Notes to Accounts of Happy Forgings Ltd.

Mar 31, 2025

(xvi) Provisions and Contingent Liabilities/Assets

Provisions are recognised when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. When
the Company expects some or all of a provision to be
reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset,
but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in the
statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.

Contingent Liabilities

Contingent liabilities are disclosed when there is
a possible obligation arising from past events, the
existence of which will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the
Company or a present obligation that arises from past
events where it is either not probable that an outflow of
resources will be required to settle or a reliable estimate
of the amount cannot be made. Contingent liabilities
are not recognised but are disclosed in notes.
Contingent Assets are not recognised in standalone
financial statements but are disclosed, since the
former treatment may result in the recognition of
income that may or may not be realised. However,
when the realisation of income is virtually certain, then
the related asset is not a contingent asset, and its
recognition is appropriate.

(xvii) Cash Flow Statement

The Cash flow statement has been prepared under
the "Indirect Method" as set out in Indian Accounting
Standard-7, "Statement of Cash Flows" whereby profit
for the period is adj usted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past
or future operating cash receipts or payments and item
of income or expenses associated with investing or
financing cash flows. The cash flows from operating,
investing and financing activities of the Company are
segregated.

(xviii) Borrowing Costs

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

(xix) Fair Value Measurements

The Company measures financial instruments, such
as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or
In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must
be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant''s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1- Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.

Level 2- Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable.

Level 3- Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.

For assets and liabilities that are recognised in the
standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.

The Company determines the policies and procedures
for both recurring fair value measurement, such
as derivative instruments and unquoted financial
assets measured at fair value, and for non-recurring
measurement, such as assets held for distribution in
discontinued operations.

External valuers are involved for valuation of significant
assets and liabilities, if any. At each reporting date,
the Company analyses the movements in the values
of assets and liabilities which are required to be
remeasured or re-assessed as per the Company''s
accounting policies.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above.

(xx) Leases

The Company assesses at contract inception whether
a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange of consideration
is considered as lease.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to
be low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

As a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.

As a Lessor

Lease income from operating leases where the
Company is a lessor is recognised in income on a
straight-line basis over the lease term unless the
receipts are structured to increase in line with expected
general inflation to compensate the lessor for the
expected inflationary cost increases. The respective
leased assets are included in the balance sheet based
on their respective nature.

(xxi) Share-based payments

Eligible Employees (including senior executives) of the
Company receive remuneration in the form of share-
based payments, whereby employees render services
as consideration for equity instruments (equity-settled
transactions).

The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model. Further details
are given in Note No. 43

That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves in
equity, over the period in which the performance and/
or service conditions are fulfilled in employee benefits
expense. The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which the
vesting period has expired and the Company''s best
estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement
of profit and loss for a period represents the movement
in cumulative expense recognised as at the beginning
and end of that period and is recognised in employee
benefits expense.

Service and non-market performance conditions are
not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions
being met is assessed as part of the Company''s best
estimate of the number of equity instruments that
will ultimately vest. Market performance conditions
are reflected within the grant date fair value. Any
other conditions attached to an award, but without
an associated service requirement, are considered to
be non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also
service and/or performance conditions.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,

the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.

When the terms of an equity-settled award are modified,
the minimum expense recognised is the grant date fair
value of the unmodified award, provided the original
vesting terms of the award are met. An additional
expense, measured as at the date of modification,
is recognised for any modification that increases the
total fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an
award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is
expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.

(xxii) Segment Reporting

As per the compliance of Ind AS 108 operating
segments are identified based on reports reviewed
by CODM (chief operating decision-maker). Operating
segments can either be based on products/services or
on geographical basis. It is reported in a manner which
is consistent with the internal reporting provided to the
judgment of CODM.

2c. Significant accounting judgments, estimates and
assumptions

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

Judgements

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

Estimates and assumptions

The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, which have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are

described below. The Company based its assumptions
and estimates on parameters available when the
standalone financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the Company. Such changes are reflected in
the assumptions when they occur.

a. Useful life of property, plant and equipment and
intangible assets

The Company uses its technical expertise along with
historical and industry trends for determining the
economic useful life of an asset/component of an
asset. The useful lives are reviewed by management
periodically and revised, if appropriate. In case of a
revision, the unamortised amount is charged over the
remaining useful life of the assets.

b. Taxes

Uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income.
Given the nature of business differences arising
between the actual results and the assumptions
made, or future changes to such assumptions, could
necessitate future adjustments to tax income and
expense already recorded. The Company establishes
provisions, based on reasonable estimates. The
amount of such provisions is based on various factors,
such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity
and the responsible tax authority. Such differences of
interpretation may arise on a wide variety of issues
depending on the conditions prevailing in the respective
domicile of the companies.

Valuation of recoverable income tax assets especially
with respect to deferred tax assets on tax loss
carry forwards. Significant judgement is required in
determining the provision for income tax. The Company
recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded,
such differences will impact the current and deferred
income tax assets and liabilities in the period in which
such determination is made.

c. Contingencies

The Company estimates the provisions and liabilities
and to the probability of expenses arising claims from
legal disputes/litigations that have present obligations
as a result of past events, and it is probable that outflow

of resources will be required to settle the obligations.
These provisions are reviewed at the end of each
reporting date and are adjusted to reflect the current
best estimates.

d. Defined Benefit Plans

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

Further details about gratuity obligations are given in
Note 33.

e. Fair Value Measurement of Financial Instruments

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

f. Revenue from contracts with customers

The Company applies the judgements in respect to
transactions relating to recognition of point in time
of Sale of Goods, when the control is transferred
generally on delivery of goods, that significantly affect
the determination of the amount and timing of revenue
from contracts with customers. For more details, refer
note 2b(i).

g. Provision for expected credit losses of trade
receivables and contract assets

The Company uses a provision matrix to calculate
ECLs for trade receivables and contract assets. The
provision rates are based on days past due for various
customer segments that have similar loss patterns
(i.e., by geography, product type, customer type and
rating, and coverage by letters of credit and other forms

of credit insurance). The provision matrix is initially
based on the Company''s historical observed default
rates. The Company will calibrate the matrix to adjust
the historical credit loss experience with forward¬
looking information. For instance, if forecast economic
conditions (i.e., gross domestic product) are expected
to deteriorate over the next year which can lead to an
increased number of defaults in the manufacturing
sector, the historical default rates are adjusted. At
every reporting date, the historical observed default
rates are updated and changes in the forward-looking
estimates are analysed. The assessment of the
correlation between historical observed default rates,
forecast economic conditions and ECLs is a significant
estimate. The amount of ECLs is sensitive to changes
in circumstances and of forecast economic conditions.
The Company''s historical credit loss experience and
forecast of economic conditions may also not be
representative of customer''s actual default in the
future.

h. Share-based payments

Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which depends 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 or appreciation right, volatility and
dividend yield and making assumptions about them.
For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the
Company uses a Black Scholes model for Employee
Share Option Plan (ESOP). The assumptions and
models used for estimating fair value for share-based
payment transactions are disclosed in Note 43.

2d. New and amended standards
The Company applied for the first-time certain
standards and amendments, which are effective for
annual periods beginning on or after 1^st April, 2024.
The Company has not early adopted any standard,
interpretation or amendment that has been issued but
is not yet effective.

a. Ind AS 117 Insurance Contracts

The Ministry of Corporate Affairs (MCA) notified
the Ind AS 117, Insurance Contracts, vide
notification dated 12^th August, 2024, under
the Companies (Indian Accounting Standards)
Amendment Rules, 2024, which is effective from
annual reporting periods beginning on or after 1^st
April, 2024.

Ind AS 117 Insurance Contracts is a
comprehensive new accounting standard for
insurance contracts covering recognition and
measurement, presentation and disclosure. Ind AS
117 replaces Ind AS 104 Insurance Contracts. Ind
AS 117 applies to all types of insurance contracts,
regardless of the type of entities that issue them
as well as to certain guarantees and financial
instruments with discretionary participation
features; a few scope exceptions will apply. Ind AS
117 is based on a general model, supplemented
by:

• A specific adaptation for contracts with
direct participation features (the variable fee
approach)

• A simplified approach (the premium
allocation approach) mainly for short-
duration contracts

The application of Ind AS 117 does not have
material impact on the Company''s Standalone
financial statements as the Company has not
entered any contracts in the nature of insurance
contracts covered under Ind AS 117.

b. Amendments to Ind AS 116 Leases - Lease
Liability in a Sale and Leaseback

The MCA notified the Companies (Indian
Accounting Standards) Second Amendment
Rules, 2024, which amend Ind AS 116, Leases,
with respect to Lease Liability in a Sale and
Leaseback.

The amendment specifies the requirements that a
seller-lessee uses in measuring the lease liability
arising in a sale and leaseback transaction, to
ensure the seller-lessee does not recognise any
amount of the gain or loss that relates to the right
of use it retains.

The amendment is effective for annual reporting
periods beginning on or after 1^st April, 2024 and
must be applied retrospectively to sale and
leaseback transactions entered into after the date
of initial application of Ind AS 116.

The amendments do not have a material impact on
the Company''s Standalone financial statements.

c. Geopolitical implications of US “reciprocal"
tariffs

In recent weeks, the United States government has
imposed new tariffs including reciprocal tariffs
against other countries and several countries
have responded with retaliatory tariffs. On 9^th April,
2025 the US government announced a 90 day

pause for the reciprocal tariffs for many countries.
However, baseline tariffs remain, as well as tariffs
related to certain countries and industries. These
tariffs, some of which are subject to change,
impact all US trading partners to varying degrees.
Much

uncertainty remains as to the duration, possible
exemptions and exclusions, as well as the extent
of any retaliatory tariffs imposed on the US by
other countries.

The Company has made the assessment against
the same and there is meagre exposure in terms
of dependency on the export to the particular
region.

2e. Climate - related matters

The Company considers climate-related matters
in estimates and assumptions, where appropriate.
This assessment includes a wide range of possible
impacts on the Company due to both physical and
transition risks. Even though the Company believes
its business model and products will still be viable
after the transition to a low-carbon economy, climate-
related matters increase the uncertainty in estimates
and assumptions underpinning several items in the
standalone financial statements. Even though climate-
related risks might not currently have a significant
impact on measurement, the Company is closely
monitoring relevant changes and developments,
such as new climate-related legislation. The items
and considerations that are most directly impacted
by climate-related matters are Useful life of property,
plant and equipment and Impairment of non-financial
assets.

Note 1: Refer to note 14A for information on property plant and equipment pledged as security by the Company.

Note 2: The title deed of all the immovable properties are held in the name of the Company.

Note 3: The Company has capitalised certain expenses of revenue nature amounting to '' 1,110.16 Lakhs (31^st March, 2024:
'' 583.66 Lakhs) to the cost of Property, plant and equipment/Capital work in progress (CWIP) and Intangible Asset Under

Development (IAUD) (Refer note 27(b)).

Note 4: On transition to Ind As (i.e. 1^st April 2018) the Company has elected to continue with the carrying value of all property,
plant and equipment measured as per the previous GAAP and use the carrying value as deemed cost of property, plant and
equipment.

*The amount was transferred from Asset held for sale to Capital Work in Progress (CWIP) during the FY 2023-24 due to change
in management decision to use this asset in near future.

(c) Share Based Payment Reserve

The share options-based payment reserve is used to recognise the grant date fair value of options issued to employees
under Employee stock option plan. Refer Note no 43.

(d) Cash Flow Hedge Reserve

The Company uses hedging instruments as part of its management of exposure to risks associated with foreign currency.
For hedging foreign currency, the Company uses foreign exchange forward contracts. To the extent these hedges are
effective, the change in fair value of the hedging instrument is recognised in the cash flow hedge reserve. Amount recognised
in the cash flow hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss.

(e) Distribution made and proposed

a) The final dividend on equity shares of '' 4.00 per share amounting to '' 3,768.20 Lakhs (31^st March, 2024: '' 1.30 per
share, amounting to '' 1,163.49 Lakhs) has been approved at the annual general meeting held on 29^th July, 2024
and dividend amount was transferred to dividend distribution account on 2^nd August, 2024 during the year ended
31^st March, 2025.

b) The proposed dividend on equity shares of ''3.00 per share amounting to '' 2,827.27 Lakhs (31^st March, 2024: '' 4.00
per share, amounting to '' 3,768.20 Lakhs) are subject to approval at the annual general meeting and is not recognised
as liability at the year end.

The Company has complied with the provisions of Section 123 of the Companies Act, 2013 related to dividend declared.

e) Aggregate number of equity shares issued as bonus, shares issued for bonus other than cash and shares bought back
during the period of five years immediately preceding the reporting date:

- During the year ended 31^st March, 2022, the Company had issued 4,47,49,500 equity shares of '' 2/- each aggregating to
'' 894.99 Lakhs as bonus shares.

f) Aggregate number of equity shares issued under Employee stock option scheme:

- During the year ended 31^st March, 2025, the Company has issued 37,318 Equity shares of '' 2/- each at exercise price of ''
190/- each aggregating to '' 70.90 Lakhs. For details related to employee stock option, Refer Note 43.

13. | OTHER EQUITY (ALSO REFER TO STATEMENT OF CHANGES IN EQUITY)

Nature and purpose of reserves

(a) Securities premium

Securities premium represents the excess consideration received by the Company over the face value of the shares issued
to the shareholders. This will be utilised in accordance with the provisions of the Companies Act, 2013.

(b) Retained earnings

Retained earnings are the profit that the Company has earned till date, less any transfers to general reserve, dividends or
other distributions paid to the Shareholders. Retained earning includes re-measurement (loss)/ gain on defined benefit
plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available
to the Company and eligible for distribution to shareholders, in case where it is having positive balance representing net
earnings till date.

Notes:

1. The Company has been sanctioned working capital limits in excess of '' Five Crores in aggregate from banks during
the year on the basis of security of current assets of the Company. The quarterly returns/statements filed from time to
time by the Company with such banks are in agreement with the books of accounts of the Company.

2. During the current year, the Company has established a supplier finance arrangement amounting to '' 9,624.62 Lakhs,
that is offered to one of the Company''s key supplier. For the supply chain fiinancing agreement entered by the Company,
it provides no security to the finance provider. However, the Cost of this arrangement is borne by the Company. Also,
the payment to the vendors will be at a credit period offered by the banks and not on the original terms of the contract.
Accordingly, the same has been recognised as Borrowings from the Bank as on 31^st March, 2025.

31. | LEASE

The Company incurred '' 42.19 Lakhs during the year ended 31^st March, 2025 (March 31 2024''29.55 Lakhs) towards expenses
relating to short terms leases and leases of low value assets and the same is recognised under other expenses in statement of
Profit and loss account. Leases mainly comprise of facilities taken for sales office and as warehouse facilities.

32. | SEGMENT INFORMATION

The Company business comprises only the Forging segment where the Company sells forged products comprising of forgings
and machined components for the automotive and industrial sector. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision maker. The disclosure requirements of Ind AS 108- operating
Segments" notified by the Companies (Accounting standard) Rules 2006 (as amended) is not applicable.

The Company''s Chairman and Managing Director is the Chief Operating Decision Maker (CODM) and monitors all operating
segments'' operating results to make decisions about resources to be allocated to the segments and assess their performance.
As the Chief operating decision maker of the Company assesses the financial performance and position of the Company as a
whole and maker strategic decision, the management considers manufacturing of forgings and related components as a single
operating segment as per Ind As 108, hence separate segment disclosure, have not been furnished.

The following table shows the distribution of the Company''s net revenue by geographical market, regardless of where the goods
were produced:

The management assessed that the fair value of current financial assets and liabilities approximate their carrying value
largely due to the short term maturities of these instruments. Further, for non-current financial assets, the management
assessed that the fair value approximate their carrying value largely due to the fact that majority of balance is represented
by fixed deposits with bank created out of IPO Proceeds.

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

The Following method and assumptions were used to estimate the fair value :

- The Company enters into investments in mutual funds, being valued using valuation techniques, which employs the
use of market observables inputs. The Company uses net asset value provided by mutual fund managers for valuation
of these investments.

C Fair Value hierarchy:

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

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

(ii) Level 2: 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).

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

37. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities, other than derivatives, comprise borrowings and trade payables. The main purpose
of these financial liabilities is to finance the Company''s working capital requirements. The Company has various financial assets
such as trade receivable, short term deposits and cash & cash equivalents, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s Board of Directors oversees the management
of these risks and also ensures that financial risk activities are governed by appropriate policies and procedures and that
financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board
of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

A. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity
price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, debt and equity
investments and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as
at 31^st March, 2025 and 31^st March, 2024.

(i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes
in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily
to the Company''s operating activities by way of direct imports/exports. The Company evaluates the exchange rate
exposure arising from foreign currency transactions and follows established risk management policies.

Foreign currency sensitivity

The following table represents the sensitivity to a reasonably possible change in US$, GBP and EURO exchange rates,
with all other variables held constant. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items as mentioned above and adjusts their translation at the year end for a 5% change in foreign currency
rates. A positive number below indicates an increase in profit or equity and vice-versa.

(ii) Interest Rate Risk

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

The Company is exposed to interest rate risk on short-term and long-term floating rate instruments. The borrowings
of the Company are principally denominated in Indian Rupees with a mix of fixed and floating rates of interest. The
Company has a policy of selectively using interest rate swaps and other derivative instruments to manage its exposure
to interest rate movements. These exposures are reviewed by appropriate levels of management on a regular basis.
The exposure of company''s borrowing to interest rate changes as reported to the management at the end of reporting
year are as follows:

(iv) Equity price risk

The Company''s non-listed equity securities are susceptible to market price risk arising from uncertainties about future
values of the investment securities. The Company''s Board of Directors reviews and approves all equity investment
decisions. At the reporting date, the exposure to unlisted equity securities at cost was '' 10.00 Lakhs (As at 31st March,

2024: '' 10.00 Lakhs).

B. Credit Risk

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

Trade receivables

Customer credit risk is managed subject to the Company''s established policy, procedures and control relating to customer
credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance
with this assessment. Outstanding customer receivables are regularly monitored by Management & President Sales and
corrective actions are taken. Any shipments to major customers are generally covered by letters of credit or other forms of
credit insurance obtained from reputable banks and other financial institutions.

(iii) Commodity price risk

The Company is affected by price volatility of certain commodities. The principal raw materials for the Company
products are alloy and carbon steel in the form of rounds and billets which are purchased by the Company from
the approved list of suppliers. Most of the input materials are procured from domestic vendors which is subject to
price negotiations. Due to significant volatility in prices of steel, the Company has agreed with its customers for pass
through of increase/decrease of prices of steel. There may be a lag effect in case of such pass-through arrangements.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s finance & accounts department
in accordance with the Company''s policy. Investments of surplus funds are made with banks in Fixed deposits.

. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial assets. The Company''s approach to manage liquidity is to
have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without
incurring unacceptable losses or risking damage to the Company''s reputation.

Management manages the liquidity risk by monitoring cash flow forecasts on a yearly basis and maturity profiles of financial
assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional
undrawn financing facilities. The Company will continue to consider various borrowings options to maximise liquidity and
supplement cash requirements as necessary. The Company''s objective is to maintain a balance between continuity of
funding and flexibility through the use of bank overdrafts, cash credit facilities and buyers'' credit facilities. As at 31⁸¹ March,
2025, the Company has available '' 34,663.58 Lakhs (31⁸¹ March, 2024: '' 23,649.26 Lakhs) in form of undrawn committed
borrowing limits.

38. | CAPITAL RISK MANAGEMENT

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

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by
total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash
equivalents and other bank balances.

39. | RECOGNITION OF GOVERNMENT GRANTS

a) Under Invest Punjab scheme, the Company is eligible for various incentives like 100% exemption of electricity duty and
Infrastructure development fund and Net SGST Incentive calculated based on GST deposited and applicable GST Rate,
100% exemption/refund of stamp duty and Change of Land Use(CLU) fees and 50% exemption of property tax.

During the current year, the Company has recognised government grant in relation to exemption of electricity duty and
Infrastructure development fund amounting to '' 641.60 Lakhs (31⁸¹ March, 2024: '' 547.06 Lakhs). The grant amount is
netted from the Power & Fuel Expenses under other expenses. As on 31⁸¹ March, 2025, '' 16.93 Lakhs (31⁸¹ March, 2024:
'' 16.78 Lakhs) of grant amount is receivable under this scheme.

Also, during the current year, the Company has recognised government grant in relation to refund of eligible Net SGST
Incentive (which is calculated based on GST paid on eligible sales) amounting to '' 805.21 Lakhs (31⁸¹ March, 2024: 737.62
Lakhs) under other operating revenue. As at 31⁸¹ March, 2025''2,606.17 Lakhs (31⁸¹ March, 2024, '' 3,161.79 Lakhs) of grant
amount is receivable under this scheme.

b) The Company has recognised export incentives under the Duty drawback Scheme and Remission of Duties or Taxes on
Export of Products Scheme (RoDTEP) aggregating to '' 593.00 Lakhs (31⁸¹ March, 2024: '' 613.36 Lakhs). The amount of
incentive recognised has been disclosed as other operating revenue.

40. | HEDGING ACTIVITIES AND DERIVATIVES

a) Derivatives not designated as hedging instruments:

The Company uses foreign exchange forward contracts to manage its exposure to risks associated with foreign currency.
These derivative contracts are not designated as hedging instrument in cash flow hedge and are entered into for years
consistent with foreign currency exposure of the underlying transactions, generally from one to twelve months.

b) Derivatives designated as hedging instruments:

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash
flow hedges of forecast sales in EURO; and thereafter as a fair value hedge for the resulting receivables. These forecast
transactions are highly probable.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in
foreign exchange forward rates.

The fair value of derivative financial instruments is as follows:

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

No changes were made in the objectives, policies or processes for managing capital during the year ended 31⁸¹ March, 2025 and
31^s1 March, 2024.

The critical terms of the foreign currency forward contracts match the terms of the expected highly probable forecast sale
transactions. As a result, no hedge effectiveness arise requiring recognition through profit or loss.

The cash flow hedges of the forecasted sale transactions during the year ended 31 ⁸¹ March, 2025 were assessed to be
highly effective and unrealised (loss) gain of '' 170.44 Lakhs (31⁸¹ March, 2024: '' 797.15 Lakhs), with a deferred tax (liability)

asset of '' (42.90) Lakhs (31⁸¹ March, 2024: '' (200.63) Lakhs) relating to the hedging instruments, is included in OCI.

Valuation Technique

The Company enters into derivative financial instruments with Banks. Foreign exchange forward contracts are valued
using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation
techniques include forward pricing models, using present value calculations. Where quoted market prices are not available,
fair values are based on management''s best estimates, which are arrived at by the reference to market prices.

44. | INITIAL PUBLIC OFFER ( IPO)

During the year ended 31^st March 2024, the Company completed its Initial Public Offer (''IPO'') of 1,18,65,802 equity shares of face
value of 2 each at an issue price of '' 850 per share (including a share premium of '' 848 per share). The issue comprised of a
fresh issue of 47,05,882 equity shares aggregating to '' 40,000 Lakhs and offer for sale of 71,59,920 equity shares aggregating
to '' 60,859.32 Lakhs. The equity shares of the Company were listed on the National Stock Exchange of India Limited (NSE) and
BSE Limited (BSE) on December 27, 2023.

Consequent to allotment of fresh issue, the paid-up equity share capital of the Company stands increased from '' 1,789.98 Lakhs
consisting of 8,94,99,000 equity shares of ''2 each to '' 1,884.10 Lakhs consisting of 9,42,04,882 equity Shares of '' 2 each.

The total offer expenses were estimated to the fresh issue are '' 2,217.67 Lakhs (including taxes). The utilisation of IPO proceeds
from fresh issue (net of IPO related expense of '' 2,217.67 Lakhs) is summarised below:

46. The Company has used accounting software for maintaining its books of account which has a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software
at the application, except that audit trail feature is not enabled for certain changes made using privileged/ administrative
access rights to the SAP application and the underlying HANA database. Further no instance of audit trail feature being
tampered with was noted in respect of accounting software, wherever audit log was enabled. Additionally, the audit trail
in respect of prior years has not been preserved by the Company as per the statutory requirements for record retention.

47. | RE-GROUPING/RE-CLASSIFICATION

In accordance with recent expert advisory committee, the Company has reclassified accrued interest which has been included in
the respective balances of assets and liabilities. Previously, accrued interest was presented as a separate line item in respective
notes. There are no other re-grouping/reclassification done during the current year.

48. | OTHER STATUTORY INFORMATION

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

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

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

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

(v) 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.

(vi) 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 i dentified in any manner whatsoever by or on behalfofthe Funding
Party (Ultimate Beneficiaries) or

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

(vii) 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.

(viii) the Company is not declared as wilful defaulter by any bank or financial institution.

49. Events after reporting date:

There are no events occurred after the reporting year which may impact the financial position as on 31^st March, 2025.

49. | EVENTS AFTER REPORTING DATE:

There are no events occurred after the reporting year which may impact the financial position as on 31^st March, 2025.

As per our report of even date For and on behalf of the board of directors of

For S.R.BATLIBOI and Co. LLP Happy Forgings Limited

Chartered Accountants

ICAI Firm registration no. 301003E/E300005 (Paritosh Kumar) (Ashish Garg)

Chairman Cum Managing Director Managing Director

DIN :00393387 DIN :01829082

per Pravin Tulsyan

Partner (Pankaj Kumar Goyal) (Bindu Garg)

Membership No. 108044 Chief Financial Officer Company Secretary

Membership No. 500683 Membership No. 6997

Place: Gurugram Place: Ludhiana

Date: 17^th May, 2025 Date: 17^th May, 2025

---

Mar 31, 2024

Note 3 (b) Assets held for sale

One of the plant and machinery was classified as held for sale based on the management decision to dispose off this asset in near future. This asset was not in active usage and was measured at the lower of its carrying amount or fair value less costs to sell. The fair value of this asset was determined using the market comparison approach. The same is transferred from Asset held for sale to Capital Work in Progress (CWIP) during 2023-24 due to change in management decision to use this asset in near future.

(IPO) of equity shares of the Company by way of fresh issue and an offer for sale by the existing shareholders. In relation to the IPO expenses incurred till date, except for listing fees which shall be solely borne by the Company, all other expenses will be shared between the Company and the Selling Shareholders on a pro-rata basis, in proportion to the Equity Shares issued and allotted by the Company in the fresh issue and the offered shares sold by the selling shareholders in the offer for sale. Accordingly, the Company will recover the expenses incurred in connection with the Issue on completion of Initial Public Offer (IPO). Third party is managing release of payment for these expenses to the Company and selling shareholders from a separate bank account maintained for this purpose under their control. Hence, the expenses relating to Company’s share of recovery is disclosed under this head.

- For terms and conditions relating to related parties receivables, refer Note 35.

- Trade receivables are non-interest bearing and are generally on terms of 30 to 120 days.

- The carrying amount of trade receivables includes receivables which are discounted with banks. The Company has transferred the relevant receivables to the discounting bank in exchange for cash. However, the Company has retained the late payment and credit risk. Accordingly, the Company continues to recognise the transferred assets in entirely in its balance sheet. Refer note 14A for information on trade receivables pledged as security by the Company.

- The Company’s exposure to credit and currency risk and loss allowance related to trade receivable are disclosed in note 37.

a) Rights, preferences and restrictions attached to equity shares

The Company currently has only one class of equity shares having a par value of 2/- per share (31^st March, 2023: '' 2/-per share). Each holder of equity shares is entitled to one vote per share. The voting rights of an equity shareholder on show of hand or through proxy shall be in proportion to his share of the paid up capital of the Company. The Company declares and pays dividends in Indian Rupees. The Dividend proposed by the Board of Directors (Except for interim dividend) is subject to approval of shareholders in the ensuring Annual General Meeting

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

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

During the current year, a trust by the name "Garg Family trust" was formed and registered on 28^th July, 2023. The settlor for the Trust is "Mrs. Suman Garg" and the trustees of the Trust are "Mr. Ashish Garg and Mr. Paritosh Kumar". On 7^th August, 2023, 2,91,48,700 equity shares of '' 2/- each held by Mr. Paritosh Kumar (Promoter of the Company) were transferred to Mrs. Suman Garg (by way of Gift deed). On 7^th August, 2023, Mrs. Suman Garg settled 3,80,47,000 equity shares of '' 2/-each to "Garg Family Trust" by way of settlor, post this "Garg Family Trust" is one of the Promoters of the Company.

13*| OTHER EQUITY (ALSO REFER TO STATEMENT OF CHANGES IN EQUITY)

Nature and purpose of reserves

(a) Securities premium

Securities premium represents the excess consideration received by the Company over the face value of the shares issued to the shareholders. This will be utilised in accordance with the provisions of the Companies Act, 2013.

(b) Retained earnings

Retained earnings are the profit that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to the Shareholders. Retained earning includes re-measurement (loss)/ gain on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company and eligible for distribution to shareholders, in case where it is having positive balance representing net earnings till date.

(c) Share Based Payment Reserve

The share options-based payment reserve is used to recognise the grant date fair value of options issued to employees under Employee stock option plan. Refer Note no 43.

(d) Cash Flow Hedge Reserve

The Company uses hedging instruments as part of its management of exposure to risks associated with foreign currency. For hedging foreign currency, the Company uses foreign exchange forward contracts. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedge reserve. Amount recognised in the cash flow hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss.

e) Distribution made and proposed

a) The final dividend on equity shares of '' 1.30 per amounting to '' 1,163.49 Lakhs (31^st March, 2023: '' Nil, amounting to '' Nil) has been approved at the annual general meeting held on 8^th August, 2023 and has been paid on 9^th August, 2023 during the year ended 31^st March, 2024.

b) The proposed dividend on equity shares of '' 4.00 per share amounting to '' 3,768.20 Lakhs (31^st March, 2023: '' 1.30 per share, amounting to '' 1,163.49 Lakhs) are subject to approval at the annual general meeting and is not recognised as liability at the year end.

The Company has complied with the provisions of Section 123 of the Companies Act, 2013 related to dividend declared.

Code on Social Security

The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post -employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/ interpretation have not yet been issued. the Company will assess the impact of the Code when it comes into effect and will record any related impact in the year the Code becomes effective.

29. ¦	| CONTINGENT LIABILITIES AND COMMITMENTS
Particulars		For the Year ended 31st March, 2024	For the Year ended 3lst March, 2023
a. Contingent Liabilities
Claims against the Company not acknowledged as debts:
(i) Excise/Goods & service tax demands (demand that pertains to reversal of Cenvat credit on Job work, classification difference of parts of railway engine and credit claimed through TRAN-1 on capital goods)		187.35	187.35
(ii) Income tax demands(Demands for Additions on account of unaccounted sales of stock/excess share premium received and for disallowance for late deposition of statutory dues)		143.57	173.11
The above matters are subject to legal proceedings in the ordinary course of business. On the basis of the current status of the individual case and as per legal advice obtained by the Company, wherever applicable, along with the opinion of Management, when ultimately concluded will not have material effect on the results of the operations or financial position of the Company.
b. Capital Commitments
Estimated amount of contracts remaining to be executed on capital expenditure and not provided for (net of advances)		14,037.47	11,364.44
c. EPCG Commitment
The Company has export obligations to the extent '' 11,179.88, Lakhs (as at 31st March, 2023''4,597.57 Lakhs) of on account of concessional rates of import duties paid on capital goods under the Export Promotion Capital Goods Scheme enacted by the Government of India which is to be fulfilled over the next eight /six years. Due to the remote likelihood of the Company being unable to meet its export obligations, the Company does not anticipate a loss with respect to these obligations and hence has not made any provision in its financial statements.		1,888.83	766.27
d. Outstanding Bank guarantees		885.02	176.43

3t| LEASE

The Company incurred '' 29.55 Lakhs during the year ended 31^st March, 2024 (31^st March, 2023''25.31 Lakhs) towards expenses relating to short terms leases and leases of low value assets and the same is recognised under other expenses in statement of Profit and loss account. Leases mainly comprise of facilities taken for sales office and as warehouse facilities.

32*| SEGMENT INFORMATION

The Company business comprises only the Forging segment where the Company sells forged products comprising of forgings and machined components for the automotive and industrial sector. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The disclosure requirements of Ind AS 108- operating Segments" notified by the Companies (Accounting standard) Rules 2006 (as amended) is not applicable.

The Company’s Chairman and Managing Director is the Chief Operating Decision Maker (CODM) and monitors all operating segments’ operating results to make decisions about resources to be allocated to the segments and assess their performance. As the Cheif operating decision maker of the Company assesses the financial performance and position of the Company as a whole and maker strategic decision, the management considers manufacturing of forgings and related components as a single operating segment as per Ind As 108, hence separate segment disclosure, have not been furnished.

33*| EMPLOYEE BENEFITS OBLIGATION (I) Defined benefit schemes (A) Gratuity (Funded)

The Company operates a gratuity plan administered through Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme. Every employee is entitled to a benefit equivalent to fifteen days’ salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. the Company pays contribution to Life Insurance Corporation of India to fund its plan.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting year. The sensitivity analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India. The discount rate is based on the government securities yield.

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards.

Terms and conditions of transactions with related parties

1. The Company’s principal related parties consist of its key managerial personnel. the Company’s related party transactions and outstanding balances are with related parties with whom the Company routinely enters into transactions in the ordinary course of business.

2. Key Managerial Personnel are entitled to short term employment benefits recognised as per Ind AS 19 ''- ''Employee Benefits’ in the financial statements. As these employees benefits are lump sum amounts provided on the basis of actuarial valuation the same is not included above.

3. All transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions and within the ordinary course of business.

C Fair Value hierarchy:

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

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

(ii) Level 2: 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).

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

~| FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities, other than derivatives, comprise borrowings and trade payables. The main purpose of these financial liabilities is to finance the Company’s working capital requirements. The Company has various financial assets such as trade receivable, short term deposits and cash & cash equivalents, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s Board of Directors oversees the management of these risks and also ensures that financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of theses risks, which are summarised below:

A. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, debt and equity investments and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as at 31^st March, 2024 and 31^st March, 2023.

(i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities by way of direct imports/exports and long term foreign currency borrowings. The Company evaluates the exchange rate exposure arising from foreign currency transactions and follows established risk management policies. Foreign currency sensitivity The following table represents the sensitivity to a reasonably possible change in US$, GBP and EURO exchange rates, with all other variables held constant. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as mentioned above and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number below indicates an increase in profit or equity and vice-versa.

(ii) Interest Rate Risk

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

The Company is exposed to interest rate risk on short-term and long-term floating rate instruments. The borrowings of the Company are principally denominated in Indian Rupees with a mix of fixed and floating rates of interest. The Company has a policy of selectively using interest rate swaps and other derivative instruments to manage its exposure to interest rate movements. These exposures are reviewed by appropriate levels of management on a regular basis. The exposure of company’s borrowing to interest rate changes as reported to the manangement at the end of reporting

(iii) Commodity price risk

The Company is affected by price volatility of certain commodities. The principal raw materials for the Company products are alloy and carbon steel in the form of rounds and billets which are purchased by the Company from the approved list of suppliers. Most of the input materials are procured from domestic vendors which is subject to price negotiations. Due to significant volatility in prices of steel, the Company has agreed with its customers for pass through of increase/decrease of prices of steel. There may be a lag effect in case of such pass-through arrangements.

(iv) Equity price risk

The Company’s non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s Board of Directors reviews and approves all equity investment decisions. At the reporting date, the exposure to unlisted equity securities at cost was ''10.00 Lakhs (As at 31^st March, 2023: Nil).

B. Credit Risk

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

Trade receivables

Customer credit risk is managed subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored by Management & President Sales and corrective actions are taken. Any shipments to major customers are generally covered by letters of credit or other forms of credit insurance obtained from reputable banks and other financial institutions.

38*| CAPITAL RISK MANAGEMENT

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

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents and other bank balances.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s finance & accounts department in accordance with the Company’s policy. Investments of surplus funds are made with banks in Fixed deposits.

C. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Company’s approach to manage liquidity is to have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company’s reputation.

Management manages the liquidity risk by monitoring cash flow forecasts on a yearly basis and maturity profiles of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities. The Company will continue to consider various borrowings options to maximise liquidity and supplement cash requirements as necessary. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, cash credit facilities and buyers’ credit facilities. As at 31^st March, 2024, the Company has available '' 23,649.26 Lakhs (31^st March, 2023: '' 39,721.40 Lakhs) in form of undrawn committed borrowing limits.

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

No changes were made in the objectives, policies or processes for managing capital during the year ended 31^st March, 2024 and 31^st March, 2023.

39. RECOGNITION OF GOVERNMENT GRANTS

a) Under Invest Punjab scheme, the Company is eligible for various incentives like 100% exemption of electricity duty and Infrastructure development fund and Net SGST Incentive calculated based on GST deposited and applicable GST Rate, 100% exemption/refund of stamp duty and Change of Land Use(CLU) fees and 50% exemption of property tax.

During the current year, the Company has recognised government grant in relation to exemption of electricity duty and Infrastructure development fund amounting to '' 547.06 Lakhs (31^st March, 2023: '' 343.18 Lakhs). The grant amount is netted from the Power & Fuel Expenses under other expenses. As on 31^st March, 2024, '' 16.78 Lakhs (31^st March, 2023: '' 15.59 Lakhs) of grant amount is receivable under this scheme. Also, during the current year, the Company has recognised government grant in relation to refund of eligible Net SGST Incentive (which is calculated based on GST paid on eligible sales) amounting to '' 737.62 Lakhs (31^st March, 2023: 3,235.65) under other operating revenue. This amount includes grant related to earlier years’ SGST incentive amounting to Nil ( 31^st March,2023 '' 2,375.08 Lakhs) which was not recognised earlier as the Company did not have reasonable assurance for its ultimate realisation at that point. As at 31^st March, 2024 '' 3,161.79 Lakhs (31^st March, 2023, '' 2,244.09 Lakhs) of grant amount is

b) The Company has recognised export incentives under the Duty drawback Scheme and Remission of Duties or Taxes on Export of Products Scheme (RoDTEP) aggregating to '' 613.36 Lakhs (31^st March, 2023: '' 323.56 Lakhs). The amount of incentive recognised has been disclosed as other operating revenue.

40*| HEDGING ACTVITIES AND DERIVATIVES

a) Derivatives not designated as hedging instruments:

The Company uses foreign exchange forward contracts to manage its exposure to risks associated with foreign currency. These derivative contracts are not designated as hedging instrument in cash flow hedge and are entered into for years consistent with foreign currency exposure of the underlying transactions, generally from one to twelve months.

b) Derivatives designated as hedging instruments:

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in EURO; and thereafter as a fair value hedge for the resulting receivables. These forecast transactions are highly probable.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.

The critical terms of the foreign currency forward contracts match the terms of the expected highly probable forecast sale transactions. As a result, no hedge effectiveness arise requiring recognition through profit or loss.

The cash flow hedges of the forecasted sale transactions during the year ended 31^st March, 2024 were assessed to be highly effective and unrealised (loss) gain of '' 797.15 Lakhs (31^st March, 2023: '' (1,102.63) Lakhs), with a deferred tax (liability) asset of '' (200.63) Lakhs (31^st March, 2023: '' 277.51 Lakhs) relating to the hedging instruments, is included in OCI.

Valuation Technique

The Company enters into derivative financial instruments with Banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models, using present value calculations. Where quoted market prices are not available, fair values are based on management’s best estimates, which are arrived at by the reference to market prices.

43*| EMPLOYEE STOCK OPTION SCHEME

Employee stock option plan namely HAPPY FORGINGS ESOP SCHEME 2023 (the "Plan") was adopted by the Board of Directors in their meeting held on 31^st July, 2023. As per the Plan the Company, at its discretion, may grant share options to eligible employees, once the employee has completed one year of service. Vesting of the share options is dependent on the completion of a minimum year of employment with the Company and/ or fulfilment of performance conditions as may be specified in this regard. Employees have a graded option plan where in the fair value of share options granted is estimated at the date of grant using a Black Scholes Model of Valuation, taking into account the terms and conditions upon which the share options were granted.

44| INITIAL PUBLIC OFFER ( IPO)

During the year ended 31^st March, 2024 the Company has completed its Initial Public Offer (''IPO'') of 1,18,65,802 equity shares of face value of 2 each at an issue price of '' 850 per share (including a share premium of '' 848 per share). The issue comprised of a fresh issue of 47,05,882 equity shares aggregating to '' 40,000 Lakhs and offer for sale of 71,59,920 equity shares aggregating to '' 60,859.32 Lakhs.The equity shares of the Company were listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on 27^th December, 2023.

Consequent to allotment of fresh issue, the paid-up equity share capital of the Company stands increased from '' 1,789.98 Lakhs consisting of 8,94,99,000 equity shares of ''2 each to '' 1,884.10 Lakhs consisting of 9,42,04,882 equity Shares of '' 2 each.

The total offer expenses are estimated to the fresh issue are '' 2,217.67 Lakhs (including taxes). The utilisation of IPO proceeds from fresh issue (net of IPO related expense of '' 2,217.67 Lakhs) is summarised below:

46.| The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for certain changes made using privileged/ administrative access rights to the SAP application and the underlying HANA database. Further no instance of audit trail feature being tampered with was noted in respect of accounting software.

47| OTHER STATUTORY INFORMATION

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

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

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

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

(v) 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.

(vi) 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.

(vii) 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.

(viii) the Company is not declared as wilful defaulter by any bank or financial institution.

48*| EVENTS AFTER REPORTING DATE:

There are no events occurred after the reporting year which may impact the financial position as on March 31,2024.

---

Mar 31, 2023

Note 1: Refer to note 14 for information on property plant and equipment pledged as security by the Company.

Note 2: The title deed of all the immovable properties (other than properties where the Company is lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the company.

Note 3: The Company has capitalised the certain expenses of revenue nature amounting to H 342.03 Lacs (31^st March, 2022: H 486.54 Lacs) to the cost of Property, plant and equipment/Capital work in progress (CWIP) (Refer note 27(b)).

Note 4: On transition to Ind As(i.e. 1^st April 2018) the company has elected to continue with the carrying value of all property, plant and equipment measured as per the previous GAAP and use the carrying value as deemed cost of property, plant and equipment.

The overdue project was related to the ''Robot Gripper Up and Down Receiving Table'' which was delayed due to covid restrictions. These projects were overdue in terms of completion only however there is no overdue project in terms of cost and this is capitalised in FY 2022-23.

Note 3 (b) Assets held for sale

One of the plant and machinery was classified as held for sale based on the management decision to dispose of this asset in near future. This asset was not in active usage and was measured at the lower of its carrying amount and fair value less costs to sell. The fair value of this asset was determined using the market comparison approach.

During the year ended 31^st March, 2022, the Company entered into a Joint Venture agreement with ''VVDN Technologies Private Limited'' and acquired 3,29,175 equity shares (representing 33% stake) at a price of H 12.52 each of Linchpin Technologies Private Limited. On 31^st March, 2023, these shares are sold to VVDN Technologies Private Limited at a price of H 13.08/- per share aggregating to H 43.05 Lacs.

• 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 receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.

• For terms and conditions relating to related parties receivables, refer Note 35.

• Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.

The carrying amount of trade receivables includes receivables which are discounted with banks. The Company has transferred the relevant receivables to the discounting bank in exchange for cash. However, the Company has retained the late payment and credit risk. Accordingly, the Company continues to recognise the transferred assets in entirely in its balance sheet. Refer note 14.3 for information on trade receivables pledged as security by the Company.

Fixed deposits earn interest at fixed rates. short-term deposits are generally made for varying periods within twelve months, depending on the cash requirements of the Company, and earn interest at the respective deposit rates.

Fixed deposit of H 30 Lacs (31^st March, 2022 H 17.47 Lacs) as margin money against the issuance of letter of credit and bank guarantee.

* During the FY 2021-22, the Company had increased authorised Capital from H 1,000 Lacs to H 3,000 Lacs divided into 1,500 Lacs shares of H 2/- each.

Further, the Company had subdivided its Equity Shares in the ratio of 50 Equity Shares of H 2/- each for the 1 equity share of H 100/- each. accordingly, 44,749,500 total fully paid-up equity shares of H 2/- are replaced from the existing 8,94,990 shares of H 100/- each.

Subsequent to the sub-division, the Company during the previous year had issued 44,749,500 equity shares of face value H 2/- each as bonus shares in ratio of 1:1 to all the existing shareholders of the Company. Consequent upon such bonus issue, the paid-up capital of the Company stands increased from H 894.99 Lacs to H 1,789.98 Lacs.

b) Rights, preferences and restrictions attached with shares

Equity Shares: The Company currently has only one class of equity shares having a par value of H 2/- per share( March 31,2022 of H 2/-per share). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if proposed by the Board of Directors, is subject to the approval of the shareholders in the Annual General Meeting, except in case of Interim dividend.

In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. Investor shareholders having 11.76% of total shareholding, upon the occurrence of Liquidation Event, shall be entitled to receive, subject to applicable laws in preference to all other equity shareholder of the Company and before any distribution is made out of the assets of the Company, higher of the cost of shares purchased or liquidation proceeds in proportion to the respective shareholding as defined investment agreement. The distribution for remaining proceeds, if any, will be in proportion to the number of equity shares held by the shareholders.

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

Subsequent to the year ended 31^st March, 2023, a trust by the name "Garg Family Trust" was formed and registered on 28^th July, 2023. The settlor for the Trust is "Ms. Suman Garg" and the trustees of the Trust are "Mr. Ashish Garg and Mr. Paritosh Kumar". On 7^th August, 2023, 29,148,700 equity shares of H 2 each held by Mr. Paritosh Kumar (Promoter of the Company) were transferred to Ms. Suman Garg (by way of GIFT deed). On 7^th August, 2023, Ms. Suman Garg settled 38,047,000 equity shares of H 2 each to "Garg Family Trust" by way of Settlor, post this "Garg Family Trust" is one of the Promoters of the Company.

Nature and purpose of reserves

(a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

(b) Retained earnings

Retained earnings are the portion of a company''s profit that is held or retained and saved for future use. Retained earnings could be used for funding an expansion or paying dividends to shareholders at a later date.

(c) Cash Flow Hedging Reserve

The Company uses hedging instruments as part of its management of exposure to risks associated with foreign currency. For hedging foreign currency, the Company uses foreign exchange forward contracts. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedge reserve. Amount recognised in the cash flow hedge reserve is reclassified to the statement of profit or loss when the hedged item affects profit or loss.

20.3 Performance obligation

Sales of Crankshafts and Motorvehicle parts

The performance obligation is satisfied upon delivery of the goods and payment is generally due within 30 to 150 days. Sales of services

The performance obligation is satisfied over-time and payment is generally due upon completion and acceptance of the customer, which is generally due within 30 to 60 days.

Code on Social Security

The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post -employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

29.	Contingent liabilities and commitments
Particulars		As at 31st March, 2023	As at 31st March, 2022
a.	Contingent Liabilities
Claims against the Company not acknowledged as debts:
	(i) Excise/Goods & service tax demands (demand that pertains to reversal of Cenvat credit on Job work, classification difference of parts of railway engine and credit claimed through TRAN-1 on capital goods)	187.35	216.75
	(ii) Income tax demands (Demands for Additions on account of unaccounted sales of stock/excess share premium received and for disallowance for late deposition of statutory dues)	173.11	143.24
The above matters are subject to legal proceedings in the ordinary course of business. On the basis of the current status of the individual case and as per legal advice obtained by the Company, wherever applicable, along with the opinion of Management, when ultimately concluded will not have material effect on the results of the operations or financial position of the Company.
b.	Capital Commitments
	Estimated amount of contracts remaining to be executed on capital expenditure and not provided for (net of advances)	11,364.44	12,635.96
c.	EPCG Commitment
	The Company has export obligations to the extent H 4,597.57 Lacs (as at 31st March, 2022 H 13,437.00 Lacs) of on account of concessional rates of import duties paid on capital goods under the Export Promotion Capital Goods Scheme enacted by the Government of India which is to be fulfilled over the next eight/six years. Due to the remote likelihood of the Company being unable to meet its export obligations, the Company does not anticipate a loss with respect to these obligations and hence has not made any provision in its financial statements.	766.27	2,239.50
d.	Outstanding Bank guarantees	176.43	174.73

31. Lease

The Company incurred H 25.31 Lacs for the year ended 31^st March 2023 (March 31,2022 H 22.40 Lacs ) towards expenses relating to short terms leases and leases of low value assets and the same is recognised under other expenses in statement of Profit and loss account. Leases mainly comprise of facilities taken for sales office and as warehouse facilities.

32. Segment Information

The Company business comprises only the Forging segment where the Company sells forged products comprising of forgings and machined components for the automotive and industrial sector. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The disclosure requirements of Ind AS 108-operating Segments" notified by the Companies (Accounting standard) Rules 2006 (as amended) is not applicable.

The Company''s Chairman and Managing Director is the Chief Operating Decision Maker (CODM) and monitors all operating segments'' operating results to make decisions about resources to be allocated to the segments and assess their performance. As the Cheif operating decision maker of the Company assesses the financial performance and position of the Company as a whole and maker strategic decision, the management considers manufacturing of forgings and related components as a single operating segment as per Ind As 108, hence separate segment disclosure, have not been furnished.

Non - current operating assets

The Company has non- current operating assets within India only. Hence, separate figures for domestic as well as overseas market are not required to be furnished.

33. Employee Benefits Obligation (I) Defined benefit schemes (a) Gratuity (Funded)

The Company operates a gratuity plan administered through Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme. Every employee is entitled to a benefit equivalent to fifteen days'' salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service. The Company pays contribution to Life Insurance Corporation of India to fund its plan.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India. The discount rate is based on the government securities yield.

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards.

Terms and conditions of transactions with related parties

1. The Company''s principal related parties consist of its key managerial personnel. The Company''s related party transactions and outstanding balances are with related parties with whom the Company routinely enters into transactions in the ordinary course of business.

2. Key Managerial Personnel are entitled to short term employment benefits recognised as per Ind AS 19 ''- ''Employee Benefits'' in the financial statements. As these employees benefits are lump sum amounts provided on the basis of actuarial valuation the same is not included above.

3. All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions and within the ordinary course of business.

C. Fair Value hierarchy:

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

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

(ii) Level 2: 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).

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

37. Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivatives, comprise borrowings and trade payables. The main purpose of these financial liabilities is to finance the Company''s working capital requirements. The Company has various financial assets such as trade receivable, short term deposits and cash & cash equivalents, which arise directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s Board of Directors oversees the management of these risks and also ensures that financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of theses risks, which are summarised below.

A. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, debt and equity investments and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as at 31^st March, 2023 and 31^st March, 2022.

(i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities by way of direct imports/exports and long term foreign currency borrowings. The Company evaluates the exchange rate exposure arising from foreign currency transactions and follows established risk management policies.

Foreign currency sensitivity

The following table represents the sensitivity to a reasonably possible change in USD, GBP and EURO exchange rates, with all other variables held constant. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as mentioned above 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 and vice-versa.

(iii) Commodity price risk

The Company is affected by price volatility of certain commodities. The principal raw materials for the Company products are alloy and carbon steel in the form of rounds and billets which are purchased by the Company from the approved list of suppliers. Most of the input materials are procured from domestic vendors which is subject to price negotiations. Due to significant volatility in prices of steel, the Company has agreed with its customers for pass through of increase/decrease of prices of steel. There may be a lag effect in case of such pass-through arrangements.

(iv) Equity price risk

The Company''s non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company''s Board of Directors reviews and approves all equity investment decisions. At the reporting date, the exposure to unlisted equity securities at fair value was NiL (31.03.2022 H 41.20 Lacs)."

B. Credit Risk

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

Trade receivables

Customer credit risk is managed subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored by Management & President Sales and corrective actions are taken. Any shipments to major customers are generally covered by letters of credit or other forms of credit insurance obtained from reputable banks and other financial institutions.

38. Capital Risk Management

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

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents and other bank balances.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s finance & accounts department in accordance with the Company''s policy. Investments of surplus funds are made with banks in Fixed deposits.

C. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Company''s approach to manage liquidity is to have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company''s reputation.

Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities. The Company will continue to consider various borrowings options to maximise liquidity and supplement cash requirements as necessary. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, cash credit facilities and buyers'' credit facilities. As at 31^st March, 2023, the Company has available H 39,721.40 Lacs (31^st March, 2022: H 28,633.10 Lacs) in form of undrawn committed borrowing limits.

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

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

39. Recognition of Government Grants

a) Under Invest Punjab scheme, the Company is eligible for various incentives like 100% exemption of electricity duty and Infrastructure development fund and Net SGST Incentive calculated based on GST deposited and applicable GST Rate, 100% exemption/refund of stamp duty and CLU fees and 50% exemption of property tax.

During the current year the Company has recoganised government grant in relation to exemption of electricity duty and Infrastructure development fund amounting to H 343.18 Lacs (31^st March, 2022: H 314.89 Lacs). The grant amount is netted from the Power & fuel Expenses under other expenses. As on 31^st March, 2023, H 15.59 Lacs (31^st March, 2022: H 159.26 Lacs) of grant amount is receivable under this scheme.

Also, during the current year, the Company has recoganised government grant in relation to refund of eligible Net SGST Incentive calculated based on GST paid on eligible sales amounting to H 3,235.65 Lacs (31^st March, 2022: Nil) under other operating revenue. This amount includes grant related to earlier years sales amounting to H 1,384.51 Lacs which was not recoganised earlier as the Company did not have reasonable assurance for its ultimate realisation at that point. As on 31^st March, 2023, H 2,244.09 Lacs of grant amount is receivable under this scheme.

b) The Company has recoganised export incentives under the Duty drawback Scheme and Remission of Duties or Taxes on Export of Products Scheme (RoDTEP) aggregating to H 323.56 Lacs (31^st March, 2022: H 194.74 Lacs). The amount of incentive recoganised has been disclosed as other operating revenue.

40. Hedging actvities and derivatives a) Derivatives not designated as hedging instruments:

The Company uses foreign exchange forward contracts to manage its exposure to risks associated with foreign currency. These derivative contracts are not designated as hedging instrument in cash flow hedge and are entered into for periods consistent with foreign currency

exposure of the underlying transactions, generally from one to twelve months.

b) Derivatives designated as hedging instruments:

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in EURO; and thereafter as a fair value hedge for the resulting receivables. These forecast transactions are highly probable.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and changes in foreign exchange forward rates.

The critical terms of the foreign currency forward contracts match the terms of the expected highly probable forecast sale transactions. As a result, no hedge effectiveness arise requiring recognition through profit or loss.

The cash flow hedges of the forecasted sale transactions during the year ended 31^st March, 2023 were assessed to be highly effective and unrealised loss of H 1102.63 Lacs (31^st March, 2022: Nil), with a deferred tax asset of H 277.51 Lacs (31^st March, 2022: Nil) relating to the hedging instruments, is included in OCI.

Valuation Technique

The Company enters into derivative financial instruments with Banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models, using present value calculations. Where quoted market prices are not available, fair values are based on management''s best estimates, which are arrived at by the reference to market prices.

43. Other Statutory Information

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

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

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

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

(v) 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.

(vi) 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.

(vii) 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.

(viii) The Company is not declared as wilful defaulter by any bank or financial institution."

44. Employee Stock Option Scheme

The Company has an Employee Stock Option (ESOP) Scheme which was passed by the Board of directors in their meeting held on 12^th February, 2022 and approved by the shareholders in their meeting held on 14^th February, 2022. As on 31^st March, 2023, no shares were granted under this scheme.

Subsequent to the year end, the Company has approved a new ESOP scheme which was passed by the Board of Directors in their meeting held on 31^st July, 2023.

45. Events after reporting date:

The board of directors have proposed dividend after the balance sheet date which are subject to approval by the shareholders at the Annual General Meeting. Refer note 13 for details. There are no other events occurred after the reporting period which may impact the financial position as on 31^st March, 2023.