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Notes to Accounts of Subros Ltd.

Mar 31, 2022

Significant estimates:

A. Appropriateness of capitalization of internal development costs related to Intangible assets under development

In relation to capitalisation of internal development costs in relation to intangible assets under development, significant judgement has been made by the management in the determination of -

i) whether the costs incurred is towards development of product or in the nature of research,

ii) the costs, including payroll costs, were directly attributable to relevant projects, and

iii) key assumptions such as future revenue, margins and the discount rate used to assess the future cash flows from the expected use of such assets once developed and capitalised.

B. Estimated useful life of intangible assets

The estimated useful lives of intangible assets are based on a number of factors including the effects of obsolescence, demand, competition, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) to obtain the expected future cash flows from the asset. The Company reviews the useful life of intangible assets at the end of each reporting period.

1. Deferred tax assets and deferred tax liabilities have been offset to the extent they relate to the same governing taxation laws.

2. In the financial year 2019-20, the tax laws were amended, providing an option to pay tax at 22% plus applicable surcharge and cess ("New Rateâ) effective April 1, 2019, with a condition that the Company will need to surrender specified deductions / incentives.

Based on the assessment of future taxable profits, the Company decided to continue with the rate of 30% plus applicable surcharge and cess until the Minimum Alternate Tax (MAT) credit asset balance is utilised and opt for the New Rate thereafter. The Company re-measured its deferred tax balances accordingly.

Significant estimate:

The deferred tax asset mainly comprises of Minimum Alternate Tax (MAT) credit which can be carried forward for a period of 15 years as per the provisions of the Income Tax Act, 1961. The Company has been consistently earning profits and is currently liable to pay Income Tax under normal provisions of Income Tax Act, 1961. The Company has concluded that the deferred tax asset will be recoverable using the estimated future taxable income based on the approved business plans and budgets.

B. Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. 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. 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.

Note: Pertains to government grant received from Ozone Cell (Ministry of Environment, Forest and Climate Change, Government of India) during the year related to property, plant and equipment to be procured at Nalagarh plant under the scheme ''India HCFC Phase-out Management Plan Stage II'' to phase out the consumption of HCFCs. As on March 31, 2022, the Company is yet to comply with the conditions attached to this grant with respect to procurement of property, plant and equipment and other conditions stated in the scheme.

The Company has also benefited from other forms of government assistance as mentioned in note 18.

i) Information about individual provisions and critical estimates Provision for employee benefits:

The provision for employee benefits include leave encashment and gratuity (refer note 2(c)(xiii) and 28).

Provision for warranty:

Significant estimate: Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. The Company generally offers 24 months warranties for its products. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The assumptions made in relation to the current period are consistent with those in the prior years. Factors that could impact the estimated claim information include the success of the Company''s productivity and quality initiatives.

Sensitivity analysis

As at March 31, 2022, provision for warranty had a carrying amount of Rs. 414.65 Lakhs (March 31, 2021: Rs. 569.74 Lakhs). Were warranty claim costs to differ by 10% of the management''s estimates, the provision would be an estimated Rs. 41.47 Lakhs higher or lower (March 31, 2021: Rs. 56.97 Lakhs higher or lower).

Note 3: The Company has disaggregated revenue from contracts with customers based on nature of revenue i.e. sale of products and sale of services. The Company does not have reportable segment. Refer note 23.

Note 4: The company derives revenue from transfer of goods and services at a point of time after acceptance from customers.

Note 5: No significant judgements have been made by the Company in applying Ind AS 115 that significantly affect the determination of the amount and timing of revenue from contracts with customers.

Note: Government grants

* Net of government grants related to refund of 50% of minimum stipend prescribed by Board of Apprenticeship Training (Northern Region) amounting to Rs. 171.43 Lakhs (March 31, 2021: Rs. 38.28 Lakhs).

** Net of government grants related to payment of employer''s contribution towards Employees Provident Fund and Employees Pension Scheme for the new employment, paid by government of India under the Pradhan Mantri Rojgar Protsahan Yojana amounting to Rs. 25.27 Lakhs (March 31, 2021: Rs. 33.75 Lakhs).

There are no unfulfilled conditions or other contingencies attached to these grants. The Company did not benefit directly from any other forms of government assistance except as disclosed in Note 11(e).

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There has been no transfer between level 1, level 2 and level 3 for the years ended March 31,2022 and March 31, 2021.

Valuation technique used to determine fair value : The Company has entered into variety of foreign currency forward contracts and swaps to manage its exposure to fluctuations in foreign exchange rates. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data. Further, Investment in equity shares included in Level 3 of the fair value hierarchy have been valued using the income approach to arrive at their fair value. In this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of this investment.

All short term financial assets and liabilities like trade receivables, cash and cash equivalents, deposit with banks, trade payables, supplier''s credit, capital creditors, security deposit received, payable to employees are stated at amortized cost which is approximately equal to their fair value.

The fair value of borrowings is estimated by discounting expected future cash flows, using a discount rate equivalent to the risk-free rate of return, adjusted for the credit spread considered by the lenders for instruments of similar maturity.

The fair value of loans to employees and security deposits are calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

22(b). Financial risk management

The Company''s activities expose it to credit risk, liquidity risk and market risk. In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The regulations, instructions, implementation rules and in particular, the regular communication throughout the tightly controlled management process consisting of planning, controlling and monitoring collectively form the risk management system used to define, record and minimize operating, financial and strategic risks. The note explains the sources of risk which the entity is exposed to and how the entity manages the risks :

Credit risk

The credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations towards the Company and arises principally from the Company''s receivables from customers and deposits with banking institutions. The maximum amount of the credit exposure is equal to the carrying amounts of these receivables.

For banks and financial institutions, only high rated banks/institutions are accepted. The Company has deposited liquid funds at various banking institutions. Primary banking institutions are major Indian and foreign banks. In long term credit ratings, these banking institutions are considered to be investment grade. Also, no impairment loss has been recorded in respect of fixed deposits that are with recognized commercial banks and are not past due.

The Company has developed guidelines for the management of credit risk from trade receivables. The Company''s primary customers are major Indian automobile manufacturers and Air-conditioner manufacturer (OEMs) with good credit ratings. Non-OEM clients are subjected to credit assessments as a precautionary measure, and the adherence of payment due dates is closely monitored on an on-going basis for all customers, thereby practically eliminating the risk of default.

A default on a financial asset is when the counterparty, fails to make contractual payments within the agreed number of days of when they fall due. This definition is determined by considering the business environment in which entity operates and other macro-economic factors. The Company''s historical experience of collecting receivables, supported by the level of default, is that credit risk is low. All customer balances which are overdue for more than 180 days are evaluated for provisioning and considered for impairment on an individual basis. The customer balances are written-off as bad debts, when legal remedies available to the Company are exhausted and / or it becomes certain that said balances will not be recovered.

Significant estimate: The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Liquidity risk

The liquidity risk encompasses any risk that the Company cannot fully meet its financial obligations. To manage the liquidity risk, the Company''s finance division monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet the operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. The Company raises short term rupee borrowings for cash flow mismatches and hence carries no significant liquidity risk.

The Company has exposure to foreign currency risk on account of its payables and loans. The Company has a foreign currency exchange risk policy to mitigate this risk by entering into appropriate hedging instruments depending on the future outlook on currencies as considered necessary from time to time for which it has entered into derivative financial instruments such as foreign exchange forward contracts.

Foreign currency sensitivity analysis

The Company is mainly exposed to EURO since it is unhedged as at reporting date.

The following table details the Company''s sensitivity to a 10% increase and decrease in the INR against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and vice-versa.

Fluctuation in commodity price in global market affects directly and indirectly the price of raw material and components used by the Company. Due to the competitive market, major OEMs demands price cuts which in turn may affect the profitability of the Company.

The Company has arrangements with its major customers for passing on the price impact. The Company is regularly taking initiatives like VA VE (value addition, value engineering) to reduce its raw material costs to meet targets set up by its customers for cost downs. In respect of customer nominated parts, the Company has back to back arrangements for cost savings with its suppliers.

22(c). Capital management

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

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

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

Consistent with others in the industry, the Company monitors Net Debt to EBIDTA ratio i.e., Net Debt (total borrowings (including supplier''s credit) and lease liabilities net of cash and cash equivalents) divided by EBIDTA (Profit before tax plus depreciation and amortization expense plus finance cost).

The Company strategy is to ensure that the Net Debt to EBITDA is managed at an optimal level considering the above factors. The Net Debt to EBIDTA ratios were as follows:

Loan covenants

Under the terms of the major borrowings facilities, the Company is required to comply with certain financial covenants and the Company has complied with those covenants throughout the reporting period.

The Board of Directors recommended a final dividend of Rs. 0.70 per share (nominal value of Rs. 2 per share) for the financial year 202122. This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been accounted as liability in these Standalone Financial Statements. The total estimated dividend to be paid is Rs. 456.65 Lakhs.

23. Segment information

The Company is primarily in the business of manufacturing of thermal products.

The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore, there is no reportable segment for the Company. Export sales constitute an insignificant portion of total business of the Company. Hence, there is no geographical segment as well.

a) Domestic information includes sales and services rendered to customers located in India.

b) Overseas information includes sales and services rendered to customers located outside India.

c) Non current segment assets includes property, plant and equipment, right-of-use assets, capital work- in- progress, intangible assets, intangible assets under development and capital advances.

d) Revenue from transactions with a single external customer amounting to 10 per cent or more of the Company''s revenues is 47% from one customer (previous year: 57%) and 34% from second customer (previous year: 27%).

ii. The Company does not expect any reimbursements in respect of the above contingent liabilities.

Significant estimate: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events requires best judgement by management considering the probability of exposure to potential loss. Judgement includes consideration of experts opinion, facts of the matter, underlying documentation and historical experience. Changes in assumptions about these factors could affect the reported value of contingencies and provisions.

(b) Guarantees issued by banks on behalf of the Company amounting to Rs. 3,236.84 Lakhs (March 31, 2021: Rs. 501.39 Lakhs).

(c) Outstanding commitments under letter of credit established by the Company aggregate to Rs. 7,933.20 Lakhs (March 31, 2021: Rs. 9,764.52 Lakhs).

27. Leases

The Company as a lessee

This note provides information for leases where the Company is a lessee. The Company leases certain premises and plant and machinery. The lease term is for 11 months - 35 years except in case of leasehold lands where lease term is upto 99 years, but may have an extension option as described in (ii)(b) below:

The total cash outflow for leases (including interest on lease liabilities) for the year ended March 31, 2022 was Rs. 600.01 Lakhs. (March 31, 2021: Rs. 484.03 Lakhs)

(a) Variable lease payments

The Company does not have any leases with variable lease payments.

(b) Extension and termination options

Extension and termination options are included in number of leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company''s operations. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.

The Company does not provide any residual value guarantee in relation to its leases.

The Company as a lessor

One office premise and one leased factory premise is let out by the Company on operating lease and its cancellable in nature. Lease rental income is set out in note 15 to these Standalone Financial Statements as "Rental incomeâ in "Other incomeâ.

Defined benefit plans and other long term benefits

a) Contribution to gratuity funds - The Company provides for gratuity for employees as per The Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement / termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and Company makes contribution to recognized funds in India.

b) Leave encashment/compensated absence - The leave obligations cover the Company''s liability for earned leave, sick leave and casual leave. The entire amount of the provisions of Rs. 330.55 Lakhs (March 31, 2021: Rs. 331.69 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employees to avail the full amount of accrued leave or require payment for such leave within the next 12 months.

These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk. Investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Sensitivity analysis

Significant actuarial assumptions for the determination of employee defined benefit obligation using projected unit credit method are discount rate and expected salary growth rate. The sensitivity analysis below has been determined based on reasonably possible changes in respective assumption occurring at the end of reporting period, while holding all other assumptions constant. Sensitivities due to mortality and withdrawals are not material and hence impact of change not calculated. The method and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

Significant estimate: Employee benefit obligations are determined using actuarial valuation. An actuarial valuation involves making appropriate assumptions that may differ from actual developments in the future. These include the determination of the discount rate and future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

32. Additional regulatory information required by Schedule III(i) Details of benami property held

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

(ii) Borrowing secured against current assets

The Company has borrowings from banks on the basis of security of current assets. The quarterly returns or statements of current assets filed by the Company with banks and financial institutions are in agreement with the books of accounts subject to reconciliations. Refer Note 34 for the reconciliations.

(iii) Wilful defaulter

The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(iv) Relationship with struck off companies

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

(v) Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(vi) Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(vii) Utilisation of borrowed funds and share premium

The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(viii) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(ix) Details of crypto currency or virtual currency

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

(x) Valuation of property, plant and equipment and intangible assets

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

(xi) Loans and advances to promoters, directors, Key management personnel (KMPs) and related parties

The Company has not granted any loans and advances to promoters, directors, KMPs and related parties during the current or previous year.

Other regulatory information

(i) Title deeds of immovable properties held in name of the company

The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in note 3 to the Standalone Financial Statements, are held in the name of the company.

(ii) Registration of charges or satisfaction with Registrar of Companies

There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

(iii) Utilisation of borrowings availed from banks and financial institutions

The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were was taken. There are no borrowings obtained from financial institutions.

37. The Supreme Court of India has passed an order dated February 28, 2019 in the matter of The Regional Provident Fund Commissioner (II) West Bengal vs. Vivekananda Vidyamandir & Ors in Civil Appeal No. 6221 of 2011 and few other linked cases. In the said order, the Supreme Court has clarified the definition of the Basic Wage under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management, the aforesaid matter is not likely to have a significant financial impact and accordingly, no provision has been made in these Standalone Financial Statements. The Company will continue to monitor and evaluate its position based on future events and developments.

38. The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these Standalone Financial Statements for the year ended March 31, 2022. While assessing the carrying value of its assets and liabilities, the Company has considered internal and external information available, and based on such information and assessment, has concluded that no further adjustments are required to be made to these Standalone Financial Statements. However, given the evolving scenario and uncertainties with respect to nature and duration, the impact of the pandemic may differ from that estimated as at the date of approval of these Standalone Financial Statements. The Company will continue to closely monitor any material changes to future economic conditions.

39. The Standalone Financial Statements were approved by the Board of Directors and authorized for issue on May 24, 2022.

40. Previous year figures have been regrouped and reclassified wherever necessary to conform to the current year classifications.

Mar 31, 2018

1. Corporate Information

Subros Limited (âthe Companyâ) is a public limited company incorporated in 1985 and domiciled in India, listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The address of its registered office is LGF, World Trade Centre, Barakhamba Lane, New Delhi 110001. The Company is the leading manufacturer of thermal products for automotive applications in India, in technical collaboration with Denso Corporation Japan. The Company is engaged primarily in the manufacture and sale of auto air conditioning system to automotive original equipment manufacturers. The Company is a joint venture with 40% ownership by Suri family of India and 13% ownership by Denso Corporation, Japan & Suzuki Motor Corporation, Japan each.

2. Basis of preparation, key accounting estimates and judgments and significant accounting policies

2(a) Basis of preparation

(i) Compliance with Ind

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer note 35 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.

(ii) Historical cost convention

The financial statements have been prepared on the historical cost convention except for certain items that are measured at fair values, as explained in the accounting policies.

All assets and liabilities have been classified as current or non-current according to the Companyâs operating cycle and other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

(iii) Standards issued but not yet effective

The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 on March 28, 2018 which includes Ind AS 115 âRevenue from Contracts with Customersâ, Appendix B to Ind AS 21, Foreign currency transactions and advance consideration and amendments to Ind AS 12, Income taxes regarding recognition of deferred tax assets on unrealized losses. The new standard and amendments will come into effect for the annual reporting periods beginning on or after April 01, 2018. The nature of changes of new standard and amendments are as follows:

a. Ind AS 115, Revenue from contracts with customers

Ind AS 115, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers. Revenue is recognized when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices.

A new five-step process must be applied before revenue can be recognized:

1. identify contracts with customers

2. identify the separate performance obligation

3. determine the transaction price of the contract

4. allocate the transaction price to each of the separate performance obligations, and

5. recognize the revenue as each performance obligation is satisfied.

The new standard is mandatory for financial years commencing on or after April 1, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.

b. Appendix B to Ind AS 21 Foreign currency transactions and advance consideration

The MCA has notified Appendix B to Ind AS 21, Foreign currency transactionsand advance consideration. The appendix clarifies determination of the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts. For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognizes the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt.

The appendix can be applied:

1. retrospectively for each period presented applying Ind AS 8;

2. prospectively to items in scope of the appendix that are initially recognized on or after the beginning of the reporting period in which the appendix is first applied (i.e. April 1, 2018 for entities with March year-end); or from the beginning of a prior reporting period presented as comparative information (i.e. April 1,2017 for entities with March year-end).

c. Amendments to Ind AS 12 Income taxes regarding recognition of deferred tax assets on unrealized losses

The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base. They also clarify certain other aspects of accounting for deferred tax assets set out below:

1. A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.

2. The estimate of future taxable profit may include the recovery of some of an entityâs assets for more than its carrying amount if it is probable that the entity will achieve this. For example, when a fixed-rate debt instrument is measured at fair value, however, the entity expects to hold and collect the contractual cash flows and it is probable that the asset will be recovered for more than its carrying amount.

3. Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.

4. Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used to evaluate the recoverability of those assets. This is to avoid double counting the deductible temporary differences in such assessment.

An entity shall apply the amendments to Ind AS 12 retrospectively in accordance with Ind AS 8. However, on initial application of the amendment, the change in the opening equity of the earliest comparative period may be recognized in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity.

The Company is currently assessing the impact of the application of Ind AS 115, Appendix B to Ind AS 21 and amendments to Ind AS 12 on the financial statements of the Company.

2(b) Key accounting estimates and judgments

The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities on the date of the financial statements and reported amounts of revenues and expenses for the years presented. Accounting estimates could change from period to period. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed at each balance sheet date. Appropriate changes in estimates are made as the management becomes aware of the changes in circumstances surrounding the estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods affected.

Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the significant effect to the carrying amount of assets and liabilities within the next financial year is included in other notes to the financial statements as mentioned below:

a. Measurement of employee defined benefit obligations - Refer note 28

b. Measurement and likelihood of occurrence of provisions and contingencies -Refer note 26

c. Recognition of deferred tax assets - Refer note 6

d. Estimation of provision for warranty - Refer note 12

e. Estimated useful life of property, plant and equipment and intangible assets Refer note 3 &4

Notes-

i) Depreciation pertaining to machineries used for manufacture of moulds has been capitalized during the year amounting to Rs. 94.54 Lakhs (Previous year Rs. 228.07 Lakhs).

ii) Capital work-in-progress mainly comprises of building and plant and machinery.

iii) In terms of IND AS - 16 on âProperty, plant and equipmentâ, the Company has reviewed the useful lives of various tangible assets and also the method of charging depreciation. On such reviews, it was found that few assets need change in useful lives to align the future economic benefits of various assets with their pattern of consumption. Accordingly, method of charging depreciation has been changed from written down value (WDV) to straight line method (SLM) w.e.f. April 1, 2017. The cumulative impact of such changes in accounting estimates was reduction in âDepreciation and amortization expenseâ and consequent impact on ââProfit before taxââ by Rs. 3,441 Lakhs during the year ended March 31,2018.

iv) Refer note 25 to these financial statements for disclosure of contractual commitments for the acquisition of property, plant and equipment.

v) Leasehold land represents land obtained on long term lease from various government authorities and considered as finance lease. (refer note 27)

vi) The carrying amount of assets pledged as security for current and non-current borrowings [refer note 11(a) & (b)] are as follows:

Notes-

i) Intangible assets under development comprises of technical know how and product development cost incurred by the Company.

ii) In terms of IND AS - 38 on âIntangible Assetsâ, the Company has reviewed the useful lives of various intangible assets. Based on the technical evaluation and market considerations, the Company has revised the estimated life of certain intangible assets w.e.f. April 01, 2017. The impact of such change was increase in âDepreciation and amortization expenseâ and consequent impact onââProfit Before Taxââ by Rs. 2,854 Lakhs during the year ended March 31,2018.

B. Rights, preferences and restrictions attached to shares

During the year, a dividend of Rs. 0.50 per share, total dividend Rs. 299.94 Lakhs (previous year: Rs. 0.80 per share, total dividend Rs. 479.91 Lakhs) was paid to equity shareholders.

The Board of Directors recommended a final dividend of Rs. 1.10 per share (nominal value of Rs. 2 per share) for the financial year 2017-18. This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been accounted as liability in these financial statements. The total estimated dividend to be paid is Rs. 794.20 Lakhs including dividend distribution tax of Rs. 134.33 Lakhs.

The Companies Act 2013 requires that where a Company issues debentures, it shall create a debenture redemption reserve out of profits of the Company available for payment of dividend. The Company is required to maintain a debenture redemption reserve (DRR) of 25% of the value of debentures issued and outstanding, either by a public issue or on a private placement basis. The amounts credited to the DRR may not be utilized by the Company except to redeem debentures.

i) Information about individual provisions and significant estimates Provision for employee benefits:

The provision for employee benefits include leave encashment and gratuity (refer note 2(c)(xiii) and 28).

Provision for warranty:

Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. The Company generally offers 24 months warranties for its products. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The assumptions made in relation to the current period are consistent with those in the prior years. Factors that could impact the estimated claim information include the success of the Companyâs productivity and quality initiatives.

Sensitivity analysis

As at March 31, 2018, provision for warranty had a carrying amount of Rs. 413.48 Lakhs (March 31, 2017: Rs. 229.66 Lakhs; April 1, 2016: Rs. 185.77 Lakhs). Were warranty claim costs to differ by 10% of the managementâs estimates, the provision would bean estimated Rs. 41.35 Lakhs higher or lower (March 31,2017: Rs. 22.97 Lakhs higher or lower; April 1, 2016: Rs. 18.58 Lakhs higher or lower).

Note 1: Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind-AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the ended March 31, 2018 by Rs. 5,667 Lakhs (Rs. 20,635.77 Lakhs for previous year). There is no impact on total equity and profit.

Note 2: Revenue from operations for current year upto June 30, 2017 include excise duty, which is discontinued effective July 01, 2017 upon implementation of Goods and Services Tax (GST) in India. In view of the aforesaid restructuringof indirect taxes, revenue from sale of products and revenue from operations for the year ended March 31, 2018 are not comparable with the previous year. The following additional information is being provided to facilitate such understanding.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There has been no transfer between level 1, level 2 and level 3 for the years ended March 31,2018, March 31, 2017 and as at April 01, 2016.

All short term financial assets and liabilities like trade receivables, cash and cash equivalents, deposit with banks, recoverable from factoring arrangements, insurance claim recoverable, trade payables, capital creditors, security deposit received, payable to employees are stated at amortized cost which is approximately equal to their fair value.

The fair value of borrowings is estimated by discounting expected future cashflows, using a discount rate equivalent to the risk-free rate of return, adjusted for the credit spread considered by the lenders for instruments of similar maturity.

3(a) Financial risk management

The Companyâs activities expose it to credit risk, liquidity risk and market risk. In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

Credit risk

The credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations towards the Company and arises principally from the Companyâs receivables from customers and deposits with banking institutions. The maximum amount of the credit exposure is equal to the carrying amounts of these receivables.

For banks and financial institutions, only high rated banks/institutions are accepted. The Company has deposited liquid funds at various banking institutions. Primary banking institutions are major Indian and foreign banks. In longterm credit ratings these banking institutions are considered to be investment grade. Also, no impairment loss has been recorded in respect of fixed deposits that are with recognized commercial banks and are not past due.

The Company has developed guidelines for the management of credit risk from trade receivables. The Companyâs primary customers are major Indian automobile manufacturers (OEMs) with good credit ratings. Non-OEM clients are subjected to credit assessments as a precautionary measure, and the adherence of payment due dates is closely monitored on an on-going basis for all customers, thereby practically eliminating the risk of default.

The Companyâs historical experience of collecting receivables, supported by the level of default, is that credit risk is low. All customer balances which are overdue for more than 180 days are evaluated for provisioning and considered for impairment on an individual basis. The customer balances are written-off as bad debts, when legal remedies available to the Company are exhausted and / or it becomes certain that said balances will not be recovered.

Liquidity risk

The liquidity risk encompasses any risk that the Company cannot fully meet its financial obligations. To manage the liquidity risk, the Companyâs finance division monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet the operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. The Company raises short term rupee borrowings for cash flow mismatches and hence carries no significant liquidity risk.

Market risk

(i) Foreign currency risk

The Company has exposure to foreign currency risk on account of its payables and external commercial borrowings. The Company has a foreign currency exchange risk policy to mitigate this risk by entering into appropriate hedging instruments depending on the future outlook on currencies as considered necessary from time to time for which it has entered into derivative financial instruments such as foreign exchange forward contracts.

Foreign currency sensitivity analysis

The Company is mainly exposed to USD, JPY, GBP and EURO.

The following table details the Companyâs sensitivity to a 10% increase and decrease in the INR against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity and vice-versa.

(ii) Interest rate risk

a) Interest rate risk exposure

The exposure of the Companyâs borrowing to interest rate changes at the end of the reporting period are as follows:

Note: The Company has external commercial borrowings with floating interest rate. The interest rate risk has been mitigated through the use of derivative financial instruments such as foreign currency interest rate swaps taken at the time of inception of the borrowings.

(iii) Price risk

Fluctuation in commodity price in global market affects directly and indirectly the price of raw material and components used by the Company in its various products segment. Due to the competitive market, major OEMs demands price cuts which in turn may affect the profitability of the Company.

3(b). Capital management

The Companyâs objective when managing capital are to:

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

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

Consistent with others in the industry, the Company monitors Net Debt to EBIDTA ratio i.e, Net Debt (total borrowings net of cash and cash equivalents) divided by EBIDTA (Profit before tax plus depreciation and amortisation expense plus finance cost).

The Company strategy is to ensure that the Net Debt to EBITDA is managed at an optimal level considering the above factors. The Net Debt to EBIDTA ratios were as follows:

Loan convenants

Under the terms of the major borrowings facilities, the Company is required to comply with certain financial convenants and the Company has complied with those convenants throughout the reporting period.

4. Segment information

The Company is primarily in the business of manufacturing of thermal products (Automotive air conditioning systems and parts thereof) for automotive applications.

The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Companyâs performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment forthe Company. Export sales constitute an insignificant portion of total business of the Company. Hence, there is no geographical segment as well.

a) Domestic information includes sales and services rendered to customers located in India.

b) Overseas information includes sales and services rendered to customers located outside India.

c) Non current segment assets includes property, plant and equipment, capital work - in - progress, intangible assets, intangible assets under development and capital advances.

d) Revenue from transactions with a single external customer amounting to 10 per cent or more of the Companyâs revenues is 60% from one customer (previous year: 74%) and 11% from another customer (previous year: 3%).

5. Related party disclosure Subsidiary of the Company

Thai Subros Limited, Thailand

Joint venture

Denso Subros Thermal Engineering Centre India Limited (DSEC), India

Key management personnel

Mr. Ramesh Suri, Chairman

Ms. Shradha Suri, Managing Director

Ms. Jyotsna Suri, Director

Mr. Keiichi Yamauchi, Alternate Director

Mr. Kenichi Ayukawa, Nominee Director

Mr. Yasuhiro Iida, Nominee Director

Mr. Mohammed Asad Pathan, Independent Director

Mr. Ramamoorthy Rajagopalan Kuttalam, Independent Director

Mr. Girish Narain Mehra, Independent Director

Mr. Shailendra Swarup, Independent Director

Ms. Meena Sethi, Independent Director

Mr. Hanuwant Singh, Independent Director (upto June 30, 2017)

Mr. Y. Kajita, Alternate Director (upto August 8, 2016)

Mr. T. Nagata, Alternate Director (upto March 29, 2017)

Mr. Manoj Kumar Sethi, Senior Vice President-Finance Mr. Rakesh Arora, Company Secretary (from August 08, 2016)

Mr. Hemant Kumar Agarwal, Deputy Company Secretary (upto August 07, 2016)

Relatives of key management personnel

Ms. Ritu Suri, Wife of Mr. Ramesh Suri

Entities over which key management personnel and/or their relatives have control or joint control:

SHS Transport Private Limited Rohan Motors Limited Hemkunt Service Station Private Limited Tempo Automobiles Private Limited M/s Ramesh Suri (HUF)

Prima Telecom Limited Prima Infratech Private Limited Fibcom India Limited

List of other related parties - Post employment benefit plan of the Company

Subros Employees Group Gratuity Cum Life Assurance Trust Subros Employees Group Superannuation Cum Life Assurance Trust

Details of transactions, in the ordinary course of business at commercial terms, and balances with related parties:

6 Capital commitments

Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances) amounting to Rs. 644.09 Lakhs (March 31, 2017: Rs. 6,223.24 Lakhs, April 01, 2016: Rs. 1,178.88 Lakhs).

Note:

i. It is not practicable for the Company to estimate the timings and amount of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

ii. The Company does not expect any reimbursements in respect of the above contingent liabilities.

(b) Guarantees issued by banks on behalf of the Company amounting to Rs. 358.40 Lakhs (March 31, 2017: Rs. 682.34 Lakhs, April 01,2016: Rs. 1,463.14 Lakhs).

(c) Outstanding commitments under letter of credit established by the Company aggregate to Rs. 2,020.88 Lakhs (March 31, 2017: Rs. 4,788.88 Lakhs, April 01, 2016: Rs. 3,235.28 Lakhs).

7. Leases

I. Operating lease arrangements The Company as a lessee

Certain premises and plant and machinery are obtained by the Company on operating lease. The lease term is for 1-3 years and renewable for further period on mutually agreeable terms and also include escalation clauses. The rent is not based on any contingencies. Lease rental expense is set out in note 21 to these financial statements as âRentâ in âOther expensesâ. There are no restrictions imposed by lease arrangements. The leases are cancellable in nature.

The Company as a lessor

One office premise is let out by the Company on operating lease and its cancellable in nature. Lease rental income is set out in note 15 to these restated financial statements as âRental incomeâ in âOther incomeâ.

II. Finance lease arrangements

The Company has taken land on long term finance lease from various government authorities in India.

The present value of minimum lease payments (MLP) under finance lease is as follows:-

8. Employee benefits

The various benefits provided to employees by the Company are as under:

Defined contribution plans

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss :

Defined benefit plans and other long term benefits

b) Leave encashment/compensated absence - The leave obligations cover the Companyâs liability for earned leave, sick leave and casual leave. The entire amount of the provisions of Rs. 460.09 Lakhs (March 31, 2017: Rs. 324.19 Lakhs, April 01,2016: Rs. 269.27 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employees to avail the full amount of accrued leave or require payment for such leave within the next 12 months.

These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest risk

Longevity risk

Salary risk

The principal assumptions used for the purpose of the actuarial valuations were as follows:

The current service cost and the interest expense for the year are included in the âEmployee benefit expenseâ in the Statement of Profit and Loss. The remeasurement of the net defined benefit liability is included in other comprehesive income.

The amount included in the Balance Sheet arising from the entityâs obligation in respect of its defined benefit plans is as follows:

Sensitivity analysis

Significant actuarial assumptions for the determination of employee defined obligation using projected unit credit method are discount rate and expected salary growth rate. The sensitivity analysis below have been determined based on reasonably possible changes in respective assumption occurring at the end of reporting period, while holding all other assumptions constant. Sensitivities due to mortality and withdrawals are not material and hence impact of change not calculated. The method and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

The fair value of the plan assets is taken as per the account statements of the insurance companies.

The average duration of the employee defined benefit obligation of gratuity fund as at March 31, 2018 is 13.88 years (March 31, 2017 is 13.75 years, April 1, 2016: 13.33 years).

The Company expects to make a contribution of Rs. 143.90 Lakhs (March 31, 2018: Rs. 120.95 Lakhs, April 1, 2016: Rs. 97.33 Lakhs) to the defined benefit plans during the next financial year.

9. Research and development expenses

The Company has two in-house Research and Development Centres, approved by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. The details of research and development expenses is as under:-

Provision for taxation has been made after taking into account the benefit available on expenditure incurred on Research and Development Centres. Such expenditure is subject to approval of appropriate authorities.

10. Disclosure on Specified Bank Notes (SBNs)

Disclosure for Specified Bank Notes (SBNâs) as required by notification no. G.S.R 308 (E) issued by Ministry of Corporate Affairs is not applicable to the Company for the year ended March 31, 2018. Corresponding amounts as appearing in the audited financial statements for the year ended March 31, 2017 have been disclosed as given below:

11. Expenses capitalized

Following construction/development period expenses (other than borrowing cost) incurred on making dies and tools and building and developing new product/technology have been capitalized orclubbed with capital work-in-progress, as the case may be :-

12. Borrowing costs

Borrowing cost amounting to Rs. 165 Lakhs (Previous Year: Rs. 230 Lakhs) has been capitalized with the cost of property, plant and equipment as per Indian Accounting Standard (Ind AS)23 on âBorrowingCostsâ.

13. Exceptional items

There was a major fire incident in one of the plants of the Company situated at Manesaron May 29, 2016. The fire has severally impacted the inventories, building, plant and machinery. These assets were adequately insured with reinstatement clause and a claim has been made with the insurance company. Special/urgent actions to restart supplies to the customer post fire incident has temporarily resulted into additional costs which have been included in exceptional items in the Statement of Profit and Loss. The Company has already received the final insurance claim of Rs. 6,324.97 Lakhs with respect to inventories in the previous year. However, insurance claim settlement in respect of property, plant and equipment is in progress and an interim amount of Rs. 2,199.41 Lakhs (March 31, 2017: Rs. 7,498 Lakhs) has been received net of reinstatement premium from the insurance company against loss of property, plant and equipment and additional expenditure incurred to restore supplies. The detail of exceptional items under major heads is as under:-

14. First time adoption of Ind AS

These are the Companyâs first standalone 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 March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Balance Sheet at April 1, 2016 (the Companyâs date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (Previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions

Deemed Cost of 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 recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible assets.

Accordingly, the Company has elected to measure items all its property, plant and equipment and intangible assets at their carrying value as per previous GAAP at the transition date. There are no decommissioning liabilities of the Company.

Investments in subsidiary and joint venture in separate financial statements

There is an option to measure investments in subsidiary and joint venture at cost in accordance with Ind AS 27 at either fair value on date of transition or previous GAAP carrying values. The Company has decided to use the previous GAAP carrying values and not to fair value its investments in subsidiary and joint venture as on thedate of transition.

Business Combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

A.2 Ind AS mandatory exceptions Estimates

An entityâs estimates in accordance with Ind ASs at the date of transition shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 01,2016 are consistent with the estimates as at the same date made in conformity with previous GAAR

The Company made estimate for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as this was not required under previous GAAP

Derecognition of financial assets and financial liabilities

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

The Company has elected to apply the derecognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

Classification and measurement of financial assets

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

B. Reconciliations between previous GAAP and Ind AS

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

C. Notes to first time adoption

(i) Loan to employees

Under the previous GAAP, interest free loans to employees are recorded at their transaction value. Under Ind AS, all financial assets are required to be initially recognized at fair value and subsequently at amortized value. Accordingly, the Company has fair valued these loans and the difference between fair value and transaction value has been recognized as employee benefits expense. Asa result, the amount of employee loans as at March 31,2017 decreased by Rs. 6.40 Lakhs (April 1,2016- Rs. 9.52 Lakhs) and the profit for the year ended March 31,2017 increased by Rs. 3.12 Lakhs due to employee benefits expense of Rs3.70 Lakhs on account of difference between fair value and transaction value of new loans provided during the year offsetted by notional interest income of Rs. 6.82 Lakhs on such loans. The decrease in employee loan as at April 1,2016 has been adjusted with retained earnings as on that date.

(ii) Loan - security deposits

Under the previous GAAP, interest free security deposits for leased assets (that are refundable in cash on completion of the lease terms) are recorded at their transaction value. Under Ind AS, all financial assets are required to be initially recognized at fair value and subsequently at amortized value. Accordingly, the Company has fair valued these security deposits and the difference between fair value and transaction value has been recognized as rent expense. As a result, the amount of security deposits as at March 31, 2017 decreased by Rs. 14.37 Lakhs (April 1, 2016 - Rs. 14.69 Lakhs) and the profit for the year ended March 31, 2017 increased by Rs. 0.32 Lakhs due to rent expense of Rs. 8.76 Lakhs on account of difference between fair value and transaction value of new security deposits provided during the year offsetted by notional interest income of Rs. 9.08 Lakhs on such deposits. The decrease in security deposit as at April 1, 2016 has been adjusted with retained earnings as on that date.

(iii) Non-current borrowings

Under Ind AS, financial liabilities are recorded at fair value on initial recognition/transition date and subsequently recorded at amortized cost using effective interest rate method. Accordingly, the non-current borrowings have increased by Rs. 578.44 Lakhs as at April 1, 2016 and reduced by Rs. 139.55 Lakhs as at March 31, 2017 with consequent impact on profit for the year ended March 31, 2017 by Rs. 717.99 Lakhs. The increase in non-current borrowings as at April 1, 2016 has been adjusted with retained earnings as at that date.

(iv) Fairvaluation of derivatives

The Company has entered into certain derivative contracts to hedge foreign currency and interest rate risk. Such contracts are accounted for at fair value through profit or loss. The gain/loss on fair valuation of derivatives is recorded as derivative asset/derivative liability under other financial asset (current) / other financial liability (current). Accordingly, the Company has recorded derivative liability of Rs. 429.63 Lakhs as at March 31, 2017 (derivative assets of Rs. 425.79 Lakhs as at April 1,2016). Asa result of this change, the profit for the year ended March 31, 2017 decreased by Rs. 855.42 Lakhs. The net impact of Rs. 425.79 Lakhs as at April 1,2016 has been adjusted with retained earnings as at that date.

(v) Provisions

Under the previous GAAP discounting of provisions was not allowed. Under Ind AS, provisions are measured at discounted amounts, if the effect of time value is material. Accordingly, non current portion of warranty provision has been discounted to its present values. Asa result, the warranty provisions as at March 31,2017 reduced by Rs. 11.24 Lakhs (April 1, 2016- Rs.12.56 Lakhs) and the profit for the year ended March 31, 2017 reduced by Rs. 1.32 Lakhs as a result of finance cost of Rs. 6 Lakhs on account of unwinding of discount on provision for warranty offsetted with discounting of additional warranty provision recognized during the year of Rs. 4.68 Lakhs. The net impact of Rs. 12.56 Lakhs as at April 1,2016 has been adjusted with retained earnings as at that date.

(vi) Deferred tax adjustments

Deferred tax has been recognized on the adjustments made on transition to Ind AS. Asa result, there is decrease in deferred tax liability as at March 31,2017 by Rs. 140.51 Lakhs (April 1, 2016- Rs.102.94 Lakhs) and increase in the profits for the year ended March 31,2017 by Rs. 37.57 Lakhs out of which Rs. 7.52 Lakhs is reclassified to other comprehensive income. The impact of Rs. 102.94 Lakhs as at April 1,2016 has been adjusted with retained earnings as at that date.

(vii) Remeasurement gain/loss on post-employment benefit obligation

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss forthe year. As a result of this change actuarial loss of Rs. 35.25 Lakhs was reclassified during March 31, 2017, from the profit or loss to other comprehensive income and corresponding deferred tax on the same of Rs. 7.52 Lakhs is also reclassified to other comprehensive income. There is no impact on the total equity as at April 1,2016.

(viii) Proposed dividend

Under the previous GAAP dividends proposed by the board of directors after the Balance Sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 577.61 Lakhs as at April 01, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

(ix) Current borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition, earlier they were shown as prepaid expenses. Accordingly, the Company has netted off commercial papers balance as at March 31, 2017 with prepaid interest of Rs. 52.79 Lakhs (April 1,2016- Rs. 31.78 Lakhs). There is no impact on the opening retained earnings and profit for the year ended March 31,2017.

(x) Excise duty

Under the previous GAAP revenue from sale of products was presented exclusive of excise duty. Under Ind-AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the ended March 31,2017 by Rs. 20,635.77 Lakhs. There is no impact on profit for the year ended March 31,2017.

15. Managerial remuneration paid to the managing director for the year ended March 31, 2017 was in excess by an amount of Rs. 78.70 Lakhs as per limits allowed under section 197 read with Schedule V to the Companies Act, 2013. Subsequent to the year end, the Company has received the required approval for such excess remuneration paid, from the Central Government.

16. The financial statements were approved by the Board of Directors and authorized for issue on May 28, 2018.

17. As required by Ind AS, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Mar 31, 2017

1. (d) The Company has only one class of equity shares having a par value of Rs.2 per share. Each shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, 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.

2.(e) There was no change in Equity during the year.

3. Contingent Liabilities Not Provided For in respect of:

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.4,788.88 Lacs (Previous Year Rs.3,235.28 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs.682.34 Lacs (Previous Year: Rs. 1,463.14 Lacs)

d) As advised to the Company, no effect has been given to MAT Recoverable on account of certain disallowances in Income Tax Assessments for earlier years as the company would get full relief in appeals filed against the assessment orders.

4. Estimated value of contracts on capital account remaining to be executed and not provided for(net of advances) including Reinstatement of assets lost in fire at Manesar plant :Rs. 6,223.24 Lacs (Previous Year: Rs.1,178.88 Lacs).

5. In the opinion of Board, the value on realization of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

* Including Raw Materials/Components consumed for production of Fan Motor Assembly. It is not practicable to furnish information of individual components consumed in view of very large number of items consumed.

6. Value of Imported and Indigenous Raw Materials/ Components and Stores and Spares consumed and percentage of each to the total consumption:

7. There were no reportable lease arrangements as defined in Accounting Standard-19 on "Leases".

8. Disclosure of provisions in terms of Accounting Standard-29 on âProvisions, Contingent Liabilities and Contingent Assetsâ.

Note: This provision is expected to be utilized for settlement of warranty claims within a period of 2 years.

9. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 on âImpairment of Assetsâ

10. Segment Reporting

The Company''s business activity falls within a single primary business segment i.e., Automotive Air conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard-17 on ''Segment Reporting âare not applicable.

11. Related Party Disclosures

In terms of Accounting Standard -18 on "Related Party Disclosure", the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors):-i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

- Mr. Manoj Kumar Sethi- Senior Vice President Finance

- Mr. Hemant Kumar Agarwal- Dy. Company Secretary (upto 7.8.2016) & Sr. General Manager-Finance

- Mr. Rakesh Arora-Company Secretary (from 8.8.2016)

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri(Wife of Mr. Ramesh Suri)

iii) Subsidiary Company

- ThaiSubros Ltd., Thailand

iv) Joint Venture

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHS Transport (P) Ltd. - Rohan Motors Limited

- Hemkunt Service Station (P) Ltd. - Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri(HUF) - Prima Telecom Ltd.

- Prima Infratech Pvt Ltd. - Fibcom India Ltd.

12. Monthly Remuneration paid to the Managing Director during the year as minimum remuneration as approved by the Shareholders has exceeded the limits prescribed u/s 197 read with Schedule V of the Companies Act, 2013 by an aggregate amount of Rs. 78.70 Lacs (Previous Year of Rs 157.10 Lacs). The Company has already sought/is in the process of seeking requisite approvals from the Central Government. The company will take appropriate steps to recover the said excess amount from the concerned Directors in case requisite approvals are not granted by the Central Government.

b) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centre''s. Such expenditure is subject to approval of appropriate authorities.

13. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the Actuary.

The expected rate of return on plan assets is determined considering the policy for plan assets management and past returns.

14. The Board of Directors of the company in their meeting held on May 23, 2017 have proposed dividend of Rs. 0.50 per share amounting to Rs. 299.94 Lacs subject to approval of shareholders in forthcoming annual general meeting.

In view of revision of Accounting Standard 4 ''Contingencies and Events occurring after Balance Sheet Date'' effective from April 1, 2016, the proposed dividend (Rs. 299.94 Lacs) and dividend distribution tax thereon (Rs. 61.06 Lacs) has not been provided as at March 31, 2017. This has resulted into increase in reserves & surplus and reduction in Short term provisions by Rs 361.00 Lacs as at March 31, 2017.

15. Exceptional Items/Fire Incident

There was a major fire incident in one of the plants of the Company situated at Manesar on May 29, 2016. The Fire has severally impacted the building, stocks, plant & machinery. These assets were adequately insured with reinstatement clause and a claim has been made with the insurance company. Special/urgent actions to restart supplies to the customer post fire incident has temporarily resulted into additional costs during the year under review which have been included in "Exceptional Items" in the Statement of Profit and Loss. The company has already received insurance claim against inventory loss. The short claim received against the same has also been included in exceptional items. Insurance claim settlement in respect of building, plant & machinery and other fixed assets is under progress as the reinstatement of assets is also in progress. However, company has received interim payments from the Insurance Company. The detail of exceptional items under major heads is as under:-

16. (i) The company does not have pending litigations which would impact its Financial Position.

(ii) The Company does not have any Long term contracts including derivative contracts which require any provision for Foreseeable Losses.

(iii) The Company has deposited an amount of Rs 3.72 Lacs (Previous Year Rs. 4.60 Lacs) during the year in Investor Education and Protection Fund. Further, no amount is pending for deposition in Investor Education and Protection Fund.

17. As informed there was no supplier who was registered under âThe Micro, Small and Medium Enterprises (Development) Act, 2006â.

18. Balance confirmations have not been received from some of the parties showing debit/credit balances. Management does not expect to have any material differences affecting the financial statements for the year upon confirmation.

19. Previous year''s figures have been regrouped/rearranged wherever considered necessary to confirm to this year''s classification.

Mar 31, 2016

1. 2 (d) The Company has only one class of equity shares having a par value of Rs.2 per share. Each shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, 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.

2(e) There was no change in Equity during the year.

d) Pursuant to the Payment of Bonus (Amendment) Act, 2015, enhanced bonus is to be paid to the eligible employees with retrospective effect from 01.04.2014. Based on various court decisions, the Company has been advised by its legal consultants that the applicability of the said Act for the Year 2014-15 is not likely to stand the trial of the jurisdictional courts. Accordingly, differential amount of Bonus for the year 2014-15 amounting to approximately Rs.192 Lacs has not been accounted for in these financial statements.

e) As advised to the Company, no effect has been given to MAT Recoverable on account of certain disallowances in Income Tax Assessments for earlier years as the company would get full relief in appeals filed against the assessment orders.

2. Contingent Liabilities Not Provided For in respect of :

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.3,235.28 Lacs (Previous Year Rs.3,966.33 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs.1,463.14 Lacs (Previous Year: Rs. 463.74 Lacs)

c) Claims against the company not acknowledged as debt :-

* Including Raw Materials/Components consumed for production of Fan Motor Assembly. It is not practicable to furnish information of individual components consumed in view of very large number of items consumed.

This provision is expected to be utilized for settlement of warranty claims within a period of 2 years.

3. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 on "Impairment of Assets".

4. Segment Reporting

The Company''s business activity falls within a single primary business segment i.e, Automotive Air-conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the Company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard Â 17 on ''Segment Reporting'' are not applicable.

5. Related Party Disclosures

In terms of Accounting Standard - 18 on "Related party Disclosures", the particulars of transactions with related parties are given as under: a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors):- i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

- Mr. D.M.Reddy, Executive Director

- Mr. Manoj Kumar Sethi- Senior Vice President - Finance

- Mr. Hemant Kumar Agarwal- Deputy Company Secretary & General Manager - Finance ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri)

- Ms. Lohitha Reddy (Daughter of Mr. D.M. Reddy) iii) Subsidiary Company

- Thai Subros Ltd., Thailand iv) Joint Venture

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHS Transport (P) Ltd. -Rohan Motors Limited

- Hemkunt Service Station (P) Ltd. - Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF) -Prima Telecom Ltd.

- Prima Infratech Pvt Ltd. -Fibcom India Ltd.

6. Monthly Remuneration paid to the Executive Directors during the year as minimum remuneration as approved by the Shareholders has exceeded the limits prescribed u/s 197 read with ScheduleV of the Companies Act, 2013 byanaggregate amount of Rs 157.10 Lacs (Previous Year of Rs. 55.36 Lacs). The Company has already sought/is in the process of seeking requisite approvals from the Central Government. The company will take appropriate steps to recover the said excess amount from the concerned Directors in case requisite approvals are not granted by the Central Government.

b) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centers. Such expenditure are subject to approval of appropriate authorities.

7. Earnings per Share

In accordance with Accounting Standard - 20 on ''Earning per Share'' issued by the Institute of Chartered Accountants of India, the Earning per Share has been computed asunder:

8. Borrowing cost amounting to Rs.515.00 lacs (Previous Year : 1,046.18 lacs) has been capitalized with the cost of fixed assets as per Accounting Standard 16 on "Borrowing Cost".

9. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the Actuary.

The expected rate of return on plan assets is determined considering the policy for plan assets management and past returns.

10. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development)Act, 2006".

11. (i) The Company does not have pending litigations which would impact its Financial Position.

(ii) The Company do not have any Long term Contracts including derivative contracts which require any provision for Force able Losses. (iii) The Company has deposited an amount of Rs 4.60 Lacs (Previous Year Rs. 6.51 Lacs) during the year in Investor Education and Protection Fund. Further, no amount is pending for deposition in Investor Education and Protection Fund.

12. Balance confirmations have not been received from some of the parties showing debit/credit balances. Management does not expect to have any material differences affecting the financial statements for the year upon confirmation.

13. Previous year''s figures have been regrouped/rearranged wherever considered necessary to confirm to this year''s classification.

Mar 31, 2015

Ii) Figures in brackets represent cash outflows.

iii) Previous years figures have been recast/restated wherever necessary.

2 (d) The Company has only one class of equity shares having a par value of Rs.2 per share. Each shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, 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.

3. Contingent Liabilities Not Provided For in respect of:

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.3,966.33 Lacs (Previous Year Rs.4,916.86 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs.463.74 Lacs (Previous Year: Rs. 736.29 Lacs)

c) Claims against the company not acknowledged as debt :-

( Rs in Lacs) As at As at Nature of Claim 31.03.15 31.03.14

Disputed Sales Tax Demands 139.36 139.36

Disputed Income Tax Demands 24.40 Â

Other claims 83.16 77.25

d) As advised to the company, no effect has been given to MAT Recoverable on account of certain disallowances in Income Tax Assessment for earlier year as the company would get full relief in appeal filed against the assessment order

4. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances) Rs. 2,052.62 Lacs. (Previous Year: Rs. 1,787.17 Lacs).

5. In the opinion of Board, the value on realization of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

* Including Raw Materials/Components consumed for production of Fan Motor Assembly. It is not practicable to furnish quantitative information of individual components resume in view of the considerable no. of items.

6. The company has identified that there is no material impairment of assets and as such no provision is required in terms ofAccounting Standard-28 on "Impairment of assets".

7. Segment Reporting

The Company's business activity falls within a single primary business segment i.e., Automotive Air conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well.

Therefore, the disclosure requirements ofAccounting Standard 17 on 'Segment Reporting' are not applicable.

8. Related Party Disclosures

In terms of Accounting Standard 18 on "Related party Disclosures", the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors):-

i. Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

- Mr. D. M. Reddy, Executive Director

ii. Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri)

- Ms. Lohitha Reddy (Daughter of Mr. D. M. Reddy)

- Ms. Likhitha Reddy (Daughter of Mr. D. M. Reddy)

iii. Subsidiary Company

- Thai Subros Ltd., Thailand

iv. Joint Venture Company

- Denso SubrosThermal Engineering Centre India Ltd. (DSEC)

v. Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHSTransport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- TempoAutomobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- PrimaTelecom Ltd.

- Prima Infratech (P) Ltd.

- Fibcom India Ltd.

9. Monthly remuneration has been paid during the year to the Managing Director as minimum remuneration as approved by the Shareholders, but eventually the same has exceeded the limits prescribed u/s 197 read with Schedule V of the Companies Act, 2013 by a small amount of Rs.55.36 Lacs (Previous Year of Rs. 61.15 Lacs). The Company is in the process on filing an application to get the waiver from Central Government.

10. Industrial Promotion Subsidy received/receivable under Packaged Scheme of Incentives, 2007 is accounted for on the basis of approval received from the Government of Maharashtra.

11. Research and Development Expenses

a) The company has two Inhouse R & D Centres, approved by the Department of Scientific and Industrial Research, Ministry of Science & Technology, Govt. of India. The detail of expenditure /income incurred/earned during the year by the said R&D Centres is as under :-

b) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centers. Such expenditure are subject to approval of appropriate authorities.

12. Earning per Share

In accordance with Accounting Standard - 20 on 'Earning per Share' issued by the Institute of Chartered Accountants of India, the Earning per Share has been computed asunder:

13. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

14. Following Construction/Development Period Expenses (other than Borrowing Cost) incurred on making Dies & Tools and Building and developing New product/ Technology have been capitalized or clubbed with Capital Work in-Progress, as the case maybe :- Â lqcs 15. Borrowing cost amounting to Rs.1046.18 lacs (Previous Year: 831.38 lacs) has been capitalized with the cost of fixed assets as per Accounting Standard 16.

16. Employees Benefits

As per Accounting Standard 15 "Employee Benefits", the required disclosures of Employee Benefits to the extent applicable to the company are given below:

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under:

Defined Benefit Plan

The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information iscertified by the actuary.

The expected rate of return on plan assets is determined considering the LIC's policy for plan assets management.

17. i. The Company does not have pending litigations which would impact its Financial Position.

ii. The Company does not have any Long term Contracts including derivative contracts which require any provision for Forceable Losses.

iii. The Company has deposited an amount of Rs 6.51 Lacs during the year in Investor Education and Protection Fund. Further, no amount is pending for deposition in Investor Education and Protection Fund.

18. Pursuant to the enactment of the Companies Act 2013, the company has applied the estimated useful lives as specified in schedule II, except in respect of certain assets as disclosed in Accounting Policy on Depreciation. Accordingly unamortised carrying value is being depreciated/ amortised over the revised/remaining useful lives w.e.f. 01st April 2014.This has resulted into depreciation and amortisation expenses for the Year ended 31st March, 2015 being lower by Rs. 483.58 lacs.

19. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006".

20. Balance confirmations have not been received from some of the parties showing debit/credit balances.

21. Previous year figures have been regrouped /rearranged wherever considered necessary.

Mar 31, 2014

1. Contingent Liabilities Not Provided For in respect of :

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.4,916.86 Lacs (Previous Year Rs.6,380.57 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs.736.29 Lacs (Previous Year: Rs. 161.64 Lacs)

c) Claims against the company not acknowledged as debt :-

(Rs. in Lacs)

As at As at

Nature of Claim 31.03.14 31.03.13

Disputed Sales Tax Demands 139.36 138.63

Other claims 77.25 70.80

d) As advised to the company, no effect has been given to AAAT Recoverable on account of certain disallowances in Income Tax Assessment for earlier year as the company would get full relief in appeal filed against the assessment order

2. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances) Rs 1,787.17 Lacs. (Previous Year: Rs. 2,626.30 Lacs).

3. In the opinion of Board, the value on realization of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

4. There were no reportable lease arrangements as defined in Accounting Standard-19

This provision is expected to be utilized for settlement of warranty claims within a period of 2 years.

5. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 on ''Impairment of assets''.

6. Segment Reporting

The Company''s business activity falls within a single primary business segment i.e., Automotive Air conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard -17 on ''Segment Reporting'' are not applicable.

7. Related Party Disclosures

In terms of Accounting Standard - 18 on ''Related Party Disclosures'', the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors):-

i) i. Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

- Mr. D. M. Reddy, Executive Director

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri)

- Ms. Lohitha Reddy (Daughter of Mr. D. M. Reddy)

- Ms. Likhitha Reddy (Daughter of Mr. D. M. Reddy)

iii) Subsidiary Company

- Thai Subros Ltd., Thailand

iv) Joint Venture Company

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHS Transport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- Prima Telecom Ltd.

- Prima Infratech (P) Ltd.

- Fibcom India Ltd.

8. Monthly remuneration has been paid during the year to the Managing Director as minimum remuneration as approved by the Shareholders, but eventually the same has exceeded the limits prescribed u/s 309 of the Companies Act, 1956 by a small amount of Rs. 61.15 Lacs (Previous Year of Rs.20.11 Lacs). The Company has filed applications to get the waiver from Central Government for which approvals are awaited.

9. Industrial Promotion Subsidy received/receivable under Packaged Scheme of Incentives, 2007 is accounted for on the basis of approval for disbursements received from the Government of Maharashtra.

10. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

11. Borrowing cost amounting to Rs. 831.38 Lacs (Previous Year: Rs. 633.30 Lacs) has been capitalised with the cost of fixed assets as per Accounting Standard 16 on ''Borrowing Cost''.

12. Employees Benefits

As per Accounting Standard 15 "Employee Benefits", the required disclosures of Employee Benefits to the extent applicable to the company are given below:

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considering the LIC''s policy for plan assets management.

13. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006".

14. Balance confirmations have not been received from some of the parties showing debit/credit balances.

15. Previous years figure have been regrouped/rearranged wherever considered necessary.

Mar 31, 2013

1. Contingent Liabilities Not Provided For in respect of :

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.6380.57 Lakhs (PreviousYearRs.8,956.50 Lakhs)

b) Guarantees given by banks on behalf of the Company: Rs 161.64 Lakhs (Previous Year: Rs. 355.66 Lakhs)

c) Claims against the company not acknowledged as debt :-

2. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances): Rs.2,626.30 Lakhs (Previous Year: Rs. 5,051.64 Lakhs).

3. In the opinion of Board, the value on realization of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

4. There were no reportable lease arrangements as defined in Accounting Standard-19

5. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 issued by the Institute of Chartered Accountants of India.

6. Segment Reporting

The Company''s business activity falls within a single primary business segment i.e., Automotive Air conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard - 17 on ''Segment Reporting'' issued by the Institute of Chartered Accountants of India are not applicable.

7. Related Party Disclosures

In terms of Accounting Standard -18 issued by the Institute of Chartered Accountants of India, the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors): - i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

- Mr. D. M. Reddy, Executive Director

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri)

- Ms. Lohitha Reddy (Daughter of Mr. D. M. Reddy)

- Ms. Likhitha Reddy (Daughter of Mr. D. M. Reddy)

iii) Subsidiary Company

- Thai Subros Ltd., Thailand

iv) Joint Venture Company

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHS Transport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- Prima Telecom Ltd.

- Prima Infratech (P) Ltd.

- Fibcom India Ltd.

8. Monthly remuneration has been paid during the year to the Managing Director as minimum remuneration as approved by the Shareholders, but eventually the same has exceeded the limits prescribed u/s 309 of the Companies Act, 1956 by a small amount of Rs.20.11 Lacs. The Company is in the process of filing an application to get the waiver from Central Government.

9. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

b) Forward Exchange Contracts entered into by the Company outstanding at the year end:-

10. Research & Development Expenses

a) The company has two In house R&D Centres, approved by the Department of Scientific and Industrial Research, Ministry of Science & Technology, Govt, of India. The detail of revenue expenditure /income incurred/earned during the year by the said R&D Centres and charged to Statement of Profit & Loss Account or capitalized/ to be capitalized is as under: -

b) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centres. Such expenditure are subject to approval of appropriate authorities.

11. Following Construction Period Expenses (other than Borrowing Cost) incurred on making Dies & Tools and Building have been capitalized or clubbed with Capital Work in-Progress, as the case may be:-

12. Borrowing cost amounting to Rs. 633.30 lakhs (Previous Year: Rs. 389.25 lakhs) has been capitalised with the cost of fixed assets as per Accounting Standard 16 issued by the Institute of Chartered Accountant of India.

13. Employees Benefits

As per Accounting Standard 15 "Employee Benefits", the required disclosures of Employee Benefits to the extent applicable to the company are given below:

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under:

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considering the LIC''s policy for plan assets management.

14. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006".

15. Balance confirmations have not been received from some of the parties showing debit/credit balances.

Mar 31, 2012

1(a The Company has only one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, 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.

NATURE OF SECURITY

Term loan amounting to Rs. NIL (March 31, 2011: Rs. 1406.25 lacs) is secured by Exclusive first charge on specific equipment.

Term loan amounting to Rs. 260.00 lacs (March 31, 2011: Rs. 390.00 lacs) is secured by Exclusive first charge on specific equipment.

Term loan amounting to Rs. 2175.00 lacs (March 31, 2011: Rs. NIL) is secured by Exclusive first charge on specific equipment.

Term loan amounting to Rs. NIL (March 2011: Rs. 290.90 lacs) is secured by Equitable Mortgage on Manesar Land 6t Bldg., Personal Gurarantee of Mr Ramesh Suri & specific assets.

Term loan amounting to Rs. 3186.03 lacs (March 2011: Rs. 4602.05 Lacs) is secured by Equitable Mortgage on Manesar Land fit Bldg., Personal Gurarantee of Mr Ramesh Suri & specific assets.

Term loan amounting to Rs. 1400.00 lacs (March 2011: Rs. Nil) is secured by is secured by Equitable Mortgage on Manesar Land & Bldg., Personal Gurarantee of Mr Ramesh Suri & specific assets.

Term loan amounting to Rs. 577.00 lacs (March 31, 2011: Rs. 865.50 Lacs) is secured by Exclusive first charge on specific equipment

Term loan amounting to Rs. 376.87 lacs (March 31, 2011: Rs. Nil) is secured by Exclusive first charge on specific equipment

Term loan amounting to Rs. 5582.50 lacs (March 31, 2011: Rs. Nil) is secured by Exclusive first charge on specific equipment

Vehicle loan amounting to Rs. 52.21 lacs (March 31, 2011: Rs 116.53 lacs) is secured by Hypothecation on specific vehicles

TERMS OF REPAYMENT

Repayment in 16 quarterly installments (@ 140.62 lacs each) commencing from December 2010. Last installment in September 2014. Rate of interest 12.07% P.A. as at year end. (Previous year 8.75% P.A.)

Repayment in 20 quarterly installments (@ 32.50 lacs each) commencing from June 2010. Last installment in September 2014. Rate of interest 11.90% P.A. as at year end. (Previous year 9.00% P.A.)

Repayment in 16 quarterly installments (@ 181.25 lacs each) commencing from June 2012. Last installment in March 2016. Rate of interest 11.90% P.A. as at year end. (Previous year NA %P.A.)

Repayment in 11 quarterly installments (@ 290.91 lacs each) commencing from December 2009. Last installment in June 2012. Rate of interest 9.00% P.A. as at year end. (Previous year 9.00% P.A.)

Repayment in 16 quarterly installments (@ 354.00 lacs each) commencing from Aug 2010. Last installment in May 2015. Rate of interest KBR 0.075% P.A. as at year end. (Previous year KBR 0.075% P.A.)

Repayment in 36 monthly installments (@ 58.33 lacs each) commencing from April 2012. Last installment in March 2015. Rate of interest KBR 1% P.A. as at year end. (Previous year N.A.)

Repayment in 16 quarterly installments (@ 72.13 lacs each) commencing from June 2011. Last installment in March 2015. Rate of interest 11.77% P.A. as at year end. (Previous year 11.77% P.A.)

Repayment in 16 quarterly installments (@ 41.87 lacs each) commencing from Aug 2011. Last installment in February 2015. Rate of interest 11.77% P.A. as at year end. (Previous year N.A.)

Repayment in 16 quarterly installments (@ 348.91 lacs each) commencing from June 2013. Last installment in March 2017. Rate of interest 9.70% P.A. as at year end. (Previous year N.A.)

Repayment in 84 equated Monthly commencing from October, 2007. Rate of interest 8.50% P.A.

1 Contingent Liabilities Not Provided For in respect of:

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.8956.50 lacs (Previous Year Rs.6,537.80 lacs)

b) Guarantees given by banks on behalf of the Company: Rs 355.66 lacs (Previous Year: Rs. 458.08 lacs)

c) Claims against the company not acknowledged as debt :-

2 Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances): Rs.5051.64 lacs (Previous Year: Rs.6,382.66 lacs).

3 In the opinion of Board, the value on realisation of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

* Including Raw Materials/Components consumed for production of Fan Motor Assembly.

** It is not practical to furnish quantitative information of individual component consumed in view of the considerable number of items.

4. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 issued by the Institute of Chartered Accountants of India.

5. Segment Reporting

The Company's business activity falls within a single primary business segment i.e, Automotive Air conditioning Systems (with or without Fan Motor Assembly) and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard - 17 on 'Segment Reporting' issued by the Institute of Chartered Accountants of India are not applicable.

6. Related Party Disclosures

In terms of Accounting Standard - 18 issued by the Institute of Chartered Accountants of India, the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon by the auditors):-

i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri)

iii) Subsidiary Company

- Thai Subros Ltd., Thailand

iv) Joint Venture Company

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence: , ,

- SHS Transport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- Prima Telecom Ltd.

- Fibcom India Ltd.

7. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

8. Research & Development Expenses

a) The company has an In house R & D Centre, approved by the Department of Scientific and Industrial Research, Ministry of Science & Technology, Govt, of India. The detail of revenue expenditure /income incurred/earned during the year by the said R & D Centre and charged to Statement of Profit & Loss Account or capitalized/ to be capitalized is as under:-

b) Other expenditure on Research & Development activities charged to statement of Profit & loss:- Rs: Nil (Previous Year: Rs. 1.92 lacs)

c) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centre. Such expenditure are subject to approval of appropriate authorities.

9. Borrowing cost amounting to Rs. 389.25 lacs (Previous Year: 257.56 lacs) has been capitalised with the cost of fixed assets as per Accounting Standard 16 issued by Institute of Chartered Accountant of India.

10. Employees Benefits

As per Accounting Standard 15 "Employee Benefits", the required disclosures of Employee Benefits to the extent applicable to the company are given below:

Defined Benefit Plan

The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considering the LIC's policy for plan assets management.

11. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006".

12. Balance confirmations have not been received from some of the parties showing debit/credit balances.

13. The Financial statements for the year ended March 31,2011 had been prepared as per the then applicable pre revised Schedule VI of the Companies Act, 1956, The financial statements for the year ended on March 31, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification.

Mar 31, 2011

1. Contingent Liabilities Not Provided Forin respect of :

a) Net Outstanding commitments against Letter of Credits established by the Company: Rs.6,537.80 Lacs (Previous Year Rs.5088.05 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs 458.08 Lacs (Previous Year: Rs. 440.05 Lacs)

c) Claims against the company not acknowledged as debt :-

As at As at

NatureofClaim 31.03.11 31.03.10 (Rupees in Lacs)

i) Disputed Sales Tax Demands -Gross 138.13 149.93

-Net of tax 92.24 98.97

ii) Disputed Demand under Income Tax Act NIL 12.95

iii) Other claims -Gross 49.61 45.32

-Netoftax 33.13 29.92

2. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances): Rs.6382.66 Lakhs (Previous Year: Rs.2,324.91 Lacs).

3. In the opinion of Board, the value on realisation of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

4. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 issued by the Institute of Chartered Accountants of India.

5. Segment Reporting

The Company's business activity falls within a single primary business segment i.e, Automotive Airconditioning Systems (with or without Fan Motor Assembly) and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements ofAccounting Standard Ã 17 on 'Segment Reporting' issued by the Institute of Chartered Accountants of India are not applicable.

6. Related Party Disclosures

In terms ofAccounting Standard Ã 18 issued by the Institute of CharteredAccountants of India, the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management & relied upon bythe auditors):- i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri) iii) Subsidiary Company

- Thai Subros Ltd., Thailand iv) Joint Venture Company

- Denso Subros Thermal Engineering Centre India Ltd. (DSEC)

v) Entities over which Key Management Personnel or their relatives are able to exercise significant influence:

- SHS Transport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- Prima Telecom Ltd.

d) Exchange gain/(loss) accounted during the year:

i) Exchange Gains/(Loss) credited Gain Rs.1,193.75 Lacs to Profit and LossAccount (Previous Year Gain Rs.442.64 Lacs)

ii) Difference between forward rates and Rs.106.22 Lacs spot ratestoberecognisedin (Previous Year Rs.10.54 Lacs) subsequent years

c) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R & D Centre. Such expenditure are subject to approval of appropriate authorities.

7. Following expenditure were incurred on making tools and dies to be used in-house as capital assets which have been capitalised with tools and dies or clubbed with Capital Work-in- Progress,as the case may be :-

Defined Benefit Plan

The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary as considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in employment market. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considering the LIC's policy for plan assets management.

8. Borrowing cost amounting to Rs. 257.56 lacs (Previous Year : 120.37 lacs) has been capitalised with the cost of fixed assets as per Accounting Standard 16 issued by Institute of CharteredAccountant of India.

9. As informed there was no supplier who was registered under " The Micro, Small and Medium Enterprises (Development)Act, 2006".

10. Balance confirmations have not been received from some of the parties showing debit/credit balances.

11. Previous year's figures have been regrouped/rearranged wherever considered necessary to confirm to this year's classification.

Statement pursuant to section 212 of the Companies Act, 1956 relatingtothe subsidiarycompany

1. Nameofthe subsidiary : THAI SUBROS LIMITED

2. Financial Year of the subsidiary ended on : 31st March, 2011

3. No. of shares held in Subsidiary Company on the above date : 599300 Common Shares of THB 5/- Each and 700 Common Shares of THB 5/- each held through seven individuals

4. ExtentofHolding (%) : 99.88%ason31/03/2011 and balance 0.12% held through seven individuals

5. Net aggregate amount of profit/(loss) of the subsidiary so far as they concern members of the Company:

A) dealt with in the Accounts of Subros Limited amounted to:- 1) for subsidiary's Financial year ended on 31st

March, 2011 (RsinLakhs) : NIL

2) for previous Financial Years of the subsidiary since it became subsidiary of Subros Ltd(Rs in Lakhs) : NIL

B) not dealt with in the Accounts of Subros Ltd amounted to:- 1) for subsidiary's Financial year ended on 31st

March, 2011 (RsinLakhs) : 30.92

2) for previous Financial Years of the subsidiary since

it became subsidiary of Subros Ltd (Rs in Lakhs) : 9.37

Mar 31, 2010

1. Contingent Liabilities Not Provided For in respect of:

a) Outstanding commitments against Letter of Credits established by the Company: Rs.9745.25 Lacs (Previous Year Rs.6264.59 Lacs)

b) Guarantees given by banks on behalf of the Company: Rs 440.05 Lacs (Previous Year: Rs. 412.29 Lacs)

c) Claims against the company not acknowledged as debt :-

As at As at

Nature of Claim 31.03.10 31.03.09

(Rupees in Lacs)

i) Disputed Sales Tax Demands -Gross 149.93 70.19

-Net of tax 98.97 46.33

ii) Disputed Demand under Income Tax Act 12.95 90.23

iii) Other claims -Gross 45.32 95.27

-Net of tax 29.92 62.89

2. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances): Rs.2324.91 Lacs (Previous Year: Rs.458.91 Lacs).

3. In the opinion of Board, the value on realisation of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly.

4. The company has identified that there is no material impairment of assets and as such nc provision is required in terms of Accounting Standard-28 issued by the Institute of Charterec Accountants of India.

5. Segment Reporting

The Companys business activity falls within a single primary business segment i.e, Automotive Airconditioning Systems (with or without Fan Motor Assembly) and parts thereof. Export sale: constitute an insignificant portion of the total business of the company. Hence, there is nc geographical segment as well. Therefore, the disclosure requirements of Accounting Standard- 17 on Segment Reporting issued by the Institute of Chartered Accountants of India are not applicable.

6. Related Party Disclosures

In terms of Accounting Standard 18 issued by the Institute of Chartered Accountants of Indie the particulars of transactions with related parties are given as under:

a) Name of related parties and description of relationship (as certified by the management relied upon by the auditors): - i) Key Management Personnel

- Mr. Ramesh Suri, Chairman

- Ms. Shradha Suri, Managing Director (Daughter of Mr. Ramesh Suri)

ii) Relatives of Key Management Personnel

- Mrs. Ritu Suri (Wife of Mr. Ramesh Suri) iii) Subsidiary Company

- Thai Subros Ltd., Thailand

iv) Entities over which Key Management Personnel or their relatives are able to exercis significant influence:

- SHS Transport (P) Ltd.

- Rohan Motors Limited

- Hemkunt Service Station (P) Ltd.

- Tempo Automobiles (P) Ltd.

- M/s. Ramesh Suri (HUF)

- Prima Telecom Ltd.

- Fibcom India Ltd.

7. Foreign Exchange Differences

a) The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments.

d) Exchange gain/(loss) accounted during the year:

i) Exchange Gains/(Loss) credited Gain Rs.442.64 Lacs

to Profit and LossAccount (Previous Year Loss Rs.243.40 Lacs)

ii) Difference between forward rates and Rs.10.54 Lacs

spot rates to be recognised in (Previous Year Rs. 1.18 Lacs) subsequent years

8. Research ft Development Expenses

c) Provision for taxation has been made after taking into account the benefit available on expenditure incurred on R 6t D Centre. Such expenditure are subject to approval of appropriate authorities.

Defined Benefit Plan

The employees gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 obligation for leave encashment is recognized in the same manner as gratuity.

9. Borrowing cost amounting to Rs. 120.37 lacs (Previous Year: 119.54 lacs) has been capitalised with the cost of fixed assets as per Accounting Standard 16 issued by Institute of Chartered Accountant of India.

10. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006".

11. Balance confirmations have not been received from some of the parties showing debit/credit balances.

13. Previous years figures have been wherever considered necessary to confirm to this years classification.

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