Notes to Accounts of Bosch Home Comfort India Ltd.

Mar 31, 2025

Note-4: Leases Accounting Policy

The Company mainly has lease arrangements for buildings (offices and warehouse spaces) and equipments. Rental contracts typically ranges from 1 year to 12 years but may have extension/termination option as described in (iv) below. The Company assesses whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgement about whether there is an identified asset, whether the Company has the right to direct the use of the asset and whether the Company obtains substantially all the economic benefits from the use of that asset.

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company except for short term leases and leases of low value assets. Contracts may contain both lease and non-lease components. However, the Company has elected not to separate lease and non-lease components and instead account for these as a single lease components.

Lease payments to be made under reasonably certain extension option are also included in the measurement of the liability. The lease payments are discounted using the lessee''s incremental borrowing rate, being the rate that lessee would have to pay to borrow the fund necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar term, security and conditions.

Payments associated with short-term leases of equipment and buildings (office and warehouses) and all leases of low-value assets are recognized on a straight-line basis in the Statement of Profit and Loss. Short-term leases are leases with a lease term of 12 months or less. In determining the lease term, management considers all facts and circumstances that creates an economic incentive to exercise an extension option, or not to exercise a termination option. Extension option (or period after termination option) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

This note provides information for leases where the Company is a lessee. For lease where the Company is a lessor, see note 6.

See note 45 for the other accounting policies relevant to leases.

(iii) Estimation of fair value

Considering nature of properties, the Company obtains valuation for investment properties atleast annually. The fair value of investment properties (as measured for disclosure purposes in the financial statements) is based on the valuation by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

The fair value estimates for investment properties are categorised as level 3 as per Ind AS -113 - Fair value measurement.

Fair value is determined by applying market approach by sales comparision method / comparable transaction method. The main inputs used under this method are area, no of floors , estimated future life, rates for the office space in the nearby vicinity of the properties after adjustment of factors such as size, marketability, locations etc.

(iv) Leasing arrangements

Investment properties are leased to tenants under cancellable operating lease arrangement for a period of 11 months.

(v) Refer note 3(e) for the details of the investment properties whose title deeds are not in the name of Company.

Note 7 (a): Other Intangible Assets

Accounting Policy

Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. They have a finite useful life. Costs associated with maintaining software programmes are recognised as an expense as incurred. The Company amortises intangible assets with a finite useful life using the straight-line method over the following periods:

Amounts recognized in the Statement of profit and loss

Write-downs/write-offs of inventories amounted to Rs. 169.9 million (March 31, 2024 - Rs. 222.9 million) during the year. These were recognized as an expense during the year and included in respective financial statement line items in Statement of Profit and Loss.

Note 13: Current financial assets Note 13(a): Trade receivables Accounting Policy

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflect the Company''s unconditional right to consideration (that is, payment is due only on the passage of time).

Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.

The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables and contract assets which do not contain a significant financing component. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

The above excludes 12,967 (March 31,2024: 12,967) equity shares of Rs.10/- each relating to rights issue (2003-04 and 2013-14), which are kept in abeyance since the matter is pending for disposal at City Civil Court, Calcutta.

(i) There is no movement in number of equity shares and the amount outstanding thereon during the year ended March 31,2025 and March 31, 2024.

(ii) Rights, Preferences and Restrictions attached to Equity shares

The Company has only one class of equity shares having a face value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend recommended by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note: As per the E-Waste (Management) Rules, 2022, each year the Company is required to ensure re-cycling of e-waste, to the extent provided in these rules, in relation to electronic products (Air Conditioners and Refrigerators) sold in the preceding 10th year as its Extended Producer Responsibility. Based on management assessment and supported by legal opinion, obligation to ensure recycling of the e-waste would only arise on annual basis for the products sold in preceding 10th year on a going concern basis. Accordingly, the Company continues to assess and recognise the liability on year to year basis.

Note 24: Revenue from operations Accounting Policy

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. The transaction price of goods sold or services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as a part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognised only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved. The Company collects Goods and Services Tax on behalf of the Government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue. No element of significant financing is deemed present as the sales are made with a credit term, which is consistent with market practice.

Sale of Products:

Sales of products are recognised as revenue when control of the products has transferred, being when products are delivered to the customer i.e. satisfaction of the performance obligation. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

Sale of Services:

Sale of services includes following:-

1. Revenue from Annual Maintenance Contracts (AMCs) is recognised over the period of respective contract on a straight line basis.

2. Revenue from Design and development services is recognised over the period of time on cost plus mark-up basis.

3. Revenue from specific repairs and maintenance (other than AMCs) contracts is recognised at a point in time in accordance with the terms of the contract.

4. Revenue from contract with customer for installation and commissioning of air conditioning system is recognised with reference to stage of completion. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.

If the services rendered by the Company exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

Note 31: Current and Deferred Tax

Accounting Policy

Deferred tax is provided in full, using the liability method, on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognized for all deductible temporary differences and unused tax losses, if any, only if it is probable that future taxable income will be available to utilise those temporary differences and losses.

The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. See note 45 for the other accounting policies relevant to taxes.

Note 31 (b): Income Tax credit of Rs. 2.7 million [March 31,2024 - Rs. 1.6 million] has been recognised in other comprehensive income on account of actuarial remeasurements of post employment benefit obligations.

No aggregate amounts of current and deferred tax have arisen in the reporting periods which have not been recognized in net profit or loss or other comprehensive income but directly debited/ (credited) to equity.

* Current tax for the year ended March 31,2025 and March 31,2024 represents current tax liability in respect of a foreign jurisdiction where credit is not available in current year due to tax losses.

Note 32: Contingent liabilities, contingent assets & commitments

Accounting Policy

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

When there is possible obligation or present obligation but the likelihood of outflow of resources is remote, no provision or disclosure is made.

(a) Contingent liabilities		Rs. in million
	As at March 31, 2025	As at March 31, 2024
Tax matters under dispute :
Service tax	92.7	92.7
Sales tax	210.7	208.6
Income tax	74.0	66.2
Excise duty	1.5	0.3
Goods and Services tax	595.2	136.6
Claims against the Company not acknowledged as debts	22.9	19.7
Bonus liability pertaining to financial year 2014-15	5.8	5.8
Total	1,002.8	529.9

Management believes that its position in the aforesaid direct and indirect tax demands and other claims is likely to be upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any, in respect of these matters, pending resolution of the proceedings with the appellate authorities.

(b) The Honorable Supreme Court of India''s Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees'' Provident Fund Organisation laid down principles regarding non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. Based on the assessment of the management, the aforesaid matter is not likely to have a significant impact.

Note 33: Research and Development

The amount of Research and Development expenditure incurred in respect of capital expenditure amounted to Rs. Nil (March 31, 2024 Rs. Nil) and in respect of revenue expense amounted to Rs. 303.9 (March 31, 2024 - Rs. 285.9 million). The Research and Development expenditure is incurred in respect of cooling products for comfort and commercial use.

Note 34: Provisions Accounting Policy

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

See note 45 for the other accounting policies relevant to provisions.

Provision for Warranty Expense

The Company gives one year complete warranty (service and parts), 4 years additional warranty for gas charging and parts, 5 years warranty on controllers and 5 or 10 years warranty on compressor at the time of sale to ultimate customer of its products. It is expected that the most of the expenses against the provision will be incurred within warranty period, as the case may be.

Provision for warranty consider historical trends and experience regarding, average failure rate, replacement cost and other variables. Provision for litigations and probable claims

Provision for litigations and probable claims include likely claims against the Company in respect of certain indirect tax matters whose outcome depends on their ultimate settlement / conclusion.

(a) Provision for warranty during the year and utilization do not include Rs.166.4 Million for the year ended March 31,2025 (March 31,2024 - Rs. 150.2 Million) contractually payable to dealers and service providers to meet warranty cost.

(b) During the year ended March 31, 2025, the Company simplified the method for estimating warranty provisions related to a specific component of air conditioner. As a result of this change, there is decrease in the warranty provision by INR 13.5 million as at March 31,2025. The amount of effect on the future periods is not disclosed because estimating it is impracticable.

Note 35: Employee benefit obligations

(a) Compensated absences

The Compensated absences covers the liability for privilege leave and sick leave.

(b) Post employment obligations

Post-employment obligations -

The Company operates the following post-employment schemes:

(a) defined benefit plans - gratuity, and

(b) defined contribution plans - provident fund and employees'' state insurance.

Defined contribution plans

The Company contributes on a defined contribution basis to Employees'' Provident Fund / Pension Fund and Employees'' State Insurance . The contributions towards Provident Fund / Pension Fund and Employees'' State Insurances is made to regulatory authorities. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Gratuity

The Company provides gratuity to employees in India. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk Exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed as below: Investment risk : If the actual return on plan assets were below the return anticipated on the basis of the discount rate, the net defined benefit obligation would increase, assuming there were no changes in other parameters. This could happen as a result of a drop in return of the fund.

Interest-rate risk: A decrease in the market yields in the government bond will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Demographic risk: The gratuity plan provides a lump sum payment to vested employees at the time of retirement, death, incapacitation or termination of employment. Change in attrition rate or mortality assumption as compared to actual rate may result in change in benefit obligations, benefit expense and/ or payments than previously anticipated.

Salary escalation: The present value of defined benefit plan liability is calculated considering future salaries of plan participants. As such, an additional increase in the salary of the plan participants will increase the plan''s liability.

Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31, 2026 is Rs. 48.1 million (March 31, 2024 - Rs. 15.6 million).

The weighted average duration of the defined benefit obligation is 13.94 years (March 31,2024- 14.33 years). The expected maturity analysis of undiscounted gratuity benefit is as follows:

(ii) Fair value hierarchy

This section explains the judgements & estimates made in determining the fair values of the financial instruments. The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements).

(a) Only derivative contracts are measured at fair value. These derivative contracts are categorised as Level 2 financial instruments.

(b) For all financial instruments referred above that have been measured at amortised cost, their carrying values are reasonable approximations of their fair values. These are classified as level 3 financial instruments.

There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. Considering that all significant inputs required to fair value such instruments are observable, these are included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(iii) Valuation technique used to determine fair value of financial instruments

- Measured at FVPL / FVOCI

The fair value of derivative contracts is determined using counterparty quote based on forward exchange rates as at the balance sheet date.

- Measured at amortised cost

The carrying amounts of current financial assets and liabilities are considered to be the same as their fair values due to short-term nature of such balances. Difference between fair value of non-current financial instruments carried at amortised cost and the carrying value is not considered to be material to the financial statement.

(iv) Valuation processes

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Chief Financial Officer (CFO).

Note 37: Financial risk management and Capital management

Financial risk management

The Company''s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company''s principal financial liabilities comprise of trade payables. The Company''s senior management''s focus is to foresee the unpredictability and minimize potential adverse effects on the Company''s financial performance. The Company''s overall risk management procedures to minimise the potential adverse effects of financial market on the Company''s performance are as follows

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from deposits with banks and other financial instruments.

Trade receivables are derived from revenue earned from customers. Credit risk for trade receivable is managed by the Company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its customers to which the Company grants credit terms in the normal course of business. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Additionally, the Company has granted corporate guarantees to bank against the credit facilities availed by customers amounting to Rs. Nil (March 31, 2024 - Rs. 75.0 million). This is not considered significant component to the overall operations of the Company.

The Company uses the Expected Credit Loss (ECL) model to assess the impairment loss in respect of its financial assets.

As per ECL simplified approach, the Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of Company''s customers'' financial condition; aging of trade accounts receivable; the value and adequacy of collateral received from the customers in certain circumstances (if any); the Company''s historical loss experience; and adjustment based on forward looking information. The Company defines default as an event when there is no reasonable expectation of recovery. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

While cash and cash equivalents are also subject to the impairment requirements of Ind AS 109, the Company has not identified impairment loss in view of banks having high credit rating. In respect of security deposits and other financial assets, the risk of financial loss on account of credit risk is not expected to be material to the financial statements.

The Company does not have a high concentration of credit risk to a single customer forming part of a group exceeding 10% of company revenue. None of the Customer and other financial instruments of the Company result in material concentration of credit risk.

Financial assets are written off when there is no reasonable expectation of recovery, such as a counter-party failing to engage in a repayment plan with the Company. Where recoveries are made, these are recognised in the Statement of Profit and Loss.

Loss allowance as at March 31, 2025 and March 31, 2024 was determined as follows for both trade receivables and contract assets under the ECL simplified approach:

(B) Management of Liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions. A material and sustained shortfall in cash flow could undermine the Company''s credit rating and impair investor confidence.

The Company has sufficient unutilised unsecured credit facilities amounting to Rs. 5,564.7 million as at March 31, 2025 (March 31, 2024: Rs. 5,824.1 million) from its bankers to address any potential liquidity risk. Further, the Company expects realisation of its current assets including accounts receivables and inventories within twelve months ending March 31,2026.

Maturities of financial liabilities

The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance sheet date:

(C) Market Risk

Market risk comprises of foreign currency risk and interest rate risk. Interest rate risk arises from variable rate borrowings that expose the Company''s financial performance, financial position and cash flows to the movement in market rates of interest. The Company usually have short term borrowings which are primarily fixed rate interest bearing borrowings. Hence, the Company is not significantly exposed to interest rate risk. Foreign currency risk arises from transactions that are undertaken in a currency other than the functional currency of the Company. Further, the financial performance and financial position of the Company is exposed to foreign currency risk that arises on outstanding receivable and payable balances at a reporting year end date.

Foreign currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the Statement of Profit and Loss.

Considering the economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in foreign currency exchange rates. The risks primarily relate to fluctuations in US Dollar (USD) and Japanese Yen (JPY) to the functional currency (Rs.) of the Company.

The Company, as per risk management policy, uses forward exchange derivative contracts to hedge foreign currency risk. The Company evaluates the impact of foreign exchange rate fluctuations by assessing exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange exposure and a simultaneous foreign exchange rate shift of USD by 5% and JPY by 5% against the functional currency of the Company

The Company undertakes import and export transactions which expose the Company to foreign currency risk. It imports capital goods, raw materials, components, spare parts and stock-in-trade.

The Company''s foreign currency exposure arises mainly from foreign currency imports. As at the end of the reporting period, the carrying amount of the Company''s foreign currency denominated monetary assets and liabilities in respect of various foreign currency and derivative to hedge the exposure is as follows:

Capital management (a) Risk management

The Company considers the following components of its balance sheet to be managed as capital:

Total equity as shown in the balance sheet includes share capital, general reserve, retained earnings, capital reserve and securities premium.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management''s judgement of the appropriate balance of key elements in order to meet its strategic and day-to day needs. The Company considers the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust its capital structure. The Company has sufficient unutilised unsecured credit facilities amounting to Rs. 5,564.7 million as at March 31,2025 (March 31,2024: Rs. 5,824.1 million) from its bankers to address any potential liquidity risk. The Company is not subject to financial covenants in any of its significant financing agreements.

The Board of directors monitors the return on capital as well as the level of dividends to shareholder and appropriate decision in the interest of the Company is taken by the Board of directors.

(b) Dividend

The Company has not declared or paid dividend for the year ended March 31, 2024. For the year ended March 31, 2025, the Board of Directors have recommended the payment of a final dividend of Rs. 15 per share for fully paid up equity share. This proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting and are not recognised as liability as at reporting date.

The dividend would result in a cash outflow of around Rs. 407.9 million.

III. Terms and Conditions

All transactions were made on normal commercial terms and condition.

All outstanding balances are unsecured and will be settled in cash.

Note 39: Segment Reporting

A. Description

Operating segments are reported in a manner consistent with the internal reporting provided to the Managing Director (MD) of the Company who is identified as the chief operating decision maker (CODM). The MD assesses the financial performance and position of the Company, and makes strategic decisions.

The Company is engaged in the business of manufacturing, selling and trading of ''Hitachi'' brand of Air conditioners, refrigerators, chillers and VRF (variable refrigerant flow) systems and providing design and development service to Group Company. Accordingly, the Chief Operating Decision Maker (CODM) have identified that the Company''s business falls within two business which are as follows:

B. Information about reportable segment

Information related to each reportable segment is set out below. Segment Earnings before Interest and Tax (EBIT) and profit before tax, as included in internal management reports reviewed by the CODM, is used to measure performance because management believes that such information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

I Total Debt = Borrowings Lease liabilities

II Earnings available for debt service = (Loss)/Profit for the year adjusted by Deferred tax charge/(credit), Depreciation and amortisation expense, Finance costs and Loss on sale of property, plant and equipment (net)

II Total Debt Service Costs = Principal Payment of lease liabilities Interest paid on lease liabilities Payment of finance cost

III Average Inventory = Average of closing inventory at end of each quarter.

IV Average Accounts Receivable = Average of accounts receivable at end of each quarter.

V Average Trade Payables = Average of trade payables at end of each quarter.

VI Capital Employed = Total Equity Total debt Lease liabilities - Deferred Tax Assets

VII Average investment = Weighted Average of Investments in fixed deposits during the year Average carrying value of Investment Properties

(b) Details of crypto currency or virtual currency

The Company has not invested or traded in Crypto Currency or Virtual Currency during the year ended March 31, 2025 and March 31,2024.

(c) Compliance with approved scheme of arrangements

The Company has not entered into any scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.

(d) Undisclosed income

During the year ended March 31, 2025 and March 31, 2024 the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(e) Loans or advances to specified persons

The Company has not granted any loans or advances in nature of loans to promoters/directors/KMPs/Related parties (as defined under the Companies Act, 2013) for the year ended March 31,2025 and March 31,2024.

(f) Compliance with numbers of layers of companies

The Company does not have any investments in any Company during the year ended March 31,2025 and March 31,2024.

(g) Utilisation of borrowed funds and share premium

During the year ended March 31,2025 and March 31,2024, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium 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:

i) 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

ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries."

During the year ended March 31, 2025 and March 31, 2024, 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:

i) 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

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

(h) Relationship with struck off companies

Except as disclosed below, the Company does not have any transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956

(i) Borrowing secured against current assets

The Company has not obtained borrowings from banks or financial institutions on the basis of security of current assets and accordingly there is no requirement of submitting the quarterly returns or statements of current assets

(j) Wilful defaulter

The Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority during the year ended March 31,2025 and period ended March 31,2024.

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

There are no charges or satisfactions which were to be registered with the Registrar of Companies during the year ended March 31,2025 and period ended March 31,2024.

Mar 31, 2024

Background

Johnson Controls-Hitachi Air Conditioning India Limited (''the Company'') was incorporated in December 1984 as "Acquest Air Conditioning Systems Private Limited".

The Company is engaged in the business of manufacturing, selling and trading of ''Hitachi'' brand of Air conditioners, refrigerators, chillers and VRF (variable refrigerant flow) systems, and providing design and development services to Group Company to design, and/or support development and improvement of features in new and existing air conditioning products. Manufacturing facility for Air conditioners is set up at Kadi (North Gujarat). The Company performs its marketing activities through branches and regional service centers spread across India. The Company is a public limited company incorporated in India and is listed on the BSE Limited and National Stock Exchange of India Limited.

Note 1 : Basis of accounting and preparation of financial statements

Compliance with Ind AS

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

New and amended standards adopted by the Company

The Ministry of Corporate Affairs vide notification dated March 31, 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023, which amended certain accounting standards, and are effective April 1,2023:

- Disclosure of accounting policies â amendments to Ind AS 1

- Definition of accounting estimates â amendments to Ind AS 8

- Deferred tax related to assets and liabilities arising from a single transaction â amendments to Ind AS 12

The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications. These amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. Specifically, no changes would be necessary as a

consequence of amendments made to Ind AS 12 as the Company''s accounting policy already complies with the now mandatory treatment.

Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

â¢ certain financial assets and liabilities (derivative instruments) that is measured at fair value; and

â¢ defined benefit plans - plan assets measured at fair value.

Note 2 : Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

1. Estimation of provision for warranty claims (notes - 18, 22 and 34)

2. Recoverability of Deferred Tax Assets (note - 9)

3. Inventory obsolescence (note - 12)

4. Contingent liabilities (note - 32)

5. Lease term (note - 4)

6. Estimation of defined benefit obligation (note - 35)

7 Estimated useful life of property, plant and equipment (notes - 3)

8. Impairment of trade receivables (note - 13(a))

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

Note-4: Leases Accounting Policy

The Company mainly has lease arrangements for buildings (offices and warehouse spaces) and equipments. Rental contracts typically ranges from 1 year to 12 years but may have extension/termination option as described in (iii) below. The Company assesses whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgement about whether there is an identified asset, whether the Company has the right to direct the use of the asset and whether the Company obtains substantially all the economic benefits from the use of that asset.

In determining the lease term, management considers all facts and circumstances that creates an economic incentive to exercise an extension option, or not to exercise a termination option. Extension option (or period after termination option) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

See note 45 for the other accounting policies relevant to leases.

(iv) Extension and termination options

These options are used to maximize operational flexibility in terms of managing the assets used in the Company''s operations. Extension and termination options are included in the lease term, only if the Company has the right to exercise these options and reasonably certain to exercise the right.

(v) The total cash outflow for the leases for the year ended March 31,2024 was Rs. 468.4 million (March 31,2023 - Rs. 501.4 million).

(iii) Estimation of fair value

The fair value estimates for investment properties are categorised as level 3 as per Ind AS -113 - Fair value measurement.

(iv) Leasing arrangements

Investment properties are leased to tenants under cancellable operating lease arrangement for a period of 11 months.

(v) Refer note 3(e) for the details of the investment properties whose title deeds are not in the name of Company.

Note 7 (a): Other Intangible Assets

Accounting Policy

Amounts recognized in the Statement of profit and loss

Write-downs/write-offs of inventories amounted to Rs. 222.9 million (March 31, 2023 - Rs. 292.1 million) during the year. These were recognized as an expense during the year and included in respective financial statement line items in Statement of Profit and Loss.

Note 13: Current financial assets Note 13(a): Trade receivables Accounting Policy

The above excludes 12,967 (March 31,2023: 12,967) equity shares of Rs.10/- each relating to rights issue (2003-04 and 2013-14), which are kept in abeyance since the matter is pending for disposal at City Civil Court, Calcutta.

(i) There is no movement in number of equity shares and the amount outstanding thereon during the year ended March 31,2024 and March 31, 2023.

(ii) Rights, Preferences and Restrictions attached to Equity shares

Note 20: Current financial liabilities

Note 20(a): Current Borrowings Accounting Policy

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

(i) Rate of interest for the year ended March 31,2024 ranges from 7.50% p.a. to 8.15 % p.a. (March 31,2023 : 4.36% p.a. to 8.10% p.a.)

(ii) Amount of Rs. 1,410.0 million and Rs. 20.0 million outstanding as at March 31,2023 was repayable on April 07, 2023 and April 12, 2023, respectively.

(iii) The Company did not have borrowings from banks/financial institutions on the basis of security of current assets during the year ended March 31, 2024 and March 31, 2023.

(iv) The Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority.

(v) There are no charges or satisfactions which were to be registered with the Registrar of Companies during the year ended March 31, 2024 and

March 31,2023.

(vi) As at year end March 31,2024 and March 31,2023, the Company has used the borrowings from banks / financial institutions for the purpose for which it was taken.

Note 24: Revenue from operations Accounting Policy

Sale of Products:

Sale of Services:

Sale of services includes following:-

1. Revenue from Annual Maintenance Contracts (AMCs) is recognised over the period of respective contract on a straight line basis.

2. Revenue from Design and development services is recognised over the period of time on cost plus mark-up basis.

3. Revenue from specific repairs and maintenance (other than AMCs) contracts is recognised at a point in time in accordance with the

terms of the contract.

If the services rendered by the Company exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

Note 31: Current and Deferred Tax

Accounting Policy

Note 31 (b): Income Tax expenses / (credit) of Rs. 1.6 million [March 31,2023 - Rs. (4.9) million] has been recognised in other comprehensive income on account of actuarial remeasurements of post employment benefit obligations.

* Current tax for the year ended March 31,2024 and March 31,2023 represents current tax liability in respect of a foreign jurisdiction where credit is not available in current year due to tax losses.

Note 32: Contingent liabilities, contingent assets & commitments

Accounting Policy

When there is possible obligation or present obligation but the likelihood of outflow of resources is remote, no provision or disclosure is made.

(a) Contingent liabilities		Rs. in million
	As at March 31, 2024	As at March 31, 2023
Tax matters under dispute :
Service tax	92.7	119.3
Sales tax	208.6	210.1
Income tax	66.2	51.9
Excise duty	0.3	0.3
Goods and Services tax	136.6	4.4
Claims against the Company not acknowledged as debts	19.7	15.5
Bonus liability pertaining to financial year 2014-15	5.8	5.8
Total	529.9	407.3

(c) Capital commitments		(Rs. in million)
	As at March 31, 2024	As at March 31, 2023
Estimated value of contracts in capital account remaining to be executed and not provided for (net of advances)	108.1	282.9
Total	108.1	282.9
(d) Other commitments		(Rs. in million)
	As at March 31, 2024	As at March 31, 2023
The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfil quantified exports within specified years. Export obligation outstanding at the year end is:	342.5	342.5
Total	342.5	342.5

(e) There are no contingent assets recognised as at the year end (March 31, 2023 Rs. Nil)

Note 33: Research and Development

The amount of Research and Development expenditure incurred in respect of capital expenditure amounted to Rs. Nil (March 31,2023 Rs.

Nil) and in respect of revenue expense amounted to Rs. 294.3 million (March 31,2023 Rs. 284.6 million). The Research and Development expenditure is incurred in respect of cooling products for comfort and commercial use.

Note 34: Provisions Accounting Policy

See note 45 for the other accounting policies relevant to provisions.

Provision for Warranty Expense

Provision for warranty consider historical trends and experience regarding, average failure rate, replacement cost and other variables. Provision for litigations and probable claims

Provision for litigations and probable claims include likely claims against the Company in respect of certain indirect tax matters whose outcome depends on their ultimate settlement / conclusion.

Movement in each class of provision during the financial year, are set out below: ¹

Note 35: Employee benefit obligations

(a) Compensated absences

The Compensated absences covers the liability for privilege leave and sick leave.

(b) Post employment obligations

Post-employment obligations -

The Company operates the following post-employment schemes:

(a) defined benefit plans - gratuity, and

(b) defined contribution plans - provident fund and employees'' state insurance.

Defined contribution plans

Defined benefit plans

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated at the year end by an independent actuary using the projected unit credit method.

Gratuity

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk Exposure

Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31, 2025 is Rs. 15.5 million (March 31, 2023 - Rs. 22.3 million).

(ii) Fair value hierarchy

(a) Only derivative contracts are measured at fair value. These derivative contracts are categorised as Level 2 financial instruments.

There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

(iii) Valuation technique used to determine fair value of financial instruments

- Measured at FVPL / FVOCI

The fair value of derivative contracts is determined using counterparty quote based on forward exchange rates as at the balance sheet date.

- Measured at amortised cost

(iv) Valuation processes

Note 37: Financial risk management and Capital management

Financial risk management

The Company''s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company''s principal financial liabilities comprise of trade payables and borrowings. The Company''s senior management''s focus is to foresee the unpredictability and minimize potential adverse effects on the Company''s financial performance. The Company''s overall risk management procedures to minimise the potential adverse effects of financial market on the Company''s performance are as follows :

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk

Trade receivables are derived from revenue earned from customers. Credit risk for trade receivable is managed by the Company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its customers to which the Company grants credit terms in the normal course of business. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Additionally, the Company has granted corporate guarantees to bank against the credit facilities availed by customers amounting to Rs. 75.0 million (March 31,2023 - Rs. 75.0 million). This is not considered significant component to the overall operations of the Company.

The Company uses the Expected Credit Loss (ECL) model to assess the impairment loss in respect of its financial assets.

The Company does not have a high concentration of credit risk to a single customer forming part of a group exceeding 10% of company revenue. Such single largest customer has the total exposure in receivables of Rs. 288.2 million as of March 31,2024 (March 31,2023 - Rs. 276.8 million). None of the other financial instruments of the Company result in material concentration of credit risk.

Loss allowance as at March 31, 2024 and March 31, 2023 was determined as follows for both trade receivables and contract assets under the ECL simplified approach:

The Company has sufficient unutilised unsecured credit facilities amounting to Rs. 5,824.1 million as at March 31, 2024 (March 31, 2023: Rs. 3,852.5 million) from its bankers to address any potential liquidity risk. Further, the Company expects realisation of its current assets including accounts receivables and inventories within twelve months ending March 31,2025.

Maturities of financial liabilities

The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance sheet date:

Foreign currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the Statement of Profit and Loss.

The Company undertakes import and export transactions which expose the Company to foreign currency risk. It imports capital goods, raw materials, components, spare parts and stock-in-trade.

Capital management

(a) Risk management

The Company considers the following components of its balance sheet to be managed as capital:

Total equity as shown in the balance sheet includes share capital, general reserve, retained earnings, capital reserve and securities premium.

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust its capital structure. The Company has sufficient unutilised unsecured credit facilities amounting to Rs. 5,824.1 million as at March 31,2024 (March 31,2023: Rs. 3,852.5 million) from its bankers to address any potential liquidity risk. The Company is not subject to financial covenants in any of its significant financing agreements.

The Board of directors monitors the return on capital as well as the level of dividends to shareholder and appropriate decision in the interest of the Company is taken by the Board of directors.

(b) Dividend

The Company has not paid dividend for the year ended March 31,2024 and March 31,2023. Further the Board of Directors did not recommend dividend subsequent to the year ended March 31,2024.

Notes:

(i) There are no allowances on account for impaired receivables in relation to any outstanding balances, and no expense have been recognised in respect of impaired receivables due from related parties.

(ii) Key management personnel compensation does not include premium paid for group health insurance, as separate premium paid is not available.

(iii) Remuneration paid during the year to Mr. Gurmeet Singh and Mr. Sanjay Sudhakaran is in accordance with the special resolution approved at Shareholders'' meeting on September 14, 2023 as per requirements of Section 197 read with Schedule V.

(iv) The transactions with related parties have prior approval of the Audit Committee and Shareholders, where applicable, in accordance with the applicable regulations/Act.

III. Terms and Conditions

All transactions were made on normal commercial terms and condition.

All outstanding balances are unsecured and will be settled in cash.

Note 39: Segment Reporting

A. Description

The Company is engaged in the business of manufacturing, selling and trading of ''Hitachi'' brand of Air conditioners, refrigerators, chillers and VRF (variable refrigerant flow) systems and providing design and development service to Group Company. Accordingly, the Chief Operating Decision Maker (CODM) have identified that the Company''s business falls within two business which are as follows:

Reportable Segments	Operations
Cooling Products for comfort and commercial use	Providing Cooling products for comfort and commercial use in India and outside India and related services.
Design and development services	Design and development services relates to Air Conditioning for group companies outside India and to the Company''s other segment- Cooling Product for comfort and commercial use.

The Company''s chief operating decision maker (CODM), Managing Director (MD) reviews internal management report of each segment at least monthly.

B. Information about reportable segment

Note:

I Total Debt = Borrowings Lease liabilities

II Total Debt Service Costs = Principal Payment of lease liabilities Interest paid on lease liabilities Payment of finance cost

III Average Inventory = Average of closing inventory at end of each quarter.

IV Average Accounts Receivable = Average of accounts receivable at end of each quarter.

V Average Trade Payables = Average of trade payables at end of each quarter.

VI Capital Employed = Total Equity Total debt Lease liabilities - Deferred Tax Assets

VII Average investment = Weighted Average of Investments in fixed deposits during the year Average carrying value of Investment Properties

(b) Details of crypto currency or virtual currency

The Company has not invested or traded in Crypto Currency or Virtual Currency during the year ended March 31, 2024 and March 31,2023.

(c) Compliance with approved scheme of arrangements

The Company has not entered into any scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.

(d) Undisclosed income

During the year ended March 31, 2024 and March 31, 2023, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(e) Loans or advances to specified persons

(f) Compliance with numbers of layers of companies

The Company does not have investments in any company during the year ended March 31,2024 and March 31,2023.

(g) Utilisation of borrowed funds and share premium

During the year ended March 31,2024 and March 31,2023, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium 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:

i) 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

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

During the year ended March 31, 2024 and March 31, 2023, 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:

i) 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

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

(h) Relationship with struck off companies

Except as disclosed below, the Company does not have any transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

Mar 31, 2023

(i) Extension and termination options

(ii) The total cash outflows for the leases for the year ended March 31,2023 was '' 501.4 million (March 31,2022''489.1 million).

(iii) During the year ended March 31,2022, the Company had applied practical expedient under Ind AS 116 "Leases" in respect to Covid-19 related concessions. Accordingly, the Company had accounted for rent concessions amounting to 1.5 million during the year ended March 31, 2022.

(iv) Estimation of fair value

Considering nature of properties, the Company obtains valuation for investment properties atleast annually. The fair value of investment property (as measured for disclosure purposes in the financial statements) is based on the valuation by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

The fair value estimates for investment properties are categorised as level 3 as per Ind AS -113 - Fair value measurement.

(v) Leasing arrangements

Investment properties are leased to tenants under cancellable operating lease arrangement for a period of 11 months.

(v) Also, refer Note 3(e) in respect of title deed of an office building not held in the name of the Company.

(i) Deferred tax assets and deferred tax liabilities have been offset as they relate to same governing taxation law.

(ii) Based on the future financial projections prepared by the management that involved use of certain key assumptions viz. sales growth rate, estimate of gross margin, etc. it is assessed that the Company will have sufficient future taxable income against which the aforesaid deferred tax assets as at March 31,2023 will be realised.

The above excludes 12,967 (March 31,2022: 12,967) equity shares of '' 10/- each relating to rights issue (2003-04 and 2013-14), which are kept in abeyance since the matter is pending for disposal at City Civil Court, Kolkata.

(i) There is no movement in number of equity shares and the amount outstanding thereon during current year and previous year.

(ii) Rights, Preferences and Restrictions attached to Equity shares

The Company has only one class of equity shares having a face value of '' 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend recommended by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

a. Rate of interest For the year ended March 31,2023 range from 4.36% p.a to 8.10% p.a.(March 31,2022 : 4.0% to 5.0% p.a)

b. Amount of '' 1,410.0 millions repayable on April 07, 2023 and '' 20.0 millions repayable on April 12, 2023 (March 31,2022 - '' 80.0 millions repayable on April 01,2022 and '' 350.0 millions repayable on April 06, 2022)

c. The Company did not have borrowings from banks/financial institutions on the basis of security of current assets during the year ended March 31, 2023 and March 31,2022.

d. The Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority.

e. There are no charges or satisfactions which were to be registered with the Registrar of Companies during the year ended March 31, 2023 and March 31, 2022.

f. As at year end March 31,2023 and March 31,2022, the Company has used the borrowings from banks / financial institutions for the purpose for which it was taken.

Note 33: Contingent liabilities, contingent assets & commitments

(a) Contingent liabilities		'' in million
	As at	As at
	March 31, 2023	March 31, 2022
Legal matters under dispute :
Service tax	119.3	147.5
Sales tax (Note 4)	210.1	152.3
Income Tax	51.9	-
Excise duty	0.3	30.6
Goods & Services tax	4.4	2.2
Claims against the Company not acknowledged as debts	15.5	13.2
Bonus liability pertaining to financial year 2014-15	5.8	5.8
Total	407.3	351.6

1. Tax matters under dispute:

The Company is contesting the demands and the management believes that its position is likely to be upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any, in respect of these matters, pending resolution of the proceedings with the appellate authorities.

2. Bonus liability: Based on stay order of the Honorable Gujarat High Court dated April 5, 2016, the Company has not provided bonus liability for 2014-15.

3. The Honorable Supreme Court of India''s Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees'' Provident Fund Organisation laid down principles regarding non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management, the aforesaid matter is not likely to have a significant impact.

4. The Company had received a demand (including interest thereon) of '' 367.5 million in respect of sales tax matter during the year ended March 31,2021. The Company has an unadjusted refund receivable amounting to '' 113.0 million in respect of assessment years covered under the said matter. Against the said demand, the Company has given Corporate Guarantee to tax authorities amounting to '' 103.0 million (March 31,2022 - '' 103.0 million). Based on the assessment performed by Management (including recomputation), the Company has determined the contingent liability of '' 15.8 million (net) which is included in 33(a).

(b) Capital commitments		'' in million
	As at March 31, 2023	As at March 31, 2022
Estimated value of contracts in capital account remaining to be executed and not provided for (net of advances)	282.9	357.2
Total	282.9	357.2
(c) Other commitments		'' in million
	As at March 31, 2023	As at March 31, 2022
The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfil quantified exports within specified years. Export obligation outstanding at the year end is:	342.5	57.3
Total	342.5	57.3

(d) There are no contingent assets recognised as at the year end (March 31,2022 '' Nil)

Note 34: Research and Development

The amount of Research and Development expenditure incurred in respect of capital expenditure amounted to '' Nil (March 31, 2022 '' Nil) and in respect of revenue expense amounted to ''284.6 million (March 31,2022''310.3 million). The Research and Development expenditure is incurred in respect of cooling products for comfort and commercial use.

Note 35: Provisions

(i) Information about provisions:

Provision for Warranty

The Company gives one year complete warranty (service and parts), 1 or 2 year additional warranty on parts, 5 year warranty on controllers and 5/10 years warranty on compressors at the time of sale to the ultimate customer of its products. It is expected that the most of the expenses against the provision will be incurred within warranty period, as the case may be.

Note: Provision for warranty during the year and utilization do not include '' 203.9 million for the year ended March 31,2023 (March 31,2022 - '' 178.4 million) contractually payable to dealers and service providers to meet warranty cost.

Note 36: Employee benefit obligations

(a) Compensated absences

The Compensated absences covers the liability for privilege leave and sick leave. The classification of compensated absences into current and non-current is based on the report of independent actuary.

(b) Post employment obligations Defined contribution plans

The Company contributes to defined contribution plan viz., employees'' provident fund / pension fund, employees state insurance and superannuation fund. The obligation of the Company is limited to the amount contributed and it has no further contractual or constructive obligation.

Defined benefit plans Gratuity

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk Exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed as below:

Investment risk : If the actual return on plan assets were below the return anticipated on the basis of the discount rate, the net defined benefit obligation would increase, assuming there were no changes in other parameters. This could happen as a result of a drop in return of the fund.

Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31,2023 is '' 22.3 million, (March 31, 2022 - '' 17.3 million).

(ii) Fair value hierarchy

This section explains the judgements & estimates made in determining the fair value of the financial instruments. The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements).

(a) Only derivative contracts are measured at fair value. These derivative contracts are categorised as Level 2 financial instruments.

There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

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

(iii) Valuation technique used to determine fair value of financial instruments

- Measured at FVPL / FVOCI

The fair value of derivative contracts is determined using counterparty quote based on forward exchange rates as at the balance sheet date.

- Measured at amortised cost

(iv) Valuation processes

Note 38: Financial risk management and Capital management

Financial risk management

The Company''s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company''s principal financial liabilities comprise of trade payables and borrowings. The Company''s senior management''s focus is to foresee the unpredictability and minimize potential adverse effects on the Company''s financial performance. The Company''s overall risk management procedures to minimise the potential adverse effects of financial market on the Company''s performance are as follows :

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk

Trade receivables are derived from revenue earned from customers. Credit risk for trade receivable is managed by the Company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its customers to which the Company grants credit terms in the normal course of business. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Additionally, the Company has granted corporate guarantees to bank against the credit facilities availed by customers amounting to '' 75.0 million(March 31, 2022 - '' 75.0 million). This is not considered significant component to the overall operations of the Company.

The Company uses the Expected Credit Loss (ECL) model to assess the impairment loss in respect of its financial assets.

when there is no reasonable expectation of recovery. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

The Company does not have a high concentration of credit risk to a single customer exceeding 10% of company revenue. Single largest customer have the total exposure in receivables of ''276.8 million as of March 31,2023 (March 31,2022 - '' 161.6 million). None of the other financial instruments of the Company result in material concentration of credit risk.

Loss allowance as at March 31, 2023 and March 31, 2022 was determined as follows for both trade receivables and contract assets under the simplified approach:

The Company has sufficient unutilised unsecured credit facilities amounting to '' 3.852.5 million as at March 31,2023 (March 31,2022 : '' 4,880.3 million) from its bankers to address any potential liquidity risk. Further, the Company expects realisation of its current assets including accounts receivables and inventories within twelve months ending March 31,2024.

Foreign currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the Statement of profit and loss.

The Company, as per risk management policy, uses forward exchange derivative contracts to hedge foreign currency risk. The Company evaluates the impact of foreign exchange rate fluctuations by assessing exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange exposure and a simultaneous parallel foreign exchange rate shift of USD by 5% and JPY by 5% against the functional currency of the Company.

The Company undertakes import and export transactions which expose the Company to foreign currency risk. It imports capital goods, raw materials, components, spare parts and stock-in-trade.

Capital management

(a) Risk management

The Company considers the following components of its balance sheet to be managed as capital:

Total equity as shown in the balance sheet includes share capital, general reserve, retained earnings, capital reserve & securities premium.

The Board of directors monitors the return on capital as well as the level of dividends to shareholder and appropriate decision in the interest of the Company is taken by the Board of directors. Refer the below note for dividend declared and paid.

(b) Dividend

The Company has not paid dividend for the year ended March 31,2023 and March 31,2022. Further the Board of Directors did not recommend dividend subsequent to the year ended March 31,2023.

(1) During the year ended March 31,2022, there was a fire at one of the Company''s warehouse and due to this, there was a loss of inventory. During the year ended March 31,2022, such loss (net of estimated insurance claim receivable) of '' 7.4 million was recognized. Based on the final assessment by Surveyor, an amount of '' 15.6 million was recognized as income during the year ended March 31,2023 towards insurance claim receivable.

(2) Represents termination benefits paid/ payable to employees pursuant to realignment/ reorganisation in certain functional areas of the Company.

* As per Para 6(L)(xiv) of the General Instructions for Preparation of the Balance Sheet under Division II of the Schedule III of the Act, the

Company is required to provide explanation for changes in the ratio by more than 25% as compared to the preceding year.

Explanation:

1 The variance is primarily on account of loss during the year ended March 31,2023. The said loss is mainly on account of increase in commodity prices during the year ended March 31,2023 which is not fully compensated by increase in sale prices of products. Further, the Company has incurred the expenditure towards termination benefits paid/payable to the employee in the current year.

Note:

I Total Debt = Borrowings Lease liabilities

II Total Debt Service Costs = Principal Payment of lease liabilities Interest paid on lease liabilities Payment of finance cost

III Average Inventory = Average of closing inventory at end of each quarter.

IV Average Accounts Receivable = Average of accounts receivable at end of each quarter.

V Average Trade Payables = Average of trade payables at end of each quarter.

VI Capital Employed = Total Equity Total debt Lease liabilities - Deferred Tax Assets

VII Average investment = Weighted Average of Investments in fixed deposits during the year Average carrying value of Investment Properties

(b) Details of crypto currency or virtual currency

The Company has not invested or traded in Crypto Currency or Virtual Currency during the year ended March 31, 2023 and March 31,2022.

The Company has not entered into any scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.

(d) Undisclosed income

During the year ended March 31, 2023 and March 31, 2022, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(e) Loans or advances to specified persons

(f) Compliance with numbers of layers of companies

The Company does not have investments in any company during the year ended March 31,2023 and March 31,2022.

(g) Utilisation of borrowed funds and share premium

During the year ended March 31,2023 and March 31,2022, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or kind of funds) to any other persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

i) 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

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

During the year ended March 31,2023 and March 31,2022, the Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

i) 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

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

Note 46: Events occurring after reporting period

The Company evaluated subsequent events through May 23, 2023, the date the financial statements were available for issuance, and determined that there were no additional material subsequent events requiring disclosure.

Mar 31, 2018

NOTE 2: CRITICAL ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgments are:

- Estimated useful life of property, plant & equipment and intangible assets (note - 1 (l), 1(m), 1(n), 3, 5 and 6)

- Estimation of defined benefit obligation (note - 1(s) and 12)

- Estimation of provision for warranty claims (note - 1(r) and 11)

- Impairment of trade receivables (note - 1(j) and 7(a))

- Recognition of revenue from construction contracts (note -29)

- Provision for sales incentives schemes (note - 1(d) and 14(c))

- Contingent liabilities (note - 1(r) and 25)

- Current tax expense and payable (note - 1(f) and 22)

- Inventory obsolescence (note - 1(i) and 9)

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

Note (iii) Estimation of fair value

Considering nature of properties, the Company obtains valuation for investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties in the area in which these properties are located adjusted for certain factors. The fair value estimates for investment properties are categorized as level 3 as per Ind AS 113 - Fair Value Measurement.

Note (iv) Leasing arrangements

Certain investment property are leased to tenants under cancellable operating lease arrangement for a period of 11 months.

(i) Information about individual provisions and significant estimates:

Provision for Warranty

The Company gives one year complete warranty (service and parts) and 5/10 years warranty on compressors at the time of sale to the ultimate customer of its products. It is expected that the most of expenses against the provision will be incurred within warranty period, as the case may be. Provision for warranty during the year and utilization do not include Rs, 232.4 million for the year ended 31 March 2018 (31 March 2017 - Rs, 1,98.4 million) contractually payable to dealers and service providers to meet warranty cost.

Provision for litigations

Provision for litigations include likely claims against the Company in respect of certain legal matters like VAT, Service tax, excise duty, etc., whose outcome depends on ultimate settlement / conclusion with relevant authorities.

(a) Long term employee benefit obligations Compensated absences

(b) Post employment obligations Defined contribution plans

The Company also contributes to defined contribution plan viz., employeesâ provident fund / pension fund, employees state insurance and superannuation fund.

Note : The above amount does not include administrative charges

Defined benefit plans

Gratuity

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk Exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed as below:

Investment risk : If the actual return on plan assets were below the return anticipated on the basis of the discount rate, the net defined benefit obligation would increase, assuming there were no changes in other parameters. This could happen as a result of a drop in return by Life Insurance Corporation.

Interest-rate risk: A decrease in the market yields in the government bond will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.

Demographic risk: The gratuity plan provides a lump sum payment to vested employees at the time of retirement, death, incapacitation or termination of employment. Change in attrition rate or mortality assumption as compared to actual rate may result in change in benefit obligations, benefit expense and/ or payments than previously anticipated.

Salary escalation: The present value of defined benefit plan liability is calculated considering future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

Refer Note 33 for details of assets pledged as security for the above borrowings.

* Commercial papers were issued @ 6.75% p.a. for 119 days, starting from January 16, 2017.

* ECB of USD 10 million, taken from a bank, carries interest @ 6 month LIBOR plus 125 basis points which is repayable in two equal installments i.e. in year 2014-15 (paid) and 2016-17 (paid).

** There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.

(ii) Fair value hierarchy

This section explains the judgments & estimates made in determining the fair value of the financial instruments. The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements).

(a) Only derivative contracts are measured at fair value. These derivative contracts are categorized as Level 2 financial instruments.

(b) Assets and liabilities which are measured at Amortized cost for which fair values are disclosed.

For all financial instruments referred above that have been measured at Amortized cost, their carrying values are reasonable approximations of their fair values. These are classified as level 3 financial instruments.

There were no transfers between Level 1, Level 2 and Level 3 during the year.

The categories used are as follows :

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2 : The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. Considering that all significant inputs required to fair value such instruments are observable, these are included in level 2.

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

(iii) Valuation technique used to determine fair value of financial instruments

- Measured at FVPL / FVOCI

The fair value of derivative contracts is determined using counterparty quote based on forward exchange rates as at the balance sheet date.

- Measured at Amortized cost

The carrying amounts of current financial assets and liabilities are considered to be the same as their fair values due to short-term nature of such balances and no material differences in the values. Difference between fair value of non-current financial instruments carried at Amortized cost and the carrying value is not considered to be material to the financial statement.

(iv) Valuation processes

Note 27: Financial risk management and Capital management Financial risk management

The Companyâs activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Companyâs principal financial liabilities comprise of trade and other payables. The Companyâs senior managementâs focus is to foresee the unpredictability and minimize potential adverse effects on the Companyâs financial performance. The Companyâs overall risk management procedures to minimize the potential adverse effects of financial market on the Companyâs performance are as follows :

The Companyâs Board of Directors have overall responsibility for the establishment and oversight of the Companyâs risk management framework.

The Companyâs risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and from deposits with banks and other financial instruments.

i) Trade receivables

The carrying amount of trade receivables represent the maximum credit exposure net of provision for impairment. The maximum exposure to credit risk was Rs, 4,142.7 million as of 31 March 2018 (31 March 2017 - Rs, 2,830.6 million and 1 April 2016 - Rs, 2,799.5 million).

The Company does not have a high concentration of credit risk to a single customer exceeding 10% of company revenue. Single largest customer have the total exposure in receivables of Rs,.360.8 million as of 31 March 2018 (31 March 2017 - Rs, 244.9 million and 1 April 2016 - Rs,.234.48 million).

On account of adoption of Ind AS 109, the Company uses the Expected Credit Loss (ECL) model to assess the impairment gain or loss. As per ECL simplified approach, the Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of Companyâs customersâ financial condition; aging of trade accounts receivable; the value and adequacy of collateral received from the customers in certain circumstances (if any); the Companyâs historical loss experience; and adjustment based on forward looking information. The Company defines default as an event when there is no reasonable expectation of recovery.

ii) Cash and cash equivalents, bank balances, bank deposits, unbilled revenue and other financial assets

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs, 624.3 million, Rs, 491.6 million and Rs, 195.8 million as at 31 March 2018, 31 March 2017 and 1 April 2016, respectively, being the total of the carrying amount of balances with banks, bank deposits, unbilled revenue and other financial assets.

The bank balances and deposits are held with banks having high credit rating. None of the other financial instruments of the Company result in material concentration of credit risk.

(B) Management of Liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions. A material and sustained shortfall in cash flow could undermine the Companyâs credit rating and impair investor confidence.

Maturities of financial liabilities

The following table shows the maturity analysis of the companyâs financial liabilities based on contractually agreed undiscounted cash flows as at the Balance sheet date:

(C) Market Risk

Market risk comprises of foreign currency risk and interest rate risk. Interest rate risk arises from variable rate borrowings that expose the Companyâs financial performance, financial position and cash flows to the movement in market rates of interest. Foreign currency risk arises from transactions that are undertaken in a currency other than the functional currency of the Company. Further, the financial performance and financial position of the Company is exposed to foreign currency risk that arises on outstanding receivable and payable balances at a reporting year end date.

Foreign currency risk

The fluctuation in foreign currency exchange rates may have potential impact on the Statement of profit and loss and other comprehensive income and equity.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in foreign currency exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar (USD) and Japanese Yen (JPY) to the functional currency ('') of the Company.

The Company, as per risk management policy, uses forward exchange derivative contracts to hedge foreign currency risk. The Company evaluates the impact of foreign exchange rate fluctuations by assessing exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange exposure and a simultaneous parallel foreign exchange rate shift of USD by 5% and JPY by 4% against the functional currency of the Company.

The Company undertakes import and export transactions which expose the Company to foreign currency risk. It imports capital goods, raw materials, components, spare parts and stock-in-trade.

The Companyâs foreign currency exposure arises mainly from foreign currency imports. As at the end of the reporting period, the carrying amount of the Companyâs foreign currency denominated monetary assets and liabilities in respect of various foreign currency and derivative to hedge the exposure is as follows:

Interest rate risk

The Companyâs short term borrowings are primarily in fixed rate interest bearing borrowings. Hence, the Company is not significantly exposed to interest rate risk.

Capital management

(a) Risk management

The Company considers the following components of its balance sheet to be managed as capital:

Total equity as shown in the balance sheet includes share capital, general reserve, retained earnings, capital reserve & securities premium account.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to shareholders. The capital structure of the Company is based on managementâs judgment of the appropriate balance of key elements in order to meet its strategic and day-today needs. The Company considers the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Companyâs policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will

take appropriate steps in order to maintain, or if necessary adjust, its capital structure. The Company is not subject to financial covenants in any of its significant financing agreements.

The Board of directors monitors the return on capital as well as the level of dividends to shareholders. The Companyâs goal is to continue to be able to provide return to shareholders by continuing to distribute dividends in future periods. Refer the below note for dividend declared and paid.

Note 28: Segment reporting

The Companyâs chief operating decision maker (CODM), Chairman & Managing Director (CMD), assesses the financial performance and position of the Company, and makes strategic decisions.

The Company is engaged in the business of manufacturing, selling and trading of âHitachiâ brand of Air Conditioners, Refrigerators, chillers and VRF (variable refrigerant flow) systems. The Companyâs business falls within a single business segment of cooling products for comfort and commercial use. The segment revenue is measured in the same way as in the Statement of Profit or Loss.

The Companyâs revenue from geographic locations other than India are insignificant to the total revenue of the Company.

The Company does not have any customer contributing 10 per cent or more of total revenue.

(i) Construction contracts

On the balance sheet, the Company reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognized profits (less recognized losses) exceed progress billings; a contract represents a liability where the opposite is the case.

Note 30: Related party disclosures (As per Ind AS - 24)

(a) Relationships

(i) Parties exercising control Ultimate Parent

Johnson Controls International PLC, Inc., USA (JC)

Intermediate Parent

Johnson Controls, Inc., USA Immediate Parent

JCHAC India Holdco Limited, UK

(ii) Fellow Subsidiary Companies

Johnson Controls-Hitachi Air Conditioning Technology (Honkong) Ltd., Hong kong Johnson Controls-Hitachi Components ( Thailand ) Co. Ltd., Thailand Johnson Controls Hitachi Air Conditioning Malaysia Sdn. Bhd.,

Malaysia Johnson Controls India Pvt. Ltd., India

Johnson Controls Marine And Refrigeration India Limited, India

Johnson Controls-Hitachi Air Conditioning Spain, S.A.U., Spain

Johnson Controls-Hitachi Air Conditioning Wuhu Co. Ltd., China

Johnson Controls-Hitachi Wanbao Air Conditioning Guangzhou Co. Ltd., China

Johnson Controls Hitachi Air Conditioning Holding (UK) Ltd, United Kingdom

Johnson Controls (S) PTE Ltd.

Johnson Controls-Hitachi Air Conditioning Taiwan Co. Ltd., Taiwan Hitachi Johnson Controls Air Conditioning Inc., Japan Rola Star Pvt. Limited, India Ruskin Titus India Pvt. Limited, India

(iii) Associate /Joint Venture in JC group Shanghai Hitachi Electrical Appliances Co. Ltd., China Highly Electrical Appliances India Pvt. Ltd.

(iv) Associates

Entities having significant influence over the Company Hitachi Appliances Inc., Japan

Subsidiaries of entities having significant influence over the Company

Hitachi Asia Ltd.

Hitachi Automotive System (India) Pvt. Limited Hitachi Consumer Marketing Inc.

Hitachi Consumer Products (Thailand) Ltd.

Hitachi Data Systems India Pvt. Limited Hitachi High Technologies Hong Kong Ltd.

Hitachi High-Technologies ( Shanghai ) Co. Ltd.

Hitachi High-Technologies Corporation Hitachi High- Technologies India Pvt. Ltd.

Hitachi Home Electronics Asia(s) Pte. Limited Hitachi India Pvt. Ltd.

Hitachi Koki India Ltd.

Hitachi Terminal Solutions India Pvt. Ltd Hitachi Lift India Pvt. Ltd.

Hitachi Metals (India) Pvt. Limited Hitachi Metals Singapore Pte Ltd.

Hitachi Payment Services Pvt. Ltd Hitachi Plant Technologies India Pvt. Ltd.

Hitachi Sales ( Malaysia ) Sdn. Berhad Hitachi Procurement Service Co. Ltd.

Tata Hitachi Construction Machinery Company Pvt. Ltd.

Hitachi Hirel Power Electronics Pvt. Ltd.

(v) Key Management Personnel

Mr. Gurmeet Singh (Chairman and Managing Director)

Mr. Franz Cerwinka (Non-executive non-independent Director)

Mr. Yoshikazu Ishihara (Director) (With effect from 30 January 2018)

Mr. Mukesh Patel (Independent Director)

Mr. Ashok Balwani (Independent Director)

Ms. Indira Parikh (Independent Director)

Mr. Vinay Chauhan (Executive Director) (upto 30 January 2018)

Mr. Varghese Joseph (Executive Director) (upto 30 January 2018)

Mr. Devender Nath (Independent Director) (upto 30 January 2018)

Mr. Ravindra Jain (Independent Director) (upto 30 January 2018)

Mr. R S Mani (Independent Director) (upto 30 January 2018)

Mr. Vinesh Sadekar (Independent Director) (upto 30 January 2018)

Mr. Anil Shah (Executive Director) (upto 03 Sptember,2016)

[vi) Post employment benefit plan of Johnson Controls-Hitachi Air Conditioning India Limited

Johnson Controls-Hitachi Air Conditioning India Limited Employeesâ Gratuity Scheme (Trust) (Refer Note 12 for contribution made)

* Exclude provision for gratuity and compensated absences since these are based on actuarial valuation on an overall company basis.

Terms and Conditions

1) Transactions with related parties were made on normal commercial terms and conditions.

2) All outstanding balances are unsecured and repayable in cash.

Note 31: Leases (a) Company as lessee

Certain premises and equipments are obtained on cancellable and non-cancellable operating leases that are renewable either at the option of lessor or lessee, or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals debited to Statement of Profit and Loss for the year is '' 387.6 million (Previous year '' 342.3 million).

(b) Company as lessor

Certain premises and equipments are given on cancellable operating leases that are renewable either at the option of lessor or lessee, or both. Further, there are no subleases nor any restrictions imposed in lease agreements.

Note 32: First time adoption of Ind AS Transition to Ind AS

These are the Companyâs first financial statements prepared in accordance with Ind AS.

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

A. Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions A. 1. 1. Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment, and intangible assets at their previous GAAP carrying value.

A.2 Ind AS mandatory exceptions

The Company has applied the following exceptions from full retrospective application of Ind AS as mandatorily required under Ind AS 101:

A. 2.1 Estimates

An entityâs estimates in accordance with Ind AS at the date of transition shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were on error. Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP The Company has made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as this was not required under previous GAAP There is no material difference arising due to this change.

A. 2.2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Further, the standard permits measurement of financial assets accounted at Amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

B: Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS. The previous GAAP information is derived based on the audited financial statements of the Company for the year ended 31 March 2016 and 31 March 2017.

(iii) There is no change in cash and cash equivalents on account of adoption of Ind AS. Also, there is no impact of Ind AS on the Statement of Cash Flows.

C Notes to first-time adoption:

Note 1: Proposed Dividend

Under the previous GAAP until 31 March 2016, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, proposed dividend and dividend distribution tax thereon to the tune of '' 49.1 million has been reversed as at 1 April 2016 and was recognized in financial year 2016-2017. Accordingly, total equity has increased to that extent as at 1 April 2016. There is no impact on profit for the year ended 31 March 2017.

Note 2: Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31 March 2017 increased by Rs, 2.9 million (before tax) and by Rs, 1.9 million (net of tax) and Other comprehensicve income reduced by an equal amount. There is no impact on the total equity as at 1 April 2016 or 31 March 2017.

Note 3: Provisions

Under the previous GAAP discounting of provisions was not allowed. Under Ind AS, provisions are measured at discounted amounts, if the effect of time value is material. Accordingly, non-current provisions have been discounted to their present values. This change reduced the non-current provisions as at 31 March 2017 by Rs, 19.0 million. (1 April 2016 - Rs, 17.5 million). Consequent to the same, finance cost increased by Rs, 6.5 million, warranty expenses reduced by Rs, 8.0 million and equity as at 31 March 2017 increased by Rs, 1.5 million.

Note 4: Government Grant

Under previous GAAP duty saved under the EPCG scheme were presented as deduction from property, plant and equipment. Under Ind AS, the duty saved under EPCG scheme is recognized as a government grant. Consequently, grant under the EPCG scheme amounting to Rs, 39.6 million is recognized as deferred income on 1 April 2016 and an equivalent amount is increased in property, plant and equipment. During 31 March 2017, deferred income of Rs, 3.5 million is recognized and an equivalent amount is added to property, plant and equipment. Income from government grant of Rs, 10.4 million is recognized and depreciation of an equivalent amount is charged to the Statement of Profit and Loss for year ended 31 March 2017.

Note 5: Tax Expenses

Tax expenses have been recognized on the adjustments made on transition to Ind AS.

Note 6: Excise Duty

Under the previous GAAP revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2017 by Rs, 1,812.5 million. There is no impact on the total equity and profit for the year ended 31 March, 2017.

Note 7: Trade receivables

As per Ind AS 109, the group is required to apply expected credit loss model for recognising the allowance for doubtful debts. There is no material difference with respect to the amount for allowance for doubtful debts computed based on expected credit loss model compared to previous GAAP

Note 8: Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the Statement of profit and loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.

Under previous GAAP, these transaction costs were charged to Statement of profit and loss over the term of the borrowings and unAmortized amount was disclosed as unAmortized borrowing cost under other current asset. Accordingly, borrowings as at 31 March 2017 have been reduced by Rs, 4.8 million.

Note 9: Investment Property

Under the previous GAAP investment properties were presented as part of tangible assets under the heading property, plant & equipment. Under Ind AS, investment properties are required to be separately presented on the face of the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

Note 10: Advertisement, Sales promotion expenditure and Cash discount

Under the previous GAAP, certain advertisement and sales promotion expenditure, and cash discount were presented as expenses. Under Ind AS, these expenses are netted off from revenue. Consequently, revenue and other expenses for the year ended 31 March 2017 is lower by Rs, 545.2 million. There is no impact on total profit or total equity.

Note 11: Assets pledged as security

As at 1 April 2016, Working capital loans (Rate of Interest during the year ranging from 10.60% to 12.50% per annum) from banks were secured by hypothecation of inventories, book debts, movable fixed assets and by equitable mortgage of certain land and buildings of the Company. The charge on these assets has since been released.

Note 12:

(a) The disclosure relating to Specified Bank Notes* (SBNs) is not applicable to the Company during the year.

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8th November, 2016.

Note 13: Events occurring after reporting period

The Company evaluated subsequent events through 23 May 2018, the date the financial statements were available for issuance, and determined that there were no additional material subsequent events requiring disclosure.

Mar 31, 2017

b) Rights, preferences and restrictions attached to shares

The Company has only one class of Equity shares having a face value of '' 10/- per share. Each holder of Equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents legal ownerships of shares.

(e) There are no shares allotted either as full paid up by way of bonus shares or under any contract without payment being received in cash during five years immediately preceding March 31, 2017.

* Working capital loans (Rate of Interest during the year ranging from 10.60% to 12.50% per annum) from banks were secured by hypothecation of inventories, book debts, movable fixed assets and by equitable mortgage of certain land and buildings of the Company.

** Working capital loans from banks which are unsecured carries interest rate from 9.60% to 9.85% per annum during the year.

*** Commercial papers issued at discount @ 6.75% per annum for 119 days, starting from January 16, 2017.

* ECB of USD 100 lacs, taken from a Bank, carries interest @ 6 month LIBOR plus 125 basis points which is repayable in two equal installments i.e. in year 2014-15 (paid in previous year) and 2016-17 (paid). The principal and interest payment under above loan was fully hedged under Indian Rupees and interest liability has been swapped against fixed interest @ 7.45% per annum.

Notes:

a. Freehold Land aggregating Rs, 2,282.43 lacs and building having gross block of Rs,189.07 lacs (excludes self constructed buildings on freehold land) are held in the erstwhile name of the Company.

b. Buildings include Rs, 130.36 lacs in respect of ownership of premises in co-operative housing society and non trading corporations. Shares with face value of Re. 1 are fully paid up and unquoted. During the current year, part of the building having gross block Rs, 86.23 lacs, cumulative depreciation Rs, 23.93 lacs and depreciation for the year Rs, 1.41 lacs has been given on operating lease for the period of 11 months.

c. Plant & Machinery includes moulds and tools, testing equipments and tool kits with gross block Rs, 11,665.28 Lacs and net block of Rs, 3,895.82 Lacs.

Notes:

a. Freehold Land aggregating Rs, 2,282.43 lacs and building having gross block of Rs,189.07 lacs (excludes self constructed buildings on freehold land) are held in the erstwhile name of the Company.

b. Buildings include Rs, 130.36 lacs in respect of ownership of premises in co-operative housing society and non trading corporations. Shares with face value of Re. 1 are fully paid up and unquoted. During the current year, part of the building having gross block Rs, 86.23 lacs, cumulative depreciation Rs, 22.52 lacs and depreciation for the year Rs, 1.41 lacs has been given on operating lease for the period of 11 months.

c. Plant & Machinery includes moulds and tools, testing equipments and tool kits with gross block Rs, 10,486.39 Lacs and net block of Rs, 4,375.48 Lacs.

1. Segment reporting Primary segment:

Business segment is considered as Primary segment.

The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Refrigerators, air purifiers, chillers and VRF (variable refrigerant flow) systems. The CompanyRs,s business falls within a single business segment of Cooling Products for comfort and commercial use. Accordingly segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire the segment assets, the amount of charge for depreciation and amortization during the year are all as reflected in the financial statements for the year ended March 31, 2017 and as on that date. Information about Secondary segments:

Geographical segment is considered as Secondary segments.

2. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days'' salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognized in the Statement of profit and loss and the funded status and amounts recognized in the balance sheet for the plan.

Statement of profit and loss

3. Leases

(a) Company as lessee

Certain premises and equipments are obtained on cancellable and non-cancellable operating leases that are renewable either at the option of less or or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals debited to Statement of profit and loss for the year is Rs, 3,423.16 lacs (Previous year Rs, 2,358.50 lacs)

(b) Company as less or

Certain premises and equipments are given on cancellable operating leases that are renewable either at the option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals credited to Statement of profit and loss for the year is Rs, 175.41 lacs (Previous year Rs, 23.88 lacs)

4. Related Party Disclosures

(a) List of related Parties and Relationship

The Company has assessed the related party relationship as per Accounting Standard 18 and based on that assessment, below are related parties:

_Relationship_Parties_

A. Parties exercising control Johnson Controls International PLC, Inc.(Ultimate Holding Company), USA

Johnson Controls, Inc. (Intermediate Holding Company) (1st October, 2015 onwards), USA

JCHAC India Holdco Ltd. (Holding Company) (1st October, 2015 onwards), UK _Also, refer paragraph C below._

B. Parties under common control (Fellow Johnson Controls-Hitachi Air Conditioning Technology (Hongkong) Ltd., Hong Subsidiaries) (1st October, 2015 onwards) Kong

Johnson Controls-Hitachi Components (Thailand) Co. Ltd., Thailand Johnson Controls-Hitachi Air Conditioning Malaysia Sdn. Bhd., Malaysia Johnson Controls India Pvt. Ltd., India Johnson Controls Marine And Refrigeration India Ltd., India Johnson Controls-Hitachi Air Conditioning Spain, S.A.U, Spain Johnson Controls-Hitachi Air Conditioning Wuhu Co. Ltd., China Johnson Controls-Hitachi Wanbao Air Conditioning Guangzhou Co.Ltd., China Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd, United Kingdom Shanghai Hitachi Electrical Appliances Co. Ltd., China Hitachi Johnson Controls Air Conditioning, Inc., Japan _Also, refer paragraph C below._

C. Associates (w.e.f. 1st October, 2015 onwards) Entities having significant influence

Hitachi Ltd. Japan (Ultimate Holding Company upto 30th September, 2015) Hitachi Appliances, Inc. Japan (Holding Company upto 30th September, 2015)

Subsidiaries / associates of entities having significant influence over the company (these entities were fellow subsidiaries upto 30th September, 2015)

Flyjac Logistics Pvt. Ltd.

Highly Electrical Appliances India Pvt. Ltd.⁴

Hitachi Air Conditioning & Refrigerating Products (Guangzhou) Co. Ltd. Hitachi Air Conditioning Products (M) Sdn. Bhd.

Hitachi Air Conditioning Products Europe S.A.U

Hitachi Asia Ltd. - Singapore

Hitachi Automotive System (India) Pvt. Ltd.

Hitachi Consumer Marketing, Inc.

Hitachi Consumer Products (Thailand) Ltd.

Hitachi Data Systems India Pvt. Ltd.

Hitachi High Technologies Hong Kong Ltd.

Hitachi High-Technologies (Shanghai) Co. Ltd.

Hitachi High-Technologies Corporation Hitachi Hi-rel Power Electronics Pvt. Ltd.*

Hitachi Home Electronics Asia(s) Pte. Ltd.

Hitachi Household Appliances (Wuhu) Co. Ltd.

Hitachi India Pvt. Ltd.

Hitachi Koki India Ltd.

Hitachi Lift India Pvt. Ltd.

Hitachi Metals (India) Pvt. Ltd.

Hitachi Metals Singapore Pte. Ltd.

Hitachi Payment Services Pvt. Ltd. _Hitachi Plant Technologies India Pvt. Ltd._

_Relationship_Parties_

Hitachi Procurement Service Co. Ltd.

Hitachi Sales (Malaysia) Sdn. Berhad Hitachi Terminal Solutions India Pvt. Ltd.

Hitachi Tochigi Electronics (Thailand) Co. Ltd.

Shizuoka Hitachi Co. Ltd.

Taiwan Hitachi Co. Ltd.

_Tata Hitachi Construction Machinery Co. Ltd._

D. Key Managerial personnel Mr. Shoji Tsubokuta (Managing Director) (Upto 31st August, 2015)

Mr. Atsushi Ohtsuka (Managing Director)

(1st September, 2015 to 31st January, 2017)

Mr. Vinay Chauhan (Executive Director)

Mr. Amit Doshi (Executive Director) (Upto 31st May, 2015)

Mr. Anil Shah (Chief Financial Officer also Executive Director Upto 3rd September, 2016)

Mr. Gurmeet Singh (Executive Director) (Upto 31st January, 2017)

(Managing Director from 1st February, 2017)

Mr. Varghese Joseph (Executive Director) (1st August, 2015 Onwards)

5. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006

Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2017. Accordingly, no disclosures are required to be made under said Act.

6. Disclosures relating to Specified Bank Notes⁵ (SBNs) held and transacted during the period from 8th November, 2016 to 30th December, 2016

a) The Company gives one year complete warranty (service and parts) and 5/10 years warranty on compressors at the time of sale to purchasers of its products. It is expected that the most of expenses against the provision will be incurred within warranty period, as the case may be.

b) Provision for warranty during the year and utilization do not include Rs,1,984.55 lacs (Previous year Rs, 1,657.47 lacs) being agreed amount payable to dealers and service providers to meet warranty cost.

c) Other provision includes likely claims against the Company in respect of certain legal matters like VAT, Service tax, excise duty etc., whose outcome depends on ultimate settlement / conclusion with relevant authorities.

d) The company does not expect net outflow consequent to applicability of E-Waste management rules w.e.f. October, 2016.

7. Disclosures pursuant to the Regulation 34 (3) read with Para A of Schedule V to the SEBI (Listing obligations and disclosure requirements) Regulations, 2015 read with section 186 (4) of the companies Act, 2013.

oiiaie oiiciie

8. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, respective expenses under the head "Other Expenses" are net of write back of excess provision of earlier years amounting to Rs, 1,173.46 lacs (Previous year Rs, 1,421.05 lacs).

9. Prior year comparatives

The previous year figures have been regrouped wherever necessary to confo

Mar 31, 2016

1. Background

Hitachi Home and Life Solutions (India) Limited (''the Company'') was incorporated in December 1984 as "Acquest Air conditioning Systems Private Limited" under the provisions of Companies Act, 1956.

The Company is engaged in the business of manufacturing, selling and trading of ''Hitachi'' brand of Air conditioners, refrigerators, washing machines, air purifiers, chillers and VRF (variable refrigerant flow) systems. Manufacturing facility for Air conditioners is set up at Kadi (North Gujarat). The Company performs its marketing activities through twenty branches and forty service centers spread across India.

On 1st October, 2015, Johnson Controls Inc., Hitachi Ltd. and Hitachi Appliances, Inc. have completed Global Joint Venture agreement and commenced operations of Johnson Controls - Hitachi Air Conditioning Company (JCH). Through this agreement Johnson Controls had acquired 60 per cent ownership stake of the JCH and Hitachi Appliances, Inc. retained ownership of remaining 40 percent of the Company. Consequent to that, Hitachi Home & Life Solutions (India) Limited has become a subsidiary of Johnson Controls - Hitachi Air Conditioning Company.

2. Segment reporting

Business segment:

The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Refrigerators, washing machines, air purifiers, chillers and VRF (variable refrigerant flow) systems. Since the Company''s business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 - Segment Reporting are not reported upon separately.

Geographical segment:

Secondary segment reporting is based on the geographical areas of operations. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India).

Since the export market revenue and assets constitute less than 10% of the total revenue and assets respectively, the same has not been disclosed.

3. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

4. Leases

(a) Company as lessee

Certain premises are obtained on cancellable and non-cancellable operating leases that are renewable either at the option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals debited to Statement of profit and loss for the year is Rs.2,358.50 lacs (Previous year Rs.1,666.25 lacs).

(b) Company as lessor

Certain premises are given on cancellable operating leases that are renewable either at the option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals credited to Statement of profit and loss for the year is Rs.23.88 lacs (Previous year Rs.20.11 lacs)

5. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as on March 31, 2016: Rs.518.67 lacs (Previous year: Rs.252.89 lacs).

6. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006

Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2016. Accordingly, no disclosures are required to be made under said Act.

Note :

a) The Company gives 5/10 years warranty on compressors at the time of sale to purchasers of its products. Product warranty expense is calculated based on past historical data of replacement of compressors and cost incurred thereon and is provided for in the year of sale. It is expected that the most of expenses against the provision will be incurred within next five / ten years, as the case may be.

b) Other provision includes likely claims against the Company in respect of certain legal matters like VAT, Service tax, excise duty etc., whose outcome depends on ultimate settlement / conclusion with relevant authorities.

7. The Company was eligible for refund of excise duty paid on goods manufactured and removed from Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Statement of profit and loss is net of such refund of Rs.Nil lacs (Previous year Rs.52.30 lacs).

8. During the year, the Company has changed the basis of estimation of provision for obsolete/ non-moving inventories and provision for doubtful debts and as a result, the provision for obsolete inventories and doubtful debts have increased by Rs.1,131.35 lacs and Rs.140.24, which have been included in change in inventories of finished goods, work in progress & stock in trade and other expenses respectively.

9. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, respective expenses under the head "Other Expenses" are net of write back of excess provision of earlier years amounting to Rs.1,421.05 lacs (Previous year Rs.758.82 lacs).

10. CSR Expenditure

Gross amount required to be spent during the year : Rs.90.72 lacs (Previous year Rs.57.56 lacs)

Amount spent during the year : Rs.Nil (Previous year Rs.16.07 lacs)

11. Prior year comparatives

The previous year figures have been regrouped wherever necessary to confirm to current year''s classification.

Mar 31, 2013

1. Background

Hitachi Home and Life Solutions (India) Limited (''the Company'') was incorporated in December 1984 as "Acquest Air conditioning Systems Private Limited" under the provisions of Companies Act, 1956.

The Company is engaged in the business of manufacturing, selling and trading of ''Hitachi'' brand of Air conditioners, refrigerators, chillers and VRF (variable refrigerant flow) systems. Manufacturing facility for Air conditioners is set up at Kadi (North Gujarat) and Jammu. The Company performs its marketing activities through twenty one branches and thirty five service centers spread across India.

The Company is a subsidiary of Hitachi Appliances, Inc., Japan.

2. Segment reporting Business segment:

The Company is engaged in the business of manufacturing, trading and other related services of Air conditioners, Chillers and Refrigerators. Since the Company''s business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 - Segment Reporting are not required.

Geographical segment:

Secondary segment reporting is based on the geographical areas of operations. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India).

Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and assets, the same has not been disclosed.

3. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

4. Leases

Certain premises are obtained on cancellable and non-cancellable operating lease that are renewable either at the option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals debited to Statement of profit and loss for the year is Rs. 971.06 lacs (Previous year Rs. 1024.84 lacs).

5. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as on March 31, 2013: Rs. 149.87 lacs (Previous year: Rs. 643.68 lacs).

6. Contingent Liabilities

March 31, 2013 March 31, 2012 Rs.Lacs Rs. Lacs

Legal matters under dispute *:

Service tax 144.80 199.57

Sales tax 284.18 264.77

Customs duty 0.92 0.92

Excise duty 17.16 0.50

Guarantees given by the bankers on behalf of the Company 78.15 44.09

Claims against the Company not acknowledged as debts 64.32 59.21

589.53 569.06

* The company is contesting the demands and the management believe that its position will likely be upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any in respect of legal matters, pending resolution of the proceedings with the appellate authorities.

7. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006

Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2013. Accordingly, no disclosures are required to be made under said Act.

Note :

a) The Company gives 5 years warranty on compressors at the time of sale to purchasers of its products. Product warranty expense is calculated based on past historical data of replacement of compressors and cost incurred thereon and is provided for in the year of sale. It is expected that the most of expenses against the provision will be incurred within next five years.

b) Other provision includes likely claims against the Company in respect of certain legal matters like VAT, Service tax, excise duty etc, whose outcome depends on ultimate settlement / conclusion with relevant authorities.

8. The Company is eligible for refund of excise duty paid on goods manufactured and removed from Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Statement of profit and loss is net of such refund of Rs. 295.88 lacs (Previous year Rs. 414.44 lacs).

9. The Company avails input tax credit on purchases made by it from the dealers availing VAT Remission Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act) since FY 2005-06. During the year, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT Act of Rs. 183.12 lacs (aggregated till date Rs. 908.37 lacs) net of Rs. 46.41 lacs (aggregated till date Rs. 466.80 lacs), being the amount adjusted against the payment of Central Sales Tax and Value Added Tax liabilities on sales made from Jammu and Kashmir unit ("VAT Set off''). In respect of the said matter, the Company has received a demand of Rs. 17.79 lacs being the VAT set off claimed in FY 2005-06, which has been challenged by the Company in High Court of Jammu & Kashmir and the matter is subjudise till the date of balance sheet. The Company, based on the external opinion, has considered the entire input tax credit of Rs. 908.37 lacs (net of VAT setoff claimed of Rs. 466.80 lacs) as recoverable.

10. There was a major fire on 18th July, 2012 at Unit II in Kadi plant due to which it had become non-operational, which has been reconstructed and production has recommenced from 13th January 2013. The loss incurred by the Company is adequately covered under insurance policy, which is on replacement cost basis. Accordingly, the Company has recognized insurance claim to the extent of written down value of fixed assets and costs of inventories destroyed / damaged only. The Company is in advanced stage of finalization of claim with insurers and has so far received Rs. 7,000 lacs from the Insurance Company by way of an "on account" payment in addition to the salvage value of destroyed assets / inventories. Balance amount of claim is disclosed as Insurance claim receivable in note no. 18.

Based on affirmation of Insurance Company, the management believes that there is certainty with respect to the realization of balance insurance claim and accordingly, no other adjustments are required in the financial in this regard.

11. a) The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, respective expenses under the head "Other Expenses" are net of write back of excess provision of earlier years amounting to Rs. 924.90 lacs (Previous year Rs. 788.73 lacs).

b) Employee benefits expense is net of write back of excess provision of earlier year amounting to Rs. 137.25 lacs (Previous year Rs. 72.80 lacs).

12. Prior year comparatives

The previous year figures have been regrouped wherever necessary to confirm to current year''s classification.

Mar 31, 2012

1. Background

Hitachi Home and Life Solutions (India) Limited ('the Company') was incorporated in December 1984 as "Acquest Air conditioning Systems Private Limited" under the provisions of Companies Act, 1956.

The Company is engaged in the business of manufacturing, selling and trading of 'Hitachi' brand of air conditioners, refrigerators and chillers. Manufacturing facility for air conditioners is set up at Kadi (North Gujarat) and Jammu. The Company performs its marketing activities through eighteen branches and thirty four service centers spread across India.

The Company is a subsidiary of Hitachi Appliances Inc., Japan.

(a) Terms / rights attached to Equity shares

The Company has only one class of Equity shares having a face value ofRs 10/- per share. Each holder of Equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012, the amount per share recognized as dividend distributions to Equity shareholders is Rs 1.50 (Previous year: Rs 1.50).

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Above ECB, carrying interest @ 1.65% p.a., was availed in financial year 2008-09 and 2009-10 from the Holding Company. The same was repayable in two equal installments, out of which one has been repaid in financial year 2011-12 and another is repayable in financial year 2012-13.

2. Income Tax a. Current Tax

The Company has taxable earnings. Provision for tax has been computed under normal taxation after claiming deductions under section 80-IB of Income Tax Act, 1961 for Jammu unit.

Working capital loan (Rate of Interest ranging from 10.5% to 14% per annum) and Buyers' Credit (Rate of Interest 1.8% per annum) facilities from banks are secured by hypothecation of inventories, book debts, movable fixed assets and by equitable mortgage of certain immovable fixed assets of the Company.

Notes:

1. Plant & Machinery includes testing equipment and moulds and tools with net block of Rs 845.56 Lacs (Previous year: Rs 1,287.13 Lacs) gross block Rs 3,239.35 Lacs (Previous year: Rs 3,196.29 Lacs).

2. Buildings include Rs 130.36 lacs (Previous year: Rs 130.36 lacs) in respect of ownership of premises in co-operative housing society and non trading corporations. Shares with face value of Rs 1 (Previous year: Rs 1) are fully paid up and unquoted.

3 Segment reporting Business segment:

The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Chillers and Refrigerators. Since the Company's business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 - Segment Reporting are not required.

Geographical segment:

Secondary segment reporting is based on the geographical areas of operations. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India).

Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and assets, the same has not been disclosed.

4. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days' salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognized in the Statement of profit and loss and the funded status and amounts recognized in the Balance sheet for the plan.

5. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as on March 31, 2012: Rs 643.68 Lacs (Previous year: Rs 285.16 Lacs).

6. Contingent Liabilities

31st March, 2012 31st March, 2011 Rs Lacs Rs Lacs

Legal matters under dispute *:

Service tax 199.57 192.02

Sales tax 264.77 326.15

Customs duty 0.92 0.92

Excise duty 0.50 -

Guarantees given by the bankers on behalf of the Company 44.09 24.30

Claims against the Company not acknowledged as debts 59.21 50.35

569.06 593.74

* The company is contesting the demands and the management believe that its position will likely be upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any in respect of legal matters, pending resolution of the proceedings with the appellate authorities.

7. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006

Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2012. Accordingly, no disclosures are required to be made under said Act.

Note :

a) The Company gives 5 years warranty on compressors at the time of sale to purchasers of its products. Product warranty expense is calculated based on past historical data of replacement of compressors and cost incurred thereon and is provided for in the year of sale. It is expected that the most of expenses against the provision will be incurred within next five years.

b) Other provision includes likely claims against the Company in respect of VAT related matters, whose outcome depends on ultimate settlement / conclusion with relevant authorities.

8. The Company is eligible for refund of excise duty paid on goods manufactured and removed from Jammu unit, other than the amount of duty paid by utilization of CENVAT credit, in terms of Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Statement of profit and loss is net of such refund of Rs 414.44 Lacs (Previous year Rs 525.51 Lacs).

9. The Company avails input tax credit on purchases made by it from the dealers availing VAT Remission Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act) since FY 2005-06. During the year, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT Act of Rs 147.15 Lacs (aggregated till date Rs 725.25 Lacs) net of Rs 39.77 Lacs (aggregated till date Rs 420.39 Lacs), being the amount adjusted against the payment of Central Sales Tax and Value Added Tax liabilities on sales made from Jammu and Kashmir unit ("VAT Set off"). In respect of the said matter, the Company has received a demand of Rs 17.79 Lacs being the VAT set off claimed in FY 2005-06, which has been challenged by the Company in High Court of Jammu & Kashmir and the matter is subjudise till the date of Balance sheet. The Company, based on the external opinion, has considered the entire input tax credit of Rs 725.25 Lacs (net of VAT set off claimed of Rs 420.39 Lacs) as recoverable.

10. The Company has paid custom duty under protest of Rs 231.89 Lacs (Previous year Rs 268.19 Lacs) during the year for which provision has been created which is included in the purchase of stock-in-trade.

11. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, Other Expenses are net of write back of excess provision of earlier years amounting to Rs 788.73 Lacs (Previous year Rs 704.91 Lacs).

12. Prior year comparatives

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

Mar 31, 2011

1. Background

Hitachi Home and Life Solutions (India) Limited (Ãthe Company) was incorporated in December 1984 as "Acquest Air conditioning Systems Private Limited" under the provisions of Companies Act, 1956.

The Company is engaged in the business of manufacturing, selling and trading of ÃHitachi brand of air conditioners, refrigerators and chillers. Manufacturing facility for air conditioners is set up at Kadi (North Gujarat) and Jammu. The Company performs its marketing activities through eighteen branches.

The Company is a subsidiary of Hitachi Appliances, Inc., Japan.

2. Segment Reporting

Business Segment:

The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Chillers and Refrigerators. Since the Companys business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 Ã Segment Reporting are not reported upon separately.

Geographical Segment:

Secondary segment reporting is based on the geographical areas of operations. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India).

Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and assets, the same has not been disclosed.

3. Related Party Transactions

(a) List of related Parties and Relationship

Relation Party

A. Related parties exercising control Hitachi Ltd., Japan, (ultimate Holding Company)

Hitachi Appliances Inc., Japan (Holding Company)

B. Parties under common control (Fellow Subsidiaries) Hitachi Air Conditioning Products (M) Sdn. Bhd.

Hitachi Asia Ltd. Ã Singapore

Hitachi Household Appliances (Wuhu) Co. Ltd.

Hitachi Procurement Service Co. Ltd.

Hitachi Metglas (India) Pvt. Ltd.

Luvata Hitachi Cable (Thailand) Ltd.

Shanghai Hitachi Electrical Appliances Co. Ltd.

Shanghai Hitachi Household Appliances Co.

Hitachi Consumer Products (Thailand) Ltd.

Hitachi Koki India Ltd.

Hitachi Air Conditioning & Refrigerating Products (Guangzhou) Co. Ltd.

Hitachi India Pvt. Ltd.

Hitachi Lift India Private Ltd.

Hitachi Transport System India Pvt. Ltd.

C. Key Managerial personnel

Mr. Motoo Morimoto (Managing Director)

Mr. Vinay Chauhan (Executive Director)

Mr. Amit Doshi (Executive Director)

Mr. Anil Shah (Executive Director)

4. Contingent Liabilities

Particulars As at As at

March 31, 2011 March 31, 2010

Income tax matters Ã 1,266

Excise duty, service tax, sales tax and customs duty matters under dispute:

Service tax 19,202 22,403

Sales tax 32,615 29,895

Customs duty 92 92

Guarantees given by the bankers to various authorities on behalf of the Company 2,430 4,349

Miscellaneous Claims against the Company not acknowledged as debts 5,035 4,231

Total 59,374 62,236

5. Capital Commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 28,516 (Previous year: Rs. 42,980).

6. Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till March 31, 2011. Accordingly, no disclosures are required to be made under said Act and Schedule VI to the Companies Act, 1956.

7. Income Tax

Current Tax -

The Company has taxable earnings. Provision for tax has been computed under normal taxation after claiming deductions under section 80-IB of Income Tax Act, 1961 for Jammu unit.

8. Disclosure as per Accounting Standard-15(Revised) on Employee Benefit.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the plan.

9. The Company is eligible for refund of excise duty paid on goods manufactured and removed from Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Profit and Loss Account is net of such refund of Rs.52,551 (Previous year Rs. 39,453).

10. The Company avails input tax credit on purchases made by it from the dealers availing VAT Remission Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act) since FY 2005-06. During the year, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT Act of Rs. 17,572 (aggregated till date Rs. 57,808) net of Rs. 4,720 (aggregated till date Rs. 38,061), being the amount adjusted against the payment of Central Sales Tax and Value Added Tax liabilities on sales made from Jammu and Kashmir unit ("VAT Set off"). In respect of the said matter, the Company has received a demand of Rs. 1,779 being the VAT set off claimed in FY 2005-06, which has been challenged by the Company in High Court of Jammu & Kashmir and the matter is subjudise till the date of balance sheet. The Company, based on the external opinion, has considered the entire input tax credit of Rs. 57,808 (net of VAT setoff claimed of Rs. 38,061) as recoverable.

11. The Company has working capital facilities from banks secured by hypothecation of inventories, book debts and movable fixed assets and by equitable mortgage of certain immovable fixed assets of the Company.

12. The Company has paid custom duties under protest of Rs. 26,819 (previous year Rs.27,527) during the year for which provision has been created by debiting Ãraw material consumed and cost of trading goods sold account.

13. During the year, Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India, has accorded recognition to In-house research and development centre of the Company. Pursuant thereto, the Company has applied to DSIR for claiming deduction under the Income tax Act, 1961, which is yet to come. Accordingly, the Company has claimed weighted deductions of research and development expenditure of Rs. 70,562, as entitled under section 35(2AB) of the Income tax Act, 1961.

14. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, Selling & Distribution Expenses are net of write back of excess provision of earlier years amounting to Rs. 70,491 (Previous year: Rs. 25,975).

15 Prior year comparatives

The previous year figures have been regrouped wherever necessary to confirm to current years classification.

Mar 31, 2010

1. Background

Hitachi Home and Life Solutions (India) Limited (the Company) was incorporated in December 1984 as "Acquest Air conditioning Systems Private Limited" under the provisions of Companies Act, 1956.

The Company is primarily engaged in the business of manufacturing and selling of Hitachi brand of air conditioners and trading of Hitachi brand of refrigerators, washing machines and chillers. Manufacturing facility for air conditioners is set up at Kadi (North Gujarat) and Jammu. The Company performs its marketing activities through eighteen branches. The Company is a subsidiary of Hitachi Appliances, Inc., Japan.

2. Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

2.1 Income Taxes

Tax expense comprises current, deferred and fringe benefit tax. Current income-tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is virtual certainty backed by convincing evidence that such deferred tax assets can be realised against future taxable profits. Unrecognised deferred tax assets of earlier years are re-assessed at the balance sheet date and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realised.

2.2 Minimum Alternate Tax (MAT) Credit

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

2.3 Earnings Per Share (EPS)

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

2.4 Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.

2.5 Cash and Cash equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

2.6 Segment Reporting

Identification of Segment

The Companys operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of Customers.

2.7 Government grants and subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant or subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, such grant or subsidy is reduced from tfte expense item which it is intended to compensate.

2.8 Capital work in progress

All expenditure, including advances given during the project construction period, are accumulated and shown as capital work in progress until the assets are ready for commercial use. Assets under construction are not depreciated.

2.9 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

3. Segment Reporting

Business Segment:

The Company is engaged in the business of manufacturing, sales and other related services of Air Conditioners. Since Companys business falls within a single reportable business segment, disclosures under Accounting Standard (AS) 17 - Segment Reporting are not reported upon separately.

The Company is also engaged in trading of Chillers, Washing Machines and Refrigerators. However, the revenue generated from trading activity is insignificant in comparison with the total revenue, hence seg- ment reporting in respect of such activities is not provided.

Geographical Segment:

Secondary segment reporting is based on the geographical location of customers. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India).

Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and assets, the same has not been disclosed.

4. Related Party Transactions

(a) List of related Parties and Relationship

Relation Party

A.Related parties Hitachi Ltd., Japan, (ultimate Holding Company) exercising control Hitachi Appliances Inc., Japan (Holding Company)

B.Parties under common control Hitachi Air Conditioning Products (M) Sdn. Bhd. (Fellow Subsidiaries) Hitachi Asia Ltd. - Singapore

Hitachi Asia Ltd. - Hong Kong

Hitachi Household Appliances (Wuhu) Co. Ltd.

Hitachi Procurement Service Co. Ltd.

Hitachi Metglas (India) Pvt. Ltd.

Luvata Hitachi Cable (Thailand) Ltd.

Shanghai Hitachi Electrical Appliances Co. Ltd.

Shanghai Hitachi Household Appliances Co.

Hitachi Consumer Products (Thailand) Ltd.

Taiwan Hitachi Co. Ltd.

Renesas Technology Singapore Pte. Ltd.

Hitachi Home Electronics Asia (S) Pte. Ltd.

Hitachi Data Systems

Hitachi Koki India Ltd.

Hitachi Air Conditioning & Refrigerating Products

(Guangzhou) Co. Ltd.

Hitachi India Trading Pvt. Ltd.,

Hitachi India Pvt. Ltd.

Hitachi Air Conditioning Systems Co. Ltd.

Hitachi Lift India Private Ltd.

Hitachi Transport System (Asia) Pte. Ltd.

Hitachi Transport System India Pvt. Ltd.

C. Key Managerial personnel

Mr. Shinichi lizuka (Managing Director upto 28/03/2010)

Mr. Vinay Chauhan (Executive Director)

Mr. Amit Doshi (Executive Director)

Mr. Anil Shah (Executive Director)

(Currency: Rupees in thousands unless otherwise stated)

5. Contingent Liabilities

Particulars As at As at March 31, 2010 March 31, 2009

Income tax matters 1,266 1,266

Excise duty, service tax, sales tax and customs duty matters under dispute:

Excise duty - 2,760

Service tax 22,403 7,430

Sales tax 29,895 29,616

Customs duty 92 92

Guarantees given by the bankers to various authorities on behalf of the Company 4,349 3,566

Miscellaneous Claims against the Company not acknowledged as debts 4,231 3,536

Total 62,236 48,266

6. Capital Commitments

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 42,980 (Previous year: Rs. 197,252).

7. Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till March 31, 2010. Accordingly, no disclosures are required to be made under said Act and Schedule VI to the Companies Act, 1956.

8. Income Tax

Current Tax -

The Company has taxable earnings. Provision for tax has been computed under normal taxation after claiming deductions under section 80-IB of Income Tax Act, 1961 for Jammu unit. Tax expense for the year is net of reversal of excess provision of Rs.4,126 (previous year Rs. Nil) created in earlier years.

9. Provisions (AS-29 disclosure)

The movement in the product warranty and other provisions during the year is as under: (Figures in parenthesis represent previous year numbers).

10. Lease

Assets taken under operating leases are cancellable leases. Amount debited to Profit and Loss Account for the year Rs. 18,965 (Previous year: Rs. 14,713).

11. Disclosure as per Accounting Standard-15(Revised) on Employee Benefit.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the plan.

12. The Company is eligible for refund of excise duty paid on goods manufactured and removed from Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of Notification No. 56/2002- CE dated 14-11-2002. Excise duty recovered as disclosed in the Profit and Loss Account is net of such refund of Rs. 39,453 (Previous year: Rs.46,245). *

13. The Company is of the view, supported by the external opinion, that it can avail the input tax credit in respect of the purchases effected by it from the dealers availing VAT Remission Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act). Accordingly, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT Act aggregating Rs.11,960 (Previous year Rs. 8,066) during the year net of amount adjusted against payment of Central Sales Tax and Value Added Tax liabilities on sales made from Jammu and Kashmir unit. An amount of Rs.41,250 (Previous year Rs. 29,192) is outstanding as recoverable/ adjustable on account of input tax credit at year end.

14. The Company has working capital facilities from banks secured by hypothecation of inventories, book debts and movable fixed assets and by equitable mortgage of certain immovable fixed assets of the Company.

15. The Company has paid custom duties of Rs.27,527 (previous year Rs.Nil) during the year for which provision has been created by debiting raw material consumed and cost of trading goods sold account.

16. Prior year comparatives

The previous year figures have been regrouped wherever necessary to confirm to current years classification.

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