309 read with Schedule XIII of the Companies Act, 1956 byRs. 177.90 lacs for the year. In addition to excess payment, the Company has also made a provision ofRs. 72.80 lacs for the year, to be paid to managerial personnel after requisite approvals.

After obtaining approval from its Board of Directors, the Company has applied to Central Government on 30th January, 2014 for its approval under Section 269 and 309 and other applicable provisions of Companies Act, 1956 for payment of the aforesaid remuneration as "Minimum Remuneration" for the year 2013-2014 and the Company is also seeking the required shareholders'' approval.

NOTE 11 - Previous year''s figures have been regrouped/reclassified, wherever necessary.

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Mar 31, 2013

NOTE 1 - LEASES

(a) Operating lease : Company as lessee

The Company has taken various residential,office premises and vehicle under operating lease on lease and license agreements. These are cancellable; have a term of 11 months and five years. The agreements for premises cannot be terminated by either party before the expiry of one year. Agreements for leasing of vehicles can generally be terminated early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. Lease payments are recognised in the statement of profit & loss in the year incurred.

The Company has taken vechicles for its employees under operating lease agreement. An amount of Rs. 15.88 lacs (previous year Rs. 22.43 lacs) is recognised in the statement of profit & loss for the year ended March 31, 2013. The future minimum lease payments are as follows:

(b) Operating lease : Company as lessor*

The Company has given part of its factory building at Chennai under operating lease on lease and licence agreement for the period of four years. The agreement for premises can be terminated by either party early by payment of compensation fees. The lease arrangement is renewable on the expiry of lease period subject to mutual agreement. Lease receipts of Rs. 36.99 lacs (previous year Rs. 35.23 lacs) are recognised in the statement of profit & loss as per terms of agreement. The future lease receipts are as follows:

NOTE 2 - SEGMENT REPORTING

The Company is primarily engaged in the business of auto components of four wheelers, which are governed by the same set of risk and returns, and hence there is only one primary segment. The Company operates mainly to the needs-- of domestic market and export turnover is less than ten percent of thejtotal turnover and secondary geographical segments.

NOTE 3 - FORWARD CONTRACTS OUTSTANDING AND UN-HEDGED FOREIGN CURRENCIES EXPOSURES ARE AS GIVEN BELOW

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. These foreign exchange contracts are not used for trading or speculation purposes.

NOTE 4 - DEFERRAL / CAPITALIZATION OF EXCHANGE DIFFERENCES

The Ministry of Corporate Affairs (MCA) had issued an amendment dated 29th December, 2011 to AS 11, The effects of changes in foreign exchange rates, to allow companies deferral / capitalization of exchange differences arising on long-term foreign currency monetary items. The MCA has further issued an amendment dated 9th August, 2012 on the treatment of borrowing cost, clarifying that the exchange difference arising on long term foreign currency monetary items, to the extent of borrowing cost, earlier charged off can be capitalised.

The Company, during the year has capitalized an exchange loss arising on long term foreign currency loans to depreciable fixed assets amounting to Rs. 158.47 lacs (previous year Rs. 192.74 lacs).

NOTE 5 - The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Changes in inventories of finished goods, work-in-progress and stock-in-trade- excise duty on Increase/(decrease) in finished goods" under note 20 annexed and forming part of statement of profit & loss.

NOTE 6 - Raw material and components consumed are net of Rs. 2184.06 lacs (previous year Rs. 2559.19 lacs) being the value of dispatches made to vendors for job work.

NOTE 7 - A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past experience of the level of returns. It is expected that significant portion of these cost will be incurred in the next financial year and all will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the three year warranty period for products sold. The table below gives information about movement in warranty provisions.

NOTE 8 - Previous year''s figures have been regrouped/reclassified, wherever necessary.

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Mar 31, 2012

NOTE 1 - SHARE CAPITAL

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.

NOTE 2 - LONG TERM BORROWINGS

1. Indian rupee loans from banks include:

(a) Rupee term loans of Rs. 14938.47 lacs (previous year Rs. 16414.35 lacs) are secured by first pari-passu charge over the entire movable and immovable fixed assets of the Company, both present and future, except the assets exclusively charged to Standard Chartered Bank for Rs. nil (previous year Rs. 388.89 lacs). Loans to the extent of Rs. 2325.00 lacs (previous year Rs. 1995.00 lacs) are further secured by way of second charge on current assets, on pari passu basis. The rate of interest on aforesaid loans are linked to the specific banks' Prime Lending Rate (PLR).

(b) Rupees term loan of Rs. 1750.00 lacs (previous year Rs. 3000.00 lacs) from State Bank of India is secured by way of first pari-passu charge on current assets and second parri-passu charge on movable and immovable fixed assets of the Company. The loan is further secured by way of exclusive mortgage on land situated at Plot No. 19, Dharuhera Industrial Area, Phase II, District Rewari (Haryana). The rate of interest on aforesaid loan is linked to bank's Prime Lending Rate (PLR).

(c) Rupee term Loan of Rs. 114.93 lacs (previous year Rs. 63.30 lacs) from Allahabad Bank, secured by way of exclusive charge on the vechicles financed out of the said term loan. The rate of interest on aforesaid loan is linked to bank's Prime Lending Rate (PLR).

2. Indian rupee loan from NBFC include :

Term loan of Rs. 680.52 lacs (previous year Rs. 874.95 lacs) is secured by way of second charge on entire assets of the Company situated at Sanand, Gujarat to be purchased or constructed out of said term loan. The rate of interest on aforesaid loan is linked to NBFC's Prime Lending Rate (PLR).

3. Foreign currency loans from banks include :

Foreign currency loan of USD 4 million equivalent to Rs. 2046.00 lacs (previous year Rs. nil) from Standard Chartered Bank is secured by first charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ LIBOR plus 3%.

Foreign currency loan of USD 5 million equivalent to Rs. 2512.50 lacs (previous year Rs. nil) from Standard Chartered Bank on fully hedged basis is secured by first charge on movable and immovable fixed assets except assets exclusively charged to other banks. The loan carries interest @ 10.28% p.a.

The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotions and other relevant factors including supply and demand in the employment market. The above information is certified by the actuarial valuer.

The discount rate is based on the prevailing market yield of Govt. bonds as at the date of valuation.

Expected return on asset - The expected return on assets over the accounting period is based on an assumed rate of return.

iv) Investment details of plan assets :

The gratuity trust has taken up a group policy with Life Insurance Corporation of India.

NOTE 3 - LEASES

(a) Operating lease: Company as lessee

The Company has taken various residential, office premises and vehicles under operating lease on lease and license agreements. These are cancellable; have a term of 11 months and five years. The agreements for premises cannot be terminated by either party before the expiry of one year. Agreements for leasing of vehicles can generally be terminated early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. Lease payments are recognised in the statement of profit and loss in the year incurred.

NOTE 4 - SEGMENT REPORTING

The Company is primarily engaged in the business of auto components of four wheelers, which are governed by the same set of risk and returns, and hence there is only one primary segment. The Company operates mainly to the needs of domestic market and export turnover is less than ten percent of the total turnover and hence there are no reportable secondary geographical segments.

NOTE 5 - CONTINGENT LIABILITIES

Current year Previous year (Rs. / Lacs) (Rs. / Lacs)

I) Claims against the Company not acknowledged as debt on account of :

a) Excise duty 1981.78 1322.54

b) Service tax 267.06 341.88

c) Local Area Development Tax 435.72 209.16

d) Income tax - matters in appeal 30.53 56.81

e) Warranties/customers - 67.25

II) Customer bills discounted 1406.00 910.00

III) Letter of credit opened by banks for purchase of inventory /capital goods 1243.31 867.00

IV) The Company has filed a writ petition with the Hon'ble High Court of Calcutta for injunction restraining the Govt. of West Bengal for acting in terms of the Singur Land Rehabilitation And Development Act, 2011, which is being heard by a Divisional Bench alongwith the appeals of Tata Motors Ltd. and their other vendors. Pending finalization of the case, the Company has not made any provision for the impairment of value of land.

V) During the year under audit, search and seizure operation were carried out by Revenue Authorities on 29th November, 2011. However neither any unexplained money, bullion or valuables were found nor there was any seizure. Additional tax liability, if any, shall be accounted for on creation of demand against the Company.

NOTE 6 - DEFERRAL / CAPITALIZATION OF EXCHANGE DIFFERENCES

The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December, 2011 to AS 11. The effects of changes in foreign exchange rates, to allow companies deferral / capitalization of exchange differences arising on long- term foreign currency monetary items.

In accordance with the amendment to AS 11, the Company has capitalized the exchange loss to depreciable fixed assets arising on long-term foreign currency loan, amounting to Rs.192.74 lacs (previous year nil) for the year ended 31st March, 2012. The Company does not have any other long-term foreign currency monetary items. Hence, the amount of exchange loss deferred in the "Foreign currency monetary item translation difference account" is nil.

NOTE 7 - The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Changes in inventories of finished goods, work-in-progress and stock- in-trade-excise duty on increase/(decrease) in finished"goods" under note 20 annexed and forming part of statement of profit and loss.

NOTE 8 - Raw material and components consumed are net of Rs. 2559.19 lacs (previous year Rs. 3036.74 lacs) being the value of dispatches made to vendors for job work.

NOTE 9 - A provision is recognized for expected warranty claims on products sold during the last two to three years, based on past experience of the level of returns. It is expected that significant portion of these cost will be incurred in the next financial year and all will have been incurred within three years after reporting date. Assumptions used to calculate the provision for warranties were based on current sales level and current information available about returns based on the three year warranty period for products sold. The table below gives information about movement in warranty provisions.

NOTE 10 - PREVIOUS YEAR FIGURES : The Company was using pre-revised Schedule VI to the Companies Act, 1956, till the year ended 31st March, 2011, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has re-classified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

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Mar 31, 2011

1. Raw Material and Components consumed are net of Rs. 3036.74 Lacs (Previous Year Rs. 2522.39 Lacs) being the value of dispatches made to vendors for job work.

2. Miscellaneous Income in Schedule 12 includes :

a) Nil (Previous Year Rs. 29.54 Lacs) being provision for slow moving inventory written back.

b) Rs. 171.99 Lacs being Service Income from Business Support fees.

3. The Company has an R&D Centre (Approved by the Department of Scientific and Industrial Research, Ministry of Science & Technology, Govt. of India) on which revenue expenditure incurred in addition to capital expenditure is Nil (Previous Year Rs. 7.07 Lacs) is as under:

4. Defined Benefit Plans

ii) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded.

5. Assumptions

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotions and other relevant factors including supply and demand in the employment market. The above information is certified by the actuarial valuer.

The discount rate is based on the prevailing market yield of Govt. Bonds as at the date of valuation.

Expected return on asset - The expected return on assets over the accounting period, based on an assumed rate of return.

iv) Investment details of plan assets :

The Gratuity Trust has taken up a group policy with Life Insurance Corporation of India.

6. Expenditure on account of premium on forward exchange contracts to be recognised in the Profit & Loss Account of subsequent accounting period aggregates to Rs. 60.21 Lacs (Previous Year Rs. 68.52 Lacs).

7. Interest in Joint Ventures

a) During the year the Company was holding 24,000 Equity Shares of US $1 each in Sona Autocomp Inc., incorporated in USA. This was 24% of the paid up share capital of Sona Autocomp Inc.

The Companys interest in this joint venture was reported as Long Term Investments (Schedule 5) and was stated at Cost at the beginning of the year.

During the year the Company has sold its entire Investment in the said Joint Venture.

b) During the year the Company was holding 12,000 Equity Shares of Euro 1 each in Sona Autocomp Europe SARL, incorporated in France. This was 24% of the paid up share capital of Sona Autocomp Europe SARL

The Companys interest in this joint venture was reported as Long Term Investments (Schedule-5) and was stated at Cost at the beginning of the year.

During the year the Company has sold its entire Investment in the said Joint venture.

c) During the year the Company was holding 27,60,000 Equity Shares of Rs. 10/- each in AAM Sona Axle Pvt. Ltd. incorporated in India. This was 30% of the paid up capital of AAM Sona Axle Pvt. Ltd.

The Companys interest in this joint venture was reported as Long Term Investments (Schedule 5) and was stated at Cost at the beginning of the year. During the year the Company has sold its entire Investment in the said Joint venture.

8. Operating Leases

a) The Company has taken various residential, vehicle and office premises under operating lease or lease and licence agreements. These are cancelable, have a term of 11 months and five years. The agreements for premises cannot be terminated by either party before the expiry of one year. Agreements for leasing of vehicles can generally be terminated early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. Lease payments are recognised in the Profit & Loss Account in the year incurred

The Company has taken cars for its employees under operating lease agreement. An amount of Rs. 25.28 Lacs (Previous Year Rs. 44.02 Lacs) is recognised as lease expenses in the Profit & Loss Account for the year ended March 31, 2011. The future lease payments are

(i) upto 1 year Rs. 21.89 Lacs (Previous Year Rs. 26.04 Lacs)

(ii) between 1 to 5 years Rs. 27.66 Lacs (Previous Year Rs. 16.77 Lacs)

b) The Company has given part of its factory building at Chennai under operating lease on lease and licence agreement. The agreement for premises cannot be terminated by either party before the expiry of three years. The lease arrangement is renewable on the expiry of lease period subject to mutual agreement. Lease receipts of Rs. 37.01 Lacs are recognised in the Profit & Loss as per terms of agreement. The future lease receipts are

(i) upto 1 year Rs. 38.85 Lacs (Previous Year Rs. Nil)

(ii) between 1 to 5 year Rs. 68.89 Lacs (Previous Year Nil)

9. The Company is primarily engaged in the business of auto components of four wheelers, which are governed by the same set of risk and returns, and hence there is only one primary segment. The Company operates mainly to the needs of domestic market and export turnover is less than ten percent of the total turnover and hence there are no reportable secondary geographical segments.

10. Provision for warranty account details as required by AS-29

The warranty expenses of Rs. 151.81 Lacs (Previous Year Rs. 120.01 Lacs) are charged off to Profit & Loss Account included under the head Forwarding Expenses (Schedule 16).

11 (a). Related Party Disclosures (Transactions with Related Parties)

Name of Related Parties & Description of Relationship is as below :

1. The Individual/Entity Excercising Control over the Company 1. Dr. Surinder Kapur

2. The entity having substantial interest in the Company 1. JTEKT Corporation

3. Joint Ventures 1. Sona Autocomp Inc.

2. Sona Autocomp Europe SARL (Part of the year till disposal of respective investments) 3. AAM Sona Axle Pvt. Ltd.

4. Others (Significant Influence) 1. Sona Somic Lemforder Components Ltd.

2. Sona Okegawa Precision Forgings Ltd.

3. Mahindra Sona Ltd.

4. Maruti Suzuki India Ltd.

5. Sona e-Design and Technologies Ltd.

6. Fuji Autotech AB, Sweden

7. Pune Heat Treat Pvt. Ltd.

8. DRSK Management Services Pvt. Ltd

9. Sona Mobility Services Ltd.

10. Sona Autocomp Holding Pvt. Ltd

11. Kapur Properties & Investment

12. Fuji Autotech Europe SAS

5. Subsidiaries 1. Sona Fuji Kiko Automotive Ltd.

2. Sona Stampings Ltd.

3. JTEKT SONA Automotive India Ltd.

6. Key Management Personnel 1. Dr. Surinder Kapur - (Transactions disclosed under category (1) above)

2. Mr. Sunjay Kapur

3. Mr. P.V. Prabhu Parriker

4. Mr. Kiran M. Deshmukh

5. Mr. Sudhir Chopra

6. Mr. Govindrajan Sunder Rajan

12. The amount of excise duty disclosed as deduction from turnover is the total excise duty for the year except excise duty related to difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed as excise duty expense in "Raw Material and Components Cost - Increase/(Decrease) in excise duty on finished goods" under Schedule 14 annexed and forming part of Profit & Loss Account.

13. Previous year figures have been regrouped/recast wherever necessary.

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Mar 31, 2010

1. Contingent Liabilities :

I. Claims against the Company not acknowledged as debt on account of

a) Excise Duty 847.36 683.72

b) Service Tax 299.22 76.21

c) Income Tax - Matters in Appeal 83.96 102.16

d) Warranties 22.11 0.00

II. Customer Bills Discounted - 1925.00

III. Letter of Credit opened by banks for purchase of inventory/capital goods 1324.51 184.92

2. a) Raw Material and Components consumed are net of Rs. 2522.39 Lacs (Previous Year Rs. 2093.10 Lacs) being thevalue of dispatches made to vendors for job work.

b) Raw Material and Components consumed includes purchase of traded goods of Rs. 521.40 Lacs (Previous Year Rs.215.20 Lacs).

3. Miscellaneous Income in Schedule 13 includes Rs. 29.54 Lacs (Previous Year NIL) being provision for slow moving inventory written back.

4. The Company has an R & D Centre (Approved by the Department of Scientific and Industrial Research, Ministry of Science & Technology, Govt. of India) on which revenue expenditure incurred in addition to capital expenditure of Rs. 7.07 Lacs (Previous Year Rs. 23.06 Lacs) is as under:

a) Travelling Expenses 7.54 6.13

b) Salary & Allowances 143.73 79.12

c) Components, Tools & Spares 2.11 5.31

d) Professional Charges 0.47 -

e) Others 0.91 2.08

TOTAL 154.76 92.64

5. The amount of Excise Duty and other Taxes recovered on sales is reduced from income and comprise Sales Tax of Rs. 3491.07 Lacs (Previous Year Rs. 2671.43 Lacs) and Excise Duty of Rs. 7866.80 Lacs (Previous Year Rs. 9016.83 Lacs).

The expense is disclosed in the line item - Contribution to Provident and Other Funds in Schedule 16 ii) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded.

6. Forward Contracts outstanding and un-hedged Foreign Currencies exposures are as given below:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. These foreign exchange contracts are not used for trading or speculation purposes.

b) The Company holds 12,000 Equity Shares of Euro 1 each in Sona Autocomp Europe SARL, incorporated in France. This being 24% of the paid up share capital of Sona Autocomp Europe SARL.

The Companys interest in this joint venture is reported as Long Term Investments (Schedule-6) and is stated at Cost.

The Financial Statements, unaudited and certified by the management of Sona Autocomp Europe SARL are drawn from 1st January, 2009 to 31st December, 2009.

c) The Company holds 27,60,000 Equity Shares of Rs. 10/- each in AAM Sona Axle Pvt. Ltd. incorporated in India. This being 30% of the paid up capital of AAM Sona Axle Pvt. Ltd.

The Company’s interest in this joint venture is reported as Long Term Investments (Schedule 6) and is stated at Cost.

The Financial Statements, unaudited and certified by the management of AAM Sona Axle Pvt. Ltd. are drawn for the year 1st April, 2009 to 31st March, 2010.

6. The Company is primarily engaged in the business of auto components of four wheelers, which are governed by the same set of risk and returns and hence there is only one primary segment. The Company operates mainly to the needs of domestic market and export turnover is less than ten percent of the total turnover and hence there are no reportable secondary geographical segments.

7. Operating Lease

The Company has taken various residential, vehicle and office premises under operating lease or lease and licence agreements. These are cancellable, have a term of 11 months and five years. The agreements for premises cannot be terminated by either party before the expiry of one year. Agreements for leasing of vehicles can generally be terminated early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. Lease payments are recognised in the Profit & Loss Account in the year incurred.

The Company has taken cars for its employees under operating lease agreement. An amount of Rs. 44.02 Lacs (Previous Year Rs. 32.44 Lacs) is recognised as lease expenses in the Proft & Loss Account for the year ended March 31, 2010. The future lease payment under leases are:

(i) upto 1 year Rs. 26.04 Lacs (Previous Year Rs. 43.74 Lacs)

(ii) between 1 to 5 years Rs. 16.77 Lacs (Previous Year Rs. 58.19 Lacs)

The warranty expenses of Rs. 120.01 Lacs (Previous Year Rs. 161.68 Lacs) are charged off to Profit & Loss Account included under the head Forwarding Expenses (Schedule 17).

8. Expenditure on account of premium on forward exchange contracts to be recognised in the Profit & Loss Account of subsequent accounting period aggregates to Rs. 68.52 Lacs (Previous Year Rs. 97.06 Lacs).

9. Previous year figures have been regrouped/recast wherever necessary.