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Notes to Accounts of ZF Commercial Vehicle Control Systems India Ltd.

Mar 31, 2023

Terms / rights attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets on winding up. The equity shareholders are entitled to receive dividend as declared from time to time, subject to preferential right of preference shareholders to payment of dividend. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to his/ its share of the paid-up equity share capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable has not been paid. Failure to pay any amount called up on shares may lead to their forfeiture. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts, in proportion to the number of equity shares held.

General reserve - Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

Capital reorganisation reserve - Amount represents a reserve created during the demerger of brakes division from Sundaram Clayton Limited.

Retained Earnings - The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013.

The estimated provision for warranty obligations is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of management''s best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is the balance unexpired period of the respective warranties on the various products which range from 12 to 24 months.

Contract assets are recognized over time based on the progress of completion of the service as per the terms of the contract, as the customer simultaneously receives and consumes the benefits provided by the Company. Upon completion and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade receivables.

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier).

30 Earnings per share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

31 Significant accounting judgements, estimates and assumptions

The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Key Judgements estimates and assumptions

In the process of applying the Companyâs accounting policies, management has made the following key judgements, estimates and assumptions, which have the most significant effect on the amounts recognised in the standalone financial statements:

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in standalone financial statements. Loss contingencies that are considered possible are not provided for but disclosed as contingent liabilities in the standalone financial statements. Contingencies the likelihood of which is remote are not disclosed in the standalone financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable. The management estimates likely outcome of any pending cases and other contingencies based upon the Companyâs / expertâs interpretation of applicable tax laws, relevant judicial pronouncements.

Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of the obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about defined benefit obligations are given in note 33.

Allowance for inventories

An allowance for inventory is recognised where the realisable value is estimated to be lower than the inventory carrying value. The inventory allowance is estimated taking into account various factors and losses associated with obsolete / slow-moving / redundant inventory items. The Company has, based on these assessments, made adequate allowance in the books.

32 Employee Benefits ObligationDefined Benefit Plan

a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972 (''Act'') . Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.

Risk exposure and asset liability matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as company take on uncertain long term obligations to make future benefit payments.

1) Liability risks

i) Asset-Liability Mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements.

ii) Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

iii) Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at managementâs discretion may lead to uncertainties in estimating this increasing risk.

2) Asset risks

All plan assets are maintained in a trust fund managed by LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.

b. Provident Fund

In respect of employees covered under Companyâs Employees Provident Fund Trust contributions to the Companyâs Employee Provident Fund Trust are made in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government. In the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation, determined based on an actuarial valuation, as an expense. The details of the defined benefit plan based on actuarial valuation report are as follows:

Liability risks:

a) Asset-liability mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements.

b) Discount rate risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future salary escalation and inflation risk

During the year ended 31 March 2023, the Company has surrendered its exemption to hold contribution in WABCO India Limited Employee Provident Fund Trust (''Provident Fund Trust'') to Employeesâ Provident Fund Organisation (''EPFO'') based on the Companyâs obligation as at 30 June 2022 by availing the option of depositing entire corpus of Provident Fund Trust to EPFO. Hence, there is no liability risk existing as on 31 March 2023.

The average duration of the defined benefit plan obligation at the end of the reporting period for gratuity plan is 10.00 years (31 March 2022: 11.00 years) and pension plan is is 7.00 years (31 March 2022: 8.00 years).

33.2 During the year ended 31 March 2023, the Company has surrendered its exemption to hold contribution in WABCO India Limited Employee Provident Fund Trust (Provident Fund Trust) to Employees'' Provident Fund Organisation (EPFO) based on the Companyâs obligation as at 30 June 2022 by availing the option of depositing entire corpus of Provident Fund Trust to EPFO. Consequent to this surrender, the liability of the Company is restricted to the monthly contributions paid by the Company to EPFO. Accordingly, there was no actuarial valuation excercise carried out as on 31 March 2023.

40 Financial risk management objectives and policies

The Company''s principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The Company also holds FVTPL investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans, deposits and FVTPL investments.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs investments are primarily in fixed rate interest bearing investments. Also, the Company has no borrowings and hence not exposed to interest rate risk.

Foreign currency risk

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

Credit risk

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

2022, being the total of the carrying amount of balances with banks, deposits with banks, trade receivables and other financial assets. As at 31 March

2023, 78% of the total dues was receivable from top 10 customers (as at 31 March 2022 - 78%). These receivables are from customers whose credit rating is above the average. Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Companyâs treasury department. The objective is to minimise the concentration of risks by investing in safer investments of high pedigree.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure funds are available for use as per requirements. The Company''s prime source of liquidity is cash and cash equivalents and the cash generated from operations. The Company has no outstanding bank borrowings. The Company invests its surplus funds in bank, fixed deposit and mutual funds, which carry minimal mark to market risks. The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.

43 Other Statutory Information

i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.

iii) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.

iv) The Company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (''intermediaries'') with the understanding (whether recorded in writing or otherwise) 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.

v) 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 from or on behalf of the Ultimate Beneficiaries.

vi) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

vii) The Company has no transactions with struck off companies during the year.

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

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

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

xi) The Company has not taken borrowings from banks and financial institutions on the basis of security of current assets.

44 Events after the reporting period

The Board has proposed a final dividend of 260% (INR 13 per share of the face value of INR 5 each) for the year 2022-23 subject to the approval of the members at the ensuing Annual General Meeting.

Mar 31, 2022

Capital reorganisation reserve - Amount represents a reserve created during the demerger of brakes division from Sundaram-Clayton Limited. Retained Earnings - The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013.

27. RESEARCH AND DEVELOPMENT COST

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate INR. 4,136.86 Lakhs (31 March 2021 : INR. 3,297.02 Lakhs). The capital expenditure incurred during the year for research and development purposes aggregate INR. 219.87 Lakhs (31 March 2021 : INR. 362.12 Lakhs).

30. EARNINGS PER SHARE

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

31. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company''s standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Key Judgements estimates and assumptions

In the process of applying the Company''s accounting policies, management has made the following key judgements, estimates and assumptions, which have the most significant effect on the amounts recognised in the standalone financial statements:

Revenue from Contract with Customers

The Company has applied judgements in determining the amount and timing of revenue from contracts with customers, including determining variable considerations.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the standalone financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable. The management estimates likely outcome of any pending cases and other contingencies based upon the Company''s / expert''s interpretation of applicable tax laws, relevant judicial pronouncements.

Defined benefit plans

Allowance for inventories

32. EMPLOYEE BENEFITS OBLIGATION Defined Benefit Plan

a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age.

Risk exposure and asset liability matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as company take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a) Asset-Liability Mismatch risk

b) Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

b. Provident Fund

In respect of employees covered under Company''s Employees Provident Fund Trust contributions to the Company''s Employee Provident Fund Trust are made in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.

In the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation, determined based on an actuarial valuation, as an expense. The details of the defined benefit plan based on actuarial valuation report are as follows:

1) Liability risks:

a) Asset-liability mismatch risk

b) Discount rate risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future salary escalation and inflation risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

The average duration of the defined benefit plan obligation at the end of the reporting period for gratuity plan is 11.00 years (31 March 2021: 10.00 years) and pension plan is 8.00 years (31 March 2021: 8.00 years).

33.2 Share based payments

Under a global compensation plan announced and administered by WABCO Holdings Inc., USA, former ultimate holding company, some of the employees are eligible for compensation in form of stock units viz., Performance Stock Units ("PSU") and Restricted Stock Units ("RSU").

PSUs vesting of which would occur at levels ranging from none to 200% of the number of granted PSUs depending upon the achievement of three year cumulative earnings per share goals approved by the Compensation, Nominating and Governance Committee of the Board of Directors of the former ultimate holding company. The former ultimate holding company assessed expected achievement levels at the end of each reporting period. RSU''s vests to the employees on a proportionate basis over the period of 3 years provided the employees continues in employment. The Company records a stock based compensation based on the estimated fair value of the award at the grant date and is recognised as an expense in the statement of profit or loss over the requisite period.''During the year 31 March 2021, all the outstanding stock options (RSUs and PSUs) were settled before the acquisition of WABCO Holdings Inc. by ZF Friedrichshafen AG in accordance with the terms of the merger agreement.

The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the outcome of various legal proceedings and therefore, cannot be predicted accurately.

The Supreme Court had passed judgement on 28 February 2019 that all allowances paid to employees are to be considered for the purposes of PF wage determination. There are numerous interpretative issues relating to the above judgement. As a matter of prudence, the Company has made a provision on a prospective basis from the date of the Supreme Court order. The Company will update its provision, on receiving further clarity on the subject.

37. SEGMENT INFORMATION

The Company primarily operates in the automotive segment. The automotive segment includes all activities related to development, design and manufacture of 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 indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of IND AS 108 "Operating Segments".

39. Financial risk management objectives and policies

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s investments are primarily in fixed rate interest bearing investments. Also, the Company has no borrowings and hence not exposed to interest rate risk.

Foreign currency risk

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

The majority of the Company''s revenue and expenses are in Indian Rupees, with the remainder denominated in US Dollars and Euro. The following table demonstrates the sensitivity to 5% change in USD and EURO exchange rates on foreign currency exposures as at the year end, with all other variables held constant. The Company''s exposure to foreign currency changes for all other currencies is not material.

Credit risk

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks. Exposure to Credit risk - The carrying amount of financial assets represents the maximum Credit exposure. The maximum exposure to Credit risk was 175,375.51 lakhs as at 31 March 2022 and 170,014.58 lakhs as at 31 March 2021, being the total of the carrying amount of balances with banks, deposits with banks, trade receivables and other financial assets. As at 31 March 2022, 78% of the total dues was receivable from top 10 customers (as at 31 March 2021 - 71%). These receivables are from customers whose credit rating is above the average. Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Company''s treasury department. The objective is to minimise the concentration of risks by investing in safer investments of high pedigree.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure funds are available for use as per requirements. The Company''s prime source of liquidity is cash and cash equivalents and the cash generated from operations. The Company has no outstanding bank borrowings. The Company invests its surplus funds in bank, fixed deposit and mutual funds, which carry minimal mark to market risks. The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

40. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders. The primary objective of the Company''s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2022 and 31 March 2021.

41. In respect of certain instances of alleged irregularities in disbursement/ settlement of provident fund dues paid out of the Employees'' Provident Fund Trust (''the Trust'') and salary payments to fixed-tenure employees in the earlier years, the management initiated investigations have been concluded and the report of the independent expert has also been shared with the stock exchange through appropriate filings. Basis the above report, no additional outlay over and above the INR 500 lakh provision accrued in the previous year is considered necessary.

43. Other Statutory Information

i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii) The Company does not have any charges or satisfaction which is yet to be registered with Register of companies beyond the statutory period.

iii) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.

iv) The Company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of 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.

v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (''Funding Party'') with the understanding 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 from or on behalf of the Ultimate Beneficiaries.

vii) The Company has no transactions with struck off companies during the year.

viii) The Company has not been declared as wilful defaulter by any bank or financial institution or Government or any Government Authority.

44. Events after the reporting period

The Board has proposed a final dividend of 240% (INR 12 per share of the face value of INR 5 each) for the year 2021-22 subject to the approval of the members at the ensuing Annual General Meeting.

Significant accounting policies (note 2)

Mar 31, 2021

Special Economic Zone Re-investment Allowance Reserve - Amount represents a reserve created as per Section 10 AA of Income Tax Act, 1961 in order to avail the deduction under the Act for its plant location in Special Economic Zone. The reserve is to be utilised as per the conditions of the said section.

27. RESEARCH AND DEVELOPMENT COST

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate INR 3,297.02 Lakhs (31 March, 2020: INR 3,362.21 lakhs). The capital expenditure incurred during the year for research and development purposes aggregate INR 362.12 Lakhs (31 March, 2020: INR 249.19 lakhs).

30. EARNINGS PER SHARE

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

31. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Companyâs Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Key Judgements estimates and assumptions

Revenue from Contract with Customers

The Company applied judgements in determining the amount and timing of revenue from contracts with customers, including determining variable considerations.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable. The management estimates likely outcome of any pending cases and other contingencies based upon the Companyâs / expertâs interpretation of applicable tax laws, relevant judicial pronouncements.

Defined benefit plans

Allowance for inventories

An allowance for Inventory is recognised where the realisable value is estimated to be lower than the inventory carrying value. The inventory allowance is estimated taking into account various factors and losses associated with obsolete / slow-moving / redundant inventory items. The Company has, based on these assessments, made adequate allowance in the books.

32. EMPLOYEE BENEFITS OBLIGATION Defined Benefit Plan

a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.

Risk exposure and asset liability matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as company take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a) Asset-Liability Mismatch risk

b) Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c) Future Salary Escalation and Inflation Risk

2) Asset Risks

b. Provident Fund

The details of the defined benefit plan based on actuarial valuation report are as follows:

1) Liability risks:

a) Asset-liability mismatch risk

b) Discount rate risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future salary escalation and inflation risk

B. Provident Fund

The Company''s Provident Fund is exempted under Section 17 of the Employees'' Provident Fund Act, 1952. Conditions for the grant of exemption stipulate that the employer shall make good the deficiency, if any, in the yield of the trustâs investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned has been higher in the past years. The Actuary has provided a valuation for Provident Fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions provided below, the Company does not have additional obligation as at 31 March, 2021.

33.2 Share based payments

PSUs vesting of which would occur at levels ranging from none to 200% of the number of granted PSUs depending upon the achievement of three year cumulative earnings per share goals approved by the Compensation, Nominating and Governance Committee of the Board of Directors of the ultimate holding company. The former ultimate holding company assesses expected achievement levels at the end of each reporting period. RSU''s vests to the employees on a proportionate basis over the period of 3 years provided the employees continues in employment.The Company records a stock based compensation based on the estimated fair value of the award at the grant date and is recognised as an expense in the statement of profit or loss over the requisite period.

39. Financial risk management objectives and policies

Market risk

Interest rate risk

Foreign currency risk

The Majority of the Companyâs revenue and expenses are in Indian Rupees, with the remainder denominated in US Dollars and Euro. The following table demonstrates the sensitivity to 5% change in USD and EURO exchange rates on foreign currency exposures as at the year end, with all other variables held constant. The Companyâs exposure to foreign currency changes for all other currencies is not material.

Credit risk

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks. Exposure to Credit risk - The carrying amount of financial assets represents the maximum Credit exposure. The maximum exposure to Credit risk was 170,015.00 lakhs as at 31 March, 2021 and 139,109.31 lakhs as at 31 March, 2020, being the total of the carrying amount of balances with banks, deposits with banks, trade receivables and other financial assets. As at 31 March, 2021, 71% of the total dues was receivable from top 10 customers (as at 31 March, 2020 - 67%). These receivables are from customers whose credit rating is above the average. Credit risk from balances with banks and investment of surplus funds in mutual funds is managed by the Companyâs treasury department. The objective is to minimise the concentration of risks by investing in safer investments of high pedigree.

Liquidity risk

40. Capital management

For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity shareholders. The primary objective of the Companyâs capital management is to maximise the shareholder value.

In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2021 and 31 March, 2020.

41. During the year ended 31 March, 2021, management has identified certain instances of alleged irregularities in disbursement/ settlement of provident fund dues paid out of the Employeesâ Provident Fund Trust (âthe Trustâ) and salary payments to fixed-tenure employees in the current and earlier years. In this regard, the Company has initiated investigation of such alleged irregularities relating to payments from the Trust and other payments from the Company to employees by engaging an external independent expert through a law firm and is also evaluating necessary actions. Pending completion of the aforesaid investigation, the management has made a preliminary assessment and has recorded a provision of INR 500 lakhs in these Financial Statements.

42. Events after the reporting period

The board of directors has recommended a dividend payment of INR 11 per share (Face value INR Rs. 5 each) for the year ended 31 March, 2021.

Mar 31, 2019

1. CORPORATE INFORMATION

WABCO INDIA LIMITED (âCompanyâ, âWABCOâ) was incorporated originally as Auto (India) Engineering Limited on November 18, 2004. The name of the Company was changed to WABCO INDIA LIMITED on August 2, 2011. The Company is a public limited company domiciled in India and has its primary listings on BSE Limited and National Stock Exchange of India Limited in India. The registered office of the Company is located at Plant 1, Plot No.3, (SP), III Main Road, Ambattur Industrial Estate, Chennai -600 058, India. The Company is primarily engaged in the manufacture of air brake actuation systems for commercial vehicles. The Company also provides software development and other services to its group companies.

The financial statements were authorized for issue in accordance with a resolution of the Board of directors at the meeting held on May 25, 2019.

2.1 Capital work in progress

Capital work in progress as at March 31, 2019 comprises expenditure for the plant in various stages of installation. Total amount of Capital work in progress is INR 1,930.60 lakhs (March 31, 2018: INR 5,238.11 lakhs)

No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. For amount outstanding from related parties and the terms and conditions relating to that, refer Note 36.

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days depending on the type of the customer.

Terms / rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed as distributions to equity shareholders is subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the assets of the Company, in proportion to the number of equity shares held by the shareholders.

General reserve - Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

Retained Earnings - The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts reported above may not be distributable in entirety.

Special Economic Zone Re-investment Allowance Reserve - Amount represents a reserve created as per Section 10 AA of Income Tax Act, 1961 in order to avail the deduction under the Act for its plant location in Special Economic Zone. The reserve is to be utilised as per the conditions of the said section.

The estimated provision for warranty obligations is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present value of managementâs best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is the balance unexpired period of the respective warranties on the various products which range from 18 to 24 months.

Provision for price adjustments is recognised when there is a reasonable certainty that the amounts will be settled. The estimate takes into account the expected claim and the historical information regarding settlement of such claims. The outstanding provision represents the amounts that are yet to be settled in relation to the products that were sold.

Revenue from operations for periods up to June 30, 2017 includes excise duty. Effective July 1, 2017, Excise duty and most indirect taxes in India have been replaced with Goods and Service Tax (GST). The Company collects GST on behalf of the Government. Hence, GST is not included in Revenue from operations post implementation of GST.Sale of goods includes excise duty collected from customers of INR Nil (March 31, 2018: INR 4,051.58 Lakhs). Sale of goods net of excise duty is INR 265,141.20 Lakhs (March 31, 2018: INR 2,43,619.81 Lakhs).

Government grants represent export incentives that the Company is eligible for. There are no unfulfilled conditions or contingencies attached to these grants. Government grant includes Merchandise Exports from India Scheme (âMEISâ) Rs. 4,548.61 lakhs of which Rs. 2,595.02 lakhs relates to earlier periods recognised in the current year upon achieving certainty of ultimate collectability on the basis of past trends.

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

3. RESEARCH AND DEVELOPMENT COST

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate INR. 2,706.22 Lakhs (March 31, 2018 : Rs. 2,551.26 Lakhs). The capital expenditure incurred during the year for research and development purposes aggregate INR. 387.33 Lakhs (March 31, 2018 : INR. 585.15 Lakhs).

For the year ended March 31, 2017 - Revenue expenditure on research and development incurred aggregate to INR. 2,184.69 Lakhs and capital expenditure on research and development incurred aggregate to INR. 305.53 Lakhs.

For the year ended March 31, 2016 - Revenue expenditure on research and development incurred aggregate to INR. 2,302,52 Lakhs and capital expenditure on research and development incurred aggregate to INR. 288.83 Lakhs.

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.

Key Judgements estimates and assumptions

Revenue from Contract with Customers

The Company applied judgements in determining the amount and timing of revenue from contracts with customers, including determining variable considerations.

Provision and contingent liability

On an on going basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable. The management estimates likely outcome of any pending cases and other contingencies based upon the Companyâs / expertâs interpretation of applicable tax laws, relevant judicial pronouncements.

Defined benefit plans

Further details about defined benefit obligations are given in Note 33.

4. EMPLOYEE BENEFITS OBLIGATION

Defined Benefit Plan a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. .

Risk exposure and asset liability matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a) Asset-Liability Mismatch risk

b) Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.

c) Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities specially unexpected salary increases provided at managementâs discretion may lead to uncertainities in estimating this increasing risk.

2) Asset Risks

b. Provident Fund

In respect of employees covered under Companyâs Employees Provident Fund Trust contributions to the Companyâs Employee Provident Fund Trust are made in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.âIn the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation, determined based on an actuarial valuation, as an expense.âThe details of the defined benefit plan based on actuarial valuation report are as follows:

1) Liability risks:

a) Asset-liability mismatch risk

Risk which arises if there is a mis match in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successful able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b) Discount rate risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future salary escalation and inflation risk

B. Provident Fund

The Companyâs Provident Fund is exempted under Section 17 of the Employeesâ Provident Fund Act, 1952. Conditions for the grant of exemption stipulate that the employer shall make good the deficiency, if any, in the yield of the trustâs investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned has been higher in the past years. The Actuary has provided a valuation for Provident Fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions provided below, the Company does not have additional obligation as at March 31, 2019.

5.1 Share based payments

Under a global compensation plan announced and administered by WABCO Holdings Inc., USA, the ultimate holding company, some of the employees are eligible for compensation in form of stock units viz., Performance Stock Units (âPSUâ) and Restricted Stock Units (âRSUâ).

RSUâs vests to the employees on a proportionate basis over the period of 3 years provided the employees continues in employment.

The Company records a stock based compensation based on the estimated fair value of the award at the grant date and is recognised as an expense in the statement of profit or loss over the requisite period.

The expected term of the RSU/PSU is determined based on the vesting term and contractual term of the RSU/PSU, as well as expected exercise behaviour of the employee who receives the RSU/PSU.

Expected volatality during the expected term of the RSU/ PSU is based on historical volatality of the observed market prices of WABCO Holding Inc., USA publicly traded equity shares during a period equivalent to the expected term of the RSU/PSU.

6. LEASE COMMITMENTS

Operating leases:

The Company has leased certain office premises under operating lease for a non-cancellable period which ranges from 5 to 6 years. The lease arrangements carry an escalation clause and does not impose significant restrictions. Lease rentals incurred during the current year have been charged as an expense in the statement of profit and loss. The future lease rental payables as follows:

The Supreme Court (SC) had passed judgement on 28^th February 2019 that all allowances paid to employees are to be considered for the purposes of PF wage determination. There are numerous interpretative issues relating to the SC judgement on PF as mentioned above. As a matter of caution, the Company has made a provision on a prospective basis from the date of SC order. The Company will update its provision on receiving further clarity on the subject.

Terms and conditions of transactions with related parties

The Company primarily operates in the automotive segment. The automotive segment includes all activities related to development, design and manufacture of products. 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 for the Company as per the requirement of IND AS 108 âOperating Segmentsâ.

Information about major customer

Revenue from major customers contributing more than 10% of sale of products amounted to INR 148,456 lakhs (March 31, 2018 : INR 130,106 lakhs), arising from sales of products and rendering of services.

7. FAIR VALUE

The carrying value of all other financial assets & liabilities approximate fair value.

The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:

The Companyâs principal financial liabilities, include trade and other payables. The Company has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The Company also holds FVTPL investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has no borrowings and hence not exposed to interest rate risk.

Foreign currency risk

The Majority of the Companyâs revenue and expenses are in Indian Rupees, with the remainder denominated in US Dollars and Euro. The Company has exports revenue and import purchases in foreign currency which act as a natural hedge and the management believes the currency risk is mitigated on account of such natural hedge and does not further hedge its currency risk.

As variations in foreign currency exchange rates are mitigated and the remaining risk, if any, is not expected to have a significant impact on the results of operations, a sensitivity analysis is not presented.

Credit risk

Liquidity risk

The Companyâs prime source of liquidity is cash and cash equivalents and the cash generated from operations. The Company has no outstanding bank borrowings. The Company invests its surplus funds in bank, fixed deposit and mutual funds, which carry minimal mark to market risks.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2019 and March 31, 2018.

8. Events after the reporting period

The Board of directors at their meeting held on May 25, 2019, considered and recommended a final dividend aggregating Rs. 9 per share (nominal value Rs. 5 per share) for the financial year 2018-19 (final dividend paid for March 31, 2018 : 1,517.41 lakhs @ Rs. 8 per share) (nominal value Rs. 5 per share).

9. PREVIOUS YEAR FIGURES

Previous yearâs figures have been regrouped and reclassified where necessary to conform to this yearâs classification.

Statement on Significant Accounting Policies and Notes to the Financial Statements are an integral part of this Financial Statements.

Mar 31, 2018

1. EMPLOYEE BENEFITS OBLIGATION Defined Benefit Plan

a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.

Risk exposure and asset liability matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1) Liability Risks

a) Asset-Liability Mismatch risk

b) Discount Rate Risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future Salary Escalation and Inflation Risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities specially unexpected salary increases provided at managementâs discretion may lead to uncertainties in estimating this increasing risk.

2) Asset Risks

b. Provident Fund

In respect of employees covered under Companyâs Employees Provident Fund Trust contributions to the Companyâs Employee Provident Fund Trust are made in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.âIn the case of contribution to the Trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate and recognizes such obligation, determined based on an actuarial valuation, as an expense.

The details of the defined benefit plan based on actuarial valuation report are as follows:

1) Liability risks:

a) Asset-liability mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the company is successful able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b) Discount rate risk

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c) Future salary escalation and inflation risk

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The average duration of the defined benefit plan obligation at the end of the reporting period is 1.50 years (March 31, 2017: 8.56 years).

2 Share based payments

Under a global compensation plan announced and administered by Wabco Holdings Inc., USA, the ultimate holding company, some of the employees are eligible for compensation in form of stock units viz., Performance Stock Units ("PSU") and Restricted Stock Units ("RSU").

RSU''s vests to the employees on a proportionate basis over the period of 3 years provided the employees continue in employment.

The Company records a stock based compensation based on the estimated fair value of the award at the grant date and is recognized as an expense in the statement of profit or loss over the requisite period.

36.1. LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIP

1) Where control exists

a) Holding company WABCO Asia Private Limited, Singapore

b) Ultimate holding company WABCO Holdings Inc., USA

Related parties under Ind AS 24 with whom transactions have taken place during the year

2) Fellow Subsidiary companies 1 WABCO Vertriebs, GmbH & Co., Germany

(formerly WABCO Fahrzeugsysteme, GmbH,Germany)

2 WABCO China Co Ltd, China

3 WABCO France SAS, France

4 Meritor WABCO Vehicle Control Systems, USA

5 Shandong WABCO Automotive Products Co. Ltd, China

6 WABCO (Shanghai) Management Co Limited, China

7 WABCO Automotive South Africa

8 WABCO Automotive UK Ltd, United Kingdom

9 WABCO Compressor Manufacturing Co. USA

10 WABCO Hong Kong Limited, Hong Kong

11 WABCO Japan Inc, Japan

12 WABCO Korea Ltd, Korea

13 WABCO Polska Sp. z o.o. Poland

14 WABCO Polska Sprzedaz Sp. z o.o. Poland

15 WABCO Development Gmbh, Germany

16 WABCO Logistik GmbH, Germany

17 WABCO Australia Pty Limited, Australia

18 WABCO Europe BVBA, Belgium

19 WABCO Austria GesmbH, Austria

20 WABCO Belgium BVBA, Belgium

21 WABCO Financial Services SPRL; Belgium

22 Tavares BVBA, Belgium

23 Transics BVBA, Belgium

24 FLC NV

25 Transics Belux BVBA, Belgium

26 Transics Deutschland GmbH, Germany

27 Transics Italia S.R.L

28 Delta Industrie Service SARL, France

29 Transics France SARL, France

30 Transics Ireland Limited, Ireland

31 Carrierweb B.V, Netherlands

32 Transics Netherland B.V

33 Transics Telematica Espana

34 WABCO do Brasil Industria e Comercio de Freios Ltda, Brazil

35 WABCO Brzdy K Vozidlum spol S.R.O, Czech Republic

36 WABCO Gmbh, Germany

37 WABCO Radbremsen Gmbh, Germany

38 WABCO Automotive Italia SRL, Italy

39 WABCO BV, Netherlands

40 WABCO Europe Holdings BV, Netherlands

41 WABCO Espana SLU, Spain

42 WABCO Automotive AB. Sweden

2) Fellow Subsidiary companies (Contd.)

43 WABCO (Schweiz) Gmbh, Switzerland

44 WABCO Automotive B.V, Netherlands

45 WABCO ARAC Kontrols Sistemleri Destek VE Pazarlama Limited Sirketi, Turkey

46 WABCO Middle East and Africa FZCO, Dubai

47 WABCO IP Holdings LLC, USA

48 WABCO Automotive Products Ltd, Cayman

49 WABCO Air Compressor Holdings Inc.,USA

50 WABCO Automotive Control Systems Inc.,USA

51 WABCO Group Inc.,USA

52 WABCO Group International Inc.,USA

53 WABCO Logistics (Quingdao) Co. Ltd, China

54 WABCO North America LLC, USA

55 WABCO Expats Inc.

56 WABCO (Thailand) Limited

57 Guang Dong WABCO Fuwa Vehicle Brakes Co Limited

58 Ephicas BV, Netherlands

59 WABCO Foundation Brakes Private Limited, Chennai

60 WABCO International LLC, USA

61 WABCO Europe Holdings LLC, USA

62 Ephicas Patents BVBA;

63 WABCO France S.A.S.

64 WABCO Services S.A.S, France

65 WABCOWURTH Workshop Services GmbH

66 WABCO Testbahn GmbH, Germany

67 WABCO Holding GmbH, Germany

68 WABCO Systeme GmbH, Germany

69 WABCO Holdings B.V., Netherlands

70 WABCO Sandown B.V., Netherlands

71 WABCO CV, Netherlands

72 WABCO RUS LLC.

73 WABCO Vostok LLC, Russia

74 WABCO Centro de Distribuicao de pecas Automotives Ltda, Brazil

75 Clayton Dewandre Holdings Limited, Rotterdam, The Netherlands

76 WABCO Automotive Pensions Trustees Limited, UK

77 WABCO Automotive U.K. Limited, UK

78 WABCO Reman Solutions

79 WABCO Vehicle Control systems, Poland

80 WABCO Vehicle Control Systems, USA

81 R.H. Sheppard Co., Inc

3) Others 1 WABCO India Limited Employeesâ Provident Fund Trust

Key Management Personnel Mr. P Kaniappan - Managing Director

Mr. RS Raja Gopal Sastry - Chief Financial Officer

Mr. M C Gokul - Company Secretary

Mr. Sean Deason - Non-executive Director

Ms. Lisa J Brown - Non-executive Director

Mr. Jorge Solis - Non-executive Director

Mr. Shivaram Narayanaswami - Non-executive Director

Mr. M Lakshminarayan - Chairman and independendent Director

Dr. Lakshmi Venu - Independent Director

Mr. Narayan K Seshadri - Independent Director

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: INR Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

3. SEGMENT INFORMATION

4. Financial risk management objectives and policies

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company has no borrowings and hence not exposed to interest rate risk.

Foreign currency risk

The Majority of the Companyâs revenue and expenses are in Indian Rupees, with the remainder denominated in US Dollars and Euros. The Company has exports revenue and import purchases in foreign currency which act as a natural hedge and the management believes the currency risk is mitigated on account of such natural hedge and does not further hedge its currency risk.

Credit risk

Liquidity risk

The Company''s prime source of liquidity is cash and cash equivalents and the cash generated from operations. The Company has no outstanding bank borrowings. The Company invests its surplus funds in bank, fixed deposit and mutual funds, which carry minimal mark to market risks.

5. Standards issued but not yet effective

The amendments to Standards that are issued, but not yet effective, up to the date of issuance of the Companyâs financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:

Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was issued on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after April 01, 2018. The Company plans to adopt the new standard on the required effective date using the modified retrospective method.

The Company has established an implementation team to implement Ind AS 115 related to the recognition of revenue from contracts with customers and it continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary. A reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will only be possible once the implementation project has been completed.

Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration. Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognized on or after:

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.

The Appendix is effective for annual periods beginning on or after April 01, 2018. However, since the Companyâs current practice is in line with the Interpretation, the Company does not expect any material effect on its financial statements.

Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealized Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, 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. Entities applying this relief must disclose that fact.

These amendments are effective for annual periods beginning on or after April 01, 2018. These amendments are not expected to have any impact on the Company as the Company has no deductible temporary differences or assets that are in the scope of the amendments.

6. Capital management

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.

7. Events after the reporting period

The Board of directors at their meeting held on May 28, 2018, considered and recommended a final dividend aggregating Rs, 1,517.41 lakhs @ Rs, 8 per share (nominal value Rs, 5 per share) for the financial year 2017-18 (final dividend paid for March 31, 2017 : Rs, 1,327.73 lakhs @ Rs, 7 per share) (nominal value Rs, 5 per share).

8. PREVIOUS YEAR FIGURES

Previous year''s figures have been regrouped and reclassified where necessary to conform to this yearâs classification.

Statement on Significant Accounting Policies and Notes to the Financial Statements are an integral part of this Financial Statements.

Mar 31, 2017

Notes to accounts

1. CORPORATE INFORMATION

WABCO INDIA LIMITED (âCompanyâ) was incorporated originally as Auto (India) Engineering Limited on November 18, 2004. The name of the Company was changed to WABCO INDIA LIMITED on August 2, 2011. The Company is a public limited company domiciled in India and has its primary listings on BSE Limited and National Stock Exchange of India Limited in India. The registered office of the Company is located at Plant 1, Plot No.3, (SP), III Main Road, Ambattur Industrial Estate, Chennai - 600 058, India. The Company is primarily engaged in the manufacture of air brake actuation systems for commercial vehicles. The Company also provides software development and other services to its group companies.

On June 3, 2009, WABCO Holdings Inc., executed its step acquisition in WABCO through Clayton Dewandre Holdings Limited and increased its percentage ownership to 75% by acquiring the shares from the other joint venture partner, TVS Group. Post-acquisition, the Company has become a subsidiary of WABCO Holdings Inc.

On June 28, 2013, M/s. Clayton Dewandre Holdings Limited, Rotterdam holding 75% of the equity shares of the Company transferred the entire holding to M/s. WABCO Asia Private Limited, Singapore, a subsidiary of M/s. Clayton Dewandre Holdings Limited, Rotterdam.

The financial statements were authorized for issue in accordance with a resolution of the directors on May 30, 2017.

2.1 Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015. For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended March 31, 2017 are the first the Company has prepared in accordance with Ind AS.

Refer to note 40 for information on how the Company adopted Ind AS.

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).

The financial statements are presented in INR and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.

3. Property plant and equipments

Capital work in progress

Capital work in progress as at March 31, 2017 comprises expenditure for the plant in various stages of installation. Total amount of Capital work in progress is INR 6,166.20 lakhs (March 31, 2016: INR 3,745.11 lakhs, April 1, 2015: INR 1,763.28 lakhs).

Opening balance of assets

The Company has elected to regard the WDV of assets as of March 31, 2015 as deemed cost, accordingly the gross block as of April 1, 2015 presented above, is net of accumulated depreciation of INR 21,406.75 lakhs (Tangible assets INR 20,537.47 lakhs and Intangible assets INR 869.28 lakhs).

The Company has classified the land at Jamshedpur with a gross book value of INR 76.10 lakhs as at April, 1 2015 under the previous GAAP taken on 30 years lease from Adityapur Industrial Area Development Authority, Adityapur, Jamshedpur as operating lease and hence, the amount paid for the leasehold land has been reclassified from PPE to Other current asset. Refer note 44 for further details.

* Represents land at Chennai taken on 99 years lease from Mahindra Industrial Park Limited and land at Panthnagar taken on 90 years lease from State Infrastructure & Industrial Development Corporation Uttarakhand Limited

Terms / rights attached to equity shares

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the assets of the Company, in proportion to the number of equity shares held by the shareholders.

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Judgements

In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Financial Statements:

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 37 for further disclosures.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Compant is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.

Deffered income taxes

The Companyâs tax expense for the year is the sum of the total current and deferred tax charges. The calculation of the total tax expense necessarily involves a degree of estimation and judgement in respect of certain items. A deferred tax asset is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Recognition, therefore. involves judgeinent regarding the prudent forecasting of future taxable gains and profits of the business.

Defined benefit plans

5. EMPLOYEE BENEFITS OBLIGATION

Defined Benefit Plan

a. Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.

b. Provident Fund

In respect of employees covered under Companyâs Employees Provident Fund Trust contribuions to the Companyâs Employee Provident Fund Trust are made in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.

5.1 Share based payments

Under a global compensation plan announced and adminstered by Wabco Holdings Inc., USA, the ultimate holding company, some of the employees are eligible for compensation in form of stock units viz., Performance Stock Units (âPSUâ) and Restricted Stock Units (âRSUâ). PSUs vesting of which would occur at levels ranging from none to 200% of the number of granted PSUs depending upon the achievement of three year cumulative earnings per share goals approved by the Compensation, Nominating and Governance Committee of the Board of Directors of the ultimate holding company. The ultimate holding company assesses expected achievement levels at the end of each reporting period. As of March 31, 2017, the Company believes it is probable that the performance conditions will be met and has accrued for the compensation expense accordingly which is in line with the estimates made by the ultimate holding company.

RSUâs vests to the employees on a proportionate basis over the period of 3 years proivded the employees continues in employment.

The expected term of the RSU / PSU is determined based on the vesting term and contractual term of the RSU / PSU, as well as expected exercise behaviour of the employee who recieves the RSU / PSU.

Expected volatality during the expected term of the RSU / PSU is based on historical volatality of the observed market prices of Wabco Holding Inc., USA publicly traded equity shares during a period equivalent to the expected term of the RSU / PSU.

6. LEASE COMMITMENTS Operating leases:

The Company had leased one of its office premises under operating lease for a non-cancellable period of 5 years. The lease rentals incurred during the current year have been charged as an expense in the statement of profit and loss. The future lease rental payables as follows:

7. COMMITMENT AND CONTINGENCIES

A) Contingent Liabilities

i) Matters wherein management has concluded the Companyâs liability to be probable and has accordingly provided for in the books. Refer Note 17.

ii) In respect of all the matters mentioned below, based on the legal advice obtained, the management is of the view that the claims are not tenable and the same can be successfully contested. Hence, no provision has been considered neccessary in the financial statments.

During the current year, the Company has received a demand order for a sum of INR. 19,552.39 lakhs, as well as penalty of INR. 28,076 lakhs from the Commercial Tax Department for VAT on various matters including differential amounts between financial statements and returns filed during the period April 1, 2010 to December 2015. The Company is contesting the order on the grounds that the Order was made based on factually incorrect information and has also obtained a stay from the Honâble High Court of Madras. Based on advice by its tax consultants and an internal evaluation, the Company has not accrued any amount towards these demands pending final outcome of this matter and these amounts have been disclosed as contingent liability.

8.1. LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIP

1) Where control exists

a) Holding company WABCO Asia Private Limited, Singapore

b) Ultimate holding company WABCO Holdings Inc., USA

Related parties under Ind AS 24 with whom transactions have taken place during the year

2) Fellow Subsidiary companies

1 WABCO Vertriebs, GmbH & Co., Germany

(formerly WABCO Fahrzeugsysteme, GmbH,Germany)

2 WABCO China Co Ltd, China

3 WABCO France SAS, France

4 Meritor WABCO Vehicle Control Systems, USA

5 Shandong WABCO Automotive Products Co. Ltd, China

6 WABCO (Shanghai) Management Co Limited, China

7 WABCO Automotive South Africa

8 WABCO Automotive UK Ltd, United Kingdom

9 WABCO Compressor Manufacturing Co. USA

10 WABCO Hong Kong Limited, Hong Kong

11 WABCO Japan Inc, Japan

12 WABCO Korea Ltd, Korea

13 WABCO Polska Sp. z o.o. Poland

14 WABCO Polska Sprzedaz Sp. z o.o. Poland

15 WABCO Development Gmbh, Germany

16 WABCO Logistik GmbH, Germany

17 WABCO Australia Pty Limited, Australia

18 WABCO Europe BVBA, Belgium

19 WABCO Austria GesmbH, Austria

20 WABCO Belgium BVBA, Belgium

21 WABCO Financial Services SPRL; Belgium

22 Tavares BVBA, Belgium

23 Transics BVBA, Belgium

24 FLC NV

25 Transics Belux BVBA, Belgium

26 Transics Deutschland GmbH, Germany

27 Transics Italia S.R.L

28 Delta Industrie Service SARL, France

29 Transics France SARL, France

30 Transics Ireland Limited, Ireland

31 Carrierweb B.V, Netherlands

32 Transics Netherland B.V

33 Transics Telematica Espana

34 WABCO do Brasil Industria e Comercio de Freios Ltda, Brazil

35 WABCO Brzdy K Vozidlum spol S.R.O, Czech Republic

36 WABCO Gmbh, Germany

37 WABCO Radbremsen Gmbh, Germany

38 WABCO Automotive Italia SRL, Italy

39 WABCO BV, Netherlands

40 WABCO Europe Holdings BV, Netherlands

41 WABCO Espana SLU, Spain

42 WABCO Automotive AB, Sweden

43 WABCO (Schweiz) Gmbh, Switzerland

44 WABCO Automotive B.V, Netherlands

45 WABCO ARAC Kontrols Sistemleri Destek VE Pazarlama Limited Sirketi, Turkey

46 WABCO Middle East and Africa FZCO, Dubai

47 WABCO IP Holdings LLC, USA

48 WABCO Automotive Products Ltd, Cayman

49 WABCO Air Compressor Holdings Inc.,USA

50 WABCO Automotive Control Systems Inc.,USA

51 WABCO Group Inc.,USA

52 WABCO Group International Inc.,USA

53 WABCO Logistics (Quingdao) Co. Ltd, China

54 WABCO North America LLC, USA

55 WABCO Expats Inc.

56 WABCO (Thailand) Limited

57 Guang Dong WABCO Fuwa Vehicle Brakes Co Limited

58 Ephicas BV, Netherlands

59 WABCO Foundation Brakes Private Limited, Chennai

60 WABCO International LLC, USA

61 WABCO Europe Holdings LLC, USA

62 Ephicas Patents BVBA;

63 WABCO France S.A.S.

64 WABCO Services S.A.S, France

65 WABCOWURTH Workshop Services GmbH

66 WABCO Testbahn GmbH, Germany

67 WABCO Holding GmbH, Germany

68 WABCO Systeme GmbH, Germany

69 WABCO Holdings B.V., Netherlands

70 WABCO Sandown B.V., Netherlands

71 WABCO CV, Netherlands

72 WABCO RUS LLC.

73 WABCO Vostok LLC, Russia

74 WABCO Centro de Distribuicao de pecas Automotives Ltda, Brazil

75 Clayton Dewandre Holdings Limited, Rotterdam, The Netherlands

76 WABCO Automotive Pensions Trustees Limited, UK

77 WABCO Automotive U.K. Limited, UK

78 WABCO Reman Solutions

79 WABCO Vehicle Control systems, Poland

80 WABCO Vehicle Control Systems, USA

3) Others Key management personnel

1 WABCO India Limited Employeesâ Provident Fund Trust

Mr. P Kaniappan - Managing Director

Mr. RS Raja Gopal Sastry - Chief Financial Officer (w.e.f 31-08-2015)

Mr. M C Gokul- Company Secretary (w.e.f 30-01-2016)

Mr. T.S. Rajagopalan - Chief Financial Officer (resigned w.e.f 31-08-2015)

Mr. Sivalai Senthilnathan- Company Secretary (resigned w.e.f 30-01-2016)

Mr. Sean Deason - Non-executive Director

Ms. Lisa J Brown - Non-executive Director

Mr. Jorge Solis - Non-executive Director

Mr. Shivaram Narayanaswami - Non-executive Director

Mr. M Lakshminarayan - Chairman and independendent Director

Dr. Lakshmi Venu- Independent Director (w.e.f. 19-05-2016)

Mr. Narayan K Seshadri- Independent Director

Mr. D E Udwadia - Independent Director (resigned w.e.f 01-04-2016)

The Company primarily operates in the automotive segment. The automotive segment includes all activities related to development, design and manufacture of products. 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 for the Company as per the requirement of IND AS 108 âOperating Segmentsâ.

* Non-current assets for this purpose consists of property, plant and equipment, intangible assets, capital work in progress and other non current assets.

Information about major customer

Revenue from three customers contributing more than 10% of sale of products amounted to INR 115,221 lakhs (March 31, 2016 : INR 96,778 lakhs), arising from sales of products and rendering of services.

9. FAIR VALUE

The carrying value of all other financial assets & liabilities approximate fair value.

The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:

Quantitative disclosures fair value measurement hierarchy for assets as at March 31, 2017:

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company has no borrowings and hence not exposed to interest rate risk.

Foreign currency risk

The majority of the Companyâs revenue and expenses are in Indian Rupees, with the remainder denominated in US Dollars. The Company has exports revenue and import purchases in foreign currency which act as a natural hedge and the management believes the currency risk is mitigated on account of such natural hedge and does not further hedge its currency risk.

Credit risk

Liquidity risk

The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.

10. CAPITAL MANAGEMENT

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017 and March 31, 2016.

These financial statements, for the year ended March 31, 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2015 (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ended on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at April 1, 2015, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Exemptions applied.

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Deemed cost for property, plant and equipment and intangible assets

Since there is no change in the functional currency, the Company has elected to continue with the carrying value as at April 1, 2015 for all of its investment property, intangibles and property plant & equipment as recognised in its Previous GAAP financial as deemed cost at the transition date.

Ind-AS 102 Share-based Payment has not been applied to equity instruments in employee stock options that were exercised before April 1, 2015 and which are vested but not exercised as on April 1, 2015.

Mandatory exceptions Estimates

The estimates at April 1, 2015 and at March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from Impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (i.e. the date of transition to Ind-AS) and as of March 31, 2016.

Effect of the Transition to Ind AS

Reconciliations of the Companyâs balance sheets prepared under Indian GAAP and Ind AS as of April 1, 2015 and March 31, 2016 are also presented in Note 40 & 41. Reconciliations of the Companyâs income statements for the year ended March 31, 2016 prepared in accordance with Indian GAAP and Ind AS in Note 42.

A. Property, plant and equipments

Under Indian GAAP, leasehold land were not required to be evaluated as operating or finance lease and accordingly, the Company had classified the land taken on lease from Adityapur Industrial Area Development Authority, Adityapur, Jamshedpur as part of Property, Plan and Equipment (PPE). However, under Ind AS, leasehold land has been classified as operating lease. Accordingly, the Company has reclassified the amount paid for the leasehold land from PPE to Other current assets and Other non-current assets. Also, the Company has reclassified the amortization on leasehold land from Depreciation and amortization expense to Rent under Other expenses.

B. Security Deposits

Under Indian GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent. The prepaid rent is amortised over the period of the deposit.

C. Investments Carried at fair value through P & L

Under Indian GAAP, the Company accounted for investments in quoted mutual funds as investment measured at the lower of cost or market value. Under Ind AS, the Company has measured such investments at fair value. The difference between fair value and Indian GAAP carrying amonut has been recognized in retained earnings.

D. Government Grant

Under Indian GAAP, the Company recognised the capital investment subsidy as in the nature of promoterâs contribution and treated it as capital reserve. Under Ind AS, the grant set up as deferred income is recognised in profit or loss on a systematic basis over the useful life of the asset.

E. Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity. On the date of transition, the net impact on deferred tax liabilities is of INR 9.83 lakhs (March, 31 2016: INR 2.23 lakhs).

F. Proposed Dividend

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability of INR 421.70 lakhs for the year ended on March 31, 2015 recorded for dividend has been derecognised against retained earnings on April 1, 2015 and recognised in the year of payment i.e. 2015-2016.

G. Sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus sale of goods under Ind AS has increased by INR 16,708.01 lakhs with a corresponding increase in other expense.

H. Other Comprehensive Income

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is reduced by INR 95.12 lakhs for the year 2015-16 and Remeasurements gains/ losses on defined benefit plans has been recognized in the OCI net of tax.

I. Share based Payment cost

Under Indian GAAP, there was no requirement to account for employee stock options scheme operated by the parent companies. The scheme of the ultimate holding Company, Wabco Holdings Inc., USA, 18,292 options (net of cancelled / lapsed) of the ultimate holding Company have been granted to some of the employees of the Company as at March 31, 2017. Based on valuation obtained by the Wabco Holdings Inc., USA, being the administrator of the Scheme, an amount of INR 239.63 Lakhs (March 31, 2016 INR 205.33 Lakhs) has been recorded as costs to the Company with respect to the scheme. Since there is no final payout by the Company, for the exercised options / units, an equivalent credit has been transferred to the reserves.

Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

11. DETAILS OF SPECIFIED BANK NOTES HELD AND TRANSACTED DURING THE PERIOD NOVEMBER 8, 2016 TO DECEMBER 30, 2016

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30 2016, the SBNs and other notes as per the notification is given below:

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

12. PREVIOUS YEAR FIGURES

Previous yearâs figures have been regrouped and reclassified where necessary to conform to this yearâs classification.

Mar 31, 2013

1. CORPORATE INFORMATION

WABCO INDIA LIMITED ("the company") was incorporated originally as Auto (India) Engineering Limited on 18th November 2004. The name of the company was changed to WABCO INDIA LIMITED on 2nd August 2011. The company is into its present business pursuant to the scheme of demerger of the brakes division of Sundaram-Clayton Limited into the company. The company is primarily engaged in the manufacture of air brake actuation systems for commercial vehicles. The company also provides software development services to the group companies.

On June 3, 2009, Clayton Dewandre Holdings Limited increased its percentage ownership to 75% by acquiring the shares from the other joint venture partner, TVS Group. Post acquisition, the company has become a subsidiary of Clayton Dewandre Holdings Limited and the company''s ultimate holding company is WABCO Holdings Inc.

2. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

3. RELATED PARTY DISCLOSURE

A. LIST OF RELATED PARTIES

a) Reporting entity WABCO INDIA LIMITED

b) Subsidiary companies The reporting entity does not have any subsidiary company.

c) Associate companies Nil

d) Holding company Clayton Dewandre Holdings Limited, (CDH) Rotterdam, The Netherlands

(became a holding Company of this Company from 3rd June 2009)

e) Ultimate holding company WABCO Holdings Inc., USA

f) Fellow Subsidiary companies 1 WABCO Fahrzeugsysteme.GmbH, Germany

2 WABCO China Co Ltd, China

3 WABCO France SAS, France

4 Meritor WABCO Vehicle Control Systems, USA

5 Shandong Weiming Automotive Products Co. Ltd, China

6 WABCO (Shanghai) Management Co Limited, China

7 WABCO Automotive SouthAfrica

8 WABCO Automotive UK Ltd, United Kingdom

9 WABCO Asia Private Limited, Singapore (Direct subsidiary of CDH)

10 WABCO Compressor Manufacturing Co. USA

11 WABCO Hong Kong Limited, Hong Kong

12 WABCO Japan Inc, Japan

13 WABCO Korea Ltd, Korea

14 WABCO Polska Sp.z o.o. Poland

15 WABCO Development Gmbh, Germany

16 WABCO Logistics GmbH, Germany

17 WABCO Australia Pty Limited, Australia

(Subsidiary of CDH through WABCO Asia Private Limited)

18 WABCO Europe BVBA, Belgium

19 WABCO Austria GesmbH, Austria

20 WABCO Belgium BVBA/SPRL, Belgium

21 WABCO do Brasil Industria e Comercio de Freios Ltda, Brazil

22 WABCO Brzdy K Vozidlum spol S.R.O, Czech Republic

23 WABCO Gmbh, Germany

24 WABCO Radbremsen Gmbh, Germany

25 WABCO Automotive Italia SRL, Italy

26 WABCO BV, Netherlands

27 WABCO Europe Holdings BV, Netherlands

28 WABCO Espana SLU, Spain

29 WABCO Automotive AB, Sweden

30 WABCO (Schweiz) Gmbh, Switzerland

31 WABCO Automotive B.V, Netherlands

32 WABCO ARAC Kontrols Sistemleri Destek VE Pazarlama Limited Sirketi, Turkey

33 WABCO Middle East and Africa FZCO, Dubai

34 WABCO IP Holdings LLC

35 WABCO Automotive Products Ltd, Cayman

36 WABCO Air Compressor Holdings Inc.,

37 WABCO Automotive Control Systems Inc.,

38 WABCO Group Inc.,

39 WABCO Group International Inc.,

40 WABCO Logistic (Quingdao) Co. Ltd

41 WABCO North America LLC

42 WABCO Expats Inc.

43 WABCO (Thailand) Limited

44 Guang Dong WABCO Fuwa Vehicle Brakes Co Limited

45 Ephicas BV

46 WABCO Foundation Brakes Private Limited, Chennai (Subsidiary of CDH through WABCO Asia Private Limited)

47 Ephicas BVBA

48 WABCO International LLC

49 WABCO Europe Holdings LLC

50 Ephicas Patents BVBA;

51 WABCO Financial Services SPRL;

52 WABCO France Logistics S.A.S.;

53 WABCO Services S.A.S

54 WABCO WURTH Workshop Services GmbH

55 WABCO Testbahn GmbH

56 WABCO Holding GmbH

57 WABCO Systeme GmbH

58 WABCO Holdings B.V.

59 WABCO Sandown B.V.

60 WABCO CV.

61 WABCO RUS LLC.

62 WABCO Vostok LLC.

63 WABCO Centro de Distribuicao de pecas Automotives Ltda, Brazil

g) Key management personnel Mr P Kaniappan - Whole Time Director

4. PREVIOUS YEAR FIGURES

Previous year''s figures have been regrouped and reclassified where necessary to conform to this year''s classification.

Mar 31, 2012

1. CORPORATE INFORMATION

WABCO INDIA LIMITED (formerly known as WABCO-TVS (INDIA) Limited) ("the company") was incorporated originally as Auto (India) Engineering Limited on 18th November 2004. The name of the company was changed to WABCO INDIA LIMITED on 2nd August 2011. The company is into its present business pursuant to the scheme of demerger of the brakes division of Sundaram-Clayton Limited into the company. The company is primarily engaged in the manufacture of air brake actuation systems for commercial vehicles. The company also provides software development services to the group companies.

On June 3, 2009, Clayton Dewandre Holdings Limited increased its percentage ownership to 75% by acquiring the shares from the other joint venture partner, TVS Group. Post acquisition, the company has become a subsidiary of Clayton Dewandre Holdings Limited and the company's ultimate holding company is WABCO Holdings Inc.

2. BASIS OF PREPARATION

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below

3. CONTINGENT LIABILITIES AND COMMITMENTS

As at As at 31st March 2012 31st March 2011

(A) Liabilities not provided for Rs. lakhs Rs. lakhs

(a) Contingent liabilities

i) Bills discounted 6,075.20 8,586.58

(b) Counter guarantee given to bankers 126.28 37.92

(c) On letters of credit opened with bankers -- 22.08

(d) Claims against the company not acknowledged as debts primarily towards:

i) Denial of Cenvat credit under Excise laws 11.27 11.27

ii) Denial of weighted deduction for Research and Development expenses claimed under Income tax Act for the years 2006-07 and 2007-08 183.30 183.30

iii) Reversal of service tax credit on certain inputs under the Service tax laws 150.45 8.67

iv) Denial of input tax credit under Tamil Nadu Value Added Tax laws for the years 2009-10 and 2010-11 86.05 --

v) Increase of trade license fees by the local authorities 3.04 3.04

vi) Levy of infrastructure and amenities charges by the Tamil Nadu Town and Country Planning Department 49.25 49.25

In respect all the above, based on legal advice obtained, the management is of the view that the above claims are not tenable and the same can be successfully contested and hence no provision has been made in the accounts.

(B) Commitments not provided for *

(a) Capital 10.53 347.14

(b) Others 1,031.70 530.06 * As certified by management

30. RELATED PARTY DISCLOSURE

A. LIST OF RELATED PARTIES

a) Reporting entity WABCO INDIA LIMITED (formerly WABCO-TVS (INDIA) Limited)

b) Subsidiary companies The reporting entity does not have any subsidiary company.

c) Associate companies Nil

d) Holding company Clayton Dewandre Holdings Limited, (CDH) Rotterdam, The Netherlands

(became a holding Company of this Company from 3rd June 2009)

e) Ultimate holding company WABCO Holdings Inc., USA

f) Fellow Subsidiary companies 1 WABCO Fahrzeugsysteme, GmbH, Germany

2 WABCO China Co Ltd, China

3 WABCO France SAS, France

4 Meritor WABCO Vehicle Control Systems, USA

5 Shandong Weiming Automotive Products Co. Ltd, China

6 WABCO (Shanghai) Management Co Limited, China

7 WABCO Automotive South Africa

8 WABCO Automotive UK Ltd, United Kingdom

9 WABCO Asia Private Limited, Singapore (Direct subsidiary of CDH)

10 WABCO Compressor Manufacturing Co. USA

11 WABCO Hong Kong Limited, Hong Kong

12 WABCO Japan Inc, Japan

13 WABCO Korea Ltd, Korea

14 WABCO Polska Sp.z o.o. Poland

15 WABCO Development Gmbh, Germany

16 WABCO Logistics GmbH, Germany

17 WABCO Australia Pty Limited, Australia

(Subsidiary of CDH through WABCO Asia Private Limited)

18 WABCO Europe BVBA, Belgium

19 WABCO Austria GesmbH, Austria

20 WABCO Belgium BVBA/SPRL, Belgium

21 WABCO do Brasil Industria e Comercio de Freios Ltda, Brazil

22 WABCO Brzdy K Vozidlum spol S.R.O, Czech Republic

23 WABCO Gmbh, Germany

24 WABCO Radbremsen Gmbh, Germany

25 WABCO Automotive Italia SRL, Italy

26 WABCO BV, Netherlands

27 WABCO Europe Holdings BV, Netherlands

28 WABCO Espana SLU, Spain

29 WABCO Automotive AB, Sweden

30 WABCO (Schweiz) Gmbh, Switzerland

31 WABCO Automotive B.V, Netherlands

32 WABCO ARAC Kontrols Sistemleri Destek VE Pazarlama Limited Sirketi , Turkey

33 WABCO Middle East and Africa FZCO, Dubai

34 WABCO Centro de Distribuicao de pecas Automotives Ltda, Brazil

35 WABCO Foundation Brakes Private Limited, Chennai (Subsidiary of CDH through WABCO Asia Private Limited)

36 WABCO IP Holdings LLC

37 WABCO Automotive Products Ltd., Cayman

38 WABCO Air Compressor Holdings Inc.,

39 WABCO Automotive Control Systems Inc.,

40 WABCO Group Inc.,

41 WABCO Group International Inc.,

42 WABCO Logistic (Quingdao) Co. Ltd

43 WABCO Inc.,

44 WABCO North America LLC

45 WABCO Automotive Holdings Inc.,

46 WABCO Expats Inc.

g) Key management personnel Mr P Kaniappan - Whole Time Director

4. PREVIOUS YEAR FIGURES

Previous year's figures have been regrouped and reclassified where necessary to conform to this year's classification.

Mar 31, 2010

Aa) AS - 27 Financial Reporting of Interests in Joint Ventures

The company has no interest in any joint venture.

ab ) AS - 28 Impairment of Assets

During the year 2009-2010, the carrying amount of the assets net of accumulated depreciation as on the balance sheet date is not less than the recoverable amount

(Rupees in lakhs) As at/ As at/ Year ended Year ended 31.03.2010 31.03.2009

ac) AS - 29 Provisions, contingent liabilities and contingent assets

i) Provisions In respect of warranty obligations, provision is made in accordance with terms of sale vide Schedule XIV to Balance Sheet

ii) Contingent liabilities

Amount for which the company is contingently liable is disclosed in note 6.

iii) Contingent assets

Contingent assets which are likely to give rise to possibility of inflow of economic benefits - Nil

iv) Contested liabilities are detailed in note 6.

2. Related party disclosure

LIST OF RELATED PARTIES

a) Reporting entity WABCO-TVS (INDIA) Limited

b) Subsidiary companies The reporting entity does not have any subsidiary company.

c) Associate companies - Sundaram Industries Limited, Madurai

- Southern Roadways Limited, Madurai

- T V Sundram Iyengar & Sons Limited, Madurai

- - Clayton Dewandre Holdings Limited, Rotterdam, The Netherlands

- ceased to be associate companies with effect from 3rd June 2009 consequent to the disposal of 35.83% of the shares held in the reporting entity to Clayton Dewandre Holdings Limited, RotterDam,The Netherlands

- The Reporting entity became a subsidiary of Clayton Dewandre Holdings Limited, (CDH) Rotterdam, The Netherlands with

effect from 3rd June 2009 consequent to the purchase of 35.83% shares.

d) Holding company Clayton Dewandre Holdings Limited, Rotterdam, The Netherlands

(became a holding Company of this company from 3rd June 2009.

e) Ultimate holding company WABCO Holdings Inc., USA

f) Fellow Subsidiary companies 1 WABCO Fahrzeugsysteme GmbH, Germany

2 WABCO China Co Ltd, China

3 WABCO France SAS, France

4 Meritor WABCO Vehicle Control Systems, USA

5 Shandong Weiming Automotive Product Co. Ltd, China

6 WABCO (Shanghai) Management Co Limited, China

7 WABCO Automotive SouthAfrica

8 WABCO Automotive UK Ltd, United Kingdom

9 WABCO Australia Pty Limited, Australia

10 WABCO Compressor Manufacturing Co. USA

11 WABCO Hong Kong Limited, Hong Kong

12 WABCO Japan Inc, Japan

13 WABCO Korea Ltd, Korea

14 WABCO Polska Sp. z.o.o, Poland

15 WABCO Development GmbH, Germany

16 WABCO Logistics GmbH, Germany

17 WABCO Asia Private Limted, Singapore

18 WABCO Europe BVBA, Belgium

19 WABCO Austria GesmbH, Austria

20 WABCO Belgium BVBA SPRL, Belgium

21 WABCO do Brasil Industria e Comercio de Freios Ltda., Brazil

22 WABCO Brzdy K Vozidlum spol S.R.O, Czeh Republic

23 WABCO GmbH, Germany

24 WABCO Radbremsen GmbH, Germany

25 WABCO Automotive Italia SRL, Italy

26 WABCO BV, Netherlands

27 WABCO Europe Holdings BV, Netherlands

28 WABCO Espana SLU, Spain

29 WABCO Automotive AB, Sweden

30 WABCO (Schweiz) GmbH, Switzerland

31 WABCO Automotive B.V, Netherlands

32 WABCO ARAC Kontrols Sistemleri Destek VE Pazarlama Limited Sirketi , Turkey

33 WABCO Middle East and Africa FZCO, Dubai

34 WABCO Centro de Distribuicao de Pecas Automotivas Ltda, Brazil

g) Key management personnel Mr C N Prasad - Whole Time Director till 17.06.2009

Mr P Kaniappan - Whole Time Director from 17.06.2009

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