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Notes to Accounts of Eicher Motors Ltd.

Mar 31, 2023

39. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company accounting policies, which are described in note 3, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:-

Recoverability of intangible assets and intangible assets under development

This requires the management''s judgement and assumptions, which are affected by future market or economic developments.

The management has analysed the recognition criteria and future market conditions and is confident that these assets do not require any adjustments to their carrying value at the year end.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. As at March 31, 2023 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Share-based payments

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 49.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.

Equity investments designated at FVTOCI

Equity instruments designated at fair value through OCI include investments in equity shares of Stark Future S.L.,. for a non-controlling interests of 11.48% (undiluted basis). This investment was irrevocably designated at initial recognition as fair value through OCI considering it to be strategic in nature.

40. RESEARCH AND DEVELOPMENT EXPENSES

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 81.44 crores (March 31, 2022 : Rs. 70.10 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 228.13 crores (March 31, 2022 : Rs. 172.44 crores).

41. CONTINGENT LIABILITIES NOT PROVIDED FOR

Particulars	As at March 31, 2023	As at March 31, 2022
a) In respect of following:
- Excise duty matters	18.69	18.97
- Sales tax matters	6.66	7.04
- Service tax matters	0.39	0.39
- Customs duty matters	3.48	3.48
- Goods and Services tax	2.00	0.25
b) Claims against the Company not acknowledged as debts	11.73	10.84
c) Guarantees given:-	274.77	252.82
to bank/others for credit facility granted to 100% subsidiary Company
- Dues outstanding	96.90	52.86

All the above matters other than guarantee given by the Company are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2023 by Mr. K.K.Dharni (FIAI M.No. 00051), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

Gratuity :

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

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 3.42 crores

(increase by Rs. 3.80 crores) [ as at March 31, 2022: Decrease by Rs. 2.39 crores (increase by Rs. 2.65 crores)].

- If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase

by Rs. 3.79 crores (decrease by Rs. 3.44 crores) [ as at March 31, 2022: Increase by Rs. 2.64 crores (decrease by Rs.

2.41 crores )].

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

45. SEGMENT REPORTING DISCLOSURE

The Company primarily operates in the automotive segment. The automotive segment includes all activities related to development, design, manufacture, assembly and sale of two-wheelers as well as sale of related parts and accessories.

As defined in Ind AS 108, the chief operating decision maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of Ind AS 108 "Operating Segments".

Geographical information

The "Geographical Segments" comprises of domestic segment which includes sales to customers located in India and the overseas segment includes sales to customers located outside India.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2023, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2022 : Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company provides a credit period of 30 days to 270 days with respect to receivables from RET, RENA RE Brasil and RE UK Ltd.

The Company has a credit period of 45 days with respect to payables to VE Commercial Vehicles Limited.

Brand fees payable to Eicher Goodearth India Private Limited upon approval by Shareholders at its Annual General Meeting.

Rent payable to Eicher Goodearth India Private Limited on due basis.

47. FINANCIAL INSTRUMENTS

Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to stakeholders through efficient allocation of capital towards expansion of business, optimization of working capital requirements and deployment of surplus funds into various investment options. The Company uses the operational cash flows and equity to meet its capital requirements.

The Company is not subject to any externally imposed capital requirements.

The management of the Company reviews the capital structure of the Company on regular basis. As part of this review, the management of the Company considers risks associated with the movement in the working capital.

No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2023 and March 31, 2022.

As the carrying values of the financial instruments disclosed above are reasonable approximations of the fair value of the respective items, the fair values have not been disclosed separately.

47.2 FAIR VALUE MEASUREMENTS

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

The following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3 :-

Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The fair value of the financial assets and liabilities are included at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

- Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house.

- The fair value of bonds is based on quoted prices and market observable inputs.

- Trade receivables, cash and cash equivalents, other bank balances, loans, other current financial assets, current borrowings, trade payables and other current financial liabilities: Approximate their carrying amounts largely due to the short-term maturities of these instruments.

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

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

48. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives

The Company''s management monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

''The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity risk which impact returns on investments. Market risk exposures are measured using sensitivity analysis.

Foreign currency sensitivity

The company uses the sensitivity rate of 5% when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. In the opinion of the management, the sensitivity of increase or decrease of Rs. 31.27 crores (March 31, 2022: Rs. 20.59 crores) against the relevant foreign currencies is not material to the financial statements.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

Balances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds, etc.

The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates, liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower, the profit for the year ended March 31, 2023 would increase/decrease by Rs. 91.87 crores (for the year ended March 31, 2022: increase/decrease by Rs. 53.90 crores).

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Since the Company''s borrowings which are affected by interest rate fluctuation is very insignificant to the size and operations of the Company, therefore, a change in interest rate risk does not have a material impact on the Company''s financial statements in relation to fair value of financial instruments.

Liquidity risk

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The surplus funds with the Company and operational cash flows will be sufficient to dispose the financial liabilities with in the maturity period.

49. SHARE-BASED PAYMENTS

Employee Stock Option Plan, 2006 of the Company

Pursuant to the approval accorded by shareholders at their Annual General Meeting held on July 5th 2006, the Nomination and Remuneration Committee of the Company formulated Employee Stock Option Plan 2006'' ("ESOP, 2006") of the Company.

ESOP, 2006 is applicable to all permanent and full-time employees (as defined in the Plan), excluding employee who is a Promoter or belonging to Promoter Group of the Company and other exclusions as per SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time ("SEBI Regulations"). The eligibility of employees to receive grants under the Plan is decided by the Nomination and Remuneration Committee, from time to time at its sole discretion.

Vesting of the options shall take place in the manner as may be determined by the Nomination and Remuneration Committee at the time of grant, provided, the vesting period shall not be less than 1 year from the date of grant or such other period as may be prescribed, from time to time, under the aforesaid SEBI Regulations.

Vesting of options shall be subject to the conditions that the Grantee shall be in continuous employment with the Company (or its subsidiary company, as the case may be) and subject to such other conditions and exceptions as provided under Company''s ESOP, 2006.

The Exercise Price of each grant is determined by the Nomination and Remuneration Committee at the time of grant, provided that the Exercise Price shall not be less than the closing market price of the shares of the Company on NSE/BSE on the day preceding the date of grant of Options.

The options vested can be exercised at any time until completion of seven years from the date of vesting. Any options remaining unexercised at the end of the exercise period shall lapse. At the time of exercise, the participant may pay the exercise price in the form as approved by the Nomination and Remuneration Committee in accordance with the terms of the ESOP, 2006.

Each stock option, when exercised, is convertible into one equity share of the Company. No amount is payable by the option grantee on grant of option. The options carry neither rights to dividends nor voting rights until they are exercised & converted into shares.

Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is Rs. Nil (March 31, 2022 : Rs.

795.34). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

Restricted Stock Units Plan, 2019 ("RSU 2019")

Pursuant to approval accorded by shareholders at their Annual General Meeting held on August 1, 2019, the Nomination and Remuneration Committee of the Company formulated ''Eicher Motors Limited - Restricted Stock Units Plan 2019'' ("RSU Plan 2019") for grant of Restricted Stock Units ("RSU"), in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time ("SEBI Regulations").

RSU Plan 2019 is applicable to (i) a permanent employee of the Company working in India or outside India; or (ii) a Director of the Company, whether whole-time or not; and (iii) an employee, as defined in (i) or (ii) of this Para, of a Subsidiary Company, in India or outside India, excluding such category of persons as defined under RSU Plan 2019 of the Company and/or SEBI Regulations. The eligibility of employees or eligibility criteria to receive grants under RSU Plan 2019 is decided by Nomination and Remuneration Committee, from time to time.

The Nomination and Remuneration Committee shall specify the vesting criteria based on continued employment with the Company (or its subsidiary, as the case may be) and/or certain performance criteria to be fulfilled for vesting of RSU and/or any other criteria as it may deems fit and subject to such other conditions and exceptions as provided under RSU Plan, 2019.

Vesting of RSU shall take place in the manner as may be determined by the Nomination and Remuneration Committee at the time of grant, provided that the vesting shall not take place earlier than minimum vesting period of one year but not later than maximum vesting period of seven years from the date of grant of such RSU.

Exercise Price of each grant shall be the face value of the share as on date of exercise of RSU. The exercise period of a vested RSU shall be a maximum of seven years from the date of vesting of RSU, or such other shorter period as may be prescribed by the Nomination and Remuneration Committee at time of Grant and as set out in the letter of Grant, subject to such other conditions and exceptions as provided under Company''s RSU Plan, 2019. Any RSU remaining unexercised at the end of the exercise period shall lapse. At the time of exercise, the participant may pay the exercise price in a form as approved by the Nomination and Remuneration Committee in accordance with the terms of the RSU Plan, 2019.

Each RSU, when exercised, is convertible into one equity share of the Company. No amount is payable by the RSU grantee on grant of RSU. RSU carry neither rights to dividends nor voting rights until they are exercised & converted into shares.

Fair value of stock units granted in the year

The weighted average fair value of the stock units granted during the financial year is Rs. 2,464.95 (March 31, 2022 : Rs. 2,526.34). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

50. CAPITAL COMMITMENT

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 538.05 crores (March 31, 2022 : Rs. 434.49 crores).

The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

CSR activities undertaken directly or through Eicher Group Foundation (EGF) majorly includes sustainable initiatives for transforming rural communities, strengthening and upgradation of education system, protection of heritage, art and culture & responsible travel initiatives at Uttarakhand & North Eastern Himalayas.

The Company''s projects are long term and money is spent depending upon the requirement of the projects. During the financial year 2022-23, Rs. 13.05 crores (March 31, 2022: 27.74 crores) was spent as per the requirements of CSR projects and the unspent amount of Rs. 32.13 crores (March 31, 2022: 24.97 crores) is transferred to unspent CSR account pursuant to the CSR Rules subsequent to the year-end.

52. IND AS 116 LEASES

A. As a lessee

The Company has lease contracts for various buildings used in its operations. Leases of buildings generally have lease terms between 2 to 25 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. There are several lease contracts that include extension and termination options which are further discussed below.

The Company also has certain leases of buildings with lease terms of 12 months or less and leases with low value. The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for these leases.

Lease expenses relating to short term leases aggregated to Rs. 27.88 crores during the year ended March 31, 2023 (Rs.

22.97 crores during the year ended March 31, 2022).

Lease liabilities are recognised at weighted average incremental borrowing rate ranging from 8% to 9.5% per annum.

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to the lease liabilities as and when they fall due.

B. As a lessor Finance Lease

During the previous years, the Company has given office equipments on finance lease to its dealers for operational use by the dealers for servicing the customers of the Company. For the year ended March 31, 2023, the Company recognised interest income on lease receivables of Rs. 0.70 crores (March 31, 2022: Rs. 1.34 crores). The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.

53. The Board of Directors of the Company at their meeting held on May 11, 2023, considered and recommended a final dividend aggregating to Rs. 1,011.88 crores @ Rs. 37 per share (nominal value of Re. 1 per share) for the financial year ended March 31, 2023 (final dividend paid for previous financial year ended March 31, 2022 was Rs. 574.19 crores @ Rs. 21 per share of nominal value of Re. 1 per share).

54. The Board of Directors and shareholders of Eicher Polaris Pvt. Ltd (a joint venture company) (''EPPL'') at their respective meetings held on February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and appointed an insolvency professional as the liquidator. The liquidation process is under progress currently.

56. OTHER STATUTORY INFORMATION

(i) The Company has not defaulted on loans payable and have not been declared as wilful defaulter.

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

(iii) The Company has not revalued its Property, Plant & Equipments, Intangible Assets and Right to Use Assets during the year.

(iv) The Company does not have any transactions with companies struck off.

(v) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities

(Intermediaries) with the understanding that the Intermediary shall:

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

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

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

(x) The Company has not granted any loans and advances to promoters, directors, KMPs and other related parties (as defined under Companies Act 2013) during the year.

(xi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

57. STANDARDS NOTIFIED BUT NOT YET EFFECTIVE

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated March 31, 2023 to amend the following Ind AS which are effective from April 1, 2023.

(i) Definition of Accounting Estimates - Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.

The amendments are effective for annual reporting periods beginning on or after April 1, 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.

The amendments are not expected to have a material impact on the Company''s financial statements.

(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ''significant'' accounting policies with a requirement to disclose their ''material'' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments to Ind AS 1 are applicable for annual periods beginning on or after April 1, 2023. Consequential amendments have been made in Ind AS 107.

The Company is currently revisiting their accounting policy information disclosures to ensure consistency with the amended requirements.

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.

The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognised for all deductible and taxable temporary differences associated with leases and decommissioning obligations. Consequential amendments have been made in Ind AS 101. The amendments to Ind AS 12 are applicable for annual periods beginning on or after April 1, 2023. The Company is currently assessing the impact of the amendments.

58. Previous year''s figures have been recast/regrouped, wherever necessary to conform with the current period''s presentation.

Mar 31, 2022

Critical accounting judgements and key sources of estimation uncertainty

Recoverability of intangible assets and intangible assets under development

In addition, the management also assesses any indications of impairment of the carrying value of the assets. This requires the management''s judgement and assumptions, which are affected by future market or economic developments. The management has analysed the recognition criteria and future market conditions and is confident that these assets do not require any adjustments to their carrying value at the year end.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2022 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Share-based payments

Impairment of non-financial assets

40. Research and development expenses

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 70.10 crores (March 31, 2021 : Rs. 103.40 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 172.44 crores (March 31, 2021 : Rs. 195.70 crores).

Contingent liabilities not provided for :-

Particulars	As at March 31, 2022	As at March 31, 2021
a) In respect of following:
- Excise duty matters	18.97	18.97
- Sales tax matters	7.29	729
- Service tax matters	0.39	0.39
- Customs duty matters	3.48	3.48
b) Claims against the Company not acknowledged as debts	10.84	10.44
c) Guarantees given:-	252.82	229.61
to bank/others for credit facility granted to 100% subsidiary Company
- Dues outstanding	52.86	15741

includes Rs. 0.58 crores (March 31, 2021: Rs. 1.58 crores) capitalized during the year and Rs. 7.53 crores (March 31, 2021: Rs. 5.91 crores) considered in pre-operative expenditure (pending allocation).

Out of the total contribution made for employees'' provident fund, Rs. 6.55 crores (March 31, 2021: Rs. 6.80 crores) is made to Eicher Executive Provident Fund Trust, while the remaining contribution has been made to government administered provident fund.

B. Defined Benefit Plans

The Defined benefit plan of the Company includes entitlement of gratuity and provident fund scheme.

This plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk , longevity risk and salary risk

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2022 by Mr. K.K.Dharni (FIAI M.No. 00051), Fellow of the Institute of Actuaries of India. The present value of the defined

benefit obligation, and the related current service cost, were measured using the projected unit credit method.

Provident fund

The provident fund is governed by the Provident Fund Act, 1952. Under the defined benefit plan, the Company contributes to the "Eicher Executive Provident Fund Trust", for certain designation. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

The Actuary has provided a valuation for Provident Fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions provided below, the Company does not have additional obligation as at March 31, 2022.

Gratuity :-

â¢ If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 2.39 crores (increase by Rs. 2.65 crores) [ as at March 31, 2021: Decrease by Rs. 1.87 crores (increase by Rs. 2.06 crores)].

â¢ If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs. 2.64 crores (decrease by Rs. 2.41 crores) [ as at March 31, 2021: Increase by Rs. 2.06 crores (decrease by Rs. 1.88 crores )].

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

. Segment Reporting Disclosure

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

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

c) Non-current segment assets represents total non current assets excluding non current financial assets.

d) The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Revenue have been identified to segments on the basis of their relationship to the operating activities of the segment.

Information about major customers

No customer individually accounted for more than 10% of the revenue.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2021 : Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company provides a credit period of 30 days to 240 days with respect to receivables from RET, RENA and RE Brasil.

The Company has a credit period of 45 days with respect to payables to VE Commercial Vehicles Limited.

Brand fees payable to Eicher Goodearth India Private Limited upon approval by Shareholders at its Annual General Meeting.

Rent payable to Eicher Goodearth India Private Limited on due basis.

47. Financial instruments

Capital Management

The Company is not subject to any externally imposed capital requirements.

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

47.2. Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:-

The following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3 :-

Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Quantitative disclosures fair value measurement hierarchy for assets:-

There are certain Company''s financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:-* represents the investments in equity of Suryadev Alloys & Power Private Limited (as at March 31, 2022 and March 31, 2021) and Flamesun Solar Private Limited (as at March 31, 2022). As per the share purchase agreement between the Company and these parties, in case of termination or as the case may be, the Company shall transfer the equity shares to the person nominated by each party (Nominated person) as may be prescribed and consideration to receive in this regard shall be the same amount as paid by the Company towards purchase of these equity investments (cost of purchase).

The fair value of the financial assets and liabilities are included at the amount that would be received to sell an asset and paid to transfer

a liability in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair

values:

â¢ Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house.

â¢ The fair value of bonds is based on quoted prices and market observable inputs.

â¢ Trade receivables, cash and cash equivalents, other bank balances, loans, other current financial assets, current borrowings, trade payables and other current financial liabilities: Approximate their carrying amounts largely due to the short-term maturities of these instruments.

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

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

Financial risk management objectives and policies

Financial risk management objectives

The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. Market risk

Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Foreign currency sensitivity

The company uses the sensitivity rate of 5% when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. In the opinion of the management, the sensitivity of increase or decrease of Rs. 20.59 crores (March 31, 2021: Rs. 8.19 crores) against the relevant foreign currencies is not material to the financial statements.

Credit risk management

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates, liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower, the profit for the year ended March 31, 2022 would increase/decrease by Rs. 53.90 crores (for the year ended March 31, 2021: increase/decrease by Rs. 18.93 crores).

Interest rate risk

Liquidity risk

49. Share-based payments

Employee Stock Option Plan, 2006 of the Company

Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is Rs. 795.34 (March 31, 2021 : Rs. 40779). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

Restricted Stock Units Plan. 2019 ("RSU 2019")

Pursuant to approval accorded by shareholders at their Annual General Meeting held on August 1, 2019, the Nomination and Remuneration Committee of the Company formulated ''Eicher Motors Limited - Restricted Stock Units Plan 2019'' (âRSU Plan 2019") for grant of Restricted Stock Units ("RSU"), in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time ("SEBI Regulations").

Fair value of share options granted in the year

The weighted average fair value of the stock units granted during the financial year is Rs. 2,526.34 (March 31, 2021 : Rs. 1,270.18). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

50. Capital commitment

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 434.49 crores (March 31, 2021 :

Rs. 29730 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

CSR activities undertaken directly or through EGF majorly includes sustainable initiative for transforming rural communities, driver care program, road safety education, driver and mechanic Training, school supports, support under Covid-19,etc.

The Company''s projects are long term and money is spent depending upon the requirement of the projects. During the financial year 2021-22, Rs. 2774 crores was spent as per the requirements of CSR projects and the unspent amount of Rs. 24.97 crores is transferred to unspent CSR account pursuant to the CSR Rules subsequent to the year-end.

52. Ind AS 116 Leases

A. As a lessee

Lease expenses relating to short term leases aggregated to Rs. 22.97 crores during the year ended March 31, 2022 (Rs. 11.43 crores during the year ended March 31, 2021).

Lease liabilities are recognised at weighted average incremental borrowing rate ranging from 8% to 9.5% per annum.

B. As a lessor

Finance Lease

During the year ended March 31, 2021, the Company has given office equipments on finance lease to its dealers for operational use by the dealers for servicing the customers of the Company. For the year ended March 31, 2022, the Company recognised interest income on lease receivables of Rs. 1.34 crores (March 31, 2021: Rs. 1.24 crores). The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.

53.

The Company has considered the possible effects that may result from the global health pandemic relating to COVID-19 on its operations. Management believes that it has taken into account external and internal information for assessing the possible impact of COVID-19 on various elements of its financial statement, including its liquidity position and the recoverability of assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions and the consequent impact on its business, if any.

54.

The Board of Directors of the Company at their meeting held on May 13, 2022, considered and recommended a final dividend aggregating to Rs. 574.19 crores @ Rs. 21 per share (nominal value of Re. 1 per share) for the financial year 2021-22 (final dividend paid for previous financial year 2020-21 was Rs. 464.67 crores @ Rs. 17 per share of nominal value of Re. 1 per share)

55.

The Board of Directors and shareholders of Eicher Polaris Pvt. Ltd (a joint venture company) (''EPPL'') at their respective meetings held on February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and appointed an insolvency professional as the liquidator. The liquidation process is under progress currently.

57. Other Statutory Information

(i) The Company has not defaulted in on loans payable and have not been declared as wilful defaulter.

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

(iii) The Company have not revalued its Property, Plant & Equipments, Intangible Assets and Right to Use Assets during the year.

(iv) The Company do not have any transactions with companies struck off.

(v) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(vi) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

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

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

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

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

(x) The Company has not granted any loans and advances to promoters, directors, KMPs and other related parties (as defined under Companies Act 2013) during the year.

(xi) The Company have complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

58.

Previous year''s figures have been recast/regrouped, wherever necessary to conform with the current period''s presentation.

Mar 31, 2021

Fair value of the Investment property

The fair value of the Company''s investment properties as at March 31, 2020 have been arrived at on the basis of valuation carried out on the respective dates by Mr. Purshotam Khandelwal, independent valuer not related to the Company. Mr. Purshotam Khandelwal is a registered valuer with the authority which governs the valuers in India, and they have appropriate qualifications and experience in the valuation of properties in the relevant location.

For the building located in Jaipur, India, the fair value of structure as on March 31, 2020 was determined based on S.O. No.X-3/2015 dated 15/07/2015 of State P.W.D.B&R issued by Chief Engineer, PWD Building and Roads, Government of Rajasthan, Jaipur with suitable adjustments for rise in cost index since July 2015 to average mean period of construction. The items not covered under Standing Order No. X-3/2015 have been valued on the rates of State PWD BSR June 2014.

During the year 2020-21, the company started using the said property for its own operations and hence the same has been reclassified as buildings under Property, plant and equipment.

No trade receivables, loans and advances or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

All domestic sales are on advance payment basis, except for sale to distributors, certain institutional sales and Canteen stores Department which carries credit period of maximum to 60 days.

Export sales carries credit period of 0 to 240 days, depending on the contractual terms with respective customers.

For terms and condition for related party sales refer note 45

The Company has only one class of equity shares having a par value of Rs. 1 per share. Each holder of equity shares is entitled to one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

(iii) Share options granted under the Company''s employee share option plan carry no rights to dividend and no voting rights. Further details of the employee share option plan are provided in note 48.

The provision for warranty claims represents the present value of the management''s best estimate of the future economic costs that will be required under the Company''s obligations for warranties. The estimate has been made on the basis of historical warranty trends and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.

(i) The deferred revenue arises as a result of:

a) The benefit received by the United Kingdom (UK) Branch of the Company from the Government of UK - Department for Business Innovation & Skills and Department for Her Majesty''s Revenue & Customs.

b) Represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme on purchase of property, plant and equipments accounted for as government grant.

These grants will be recognized in statement of profit and loss on a systematic basis over the useful life of the related fixed assets.

38. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Recoverability of intangible assets and intangible assets under development

The Company has various internally generated intangible assets either capitalised or under development. Initial recognition of the expenditure under these assets are based on assessing each asset in relation to the specific recognition criteria to be met for capitalisation, for e.g. technological and economic feasibility and the ability of the asset to generate economic benefits in the future. In addition, the management also assesses any indications of impairment of the carrying value of the assets. This requires the management''s judgement and assumptions, which are affected by future market or economic developments. The management has analysed the recognition criteria and future market conditions and is confident that these assets do not require any adjustments to their carrying value at the year end.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2021 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Share-based payments

Impairment of non-financial assets

39. RESEARCH AND DEVELOPMENT EXPENSES:

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 103.40 crores (March 31, 2020 : Rs. 83.74 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 195.70 crores (March 31, 2020 : Rs. 173.62 crores).

Out of the total contribution made for employees'' provident fund, Rs. 6.80 crores (March 31, 2020: Rs. 6.57 crores) is made to Eicher Executive Provident Fund Trust, while the remaining contribution has been made to government administered provident fund.

B. Defined Benefit Plans:

The Defined benefit plan of the Company includes entitlement of gratuity and provident fund scheme.

This plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk , longevity risk and salary risk

Provident fund:

The fair values of the above instruments are determined based on quoted market prices in active market. The actual return on plan assets was Rs. 1.85 crores for the year ended March 31, 2021.

â¦ If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 1.87 crores (increase by Rs. 2.06 crores) [ as at March 31, 2020: Decrease by Rs. 1.80 crores (increase by Rs. 2.00 crores)].

â¦ If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs. 2.06 crores (decrease by Rs. 1.88 crores) [ as at March 31, 2020: Increase by Rs. 2.00 crores (decrease by Rs. 1.82 crores )].

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Pursuant to the approval of the shareholders at the Annual General Meeting of the Company held on August 10, 2020, each equity share of face value of Rs. 10/- per share was sub-divided into ten equity shares of face value of Re. 1/- per share, with effect from the record date, i.e., August 25, 2020. Consequently, the basic and diluted earnings per share have been computed for all the periods presented in the Standalone Financial Statements of the Company on the basis of the new number of equity shares in accordance with Ind AS 33 - Earnings per Share.

44. SEGMENT REPORTING DISCLOSURE

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

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

c) Non-current segment assets represents total non current assets excluding non current finanical assets.

Information about major customers

No customer individually accounted for more than 10% of the revenue.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2021, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2020 : Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company provides a credit period of 30 days to 240 days with respect to receivables from RET, RENA and RE Brasil.

The Company has a credit period of 45 days with respect to payables to VE Commercial Vehicles Limited.

Brand fees payable to Eicher Goodearth India Private Limited upon approval by Shareholders at its Annual General Meeting.

Rent payable to Eicher Goodearth India Private Limited on due basis.

46. FINANCIAL INSTRUMENTS

Capital Management

The Company is not subject to any externally imposed capital requirements.

46.2 Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

The following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3 :-

Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Quantitative disclosures fair value measurement hierarchy for assets:

- The fair value of bonds is based on quoted prices and market observable inputs.

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

47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives

The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Foreign currency risk management

Foreign currency sensitivity

The company uses the sensitivity rate of 5% when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. In the opinion of the management, the sensitivity of increase or decrease of Rs. 8.19 crores (March 31, 2020: Rs. 5.06 crores) against the relevant foreign currencies is not material to the financial statements.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower, the profit for the year ended March 31, 2021 would increase/decrease by Rs.18.93 crores (for the year ended March 31, 2020: increase/decrease by Rs. 38.10 crores).

Interest rate risk

Liquidity risk

48. SHARE-BASED PAYMENTS

Employee Stock Option Plan, 2006 of the Company

Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is Rs. 407.79 (March 31, 2020 : Rs. 762.29). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations.Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

Restricted Stock Units Plan, 2019 ("RSU 2019")

Fair value of share options granted in the year

The weighted average fair value of the stock units granted during the financial year is Rs. 1,270.20 (March 31, 2020 : Rs. 1,579.61). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations.Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

49. CAPITAL COMMITMENT

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 297.30 crores (March 31, 2020 : Rs. 216.45 crores).

51. IND AS 116 LEASES

A. As a lessee

Lease expenses relating to short term leases aggregated to Rs. 11.43 crores during the year ended March 31, 2021 (Rs. 12.67 crores during the year ended March 31, 2020).

Lease liabilities are recognised at weighted average incremental borrowing rate ranging from 8% to 9.5% per annum.

B. As a lessor

Finance Lease

During the year ended March 31, 2021, the Company has given office equipments on finance lease for operational use by the dealers for servicing the customers of the Company. During the year ended March 31, 2021, the Company recognised interest income on lease receivables of Rs. 1.24 crores (March 31, 2020: nil). The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.

52. The Company has considered the possible effects that may result from the global health pandemic relating to COVID-19 on its operations. Management believes that it has taken into account external and internal information for assessing the possible impact of COVID-19 on various elements of its financial statement, including its liquidity position and the recoverability of assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions and the consequent impact on its business, if any.

53. The Board of Directors of the Company at their meeting held on May 27, 2021, considered and recommended a final dividend aggregating to Rs. 464.67 Crores @ Rs. 17 per share (nominal value Rs. 1 per share) for the financial year 2020-21 (interim dividend paid for previous financial year 2019-20 was Rs. 341.32 Crores @ Rs. 125 per share of nominal value of Rs. 10 per share and final dividend paid for previous year was Rs. Nil).

55. Previous year''s figures have been recast/regrouped, wherever necessary to conform with the current period''s presentation.

Mar 31, 2019

1 CORPORATE INFORMATION

Eicher Motors Limited (âthe Companyâ) is a public company domiciled and incorporated in India under the provisions of the Companies Act, 1956. The Company is engaged in the manufacturing and selling of motorcycles, spare parts and related services. The Company has its registered office at New Delhi, India and its corporate office at Gurugram, Haryana, India.

The Company has its equity shares listed on the BSE Limited and National Stock Exchange of India Limited. The standalone financial statements were authorized for issue in accordance with a resolution of the Board of Directors on May 10, 2019.

2 BASIS OF PREPARATION AND PRESENTATION

2.1 Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015, as amended and the presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statements.

2.2 Accounting convention

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange of goods and services. The financial statements are presented in Indian Rupees and all values are rounded to the nearest crore, except otherwise indicated.

2.3 Operating cycle

Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

Fair value of the Investment property

The fair value of the Companyâs investment properties as at March 31, 2018 and March 31, 2019 have been arrived at on the basis of valuation carried out on the respective dates by Mr. Purshotam Khandelwal, independent valuer not related to the Company. Mr. Purshotam Khandelwal is a registered valuer with the authority which governs the valuers in India, and they have appropriate qualifications and experience in the valuation of properties in the relevant location.

For the building located in Jaipur, India, the fair value of structure as on March 31, 2018 and March 31, 2019 was determined based on S.O. No.X-3/2015 dated 15/07/2015 of State P.W.D.B&R issued by Chief Engineer, PWD Building and Roads, Government of Rajasthan, Jaipur with suitable adjustments for rise in cost index since July 2015 to average mean period of construction. The items not covered under Standing Order No. X-3/2015 have been valued on the rates of State PWD BSR.

Write-downs of inventories to net realisable value resulted in net loss of Rs. 5.83 crores (March 31,2018: Rs. 3.84 crores). These were recognised as an expense during the year in the Statement of Profit and Loss.

The mode of valuation of inventories has been stated in note 3.14.

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

All domestic sales are on advance payment basis, except for sale to distributors and certain institutional sales which carries credit period of maximum to 60 days.

Export sales carries credit period of 0 to 240 days, depending on the contractual terms with respective customers.

For terms and condition for related party sales refer note 45

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

(iii) Share options granted under the Companyâs employee share option plan carry no rights to dividend and no voting rights. Further details of the employee share option plan are provided in note 48.

The generalreserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the generalreserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the generalreserve will not be reclassified subseguently to profit or loss.

The above reserve relates to share options granted by the Company to certain employees under its employee share option plan. Further information about share-based payments to employees is set out in note 48.

The provision for warranty claims represents the present value of the managementâs best estimate of the future economic costs that will be required under the Companyâs obligations for warranties. The estimate has been made on the basis of historical warranty trends and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.

(i) The deferred revenue arises as a result of :

a) The benefit received by the United Kingdom (UK) Branch of the Company from the Government of UK - Department for Business Innovation & Skills and Department for Her Majestyâs Revenue & Customs.

b) Represents government assistance in the form of the duty benefit availed under Export Promotion CapitalGoods (EPCG) Scheme on purchase of property, plant and equipments accounted for as government grant.

These grants will be recognized in statement of profit and loss on a systematic basis over the useful life of the related fixed assets.

* Conseguent to the introduction of Goods and Services Tax (GST) with effect from July 1, 2017, Excise Duty, Value Added Tax (VAT) etc, have been subsumed into GST. In accordance with Ind AS - 18 / Ind AS - 115 and Schedule III of the Companies Act, 2013, unlike Excise Duty, levies like GST are not considered to be a part of Revenue from operations. Accordingly, the figures for the first three months of the previous year, i.e, April2017 tojune 2017, includes Excise Duty on sales. Excise Duty on sales amounting to Rs. 254.30 crores has been disclosed seperately in the statement of profit and loss.

** Government grants have been received for the purchase of certain items of property, plant and eguipment. There are no unfulfilled conditions or contingencies attached to these grants.

Pursuant to the decision of the Board of Directors of the joint venture company, Eicher Polaris Private Limited at their meeting held on March 09,2018 to wind down the operations with immediate effect, the Company had recorded an impairment loss of Rs. 294.50 crores on the investment and Rs. 17.48 crores towards its share of cost to wind down the operations, totalling to Rs. 311.98 crores in the previous year.

During the current year, it has further recorded an impairment loss of Rs. 12.52 crores and Rs. 5.00 crores towards share of cost to wind down operations, totalling to Rs. 17.52 crores.

Cumulatively, the company has recorded total impairment loss of Rs. 329.50 crores till date. (refer note 9, 20).

3 CAPITAL COMMITMENT

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 290.85 crores (March 31, 2018 : Rs. 273.00 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employeeâs benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

4 RESEARCH AND DEVELOPMENT EXPENSES

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 44.66 crores (March 31,2018 : Rs. 31.38 crores).The capital expenditure incurred during the year for research and development purposes aggregate Rs. 310.28 crores (March 31, 2018 : Rs. 206.18 crores).

All the above matters other than guarantee given by the Company are subject to legal proceedings in the ordinary course of business. The legalproceeding when ultimately concluded will not, in the opinion of management, have a materialeffect on the result of operations or the financialposition of the Company.

There are numerous interpretation issues relating to the Supreme Courtjudgement on Provident Fund dated February 28, 2019. Given the uncertainty of the impact of such matter, the Company will create a provision after receiving further clarity

5 EMPLOYEE BENEFIT PLANS

The details of various employee benefits provided to employees are as under:

A. Defined Contribution Plans

* includes Rs. 1.36 crores (March 31, 2018 : Rs. 0.10 crore) capitalized during the year and Rs. 4.86 crores (March 31, 2018 : Rs. 6.18 crores) considered in pre-operative expenditure (pending allocation).

Out of the totalcontribution made for employeesâ provident fund, Rs. 4.71 crores (March 31,2018: Rs. 3.55 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution has been made to government administered provident fund.

B. Defined Benefit Plans:

The Defined benefit plan of the Company includes entitlement of gratuity and provident fund scheme.

This plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk , longevity risk and salary risk

The most recent actuarialvaluation of the plan assets and the presentvalue of the defined benefit obligation were carried out as at March 31, 2019byMr. K.K. Dharni(FIAI M.No. 00051), Fellow of the Institute of Actuaries of India. The presentvalue of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

Provident fund:

The provident fund is governed by the Provident Fund Act, 1952. Under the defined benefit plan, the Company contributes to the âEicher Executive Provident Fund Trustâ, for certain designation. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

Gratuity:

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

The fair values of the above instruments are determined based on quoted market prices in active market. The actual return on plan assets was Rs. 1.12 crores for the year ended March 31, 2019.

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 1.20 crores (increase by Rs. 1.32 crores) [ as at March 31,2018: Decrease by Rs. 0.87 crore (increase by Rs. 0.95 crore)].

- If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs. 1.32 crores (decrease by Rs. 1.21 crores) [ as at March 31,2018: Increase by Rs. 0.95 crore (decrease by Rs. 0.87 crore)].

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

The estimated contribution during next year is Rs. 4.05 crores (March 31,2018 : Rs. 3.18 cores) to the defined benefit plan.

6 SEGMENT REPORTING DISCLOSURE

As defined in ind AS108, the chief operating decision maker (CODM), evaluates the Companyâs performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of Ind AS 108 âOperating Segmentsâ.

Geographical information

The âGeographical Segmentsâ comprises of domestic segment which includes sales to customers located in India and the overseas segment includes sales to customers located outside India.

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

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

c) Non-current segment assets include property, plant and equipment, investments in subsidiaries &joint ventures and other non-current assets.

Information about major customers

No customer individually accounted for more than 10% of the revenue.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31,2018: Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company provides a credit period of 30 days to 240 days with respect to receivables from RET, RENA and RE Brasil, respectively

7 FINANCIAL INSTRUMENTS

Capital Management

The Company is not subject to any externally imposed capital requirements.

The following table summarizes the capital of the Company:

7.1 Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

The following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3

Level 1: This level includes financial assets that are measured by reference to guoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: This level includes financial assets and liabilities, measured using inputs other than guoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3:This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Fair value of the Companyâs financial assets that are measured at fair value on a recurring basis:-

There are certain Companyâs financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:-

Fair value of the Companyâs financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)

Except as detailed out in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognized in the standalone financial statements approximate their fair values.

- The fair value of bonds is based on quoted prices and market observable inputs.

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

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

8. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives

The Companyâs management monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity risk which impact returns on investments. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Foreign currency sensitivity

The company uses the sensitivity rate of 5% when reporting foreign currency risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. In the opinion of the management, the sensitivity of increase or decrease of Rs. against the relevant foreign currencies is not material to the financial statements.

Credit risk management

Balances with banks were not past due or impaired as at the yearend. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower: - profit for the year ended March 31,2019 would increase/decrease by Rs. 29.35 crores (for the year ended March 31, 2018: increase/decrease by Rs. 37.73 crores).

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Since the Companyâs borrowings which are affected by interest rate fluctuation is very insignificant to the size and operations of the Company, therefore, a change in interest rate risk does not have a material impact on the Companyâs financial statements in relation to fair value of financial instruments.

Liquidity risk

The surplus funds with the Company and operational cash flows will be sufficient to dispose the financial liabilities with in the maturity period.

9 SHARE-BASED PAYMENTS

Employee share option plan of the Company

Pursuant to the approval accorded by shareholders at their Annual General Meeting held on 5th July 2006, the Nomination and Remuneration Committee of the Company formulated âEicher Employee Stock Option Plan 2006â (ESOP Scheme 2006).

Eicher Employee Stock Option Plan is applicable to all permanent and full-time employees (as defined in the Plan), excluding promoters of the Company. The eligibility of employees to receive grants under the Plan has to be decided by the Nomination and Remuneration Committee from time to time at its sole discretion.

Vesting of the options shall take place in the manner determined by the Nomination and Remuneration Committee at the time of grant, provided, the vesting period shall not be less than 1 year from the date of grant.

Vesting of options shall be subject to the condition that the Grantee shall be in continuous employment with the Company and such other conditions as provided under Companyâs Employee Stock Option Plan, 2006.

The options granted can be exercised at any time until completion of seven years from the date of vesting. Any options remaining unexercised at the end of the exercise period shall lapse. At the time of exercise the participant may pay the exercise price in the form of payment as approved by the Nomination and Remuneration Committee.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

Fair value of share options granted in the year

The weighted average fairvalue of the share options granted during the financial year is Rs. 12,138.03 (March 31, 2018 :

Rs. 13,884.46). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on managementâs best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected Volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

10. DISCLOSURE IN RESPECT OF OPERATING LEASES:

(A) Assets taken on lease:

The Company has taken certain premises under various operating lease agreements. The total lease rental recognized as expense aggregate to Rs. 45.74 crores (March 31,2018 : Rs. 36.50 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

(B) Assets given on lease:

The Company has given assets under operating lease agreement to itsjoint venture company âEicher Polaris Private LimitecT.The total lease rental recognized as income aggregate to Rs. 0.26 crores (March 31,2018: Rs. 2.92 crores). Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

SOL CRITICAL ACCOUNTING. JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company accounting policies, which are described in note 3, the management of the Company are required to makejudgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The following are the areas of estimation uncertainty and criticaljudgements that the management has made in the process of applying the Companyâs accounting policies and that have the most significant effect on the amounts recognised in the financial statements:-

Recoverability of intangible assets and intangible assets under development

The Company has various internally generated intangible assets either capitalised or under development. Initial recognition of the expenditure under these assets are based on assessing each asset in relation to the specific recognition criteria to be met for capitalisation, for e.g. technological and economic feasibility and the ability of the asset to generate economic benefits in the future. In addition, the management also assesses any indications of impairment of the carrying value of the assets. This requires the managementâsjudgement and assumptions, which are affected by future market or economic developments.The management has analysed the recognition criteria and future market conditions and is confident that these assets do not require any adjustments to their carrying value at the year end.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting period. As at March 31, 2019 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Investment in equity instruments of subsidiary and joint venture companies

During the year, the Company assessed the investment in equity instrument of subsidiary andjoint venture companies carried at cost for impairment testing. Some of these companies are at early stage of their operations and are expected to generate positive cash flows in the future years. For subsidiary andjoint ventures, where the operations has been discontinued, the company provides for impairment loss wherever considered necessary

Share-based payments

âEstimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 48.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model.

11 Previous yearâs figures have been recast/regrouped, wherever necessary to conform with the current periodâs presentation.

12 STANDARDS ISSUED BUT NOT YET EFFECTIVE

Ind AS 116 Leases

ind AS 116 Leases was notified by MCA on March 30, 2019 and it replaces Ind AS 17 Leases, including appendices thereto.

Ind AS 116 is effective for annual periods beginning on or after April 01, 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The standard includes two recognition exemptions for lessees â leases of âlow-valueâ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under Ind AS 116 is substantially unchanged from todayâs accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases: operating and finance leases.

The Company intends to adopt these standards from April 01, 2019. As the Company does not have any material leases, therefore the adoption of this standard is not likely to have a material impact on the Financial Statements.

Appendix C to Ind AS 12 Uncertainty over Income Tax Treatment

The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of Ind AS 12 and does not apply to taxes or levies outside the scope of Ind AS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

- Whether an entity considers uncertain tax treatments separately

- The assumptions an entity makes about the examination of tax treatments by taxation authorities

- How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates

- How an entity considers changes in facts and circumstances

An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. In determining the approach that better predicts the resolution of the uncertainty, an entity might consider, for example, (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination.

The interpretation is effective for annual reporting periods beginning on or after 1 April 2019, but certain transition reliefs are available. The Company will apply the interpretation from its effective date. However, the Company does not foresee a material impact on account of the same.

13 EVENTS AFTER THE REPORTING PERIOD

The Board of directors at their meeting held on MaylO, 2019, considered and recommended a final dividend aggregating Rs. 341.03 crores @ Rs. 125 per share (nominal value Rs. 10 per share) for the financial year 2018-19 (final dividend paid for March 31, 2018 : Rs. 299.93 crores @ Rs. 110 per share).

Mar 31, 2018

FAIR VALUE OF THE INVESTMENT PROPERTY

The fair value of the Company''s investment properties as at March 31, 2017 and March 31, 2018 have been arrived at on the basis of valuation carried out on the respective dates by Purshotam Khandelwal, independent valuers not related to the Company. Purshotam Khandelwal is a registered valuer with the authority which governs the valuers in India, and they have appropriate qualifications and experience in the valuation of properties in the relevant location.

For the building located in Jaipur, India, the fair value of structure as on March 31, 2017 and March 31, 2018 was determined based on S.O. No.X-3/2015 dated 15/07/2015 of State P.W.D.B&R issued by Chief Engineer, PWD Building and Roads, Government of Rajasthan, Jaipur with suitable adjustments for rise in cost index since July 2015 to average mean period of construction. The items not covered under Standing Order No. X-3/2015 have been valued on the rates of State PWD BSR.

@ Represents premium @ Rs. 452 per equity share on 500 (March 31, 2017 : 2,500) equity shares, @ Rs. 685 per equity share on 29,000 (March 31, 2017 : 11,000) equity shares, @ Rs. 1,152 per equity share on Nil (March 31, 2017 : 32,100) equity shares, @ Rs. 1,760 per equity share on 1,800 (March 31, 2017 : 1,800) equity shares, and @ Rs. 4,905 per equity share on 1,000 (March 31, 2017 : 1,666) equity shares, and @ Rs. 8,467.50 per equity share on 3,830 (March 31, 2017 : Nil) equity shares, and @ Rs. 12,983.65 per equity share on 800 (March 31, 2017 : Nil) equity shares, and @ Rs. 14,729 per equity share on 8,370 (March 31, 2017 : Nil) equity shares issued and allotted during the year under Employee Stock Option Scheme. The Company can utilise the same for the purpose of buy back of share or issue of fully paid bonus shares.

(i) The deferred revenue arises as a result of :

a) The benefit received by the United Kingdom (UK) Branch of the Company from the Government of UK - Department for Business Innovation & Skills - Regional Growth Fund.

b) T epresents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme on purchase of property, plant and equipment accounted for as government grant.

These grants will be recognized in statement of profit and loss on a systematic basis over the useful life of the assets after capitalisation of the related fixed assets.

*Consequent to the introduction of Goods and Services Tax (GST) with effect from July 1, 2017, Excise Duty, Value Added Tax (VAT) etc., have been subsumed into GST. In accordance with Indian Accounting Standard - 18 on Revenue and Schedule III of the Companies Act, 2013, unlike Excise Duty, levies like GST is not considered as part of Revenue. Accordingly, the figures of previous year ended March 31, 2017 and first three months of the current period, i.e., April 2017 to June 2017, includes Excise duty on sales. Excise duty on sales has been disclosed separately in the Statement of Profit and Loss.

âGovernment grants have been received for the purchase of certain items of property, plant and equipment. There are no unfulfilled conditions or contingencies attached to these grants.

1. CAPITAL COMMITMENT

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 273.00 crores (March 31, 2017 : Rs. 397.57 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long-term commitments or material non-cancellable contractual commitments/ contracts, which might have material impact on the financial statements.

2. RESEARCH AND DEVELOPMENT EXPENSES

R evenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 31.38 crores (March 31, 2017 : Rs. 36.78 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 206.18 crores (March 31, 2017 : Rs. 91.29 crores).

âincludes Rs. 0.10 crore (March 31, 2017 : Rs. 0.06 crore) capitalised during the year and Rs. 6.18 crores (March 31, 2017 : Rs. 3.31 crores) considered in pre-operative expenditure (pending allocation).

Out of the total contribution made for employees'' provident fund, Rs. 3.55 crores (March 31, 2017 : Rs. 2.59 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to Government administered provident fund.

B. Defined Benefit Plans:

The Defined benefit plan of the Company includes entitlement of gratuity and provident fund scheme.

This plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk , longevity risk and salary risk

Investment Risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest Risk A decrease in the bond interest rate will increase the plan liability: however, this will be partially offset by an increase in

the return on the plan''s debt investments.

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

Salary Risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan

participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

T he most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by Mr. K.K. Dharni (FIAI M. No. 00051), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

Provident fund:

Under the defined benefit plan, the Company contributes to the "Eicher Executive Provident Fund Trust". The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.

- I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 0.87 crores (increase by Rs. 0.95 crores) (as at March 31, 2017: Decrease by Rs. 0.62 crores (increase by Rs. 0.68 crores)).

- I f the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs.0.95 crores (decrease by Rs. 0.87 crore) (as at March 31, 2017: Increase by Rs. 0.68 crores (decrease by Rs. 0.62 crores)).

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

R urthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

3. SEGMENT REPORTING DISCLOSURE

Ts defined in Ind AS 108, the chief operating decision maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of Ind AS 108 "Operating Segments".

Geographical information

The "Geographical Segments" comprises domestic segment which includes sales to customers located in India and the overseas segment includes sales to customers located outside India.

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

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

c) Non-current segment assets include property, plant and equipment, investments in subsidiaries & joint ventures and other non-current assets.

information about major customers

No customer individually accounted for more than 10% of the revenue.

4. RELATED PARTY DISCLOSURES UNDER IND AS 24

a. Related party disclosures:

Name of related parties and their relationship:

Name of related party Nature of Relationship

Royal Enfield North America Ltd. (RENA) Subsidiary company

Royal Enfield Canada Ltd. (RECA) 100% subsidiary company of RENA

Royal Enfield Brasil Comercio de Motocicletas Ltda (RE Brasil) Subsidiary company

VE Commercial Vehicles Limited (VECVL) Joint venture company

Eicher Polaris Private Limited (EPPL) Joint venture company

Eicher Group Foundation (EGF) Joint venture company

Eicher Goodearth Private Limited (EGPL) E ntity under the control of the key

management personnel

Eicher Goodearth India Private Limited # (EGIPL) T ntity under the control of the key

management personnel

Eicher Executive Provident Fund (EEPF) Post employment benefit plan

Eicher Tractors Executive Staff Superannuation Fund (ETESSF) Post employment benefit plan

Eicher Motors Limited Employees Gratuity Trust (EMLEGT) Post employment benefit plan

The Simran Siddhartha Tara Benefit Trust (SSTBT) T hareholders holding more than 5% equity

shares in the Company

incorporated on January 01, 2018

b. Key management personnel:

Mr. Siddhartha Lal Managing Director & Chief Executive Officer

Mr. S. Sandilya Chairman

Mr. Priya Brat Non-Executive and Independent Director

(Resigned w.e.f. June 16, 2017)

Mr. M.J. Subbaiah Non-Executive and Independent Director

(Resigned w.e.f. March 31, 2018)

Mr. Prateek Jalan Non-Executive and Independent Director

Ms. Manvi Sinha Non-Executive and Independent Director

Mr. Lalit Malik Chief Financial Officer

Mr. Manhar Kapoor Company Secretary

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s-length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017 : Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company provides a credit period of 90 days and 180 days with respect to receivables from RENA and RE Brasil, respectively.

5 Fair value measurements

R he Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

Rhe following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3 :

L evel 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

L evel 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

L evel 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Fair value of the Company''s financial assets that are measured at fair value on a recurring basis:

R here are certain Company''s financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:

T he fair value of the financial assets and liabilities are included at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

- The fair value of bonds is based on quoted prices and market observable inputs.

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

6. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives

The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/liquidity risk which impact returns on investments. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

Foreign currency sensitivity

The Company uses the sensitivity rate of 5% when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. In the opinion of the management, the sensitivity of increase or decrease of Rs. against the relevant foreign currencies is not material to the financial statement.

Credit risk management

Rredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/bonds, trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

R alances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

R he Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward-looking information.

Other price risks including interest rate risk

the Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower:

â¢ r rofit for the year ended March 31, 2018 would increase/decrease by Rs. 37.73 crores (for the year ended March 31, 2017: increase/decrease by Rs. 31.97 crores).

Interest rate risk

interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Since the Company''s borrowings which are affected by interest rate fluctuation is very insignificant to the size and operations of the Company, therefore, a change in interest rate risk does not have a material impact on the Company''s financial statements in relation to fair value of financial instruments.

Liquidity risk

The surplus funds with the Company and operational cash flows will be sufficient to dispose the financial liabilities within the maturity period.

7. SHARE-BASED PAYMENTS

Employee share option plan of the Company

Pursuant to the approval accorded by shareholders at their Annual General Meeting held on July 5, 2006, the Nomination and Remuneration Committee of the Company formulated ''Eicher Employee Stock Option Plan 2006'' (ESOP Scheme 2006).

T icher Employee Stock Option Plan is applicable to all permanent and full-time employees (as defined in the Plan), excluding promoters of the Company. The eligibility of employees to receive grants under the Plan has to be decided by the Nomination and Remuneration Committee from time to time at its sole discretion.

Vesting of the options shall take place in the manner determined by the Nomination and Remuneration Committee at the time of grant provided the vesting period shall not be more than 5 (five) years and not less than 1 year from the date of grant.

Vesting of options shall be subject to the condition that the Grantee shall be in continuous employment with the Company and such other conditions as provided under Company''s Employee Stock Option Plan, 2006.

The options granted can be exercised at any time until completion of seven years from the date of vesting. Any options remaining unexercised at the end of the exercise period shall lapse. At the time of exercise, the participant may pay the exercise price in the form of payment as approved by the Compensation Committee.

Fair value of share options granted in the year

the weighted average fair value of the share options granted during the financial year is Rs. 29,728.74 (March 31, 2017 :

Rs. 22,751.61). Options were priced using Black Scholes options pricing model. Where relevant, the expected life used in the model has been adjusted based on management''s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected volatility was determined by taking the daily volatility of the share price on NSE, over a period prior to the date of grant, corresponding to the expected life of the options for each vesting.

8. DISCLOSURE IN RESPECT OF OPERATING LEASES

(A) Assets taken on lease:

The Company has taken certain premises under various operating lease agreements. The total lease rental recognize as expense aggregate to Rs. 36.50 crores (March 31, 2017 : Rs. 28.40 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

Note : Lease agreement with Eicher Polaris Private Limited has been terminated with effect from April 30, 2018.

9. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company accounting policies, which are described in note 3, the management of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgments that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognized in the financial statements:-

Recoverability of intangible asset

Capitalization of cost in intangible assets and intangible assets under development is based on management''s judgment that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the Company''s management has determined that there are no factors which indicates that these assets have suffered any impairment loss.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2018 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

investment in equity instruments of subsidiary and joint venture companies

During the year, the Company assessed the investment in equity instrument of subsidiary and joint venture companies carried at cost for impairment testing. Some of these companies are at early stage of their operations and are expected to generate positive cash flows in the future years. For subsidiary and joint ventures, where the operations has been discontinued, the Company provides for impairment loss wherever considered necessary.

Share-based payments

The Company initially measures the cost of cash-settled transactions with employees using a Black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 48.

impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s-length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model.

10. Previous year''s figures have been recast/regrouped, wherever necessary to conform with the current period''s presentation.

11. STANDARDS ISSUED BUT NOT YET EFFECTIVE

ind AS 115 Revenue from Contracts with Customers

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

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This new standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on revenue resulting from the application of Ind AS 115 will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements.

Amendments to ind AS 112 Disclosure of interests in other Entities: Clarification of the scope of disclosure requirements in Ind AS 112

The amendments clarify that disclosure requirements for interests in other entities also apply to interests that are classified (or included in a disposal group that is classified) as held for sale or as discontinued operations in accordance with Ind AS 105, Non-current Asset Held for Sale and Discontinued Operations.

The amendments are effective for annual periods beginning on or after April 1, 2018. The Company will apply amendments when they become effective.

Transfers of investment Property - Amendments to ind AS 40

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management''s intentions for the use of a property does not provide evidence of a change in use.

The amendments are effective for annual periods beginning on or after April 1, 2018. The Company will apply amendments when they become effective. However, since Company current practice is in line with the clarifications issued, the Company does not expect any effect on its standalone financial statements

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

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the nonmonetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognized on or after:

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

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

The Appendix is effective for annual periods beginning on or after April 1, 2018. The Company is analysing the changes and impact as applicable from financial year 2018-19.

12. EVENTS AFTER THE REPORTING PERIOD

The Board of Directors at their meeting held on May 09, 2018, considered and recommended a final dividend aggregating Rs. 299.81 crores @ Rs. 110 per share (nominal value Rs. 10 per share) for the financial year 2017-18 (final dividend paid for March 31, 2017 : Rs. 272.22 crores @ Rs. 100 per share).

Mar 31, 2017

1. CORPORATE INFORMATION

Eicher Motors Limited (âthe Companyâ) is a public company domiciled and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the manufacturing and selling of motorised two-wheelers, spare parts and related services. The Company has its registered office at New Delhi, India and its corporate office at Gurugram, Haryana, India. The Company has its primary listings on the BSE Limited and National Stock Exchange of India Limited.

2. BASIS OF PREPARATION AND PRESENTATION

2.1 Statement of compliance

The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015.

Upto the year ended March 31, 2016, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are Companyâs first Ind AS financial statements. The date of transition to Ind AS is January 1, 2015. Refer Note 3.21 for the details of first-time adoption exemptions availed by the Company.

2.2 Accounting convention

2.3 Operating cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

3.CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Companyâs accounting policies and that have the most significant effect on the amounts recognised in the financial statements:-

Recoverability of intangible asset

Capitalisation of cost in intangible assets and intangible assets under development is based on managementâs judgement that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the Companyâs management has determined that there are no factors which indicates that these assets have suffered any impairment loss.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2017 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Investment in equity instruments of subsidiary and joint venture companies

During the year, the Company assessed the investment in equity instrument of subsidiary and joint venture companies carried at cost for impairment testing. Some of these companies are at early stage of their operations and are expected to generate positive cash flows in the future years. Detailed analysis has been carried out on the future projections and the Company is confident that the investments do not require any impairment.

4.INVESTMENT PROPERTY

FAIR VALUE OF THE INVESTMENT PROPERTY

The fair value of the Companyâs investment properties as at March 31, 2017, March 31, 2016 and January 1, 2015 have been arrived at on the basis of valuation carried out on the respective dates by Purshotam Khandelwal, independent valuers not related to the Company. Purshotam Khandelwal is a registered valuer with the authority which governs the valuers in India, and they have appropriate qualifications and experience in the valuation of properties in the relevant location.

For the building located in Jaipur, India, the fair value of structure as on January 1, 2015 was determined based on S.O. No.X-3/2011 dated 24/04/2011 of State P.W.D. B&R issued by Chief Engineer, PWD Building and Roads, Government of Rajasthan, Jaipur with suitable adjustments for rise in cost index since April 2011 to average mean period of construction. The items not covered under Standing Order No. X-3/2011 have been valued on the rates of State PWD BSR. The fair value of structure as on March 31, 2016 and March 31, 2017 was determined based on S.O. No. X-3/2015 dated 15/07/2015 of State P.W.D.B&R issued by Chief Engineer, PWD Building and Roads, Government of Rajasthan, Jaipur with suitable adjustments for rise in cost index since July 2015 to average mean period of construction. The items not covered under Standing Order No. X-3/2015 have been valued on the rates of State PWD BSR.

5. Inventories

(At lower of cost and net realisable value)

- The cost of inventories recognised as an expense during the year was Rs 4,140.86 crores (previous period Rs 3,880.64 crores).

- The cost of inventories recognised as an expense includes Rs.5.60 crores (during January 1, 2015 to March 31, 2016 Rs.10.87 crores) in respect of write-downs of inventory to net realisable value, and has been reduced by Rs.7.69 crores (during January 1, 2015 to March 31, 2016 Rs.0.58 crores) in respect of the reversal of such write-downs. Previous writedowns have been reversed as a result of material consumed/sold.

- Inventories of Rs 6.27 crores (March 31, 2016 Rs 5.83 crores and January 1, 2015 Rs 1.18 crores) are expected to be recovered after more than 12 months.

- The mode of valuation of inventories has been stated in Note no. 3.13.

6. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 397.57 crores (Rs. 96.92 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employeesâ benefits including union agreement in normal course of business. The Company does not have any long-term commitments or material non-cancellable contractual commitments/ contracts, which might have material impact on the financial statements.

7. Research and development expenses:

Revenue expenditure on research and development incurred and expensed off during the year/period through the appropriate heads of account aggregate Rs. 36.78 crores (previous period Rs. 32.20 crores). The capital expenditure incurred during the year/period for research and development purposes aggregate Rs. 91.29 crores (previous period Rs. 59.33 crores). The details of capital expenditure and revenue expenditure are as below:

8. EMPLOYEE BENEFIT PLANS

The details of various employee benefits provided to employees are as under:

A. Defined Contribution Plans

Out of the total contribution made for employeesâ provident fund, Rs. 2.59 crores (Rs. 2.28 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to government-administered provident fund.

The total plan liabilities under the Eicher Executive Provident Fund Trust as at March 31, 2017 is Rs. 154.36 crores as against the total plan assets of Rs. 155.97 crores. The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

B. Defined benefit plans:

The Defined benefit plan of the Company includes entitlement of gratuity for each year of service until the retirement age.

This plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2017 by Mr. K.K. Dharni (FIAI M. No. 00051), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

The fair values of the above instruments are determined based on quoted market prices in active market. The actual return on plan assets was Rs. 1.27 crores for the year ended March 31, 2017.

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs. 0.62 crore (increase by Rs. 0.68 crore) (as at March 31, 2016: Decrease by Rs. 0.46 crore (increase by Rs. 0.51 crore))(as at January 1, 2015: Decrease by Rs. 0.29 crore (increase by Rs. 0.32 crore)).

- If the expected salary growth increases (decreases) by 50 basis points, the defined benefit obligation would increase by Rs. 0.68 crore (decrease by Rs. 0.62 crore) (as at March 31, 2016: Increase by Rs. 0.51 crore (decrease by Rs. 0.46 crore))(as at January 1, 2015: increase by Rs. 0.32 crore (increase by Rs. 0.30 crore)).

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

9. SEGMENT REPORTING DISCLOSURE

As defined in Ind AS 108, the chief operating decision maker (CODM), evaluates the Companyâs performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of Ind AS 108 âOperating Segmentsâ.

Geographical information

The âGeographical Segmentsâ comprises of domestic segment which includes sales to customers located in India and the overseas segment includes sales to customers located outside India.

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

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

c) Non-current segment assets include property, plant and equipment, non-current financial assets and other noncurrent assets.

Information about major customers

No customer individually accounted for more than 10% of the revenue.

10. FINANCIAL INSTRUMENTS

Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern, while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds into various investment options. The Company does not have any debt to meet its capital requirement and uses the operational cash flows and equity to meet its capital requirements.

The Company is not subject to any externally imposed capital requirements.

The following table summarises the capital of the Company:

10.1 Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques.

The following is the basis for categorising the financial instruments measured at fair value into Level 1 to Level 3 :

Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair value of the Companyâs financial assets that are measured at fair value on a recurring basis:

There are certain Companyâs financial assets which are measured are fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:

Fair value of the Companyâs financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)

Except as detailed out in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognised in the standalone financial statements approximate their fair values.

- The fair value of bonds is based on quoted prices and market observable inputs.

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

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

11. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives

The management reviews cash resources, implements strategies for foreign currency exposures and ensuring market risk limit and policies.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/liquidity risk which impact returns on investments. Market risk exposures are measured using sensitivity analysis.

Foreign currency risk management

Foreign currency sensitivity

The following table details the Companyâs sensitivity to a 5% increase and decrease in the Rs. against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below indicates an increase in profit or equity where the Rs. strengthens 5% against the relevant currency. For a 5% weakening of the Rs. against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.

In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/bonds, trade receivables, loans and advances. None of the financial instruments of the Company result in material concentrations of credit risks.

The age analysis of trade receivables as of the balance sheet date have been considered from the due date and disclosed in the Note no. 16 above.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower:

â¢ profit for the year ended March 31, 2017 would increase/decrease by Rs. 31.97 crores (for the fifteen months ended March 31, 2016: increase/decrease by Rs. 18.08 crores).

Interest rate risk

Liquidity risk

The surplus funds with the Company and operational cash flows will be sufficient to dispose the financial liabilities within the maturity period..

12. SHARE-BASED PAYMENTS

Employee share option plan of the Company

Details of the employee share option plan of the company

The following share-based payment arrangements were in existence during the current and prior years :

Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is Rs. 22,751.16 (previous period:

Rs. 15,599.37). Options were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on managementâs best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected volatility is based on the historical share price volatility over the past 3 years.

13. DISCLOSURE IN RESPECT OF OPERATING LEASES

(A) Assets taken on lease:

The Company has taken certain premises under various operating lease agreements. The total lease rental recognised as expense aggregate to Rs. 28.40 crores (Rs. 27.93 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year/period:

(B) Assets given on lease:

The Company has given assets under operating lease agreement to its joint venture company âEicher Polaris Private Limitedâ . The total lease rental recognised as income aggregate to Rs. 2.78 crores (Rs. 3.28 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

14. The details of disputed excise duty, sales tax, service tax and income tax dues as on March 31, 2017 which have not been deposited or deposited under protest are as follows:

15. The figures for the current year are for twelve months from April 1, 2016 to March 31, 2017, whereas the corresponding previous period figures are for fifteen months from January 1, 2015 to March 31, 2016. As such corresponding figures for the previous period are not directly comparable with those of current year.

16. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

17. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Dec 31, 2014

1. Share capital

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

(iii) The Company has not issued shares for consideration other than cash and has not bought back shares during five years immediately preceding the reporting date, December 31, 2014.

(iv) Employee stock option plan

a. 1,77,000 (1,77,000) options on September 30, 2006, exercisable over a period of seven years after vesting on October 1, 2009 at an exercise price of Rs. 297 (including premium of Rs. 287) per option, out of which Nil (Nil) options are outstanding at year end. During the year, Nil (6,400) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 297 (including premium of Rs. 287 each) per equity share.

b. 2,08,900 (2,08,900) options on October 22, 2007, exercisable over a period of seven years after vesting on October 23, 2010 at an exercise price of Rs. 462 (including premium of Rs. 452) per option, out of which 29,500 (32,000) options are outstanding at year end. During the year, 2,500 (31,500) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 462 (including premium of Rs. 452 each) per equity share.

c. 40,000 (40,000) options on April 29, 2010, exercisable over a period of seven years after vesting on April 29, 2011 at an exercise price of Rs. 695 (including premium of Rs. 685) per option are outstanding as at year end.

d. 15,400 (15,400) options on November 8, 2010, exercisable over a period of seven years after vesting on November 8, 2013 at an exercise price of Rs. 1,411 (including premium of Rs. 1,401) per option out of which Nil (15,400) options are outstanding at year end. During the year, 15,400 (Nil) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,411 (including premium of Rs. 1,401 each) per equity share.

e. 1,08,200 (1,08,200) options on May 6, 2011, exercisable over a period of seven years after vesting on May 6, 2014 at an exercise price of Rs. 1,162 (including premium of Rs. 1,152) per option out of which 60,200 (1,08,200) options are outstanding at year end. During the year, 48,000 (Nil) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,162 (including premium of Rs. 1,152 each) per equity share. During the year, Nil (24,000) options were forfeited.

f. 5,400 (5,400) options on February 11, 2012, exercisable over a period of seven years after vesting on February 11, 2015 at an exercise price of Rs. 1,770 (including premium of Rs. 1,760) per option are outstanding as at year end. During the year, Nil (7,200) options were forfeited.

g. 5,000 (5,000) options on December 16, 2013, exercisable over a period of seven years after vesting on December 15, 2016 at an exercise price of Rs. 4,915 (including premium of Rs. 4,905) per option are outstanding as at year end.

h. 22,500 (Nil) options on August 11, 2014, exercisable over a period of seven years after vesting on August 11, 2017 at an exercise price of Rs. 8,477.50 (including premium of Rs. 8,467.50) per option are outstanding as at year end.

i. 5,400 (Nil) options on November 12, 2014, exercisable over a period of seven years after vesting on November 12, 2017 at an exercise price of Rs. 12,993.65 (including premium of Rs. 12,983.65) per option are outstanding as at year end.

j. Each option entitles the holders thereof to apply for and be allotted one equity share of the face value of Rs. 10 each.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 139.79 crores (Rs. 62.49 crores).

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

3. Research and development expenses:

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 19.26 crores (Rs. 20.88 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 14.75 crores (Rs 10.89 crores). The details of capital expenditure and revenue expenditure are as below:

4. Contingent liabilities not provided for:

Rs. in crores

Particulars As at As at December 31, 2014 December 31, 2013

a) In respect of following:

- Excise duty matters 54.98 54.98

- Sales tax matters 5.06 6.87

- Service tax matters 0.39 0.40

- Income tax matters 4.26 6.79

b) Claims against the Company not acknowledged as debts 6.13 5.51

All the above matters are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

5. Disclosures under Accounting Standard 15 (Revised):

The details of various employee benefits provided to employees are as under:

a. Employee plans

Out of the total contribution made for employees'' provident fund, Rs. 1.44 crores (Rs. 1.14 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to government administered provident fund.

The total plan liabilities under the Eicher Executive Provident Fund Trust as at March 31, 2014 is Rs. 78.21 crores as against the total plan assets of Rs. 78.90 crores. The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

* includes Rs. 0.07 crore (Rs. Nil) capitalised during the year and Rs. 0.05 crore (Rs. 0.03 crore) considered in pre-operative expenditure (pending allocation).

6. Segment reporting:

As the Company''s business activities falls within a single primary business segment viz. ÂAutomobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard - 17 ÂSegment Reporting" notified under the Companies (Accounting Standards) Rules, 2006 are not applicable.

7. Disclosure in respect of operating leases:

(A) Assets taken on lease:

The Company has taken certain premises under various operating lease agreements. The total lease rental recognize as expense aggregate to Rs. 12.59 crores (Rs. 10.60 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

(B) Assets given on lease:

The Company has given assets under operating lease agreement to its joint venture company "Eicher Polaris Private Limited" . The total lease rental recognize as income aggregate to Rs. 2.49 crores (Rs. 1.20 crores).

Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following year:

8. The Company has a joint venture with Polaris Industries, Inc., U.S.A., Eicher Polaris Private Limited (EPPL) with an investment of Rs. 130.50 crores (including advance for equity Rs. 25.00 crores) (investment of Rs. 55.00 crores (including advance for equity Rs. 30.00 crores)) as at December 31, 2014, representing 50% shareholding in EPPL.

9. Figures in brackets represent previous year''s figures.

10. Previous year''s figures have been recast/regrouped, wherever necessary to confirm the current year''s presentation.

Dec 31, 2013

1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 318.63 crores (Rs. 361.43 crores) (includes share of joint venture Rs. 27.52 crores (Rs. Nil)). The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

2. Research and development expenses: Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. 90.69 crores (Rs. 90.83 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 129.75 crores (Rs 137.34 crores).

3. Contingent liabilities not provided for in respect of:

Rs. in crores

Particulars As at December 31, 2013 As at December 31, 2012

a) In respect of demands contested by the Company :

- Excise duty matters 54.98 54.99

- Sales tax matters 6.87 10.43

- Service tax matters 0.40 0.77

- Income tax matters 6.79 8.80

b) Claims against the Company not acknowledged as debts 5.51 5.00

All the above matters other than bills discounted are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

4. Segment reporting:

As the Company''s, its subsidiaries'' and joint venture business'' activities falls within a single primary business segment viz. "Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard Â 17 "Segment Reporting" notified under the Companies (Accounting Standards) Rules, 2006 are not applicable.

5. Pursuant to revised Schedule VI to the Companies Act, 1956, being applicable on the Company from the previous year ended on December 31, 2012, Dividend for the year ended December 31, 2012 declared by its subsidiary company i.e. VE Commercial Vehicles Limited (VECVL) after the date of balance sheet has been recognised in the current year when the right to receive dividends was established as per AS-9 ''Revenue Recognition''. However, Dividend declared by VECVL for the year ended December 31, 2011 was recognised as Dividend income in the year ended December 31, 2011 itself per requirement of Old Schedule VI to the Companies Act 1956. This has resulted into no Dividend income being recognised in the previous year ended December 31, 2012.

6. Figures in brackets represent previous year''s figures.

7. Previous year''s figures have been recast/regrouped, wherever necessary to confirm the current year''s presentation.

Dec 31, 2012

(i) Employee stock option plan

a. I,77,000 (I,77,000) options on september 30, 2006, exercisable over a period of seven years after vesting on October 1, 2009 at an exercise price of Rs.297 (including premium of Rs 287) per option, out of which 6,400 (6,400) options are outstanding at year end. during the year, Nil (8,000) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 297 (including premium of Rs. 287 each) per equity share.

b. 2,08,900 (2,08,900) options on October 22, 2007, exercisable over a period of seven years after vesting on October 23, 20I0 at an exercise price of Rs.462 (including premium of Rs. 452) per option, out of which 63,500 (7I,900) options are outstanding at year end. during the year, 8,400 (46,800) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 462 (including premium of Rs. 452 each) per equity share.

c. 40,000 (40,000) options on April 29, 20I0, exercisable over a period of seven years after vesting on April 29, 20II at an exercise price of Rs. 695 (including premium of Rs. 685) per option are outstanding as at year end.

d. 15,400 (I5,400) options on November 8, 20I0, exercisable over a period of seven years after vesting on November 8, 20I3 at an exercise price of Rs.I,4II (including premium of Rs. I,40I) per option are outstanding as at year end.

e. 1,32,200 (I,35,200) options on May 6, 20II, exercisable over a period of seven years after vesting on May 6, 20I4 at an exercise price of Rs. I,I62 (including premium of Rs. I,I52) per option are outstanding as at year end. during the year, 3,000 (Nil) equity shares were forfeited.

f. 12,600 (Nil) options on February II, 20I2, exercisable over a period of seven years after vesting on February II, 20I5 at an exercise price of Rs. I,770 (including premium of Rs.I,760) per option are outstanding as at year end.

g. Each option entitles the holders thereof to apply for and be allotted one equity share of the face value of Rs. I0 each.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3I.95 crores (Rs. 26.50 crores).

The company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services, employee''s benefits including union agreement in normal course of business. The company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which might have material impact on the financial statements.

3. Research and development expenses:

Revenue expenditure on research and development incurred and expensed off during the year through the appropriate heads of account aggregate Rs. I6.75 crores (Rs. I0.45 crores). The capital expenditure incurred during the year for research and development purposes aggregate Rs. 3.95 crores (Rs. 5.55 crores). The details of capital expenditure and revenue expenditure are as below:

4. contingent liabilities not provided for in respect of: Rs. in crores

Particulars As at As at December 31, 2012 December 31, 2011

a) in respect of demands contested by the company:

- Excise duty matters 54.99 54.99

- sales tax matters 10.43 10.38

- service tax matters 0.77 0.76

- income tax matters 8.80 14.15

b) claims against the company not acknowledged as debts 5.00 4.59

c) Guarantees given to:

A subsidiary, for certain receivables transferred - 0.06 pursuant to Business Purchase Agreement signed by the company with subsidiary company

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the company.

Out of the total contribution made for employees'' provident fund, Rs. 0.69 crores (Rs. 0.34 crores) is made to Eicher Executive Provident Fund Trust, while the remainder contribution is made to government administered provident fund. The total plan liabilities under the Eicher Executive Provident Fund Trust as at March 3I, 20I2 is Rs. 45.50 crores as against the total plan assets of Rs. 45.64 crores. The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

5. Segment reporting:

As the company''s business activities falls within a single primary business segment viz. ''Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting standard - I7 "segment Reporting" notified under the companies (Accounting standards) Rules, 2006 are not applicable.

6. The company has taken certain premises under various operating lease agreements. The total lease rental recognize as expense aggregate to Rs. 6.69 crores ( Rs. 3.59 crores).

7. Hitherto in terms of Old schedule Vi to the companies Act, I956, the company was recognising income from dividend declared by its subsidiary company, i.e. VE commercial Vehicles Limited (VEcVL) even after the date of the Balance sheet if they were pertaining to the period on or before the Balance sheet date. This requirement no longer exists in the Revised schedule Vi. Accordingly, the company as per As - 9 ''Revenue Recognition'' has decided to recognise dividend from subsidiary companies as income only when the right to receive dividends is established as on the Balance sheet date. Had the company recognised dividend from VEcVL as income as per Old schedule Vi, the profit for the year would have been higher by Rs. 40.80 crores.

8. Figures in brackets represent previous year''s figures.

9. The revised schedule Vi has become effective for the accounting year commencing on or after I April, 20II for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figure have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.

Dec 31, 2010

1. In 2008, the Commercial Vehicles business along with Components (including Gears) and Engineering Design Services business of the Company together with related assets, the discontinued operations (collectively hereinafter referred to as "CV Business") had been transferred by way of a Slump Sale as defi ned under Section 2(42C) of Income Tax Act, 1961 on a "going concern" basis to VE Commercial Vehicle Limited (VECVL, subsidiary of the Company) as per the Business Purchase Agreement (BPA) signed between VECVL and the Company.

2. The Composite Scheme of Arrangement ("the Scheme") between Eicher Goodearth Investment Limited (EGIL) and Eicher Goodearth Private Limited (EGPL) and Eicher Motors Limited (the Company) under section 391 to section 394 of the Companies Act, 1956, was approved by the High Court of Delhi vide its order dated October 27, 2009, and had become effective on November 12, 2009 on fi ling of certifi ed copy of the Order of High Court in the office of Registrar of Companies, NCT of Delhi. Consequent to effectuation of the Scheme in the previous year, the investment held by Residual EGIL in the equity share capital of the Company stood cancelled and accordingly the issued, subscribed and paid up share capital of the Company stood reduced to the extent of Rs. 140.3 millions being the face value of 14032762 equity shares held by Residual EGIL in the Company as on the appointed date. Further, since the shares had not been allotted till December 31, 2009, an amount of Rs.140.3 millions representing the aggregate nominal value of such shares had been included in the previous year under the head "Capital suspense" in the balance sheet. During the year, on January 5, 2010, the Company has issued and allotted 14032764 shares of Rs. 10 each (rounded off to the nearest integer in terms of the Scheme) aggregating Rs.140.3 millions to the members of Residual EGIL in the proportion in which they held equity shares in Residual EGIL.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 56.0 millions (Rs. 67.0 millions).

4. Contingent liabilities not provided for in respect of:

Rs. in millions

Particulars As at As at December 31, 2010 December 31, 2009

a) In respect of demands contested by the Company:

Sales tax matters 111.0 115.3

Excise duty matters 585.6 580.1

Income tax matters 88.8 56.7

Service tax matters 9.5 9.5

b) Claims against the Company not acknowledged as debts 9.2 9.5

c) Guarantees given to:

VECVL, a subsidiary, for certain receivables transferred pursuant to BPA signed by the 2.1 12.3 Company with VECVL (refer note 2 above)

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

5. Segment reporting:

As the Companys business activities falls within a single primary business segment viz. "Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard - 17 "Segment Reporting" notifi ed under the Companies (Accounting Standards) Rules, 2006 are not applicable.

6. Related party disclosure:

a. Name of related parties and their relationship

Name of related party Nature of relationship

VE Commercial Vehicles Ltd. (VECVL) Subsidiary Company

Eicher Engineering Solutions, Inc., U.S.A. (EES, Inc.) Subsidiary Company of VECVL

Hoff Automotive Design (Beijing) Co. Ltd (Hoff Beijing) 100% subsidiary company of EES, Inc.

Hoff Auto Design (Shanghai) Co. Ltd. (Hoff Shanghai) 100% subsidiary company of EES, Inc.

Eicher Goodearth Investment Limited* (EGIL) Part for which the Company is Associate

* Ceased to exist w.e.f. January 1, 2009 (refer to note 3 above).

b. Key management personnel

Mr. Siddhartha Lal Managing Director

Transactions with the above key management personnel:

Refer to note 9 for managerial remuneration in respect of the above personnel

7. Excise duty on sales has been deducted from gross sales on the face of profit and loss account. Increase / (decrease) in excise duty on finished goods has been shown under the head Materials consumed in schedule 10.

8. a) Figures in brackets represent previous years figures. b) Previous years figures have been recast/ regrouped where necessary.

9. Schedules 1 to 12 and the statement of additional information form an integral part of the accounts.

Dec 31, 2009

1. a) During the previous period, the Commercial Vehicles business along with Components (including Gears) and Engineering Design Services business of the Company together with related assets (collectively hereinafter referred to as ÃCV BusinessÃ) has been transferred by way of a Slump Sale as defi ned under Section 2(42C) of Income Tax Act, 1961 on a Ãgoing concernÃ basis to VE Commercial Vehicles Limited (VECVL, subsidiary of the Company) as per the Business Purchase Agreement (BPA) signed between

b) Expenses for contractual liability represent indemnifi ed loss on account of certain receivables pertaining to erstwhile Commercial Vehicle business.

2. Pursuant to the Composite Scheme of Arrangement (Ãthe SchemeÃ) between Eicher Goodearth Investment Limited (EGIL) and Eicher Goodearth Private Limited (EGPL) and Eicher Motors Limited (the Company) under section 391 to section 394 of the Companies Act, 1956, approved by the High Court of Delhi vide its order dated October 27, 2009, which became effective on November 12, 2009 on fi ling of certifi ed copy of the Order of High Court in the offi ce of Registrar of Companies, NCT of Delhi:

ii) Consequent to effectuation of the Scheme;

a) the investment held by residual EGIL in the equity share capital of the Company stands cancelled and accordingly the issued and paid up share capital of the Company stands reduced to the extent of Rs. 140.3 millions being the face value of 14032762 equity shares held by Residual EGIL in the Company as on the appointed date;

b) the Company, subsequent to the year end, on January 5, 2010, has issued and allotted 14032764 shares of Rs. 10 each (round- ed off to the nearest integer in terms of the Scheme) aggregating Rs.140.3 millions to the members of residual EGIL in the proportion in which they held equity shares in Residual EGIL. Since the shares had not been allotted till December 31, 2009, an amount of Rs.140.3 millions representing the aggregate nominal value of such shares has been included in these accounts as ÃCapital suspenseÃ under the head ÃShareholders fundÃ;

c) in accordance with Accounting Standard (AS) Ã 14 ÃAccounting for AmalgamationsÃ, the merger of Residual EGIL with the Company has been accounted for under the ÃPooling of interestÃ method. In terms of the Scheme, all the assets and liabilities, including reserves and profi t and loss of Residual EGIL have vested in the Company at their book values as appearing in the books of account of Residual EGIL;

d) the excess of net assets (after adjusting for the cancellation of investments held in the Company) of Residual EGIL over the value of share capital to be issued to the shareholders of Residual EGIL amounting to Rs. 0.4 million has been credited to General reserve account in schedule 2 Ã Reserves and surplusÃ.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 67.0 millions (Rs. 30.7 millions).

4. Contingent liabilities not provided for in respect of:

Rs. in millions

Particulars As at December As at December 31, 2009 31, 2008

a) In respect of demands contested by the Company:

- Sales tax matters 115.3 93.7

- Excise duty matters 580.1 558.2

- Income tax matters 56.7 42.1

- Service tax matters 9.5 4.8

b) Claims against the Company not acknowledged as debts 9.5 10.1

c) Guarantees given:

i) to certain finance companies and banks for recovery of their 350.0 360.0 dues against auto finance business of VECVL, a subsidiary

- Dues outstanding in the books of VECVL - 3.4

(ii) to VECVL, a subsidiary, for certain receivables transferred 12.3 183.8 pursuant to BPA signed by the Company with VECVL

All the above matters other than guarantees are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the fi nancial position of the Company.

5. Segment reporting

As the CompanyÃs business activities falls within a single primary business segment viz. ÃAutomobile products and related componentsÃ and is a single geographical segment, the disclosure requirements of Accounting Standard Ã 17 ÃSegment ReportingÃ specifi ed in the Companies (Accounting Standards) Rules, 2006 are not applicable.

6. Related party disclosure:

a. Name of related parties and their relationship:

Name of related party Nature of relationship

Eicher Goodearth Investments Limited* (EGIL) Party for which the Company is Associate

VE Commercial Vehicles Ltd. (VECVL) Subsidiary Company

Eicher Engineering Solutions, Inc., U.S.A. (EES, Inc.) Subsidiary Company of VECVL

Royal Enfield Motorcycles Limited (REML) Significant influence of key management personnel

ECS Limited** (ECS) Significant influence of key management personnel

Eicher Goodearth Private Limited (EGPL) Significant influence of key management personnel

* Ceased to exist w.e.f January 1, 2009. (refer to note 3 above)

** Ceased to be a related party w.e.f December 24, 2008

b. Key management personnel:

Mr. Siddhartha Lal Managing Director

Transactions with the above key management personnel:

Refer to note 9 for managerial remuneration in respect of the above personnel

7. ÃExcise dutyÃ on sales has been deducted from gross sales on the face of profi t and loss account. ÃIncrease/ (decrease) in excise duty on fi nished goodsÃ has been shown under the head ÃMaterials consumedÃ in schedule 10.

8. In terms of shares buy back scheme approved by the shareholders of the Company on December 28, 2008 to buy back upto 1408969 equity shares of its own fully paid up equity shares of Rs.10 each from its existing shareholders on a proportionate basis through ÃTender Offer RouteÃ at a fi xed price of Rs.691.68 (including premium of Rs. 681.68) per share from March 12, 2009 to March 26, 2009, the Company has completed the buy back of 1408969 equity shares at the mentioned price on April 16, 2009.

9. The figures for the current year are for a period of twelve months from January 1, 2009 to December 31, 2009, whereas the corresponding previous period fi gures are for a period of nine months from April 1, 2008 to December 31, 2008. Further, the previous period fi gures included fi gures upto June 30, 2008 of CV Business which was transferred under a slump sale (refer note 2 above). As such, corresponding fi gures for the previous period are not comparable with those of current year.

10. a) Figures in brackets represent previous yearÃs figures.

b) Previous yearÃs figures have been recast/regrouped where necessary.

11. Schedule 1 to 12 and the statement of additional information form an integral part of the accounts.

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