Notes to Accounts of Hitachi Energy India Ltd.

Mar 31, 2025

2.17 Provisions, contingent liabilities and contingent assets
General

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that is reliably estimable, and it is probable that an outflow of economic benefits will be required to
settle the obligation. If the effect of time value of money is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from
a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is
measured at the present value of the lower of the expected cost of terminating the contract and the expected
net cost of continuing with the contract. Before a provision is established, the Company recognises any
impairment loss on the assets associated with that contract.

Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold to the customer. Initial recognition
is based on historical experience. The initial estimate of warranty-related costs is revised annually. Also, refer
note 22.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company
or a present obligation that is not recognised because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a
liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize
a contingent liability but discloses its existence in the financial statements.

Contingent assets

Contingent assets are not recognised or disclosed in financial statements since this may result in the recognition
of income that may never be realised. However, when the realisation of income is virtually certain, then the
related asset is not a contingent asset and is recognised.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet.

2.18 Impairment

a Financial assets

Financial assets (other than at fair value) The Company assesses at each date of balance sheet whether
a financial asset or a group of financial assets is impaired. Ind AS 109 (‘Financial Instruments'') requires
expected credit losses to be measured through a impairment allowance. The Company recognises
lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a
financing transaction. For all other financial assets, expected credit losses are measured at an amount
equal to the 12-month expected credit losses or at an amount equal to the life time expected credit
losses if the credit risk on the financial asset has increased significantly since initial recognition. The
Company provides for impairment upon the occurrence of the triggering event.

b Non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or
cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.

Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and
the value-in-use) is determined on an individual asset basis unless the asset does not generate cash
flows that are largely independent of those from other assets. In such cases, the recoverable amount is
determined for the CGU to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognised in the statement of profit
and loss is measured by the amount by which the carrying value of the assets exceeds the estimated
recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if
there has been a change in the estimates used to determine the recoverable amount. An impairment
loss in case of goodwill is not reversed. The carrying amount of the asset is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would have
been determined (net of any accumulated amortization or depreciation) had no impairment loss been
recognised for the asset in prior years.

2.19 Earnings per share

The Company presents basic and diluted Earnings per share for its ordinary shares. Basic earnings per equity
share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted
average number of equity shares outstanding during the year/period. Diluted earnings per equity share is
computed by dividing the net profit attributable to the equity holders of the Company by the weighted average
number of equity shares considered for deriving basic earnings per equity share and also the weighted average
number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The
dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually
issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity
shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential
equity shares are determined independently for each period presented.

2.20 Retirement and other employee benefits

2.20.1 Gratuity - defined benefit plans

The present value of the obligation under defined benefit plans are determined based on actuarial valuation
using the Projected Unit Credit Method. In case of funded plans, the fair value of the plan assets is reduced
from the gross obligation under the defined benefit plans to recognize the obligation on a net basis.

Remeasurement comprising of actuarial gains and losses is recognised in other comprehensive income (OCI)
and is reflected in reserves and surplus as part of equity and is not eligible to be reclassified to profit or loss.

The Company recognises the following changes in the net defined benefit obligation as an expense in statement
of profit and loss:

• Service cost including current service cost, past service cost and gains and losses on curtailments and
settlements; and

• Net interest expense or income.

2.20.2 Provident fund - Defined contribution scheme

Retirement benefit in the form of provident fund and pension fund are defined contribution scheme. The
Company has no obligation, other than the contribution payable. The Company recognizes contribution payable
to provident fund and pension fund as expenditure, when an employee renders the related service.

2.20.3 Superannuation - Defined contribution scheme

Contribution to Superannuation Fund, is made at pre-determined rates to the Superannuation Fund Trust and
is charged to the statement of profit and loss during the period in which the employee renders the related
services. There are no other obligations other than the contribution payable to the Superannuation Fund Trust.
The corpus of which is invested with the Life Insurance Corporation of India.

2.20.4 Compensated absences

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term
employee benefits. The Company measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The
Company presents the entire accumulated leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer its settlement for 12 months after the reporting date. Such long-term
compensated absences are provided for based on the actuarial valuation using the projected unit credit method
at each balance sheet date.

2.21 Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash and cheque at hand/
remittance in transit and cash and deposit with bank.

2.22 Cash dividend

The Company recognises a liability to make cash distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer at the discretion of the Company. A corresponding
amount is recognised directly in equity. Final dividends on shares are recorded as a liability on the date of
approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the
Company''s Board of Directors.

2.23 Corporate social responsibility (‘CSR'') expenditure

The Company charges its CSR expenditure during the year to the statement of profit and loss.

2.24 Segment

Operating segments are identified as those components of the Company (a) that engage in business activities
to earn revenues and incur expenses (including transactions with any of the Company''s other components (b)
whose operating results are regularly reviewed by the Company''s Chief Executive Officer to make decisions
about resource allocation and performance assessment and (c) for which discrete financial information is
available. The accounting policies consistently used in the preparation of the financial statements are also
applied to record revenue and expenditure in individual segments.

The Company is engaged in the business relating to products, projects and services for electricity transmission
and related activities. These activities of the Company are reviewed regularly by the chief operating decision
maker from an overall business perspective, rather than reviewing its products/services as individual
standalone components and therefore subject to the same risk and reward and accordingly falls within single
business segment.

2.25 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 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.

2.26 New and amended standards (Ind AS)

The following amended standards as considered applicable were effective during the year, however, these
amendments had no material impact on the financial statements of the Company

(i) Ind AS 117 Insurance Contracts

The Ministry of corporate Affairs (MCA) notified the Ind AS 117, Insurance Contracts, vide notification
dated August 12, 2024, under the Companies (Indian Accounting Standards) Amendment Rules, 2024,
which is effective from annual reporting periods beginning on or after April 1, 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 had no impact on the Company''s financial statements as the Company
has not entered any contracts in the nature of insurance contracts covered under Ind AS 117.

(ii) Amendment 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 April 1, 2024 and must be
applied retrospectively to sale and leaseback transactions entered into after the date of initial application
of Ind AS 116.

The amendment does not have a material impact on the Company''s financial statements.

2.27 Recent Indian Accounting Standards (Ind AS)

Lack of exchangeability - Amendments to Ind AS 21

The Ministry of Corporate Affairs notified amendments to Ind AS 21 The effects of changes in foreign exchange
rates to specify how an entity should assess whether a currency is exchangeable and how it should determine
a spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information
that enables users of its financial statements to understand how the currency not being exchangeable into
the other currency affects, or is expected to affect, the entity''s financial performance, financial position and
cash flows.

The amendments are effective for annual reporting periods beginning on or after April 1, 2025. When applying
the amendments, an entity cannot restate comparative information.

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

Goodwill impairment testing

The carrying amount of goodwill as at March 31, 2025 and March 31, 2024 has been attributed to power grids
business as a cash generating unit (‘CGU'') . The Company tests whether goodwill has suffered any impairment
on an annual basis or in case of any indicator. The recoverable amount of a CGU is determined based on value-
in-use calculations which require the use of assumptions. The calculations use pre-tax cash flow projections
based on financial budgets approved by the management. An average of the range of each key assumption
used as at March 31, 2025 and March 31, 2024 is mentioned below.

*The Company raised capital of '' 2,520.82 Crores through Qualified Institutions Placement ("QIP”) of equity shares. The
Fund-Raising Committee of the Board of Directors of the Company, at its meeting held on March 13, 2025, approved
the allotment of 2,190,688 equity shares of face value '' 2/- each to eligible investors at a price '' 11,507 per equity
share (including a premium of '' 11,505 per equity share)

c. Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 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 Board of directors have recommended dividend of '' 6.00/- per equity share, which translates to a total
dividend of '' 26.74 Crores, for the year ended March 31, 2025. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

g. Aggregate number of shares issued for consideration other than cash during the period of five years
immediately preceding the reporting date:

The Board of directors of ABB India Limited on March 5, 2019 approved the Scheme of Arrangement under
Sections 230-232 and other applicable provisions of the Companies Act, 2013 (‘the Scheme'') between
ABB India Limited (‘transferor Company''), ABB Power Products and Systems India Limited (‘Resulting
Company'' or ‘APPSIL'') and their respective shareholders and creditors for the demerger of Power Grid
business from ABB India Limited into the Company. The appointment date for the Scheme was April 01,
2019. The Scheme was approved by National Company Law Tribunal (NCLT), Bengaluru Bench vide its
order dated. November 27, 2019 and a certified copy has been filed by the Company with the Registrar
of Companies, Bengaluru, on December 1, 2019 (effective date). Pursuant to the aforesaid Scheme, on
December 24, 2019, the Company issued 42,381,675 number of fully paid equity shares having face value
of '' 2 each to the existing equity shareholders of ABB India Limited in the proportion of 1 share for every 5
shares held. Further, 50,000 number of shares issued to the ABB India Limited at the time of incorporation
of the Company was cancelled as per the aforesaid Scheme.

Nature and purpose of other reserves

a) Securities premium

Securities premium acquired pursuant to scheme of arrangement shall be utilised in accordance with the
provisions of Companies Act, 2013.

b) Retained earnings

Retained earnings are the profits of the Company earned till date net of appropriations/distributions, includes
amount acquired pursuant to scheme of arrangement and other adjustments permitted as per the applicable
regulations and accounting standards.

c) Amalgamation adjustment deficit account

Amalgamation adjustment deficit account is the deficit between the carrying value of assets, liabilities and
reserves transferred to the Company and the consideration discharged by way of the New Equity Shares
issued to the shareholders of ABB India Limited pursuant to the demerger of Power Grid Business from
ABB India Limited (refer note 16(g)).

d) Capital reserve

Capital reserve is acquired pursuant to scheme of arrangement.

e) General reserve

General reserve is acquired pursuant to scheme of arrangement. The Company can use this reserve for
payment of dividend and issue of fully paid-up shares. As General reserve is created by transfer of one
component of equity to another and is not an item of other comprehensive income, items included in the
General reserve will not be subsequently reclassified to statement of profit and loss.

The above disclosures are provided by the Company based on the information available with the Company in
respect of the registration status of its vendors/suppliers.

Foreign currency trade payables amounting to '' 48.23 Crores (March 31, 2024: '' 32.42 Crores) includes '' 8.23
Crores (March 31, 2024: '' 11.86 Crores) which are payable from more than 3 years, towards purchase of goods
and services, which are outstanding beyond permissible time period stipulated under the Master Circular on
Import of Goods and Services issued by Reserve Bank of India (‘the RBI''), which states that payments against
imports of goods are required to be made within 6 months from date of shipment. Considering that the balances
are outstanding for more than the stipulated time, the Company is in the process of intimating the appropriate
regulatory authorities and seeking requisite approvals for extensions. The management is confident that required
approvals would be received and penalties, if any that may be imposed on the Company would not be material.
Accordingly, no adjustments have been made by the management to these financial statements in this regard.

Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair
or replace the items that fail to perform satisfactorily during the warranty period. Provision represents
the amount of the expected cost based on technical evaluation and past experience of meeting such
obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Loss orders: A provision for expected loss on construction contracts is recognised when it is probable that
the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made
when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated
economic benefits.

32 POST-EMPLOYMENT BENEFIT PLAN
Gratuity plan :

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity
Act, 1972 or as per the Company''s scheme, whichever is higher. The plan assets are held by Hitachi
Energy India Limited Employees'' Gratuity Trust (The said trust was duly set up by Company on September
1, 2020 and the same was approved on February 22, 2021 by Hon''ble Commissioner of Income Tax).
Under the Payment of Gratuity Act, 1972, every employee who has completed five years or more of service gets
gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The level of benefits
provided depends on the member''s length of service and salary at retirement age. The Gratuity scheme provides
for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The
benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit.

Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of
return on assets have been considered based on relevant economic factors such as inflation, market growth and
other factors applicable to the period over which the obligation is expected to be settled.

Impact on defined benefit obligation

The sensitivity analysis 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 analysis are based on a change in a significant assumption, keeping all other
assumptions constant. The sensitivity analysis 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.

33 FINANCIAL INSTRUMENTS

This section gives an overview of the significance of financial instruments for the Company and provides additional
information on balance sheet items that contain financial instruments.

The details of material accounting policies, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised in respect of each class of financial asset, financial
liabilities and equity instrument are disclosed in the financial statements.

A Fair value of financial assets and financial liabilities

The carrying amount of all financial assets and liabilities appearing in the financial statements is reasonable
approximation of fair value. The following tables presents the carrying value and fair value / amortised cost
of each category of financial assets and liabilities:

Valuation technique and significant unobservable inputs:

This section explains the judgements and estimates made in determining the fair values of the
financial instruments that are (a) recognised and measured at fair value and (b) measured at
amortised cost and for which fair values are disclosed in the financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, the Company has classified its financial
instruments into the three levels prescribed under the accounting standard. An explanation of each level
follows underneath the table.

i) The management assessed the trade receivables, trade payables, loans, cash and cash equivalents,
borrowings, other financial assets and other financial liabilities approximate their carrying amounts
largely due to the short-term maturities of these instruments.

ii) The fair value of the financial assets and liabilities is included at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced or liquidation
sale. The following methods and assumptions were used to estimate the fair values:

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

(b) Lease liabilities are carried at discounted value using incremental borrowing rate.

(c) The Company enters into derivative financial instruments with banks/financial institutions. Foreign
currency forward contracts are valued using valuation techniques which employs the use of market
observable inputs using present value calculations. The model incorporates various inputs including
the deal specific fundamental, market conditions, maturity period, transaction size, comparable
trades, foreign currency spot and forward rates.

(d) Embedded foreign currency are measured similarly to the foreign currency forward contracts. The
embedded derivatives are foreign currency forward contracts which are separated from long-term
sales contracts and purchase contracts where the transaction currency differs from the functional
currencies of the involved parties. These contracts require physical delivery and will be held
for the purpose of the delivery of the commodity in accordance with the buyers'' expected sale
requirements. These contracts have embedded foreign exchange derivatives that are required to
be separated.

B Fair value hierarchy

The following table presents the fair value hierarchy of assets and liabilities measured at fair value on a
recurring basis:

There have been no transfers between Level 1, Level 2 and Level 3 for the year ended March 31, 2025
and March 31, 2024.

C Financial risk management

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and
other payables. The main purpose of these financial liabilities is to support its operations. The Company''s
principal financial assets include trade and other receivables, and cash and cash equivalents that derive
directly from its operations.

The Company is exposed to market risk, foreign currency risk, liquidity risk and credit risk. The Company''s
senior management oversees the management of these risks. The Company''s senior management is
supported by a Risk management committee that advises on financial risks and the appropriate financial
risk governance framework for the Company. The Risk management committee provides assurance to the
Company''s senior management that the Company''s financial risk activities are governed by appropriate
policies and procedures and that financial risks are identified, measured and managed in accordance with
the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried
out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s
policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors
reviews and agrees policies for managing each of these risks, which are summarised below.

(i) 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, trade payables, deposits, investments, trade
receivables, other financial assets and derivative financial instruments.

Commodity contracts

The Company uses commodity future contracts to hedge risk against fluctuation in commodity prices.
As at March 31, 2025 and March 31, 2024, there are no outstanding commodity future contracts
entered into by the Company.

(ii) 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. The Company''s risk management
policy is to hedge foreign currency exposures above certain thresholds.

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Company''s exposure to changes in interest rates relates
primarily to the Company''s outstanding working capital facility obtained from banks.

The exposure of the Company''s borrowing to interest rate changes at the end of the reporting year are
as follows:

The interest rate is fixed, hence there is no interest rate risk applicable for the Company.

(iv) 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. Financial instruments that are subject to credit risk and concentration
thereof principally consist of loan receivables, trade receivables, derivatives, cash and cash equivalents,
bank balances and other financial assets of the Company, as well as credit exposure to customers.

The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of
managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit
quality of the counterparties, taking into account their financial position, past experience and other factors.

a) Trade receivables, financial assets and other current assets

The Company''s customer profile consists of a large number of customers spread across diverse
industries include public sector enterprises, state owned companies and large private corporates.
Accordingly, the Company''s customer credit risk is low. The Company''s projects business comprises
long-term contracts which have an execution period exceeding one year. General payment terms
include mobilisation advance, monthly progress payments with a credit period ranging from 0 to 90
days and certain retention money to be released at the end of the project. In some cases, retentions
are substituted with bank/corporate guarantees.

The Company follows ‘simplified approach'' for recognition of impairment allowance on trade receivable.
Under the simplified approach, the Company tracks changes in credit risk. Further, it recognizes
impairment allowance based on lifetime ECLs at each reporting date, right from initial recognition.

The Company uses a provision matrix to determine impairment allowance on the portfolio of trade
receivables. The provision matrix is based on its historically observed default rates over the expected
life of the trade receivable and is adjusted for forward looking estimates. At year end, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.

Individual receivables which are known to be uncollectible are written off by reducing the carrying
amount of trade receivable and the amount of the loss is recognised in the statement of profit and loss
within other expenses.

Specific allowance for loss has also been provided by the management based on expected recovery
on individual parties.

The provision provided in books for trade receivables, financial assets and other current assets overdue:

Management does not expect any significant loss from non-performance by counterparties on credit
granted that has not been provided for.

b) Credit risk from balances with bank and financial institutions is managed by the Company''s treasury
department in accordance with the Company''s policy.

(v) Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of
liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per
requirements. The Company''s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank overdrafts. Prudent liquidity risk management implies maintaining sufficient cash
and marketable securities and the availability of funding through an adequate amount of committed credit
facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the
underlying businesses, Company maintains flexibility in funding by maintaining availability under committed
credit lines.

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

34 CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium
and all other equity reserves attributable to the shareholders of the Company. Net debt includes borrowings,
trade payables, lease liabilities and other financial liabilities net of cash and cash equivalents.

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. To maintain or adjust the capital structure, the Company may
adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company
monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The net debt has
turned negative on account of repayment of borrowings through internal accruals and the proceeds received
through QIP during the current year.

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

iii) The Company does not have any contingent assets at the balance sheet date.

a) The Company is contesting certain legal disputes with customers. The management believes that its
position will likely be upheld in the various appellate authorities/ courts. The management believes that
the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s
financial position.

b) In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt
of judgement pending at various forums/ authorities.

c) The Company has been granted Export Promotion Capital Goods (EPCG) licenses / Advance
Authorizations (“Licenses”) towards duty-free imports with a commitment against future export
obligations. As at March 31, 2025, the Company is in the process of meeting the export obligations
amounting to '' 133.47 crores for certain Licenses. Further, for certain Licenses where duty saved
amounts to '' 9.62 crores the Company is awaiting Export Obligation Discharge Certificate (EODC).

d) The Supreme court of India in the month of February 2019 had passed a judgement relating to
definition of wages under the Provident Fund Act, 1952. The management is of the view that there
are interpretative challenges on the application of the judgement retrospectively. Based on the legal
advice and in the absence of reliable measurement of the provision for earlier periods, the Company
has made a provision for provident fund contribution pursuant to the judgement only from the date of
Supreme Court Order. The Company will evaluate its position and update its provision, if required, on
receiving further clarity on the subject, the Company does not expect any material impact of the same.

e) 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. Certain sections of the Code came into effect on 3 May 2024. However, 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 such final rules/interpretation will
be issued.

f) Power Grids business was demerged from ABB India Limited to the Company pursuant to order of
National Company Law Tribunal (“NCLT”) vide its order dated November 27, 2019 (“Demerger”). ABB
India Limited was granted Export Promotion Capital Goods (EPCG) licenses / Advance Authorizations
("Licenses") towards duty-free imports with a commitment against future export obligations prior to
the effective date of Demerger. For certain Licenses which were applied for and issued to ABB India
Limited, prior to Demerger wherein duty saved aggregated to INR 151.80 crores, Export Obligation
Discharge Certificate (EODC) remains outstanding. While the Company on good faith basis has been
assisting ABB India Limited to secure EODC, the Company is now unable to assist ABB India Limited
as the Letter of Authority issued to the Company for this purpose expired on December 31, 2024. In
terms of the aforesaid order of the NCLT, Demerger and the Director General of Foreign Trade rules, the
management of the Company based on internal assessment and external expert opinion is of the view

that ABB India Limited continues to be responsible for submitting necessary documents to appropriate
authorities to ensure closure of the licenses to avoid any financial exposure. Therefore, the Company
does not foresee any material financial exposure. Accordingly, no adjustment has been made to the
financial statements in this regard.

(b) Leases

The Company has lease contracts for building, leasehold land and vehicles used in its operations. Leases of
building have lease terms between 2 and 15 years, land is 98 years and motor vehicles have lease terms
between 4 and 5 years. The Company''s obligations under its leases are secured by the lessor''s title to the
leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets and
some contracts require the Company to maintain certain financial ratios. Some of the lease agreements have
escalation clause ranging from 0% to 7% (March 31, 2024: 0% to 7%). There are several lease contracts
that include extension and termination options and variable lease payments.

The Company also has certain leases of machinery/computer equipments with lease terms of 12 months
or less and with low value. The Company applies the ‘short-term lease'' and ‘lease of low-value assets''
recognition exemptions for these leases. The Company applied a single discount rate to leases of similar
economic environment with a similar end date and excluded the initial direct costs from the measurement
of the right-of-use asset at the date of initial application.

Refer note 3 for carrying value of right-of-use assets recognised on date of transition and the movements
thereof during the year ended March 31, 2025.

37 SEGMENT INFORMATION

An operating segment is a component that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the other components,
whose operating results are regularly reviewed by the Company''s Chief Operating Decision Maker (CODM)
to make decisions about resource allocation and performance assessment and for which discrete financial
information is available. The Company is engaged in the business relating to products, projects and services
for electricity transmission and related activities. Accordingly, the Company''s activities and business is reviewed
regularly by the chief operating decision maker from an overall business perspective, rather than reviewing its
products/services as individual standalone components. Thus, the Company has only one operating segment,
and has no reportable segment in accordance with Ind AS-108 ''Operating Segments''.

** Non current assets does not include deferred tax assets, financial assets and non-current tax assets.

(iii) Adani Electricity Mumbai Infra Limited accounted for more than 10% of Company''s total revenue from
operations for the year ended March 31, 2025 and March 31, 2024.

Hitachi Energy USA Inc and Hitachi Energy Sweden AB accounted for more than 10% of Company''s total
export revenue from operations for the year ended March 31, 2025 and March 31, 2024.

A contract asset is an entity''s right to consideration in exchange for goods or services that the entity has
transferred to a customer and hence is not a financial instrument. In Company''s contracts with customers,
since the contractual right to payment arises only upon achievement of milestones specified in the contract,
it is believed that the performance completed until the achievement of a particular milestone should be
recorded as a contract asset under non-financial assets.

During the year, '' 673.61 Crores (March 31, 2024''140.72 Crores) from opening balance of contract
assets has been reclassified to trade receivables upon billing to customers on completion of milestones.

During the year, the Company has recognised revenue of ''35.75 Crores arising from opening billing in
excess of contract revenue as of April 01, 2024 (April 01, 2023 is '' 39.60 Crores).

c) No significant adjustments are expected in contract price for revenue recognised in statement of profit
and loss.

d) Performance Obligation

Information about the Company''s performance obligations are summarised below:

i. ) Long term (Construction type) contracts - The long term contracts are ordinarily presumed to consist

of combined obligations which are not distinct in the context of the contract (i.e., single performance
obligation). This is highly attributed to the long-term construction nature of the projects, whereby
deliverables are typically highly interrelated and combined. The typical scope of turnkey contracts
arrangements includes engineering, manufacturing, shipment, delivery installation, testing, erection
and commissioning and civil works. Although there are several components to the overall scope of the
contract, the turnkey contracts are generally considered one performance obligation.

ii. ) Products manufacturing and erection, commissioning and installation contracts - These contracts

comprising of two performance obligations of supply of products and erection and commissioning
thereof. When the manufacturing stage is complete, factory acceptance testing procedures are
performed to ensure the equipment meets customer specifications and may involve the customer
physically observing the testing procedures. Revenue from contracts, where the performance obligations
are satisfied over time and other consideration, is recognised as per the percentage of completion
method. The Company uses the percentage of completion method based on the costs expended to
the date as a proportion of the total costs to be expended.

Company as part of its contracts, provides warranties of the equipment for defects arising out of poor
workmanship, inferior material or manufacturing. Such warranty provided is in the nature of assurance
warranty and is not accounted for as a separated performance obligation.

e) Remaining performance obligations

The remaining performance obligation disclosure provides the aggregate amount of the transaction price
yet to be recognised as at the end of the reporting period and an explanation as to when the Company
expects to recognize these amounts in revenue.

The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31,
2025 is ''19,245.95 Crores (March 31, 2024 is '' 7,229.53 Crores). The conversion to revenue is highly
dependent on meeting the delivery schedules, contractual terms and conditions with customers, availability
of customer sites, changes/ variation in scope/ prices etc. In view of these, it is not practical to define the
accurate percentage of conversion to revenue. However, it will be in a range of 1 to 3 years.

f) There was no revenue recognised in the current year ended March 31, 2025 from performance obligations
satisfied (or partially satisfied) in previous periods on account of significant changes in transaction price.

¹ Pursuant to demerger of Power Grid business from ABB India Limited (''ABB''), as detailed in note 16(g), the Company has
accounted sales and purchases towards the contracts yet to be novated by the Company with customers and vendors. The
aforesaid sales and purchases has been included in the revenue from operations and cost of sales of the Company. The
receivables and payables on account of the same has been included in trade receivables and payables respectively.

* During the year ended March 31, 2024, ABB Asea Brown Boveri Ltd, ABB Switzerland Ltd, and ABB Ltd have been
reclassified from ‘Promoter/Promoter Group'' to ‘Public Category'' in the shareholding of the Company with effect from October
6, 2023 basis the necessary approvals from the National Stock Exchange of India Limited and BSE Limited (collectively referred
to as the “Stock Exchanges”) vide their respective letters dated October 6, 2023. Accordingly, ABB Asea Brown Boveri Ltd,
ABB Switzerland Ltd, ABB Ltd and their group companies ceased to be related party w.e.f October 6, 2023.

Terms and conditions of transactions with related parties

AH transactions entered into with related parties defined under the Companies act, 2013 were as per the
contractual terms with the respective related parties on arm''s-length pricing basis and the Company has
undertaken necessary steps to comply with the transfer pricing regulations under the Income tax act, 1961.
Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash as per the
credit terms with the respective related parties.

There are no loans or advances in nature of loans granted to promoters, directors or key managerial personnel.
There have been no guarantees provided or received for any related party receivables or payables.

40 CORPORATE SOCIAL RESPONSIBILITY EXPENSES

As per the Section 135 of the Companies Act 2013 (''Act''), the Board shall ensure that the Company spends, in
every financial year, at least two per cent of the average of the net profits of the three immediately preceding
financial years, in pursuance of its Corporate Social Responsibility (''CSR'') Policy. Hence, the Company falls within
the ambit of Section 135 of the Act and is required to contribute the amount stipulated under the aforesaid
provisions of the Act.

Note:

1. Current ratio variance as compared to previous year is on account of proceeds received through QIP.

2. Debt equity ratio variance as compared to previous year is on account of repayment of borrowings during the year.

3. Debt service coverage ratio variance as compared to previous year is mainly due to increase in profits during the year.

4. Net capital turnover ratio variance as compared to previous year is mainly on account of increase in closing working
capital due to proceeds received through QIP.

5. Net profit ratio variance as compared to previous year is on account of improvement in operational profit margin.

6. Return on capital employed variance as compared to previous year is mainly on account of increase in closing capital
employed due to proceeds received through QIP.

42 The Company is in the process of conducting a transfer pricing study as required by the transfer pricing regulations
under the Income Tax Act, 1961 (‘regulations'') to determine whether the transactions entered during the
year ended March 31, 2025, with the associated enterprises were undertaken at “arm''s length price”. The
management confirms that all the transactions with associate enterprises are undertaken at negotiated prices on
usual commercial terms and is confident that the aforesaid regulations will not have any impact on the financial
statements, particularly on the amount of tax expense and that of provision for taxation.

43 ADDITIONAL REGULATORY INFORMATION/DISCLOSURES TO THE EXTENT APPLICABLE TO THE
COMPANY

- No funds have been advanced or loaned or invested either from borrowed funds or share premium or any
other sources or kind of funds by the company to or in any other person or entity, including foreign entities
(“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, 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 provide any guarantee, security or the like on behalf
of the Ultimate Beneficiaries.

- There are no funds received by the Company from any person or entity, including foreign entities (“Funding
Party”) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether,
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 provide any guarantee, security or the like on behalf
of the Ultimate Beneficiaries.

- No transactions to report against Benami Property held under Prohibition of Benami Property Transactions
Act, 1988 and rules made thereunder.

- 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.

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

44 PHYSICAL SERVER OF BOOKS OF ACCOUNTS

Ministry of corporate affairs has amended the Rule 3 of the Companies (Accounts) Rules, 2014 (the “Accounts
Rules”) vide notification dated August 05, 2022, relating to the mode of keeping books of account and other
books and papers in electronic mode. Back-ups of the books of account and other books and papers of the
company maintained in electronic mode are now required to be retained on a server located in India on daily
basis as prescribed under Rule 3(5) of the Accounts Rules.

The Company has identified SAP (primary accounting software) and certain other applications for which the
aforementioned provision and guidance is applicable and the Company is in compliance with the aforesaid
requirement except (a) in case of SAP, the back-ups has not been taken on daily basis throughout the year and
(b) for certain other applications operated by third-party service providers such back-ups has not been retained
on a server located in India on daily basis.

45 AUDIT TRAIL

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 in so far it relates to such accounting software. Further, no instances of audit trail
feature being tampered with respect to the above accounting software has been noted where audit trail has
been enabled. Also, the Company has used certain accounting softwares which are operated by third-party
software service providers for maintaining its books of account. Management is not in possession of necessary
information to determine whether audit trail feature of the said software was enabled and operated throughout
the year for all relevant transactions recorded in the software or whether there were any instances of the audit
trail feature being tampered with during the year.

Additionally, the audit trail of relevant prior year has been preserved by the company as per the statutory
requirements for record retention to the extent it was enabled and recorded in those respective year except at
the database level where such audit trail was not enabled.

The Company is in the process of initiating the necessary steps to ensure necessary compliance.

46 The management has evaluated the likely impact of prevailing uncertainties relating to imposition or enhancement
of reciprocal tariffs and believes that there are no material impacts on the financial statements of the Company
for the year ended March 31, 2025. However, the management will continue to monitor the situation from the
perspective of potential impact on the operations of the Company.

47 SUBSEQUENT EVENTS

The Board of directors have recommended dividend of '' 6.00/- per equity share, which translates to a total
dividend of '' 26.74 Crores, for the year e

---

Mar 31, 2024

i) There are no property, plant and equipment given on operating lease.

ii) Pursuant to the Scheme of arrangement, as detailed in note 16(g), freehold land, leasehold land, factory buildings and other buildings has been transferred to the Company from ABB India Limited. Out of such assets, as at March 31,2024, the Company is in process of getting the registered name transferred to the Company for gross block (deemed cost) amounting to C 174.81 crores and net carrying value amounting to C 135.33 crores. Furthermore, the title deeds of aforementioned properties are not in the name of a promoter.

iii) Reimbursement of capital expenditure: During the year ended March 31,2023, Hitachi Energy Ltd entered into an agreement with the Company towards reimbursement of C 28.50 crore pertaining to capital expenditure incurred by the Company post separation of Power Grids business as such cost was not to be incurred by the Company, pursuant to global arrangement with ABB Ltd, Switzerland (‘ABB'') and Hitachi Ltd, Japan (‘Hitachi'') (being the shareholders of Hitachi Energy Ltd).Accordingly, the reimbursement of C 28.50 Crore receivable has been reduced from the gross block of property, plant and equipment with a consequent impact on accumulated depreciation as on March 31, 2023 amounting to C 2.25 crore which has been adjusted against the depreciation in the financial statements for the year ended March 31, 2023. Also refer note 39.

c. Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of C 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 Board of directors have recommended dividend of C 4/- per equity share, which translates to a total dividend of C 16.95 crores, for the year ended March 31, 2024. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

g. Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:

The Board of directors of ABB India Limited on March 5, 2019 approved the Scheme of Arrangement under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (‘the Scheme'') between ABB India Limited (‘transferor Company''), ABB Power Products and Systems India Limited (“‘Resulting Company'' or, ‘APPSIL''”) and their respective shareholders and creditors for the demerger of Power Grid business from ABB India Limited into the Company. The appointment date for the Scheme was April 01, 2019. The Scheme was approved by National Company Law Tribunal (NCLT), Bengaluru Bench vide its order dated. November 27, 2019 and a certified copy has been filed by the Company with the Registrar of Companies, Bengaluru, on December 1,2019 (effective date). Pursuant to the aforesaid Scheme, on December 24, 2019, the Company issued 42,381,675 number of fully paid equity shares having face value of C 2 each to the existing equity shareholders of ABB India Limited in the proportion of 1 share for every 5 shares held. Further, 50,000 number of shares issued to the ABB India Limited at the time of incorporation of the Company was cancelled as per the aforesaid Scheme.

Nature and purpose of other reserves

a) Securities premium

Securities premium acquired pursuant to scheme of arrangement shall be utilised in accordance with the provisions of Companies Act, 2013.

b) Retained earnings

Retained earnings are the profits of the Company earned till date net of appropriations/distributions, includes amount acquired pursuant to scheme of arrangement and other adjustments permitted as per the applicable regulations and accounting standards.

c) Amalgamation adjustment deficit account

Amalgamation adjustment deficit account is the deficit between the carrying value of assets, liabilities and reserves transferred to the Company and the consideration discharged by way of the New Equity Shares issued to the shareholders of ABB India Limited pursuant to the demerger of Power Grid Business from ABB India Limited (refer note 16(g)).

d) Capital reserve

Capital reserve is acquired pursuant to scheme of arrangement.

e) General reserve

General reserve is acquired pursuant to scheme of arrangement. The Company can use this reserve for payment of dividend and issue of fully paid-up shares. As General reserve is created by transfer of one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be subsequently reclassified to statement of profit and loss.

Foreign currency trade payables amounting to C 32.42 crores (March 31,2023: C 60.61 crores) includes C 11.86 crores (March 31, 2023: C 13.64 crores) which are payable from more than 3 years, towards purchase of goods and services, which are outstanding beyond permissible time period stipulated under the Master Circular on Import of Goods and Services issued by Reserve Bank of India (‘the RBI''), which states that payments against imports of goods are required to be made within 6 months from date of shipment. Considering that the balances are outstanding for more than the stipulated time, the Company is in the process of intimating the appropriate regulatory authorities and seeking requisite approvals for extensions. The management is confident that required approvals would be received and penalties, if any that may be imposed on the Company would not be material. Accordingly, no adjustments have been made by the management to these financial statements in this regard.

Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Loss orders: A provision for expected loss on construction contracts is recognised when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

32 Post-employment benefit plan

Gratuity plan :

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s scheme, whichever is higher. The plan assets are held by Hitachi Energy India Limited Employees'' Gratuity Trust (The said trust was duly set up by Company on September 1, 2020 and the same was approved on February 22, 2021 by Hon''ble Commissioner of Income Tax).

Under the Payment of Gratuity Act, 1972, every employee who has completed five years or more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The level of benefits provided depends on the member''s length of service and salary at retirement age. The Gratuity scheme provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit.

Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

Impact on defined benefit obligation

The sensitivity analysis 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 analysis are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analysis 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.

33 Financial instruments

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of material accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liabilities and equity instrument are disclosed in the financial statements.

Valuation technique and significant unobservable inputs:

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are

(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

i) The management assessed the trade receivables, trade payables, loans, cash and cash equivalents, borrowings, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

ii) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

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

(b) Lease liabilities are carried at discounted value using incremental borrowing rate.

(c) The Company enters into derivative financial instruments with banks/financial institutions. Foreign currency forward contracts are valued using valuation techniques which employs the use of market observable inputs using present value calculations. The model incorporates various inputs including the deal specific fundamental, market conditions, maturity period, transaction size, comparable trades, foreign currency spot and forward rates.

(d) Embedded foreign currency are measured similarly to the foreign currency forward contracts. The embedded derivatives are foreign currency forward contracts which are separated from long-term sales contracts and purchase contracts where the transaction currency differs from the functional currencies of the involved parties. These contracts require physical delivery and will be held for the purpose of the delivery of the commodity in accordance with the buyers'' expected sale requirements. These contracts have embedded foreign exchange derivatives that are required to be separated.

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, foreign currency risk, liquidity risk and credit risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk management committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(i) 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, trade payables, deposits, investments, trade receivables, other financial assets and derivative financial instruments.

(ii) 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. The Company''s risk management policy is to hedge foreign currency exposures above certain thresholds.

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not Company''s functional currency (INR).

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to changes in interest rates relates primarily to the Company''s outstanding working capital facility obtained from banks.

(iv) 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. Financial instruments that are subject to credit risk and concentration thereof principally consist of loan receivables, trade receivables, derivatives, cash and cash equivalents, bank balances and other financial assets of the Company, as well as credit exposure to customers.

The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

a) Trade receivables and contract assets

The Company''s customer profile consists of a large number of customers spread across diverse industries include public sector enterprises, state owned companies and large private corporates. Accordingly, the Company''s customer credit risk is low. The Company''s projects business comprises long-term contracts which have an execution period exceeding one year. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 0 to 90 days and certain retention money to be released at the end of the project. In some cases, retentions are substituted with bank/corporate guarantees.

The Company follows ‘simplified approach'' for recognition of impairment loss allowance on trade receivable. Under the simplified approach, the Company tracks changes in credit risk. Further, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from initial recognition.

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At year end, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

I ndividual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the statement of profit and loss within other expenses.

Specific allowance for loss has also been provided by the management based on expected recovery on individual customers.

The provision provided in books for trade receivables overdue:

Further in addition to the above, loss allowance on contract assets amounts to C 10.00 crores (March 31, 2023: C 9.27 crores).

Management does not expect any significant loss from non-performance by counterparties on credit granted during the financial year that has not been provided for.

b) Other than trade receivables and contract assets

Management believes that the parties from which the receivables are due have strong capacity to meet the obligations and risk of default is negligible or nil, accordingly only specific allowance is made and no expected credit loss has been recorded.

C) Credit risk from balances with bank and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy.

(v) Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.

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

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the shareholders of the Company. Net debt includes borrowings, trade payables, lease liabilities and other financial liabilities net of cash and cash equivalents. 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. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

35 Contingent liabilities and contingent assets Contingent liabilities (Claims against the Company not acknowledged as debts) All amount in Indian Rupees in crores, except as stated otherwise March 31, 2024 March 31, 2023
Other matters	0.35	47.44
	0.35	47.44

The Company does not have any contingent assets at the balance sheet date.

a) The Company is contesting certain tax and other demands and the management believes that its position will likely be upheld in the various appellate authorities/ courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position.

b) In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgement pending at various forums/ authorities.

c) The Supreme court of India in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision for provident fund contribution pursuant to the judgement only from the date of Supreme Court Order. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject, the Company does not expect any material impact of the same.

d) 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. 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.

e) The Company has outstanding guarantee / bonds amounting to C 322.70 crores in connection with import of duty-free capital and other goods made by the Company. The Company was granted Export Promotion Capital Goods (EPCG) licenses / Advance Authorizations (“Licenses”) secured by ABB India Limited prior to the effective date of demerger of Power Grids business pursuant to order of National Company Law Tribunal (NCLT) vide its order dated November 27, 2019 towards such duty-free imports with a commitment against future export obligations. As at March 31, 2024, the Company is in the process of meeting the export obligations amounting to C 9.12 crores for certain Licenses. Further, for certain Licenses where duty saved amounts to C 158.01 crores the Company is awaiting Export Obligation Discharge Certificate (EODC) and has also received deficiency letters/show case notices/orders as applicable. The Company is in the process of submitting necessary documents and make necessary submissions to appropriate authorities, as applicable. The management, based on an internal assessment and external advise is of the view that EODC will be received after making suitable representations and submission of necessary documents. Therefore, the Company does not foresee any material financial exposure on the Company. Accordingly, no adjustment has been made to the financial statements in this regard.

Further, post demerger, the Company has been granted Export Promotion Capital Goods (EPCG) licenses / Advance Authorizations (“Licenses”) towards duty-free imports with a commitment against future export obligations. As at March 31, 2024, the Company has outstanding guarantee / bonds amounting to C 59.52 crores in connection with such import of duty-free capital and other goods made by the Company and the Company is in the process of meeting the export obligations amounting to C 167.83 crores for certain Licenses. Further, for certain Licenses where duty saved amounts to C 0.37 crores the Company is awaiting Export Obligation Discharge Certificate (EODC).

36 Commitments

(a) Capital commitments

All amount in Indian Rupees in crores, except as stated otherwise
		March 31, 2024	March 31, 2023
Estimated amount of contracts remaining to be executed on account of capital commitments and not provided for (net of advances)		55.56	26.71

(b) Leases

The Company has lease contracts for building, leasehold land and vehicles used in its operations. Leases of building have lease terms between 2 and 15 years, land is 98 years and motor vehicles have lease terms between 4 and 5 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets and some contracts require the Company to maintain certain financial ratios. Some of the lease agreements have escalation clause ranging from 0% to 7% (March 31, 2023: 0% to 7%). There are several lease contracts that include extension and termination options and variable lease payments.

The Company also has certain leases of machinery/computer equipments with lease terms of 12 months or less and with low value. The Company applies the ‘short-term lease'' and ‘lease of low-value assets'' recognition exemptions for these leases. The Company applied a single discount rate to leases of similar economic environment with a similar end date and excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

Refer note 3 for carrying value of right-of-use assets recognised on date of transition and the movements thereof during the year ended March 31,2024.

37 Segment information

An operating segment is a component that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the other components, whose operating results are regularly reviewed by the Company''s Chief Operating Decision Maker (CODM) to make decisions about resource allocation and performance assessment and for which discrete financial information is available. The Company is engaged in the business relating to products, projects and services for electricity transmission and related activities. Accordingly, the Company''s activities and business is reviewed regularly by the chief operating decision maker from an overall business perspective, rather than reviewing its products/services as individual standalone components. Thus, the Company has only one operating segment, and has no reportable segment in accordance with Ind AS- 108 ‘Operating Segments''.

A contract asset is an entity''s right to consideration in exchange for goods or services that the entity has transferred to a customer and hence is not a financial instrument. In Company''s contracts with customers, since the contractual right to payment arises only upon achievement of milestones specified in the contract, it is believed that the performance completed until the achievement of a particular milestone should be recorded as a contract asset under non-financial assets.

During the year, C 140.72 crores (March 31, 2023 C 95.55 crores) from opening balance of contract assets has been reclassified to trade receivables upon billing to customers on completion of milestones.

During the year, the Company has recognised revenue of C 39.60 crores arising from opening billing in excess of contract revenue as of April 01,2023 (April 01, 2022 is C 77.31 crores).

c) No significant adjustments are expected in contract price for revenue recognised in statement of profit and loss.

d) Performance Obligation

Information about the Company''s performance obligations are summarised below:

i. ) Long term (Construction type) contracts - The long term contracts are ordinarily presumed to consist of combined

obligations which are not distinct in the context of the contract (i.e., single performance obligation). This is highly attributed to the long-term construction nature of the projects, whereby deliverables are typically highly interrelated and combined. The typical scope of turnkey contracts arrangements includes engineering, manufacturing, shipment, delivery installation, testing, erection and commissioning and civil works. Although there are several components to the overall scope of the contract, the turnkey contracts are generally considered one performance obligation.

ii. ) Products manufacturing and erection, commissioning and installation contracts - These contracts

comprising of two performance obligations of supply of products and erection and commissioning thereof. When the manufacturing stage is complete, factory acceptance testing procedures are performed to ensure the equipment meets customer specifications and may involve the customer physically observing the testing procedures. Revenue from contracts, where the performance obligations are satisfied over time and other consideration, is recognized as per the percentage of completion method. The Company uses the percentage of completion method based on the costs expended to the date as a proportion of the total costs to be expended.

Company as part of its contracts, provides warranties of the equipment for defects arising out of poor workmanship, inferior material or manufacturing. Such warranty provided is in the nature of assurance warranty and is not accounted for as a separated performance obligation.

e) Remaining performance obligations

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.

The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2024 is C 7,229.53 crores (March 31, 2023 is C 7,070.91 crores). The conversion to revenue is highly dependent on meeting the delivery schedules, contractual terms and conditions with customers, availability of customer sites, changes/ variation in scope/ prices etc. In view of these, it is not practical to define the accurate percentage of conversion to revenue. However, it will be in a range of 1 to 3 years.

f) There was no revenue recognised in the current year ended March 31, 2024 from performance obligations satisfied (or partially satisfied) in previous periods on account of significant changes in transaction price.

¹ Pursuant to demerger of Power Grid business from ABB India Limited (‘ABB''), as detailed in note 16(g), the Company has accounted sales and purchases towards the contracts yet to be novated by the Company with customers and vendors. The aforesaid sales and purchases has been included in the revenue from operations and cost of sales of the Company. The receivables and payables on account of the same has been included in trade receivables and payables respectively.

* During the year, ABB Asea Brown Boveri Ltd, ABB Switzerland Ltd, and ABB Ltd have been reclassified from ‘Promoter/Promoter Group'' to ‘Public Category'' in the shareholding of the Company with effect from October 6, 2023 basis the necessary approvals from the National Stock Exchange of India Limited and BSE Limited (collectively referred to as the “Stock Exchanges”) vide their respective letters dated October 6, 2023. Accordingly, ABB Asea Brown Boveri Ltd, ABB Switzerland Ltd, ABB Ltd and their group companies ceased to be related party w.e.f October 6, 2023.

Also refer sl. no. xi of transactions with related parties.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and settlement occurs in cash.

40 Corporate social responsibility expenses

As per the Section 135 of the Companies Act 2013 (‘Act''), the Board shall ensure that the Company spends, in every financial year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (‘CSR'') Policy. Hence, the Company falls within the ambit of Section 135 of the Act and is required to contribute the amount stipulated under the aforesaid provisions of the Act.

42 The Company is in the process of conducting a transfer pricing study as required by the transfer pricing regulations under the Income Tax Act, 1961 (‘regulations'') to determine whether the transactions entered during the year ended March 31, 2024, with the associated enterprises were undertaken at “arm''s length price”. The management confirms that all the transactions with associate enterprises are undertaken at negotiated prices on usual commercial terms and is confident that the aforesaid regulations will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

43 Additional regulatory information/disclosures to the extent applicable to the Company

- No funds have been advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds by the company to or in any other person or entity, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

- There are no funds received by the Company from any person or entity, including foreign entities (“Funding Party”) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

- No transactions to report against Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

- 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.

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

44 The Company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the database level insofar as it relates to the accounting software. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.

45 Subsequent events

The Board of directors have recommended dividend of C 4/- per equity share, which translates to a total dividend of C 16.95 crores, for the year ended March 31, 2024. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

46 Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the financial statements have been rounded off or truncated as deemed appropriate by the management of the Company.

---

Mar 31, 2023

c. Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of ? 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 Board of directors have recommended dividend of ? 3.40 per equity share, which translates to a total dividend of ? 14.41 Crores, for the year ended March 31,2023. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

g. Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:

The Board of directors of ABB India Limited on March 5, 2019 approved the Scheme of Arrangement under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (‘the Scheme’) between ABB India Limited (‘transferor Company’), ABB Power Products and Systems India Limited (“‘Resulting Company’ or, ‘APPSIL’’’) and their respective shareholders and creditors for the demerger of Power Grid business from ABB India Limited into the Company. The appointment date for the Scheme was April 01,2019. The Scheme was approved by National Company Law Tribunal (NCLT), Bengaluru Bench vide its order dated. November 27, 2019 and a certified copy has been filed by the Company with the Registrar of Companies, Bengaluru, on December 1,2019 (effective date). Pursuant to the aforesaid Scheme, on December 24, 2019 , the Company issued 42,381,675 number of fully paid equity shares having face value of ? 2 each to the existing equity shareholders of ABB India Limited in the proportion of 1 share for every 5 shares held. Further, 50,000 number of shares issued to the ABB India Limited at the time of incorporation of the Company was cancelled as per the aforesaid Scheme.

a) Securities premium

Securities premium acquired pursuant to scheme of arrangement shall be utilised in accordance with the provisions of Companies Act, 2013.

b) Retained earnings

Retained earnings are the profits of the Company earned till date net of appropriations/distributions, includes amount acquired pursuant to scheme of arrangement and other adjustments permitted as per the applicable regulations and accounting standards.

c) Amalgamation adjustment deficit account

Amalgamation adjustment deficit account is the deficit between the carrying value of assets, liabilities and reserves transferred to the Company and the consideration discharged by way of the New Equity Shares issued to the shareholders of ABB India Limited pursuant to the demerger of Power Grid Business from ABB India Limited (refer note 16(g)).

d) Capital reserve

Capital reserve is acquired pursuant to scheme of arrangement.

e) General reserve

General reserve is acquired pursuant to scheme of arrangement. The Company can use this reserve for payment of dividend and issue of fully paid-up shares. As General reserve is created by transfer of one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be subsequently reclassified to statement of profit and loss.

The above disclosures are provided by the Company based on the information available with the Company in respect of the registration status of its vendors/suppliers.

As at March 31,2023, foreign currency trade payables amounting to ? 60.61 Crores (includes ? 13.64 Crores which are payable from more than 3 years), towards purchase of goods and services, which are outstanding beyond permissible time period stipulated under the Master Circular on Import of Goods and Services issued by Reserve Bank of India (‘the RBI’), which states that payments against imports of goods are required to be made within 6 months from date of shipment. Considering that the balances are outstanding for more than the stipulated time, the Company is in the process of intimating the appropriate regulatory authorities and seeking requisite approvals for extensions. The management is confident that required approvals would be received and penalties, if any that may be imposed on the Company would not be material. Accordingly, no adjustments have been made by the management to these financial statements in this regard.

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Loss orders: A provision for expected loss on construction contracts is recognised when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

32. Post-employment benefit plan Gratuity plan :

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company’s scheme, whichever is higher. The plan assets were held by Asea Brown Boveri Ltd Employees Gratuity Fund on behalf of the Company. During the period ended March 31,2022, the aforesaid funds has been transferred to the APPSIL Employees Gratuity Trust (The said trust was duly set up by Company on September 1,2020 and the same was approved on February 22, 2021 by Hon’ble Commissioner of Income Tax).

Under the Payment of Gratuity Act, 1972, every employee who has completed five years or more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The level of benefits provided depends on the member’s length of service and salary at retirement age. The Gratuity scheme provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit.

Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

Impact on defined benefit obligation

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.

33. Financial instruments

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liabilities and equity instrument are disclosed in the financial statements.

Valuation technique and significant unobservable inputs:

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

i) The management assessed the trade receivables, trade payables, loans, cash and cash equivalents, borrowings, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

ii) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

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

(b) Lease liabilities are carried at discounted value using incremental borrowing rate.

(c) The Company enters into derivative financial instruments with banks/financial institutions. Foreign currency forward contracts are valued using valuation techniques which employs the use of market observable inputs using present value calculations. The model incorporates various inputs including the deal specific fundamental, market conditions, maturity period, transaction size, comparable trades, foreign currency spot and forward rates.

(d) Embedded foreign currency are measured similarly to the foreign currency forward contracts. The embedded derivatives are foreign currency forward contracts which are separated from long-term sales contracts and purchase contracts where the transaction currency differs from the functional currencies of the involved parties. These contracts require physical delivery and will be held for the purpose of the delivery of the commodity in accordance with the buyers’ expected sale requirements. These contracts have embedded foreign exchange derivatives that are required to be separated.

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, foreign currency risk, liquidity risk and credit risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by a Risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk management committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(i) 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, trade payables, deposits, investments, trade receivables, other financial assets and derivative financial instruments.

(ii) 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. The Company’s risk management policy is to hedge foreign currency exposures above certain thresholds.

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not Company’s functional currency (?).

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding working capital facility obtained from banks.

(iv) 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. Financial instruments that are subject to credit risk and concentration thereof principally consist of loan receivables, trade receivables, derivatives, cash and cash equivalents, bank balances and other financial assets of the Company, as well as credit exposure to customers.

The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

a) Trade receivables and financial assets

The Company’s customer profile consists of a large number of customers spread across diverse industries include public sector enterprises, state owned companies and large private corporates. Accordingly, the Company’s customer credit risk is low. The Company’s projects business comprises long-term contracts which have an execution period exceeding one year. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 0 to 90 days and certain retention money to be released at the end of the project. In some cases, retentions are substituted with bank/corporate guarantees.

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivable. Under the simplified approach, the Company tracks changes in credit risk. Further, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from initial recognition.

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At year end, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the statement of profit and loss within other expenses.

Specific allowance for loss has also been provided by the management based on expected recovery on individual customers.

The provision provided in books for trade receivables overdue:

Management does not expect any significant loss from non-performance by counterparties on credit granted during the financial year that has not been provided for.

b) Other than trade receivables and financial assets

Management believes that the parties from which the receivables are due have strong capacity to meet the obligations and risk of default is negligible or nil, accordingly only specific allowance is made and no expected credit loss has been recorded.

c) Credit risk from balances with bank and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy.

(v) Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the shareholders of the Company. Net debt includes borrowings, trade payables, lease liabilities and other financial liabilities net of cash and cash equivalents. 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. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

35. Contingent liabilities and contingent assets Contingent liabilities (Claims against the Company not acknowledged as debts) All amount in Indian Rupees in Crores, except as stated otherwise
	March 31, 2023	March 31, 2022
Other matters	47.44	50.11
	47.44	50.11

The Company does not have any contingent assets at the balance sheet date.

a) The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities/ courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position.

b) In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgement pending at various forums/ authorities.

c) The Supreme court of India in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision for provident fund contribution pursuant to the judgement only from the date of Supreme Court Order. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject, the Company does not expect any material impact of the same.

d) The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and postemployment 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. 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.

36. Commitments
(a) Capital commitments
All amount in Indian Rupees in Crores, except as stated otherwise
	March 31, 2023	March 31, 2022
Estimated amount of contracts remaining to be executed on account of capital commitments and not provided for (net of advances)	26.71	56.95

(b) Leases

The Company has lease contracts for building, leasehold land and vehicles used in its operations. Leases of building have lease terms between 2 and 15 years, land is 98 years and motor vehicles have lease terms between 4 and 5 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets and some contracts require the Company to maintain certain financial ratios. Some of the lease agreements have escalation clause ranging from 0% to 7% (March 31,2022: 0% to 7%). There are several lease contracts that include extension and termination options and variable lease payments.

The Company also has certain leases of machinery/Computer equipments with lease terms of 12 months or less and with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. The Company applied a single discount rate to leases of similar economic environment with a similar end date and excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

Refer note 3 for carrying value of right of use assets recognised on date of transition and the movements thereof during the year ended March 31,2023.

37. Segment information

An operating segment is a component that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the other components, whose operating results are regularly reviewed by the Company’s Chief Operating Decision Maker (CODM) to make decisions about resource allocation and performance assessment and for which discrete financial information is available. The Company is engaged in the business relating to products, projects and services for electricity transmission and related activities. Accordingly, the Company’s activities and business is reviewed regularly by the chief operating decision maker from an overall business perspective, rather than reviewing its products/services as individual standalone components. Thus, the Company has only one operating segment, and has no reportable segment in accordance with Ind AS- 108 ‘Operating Segments’.

A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer and hence is not a financial instrument. In Company’s contracts with customers, since the contractual right to payment arises only upon achievement of milestones specified in the contract, it is believed that the performance completed until the achievement of a particular milestone should be recorded as a contract asset under non-financial assets.

During the year, ? 95.55 Crores of contract assets pertaining to the long term contracts as of April 01, 2022 (During the period, January 1,2021 to March 31,2022 ? 111.03 Crores of contract assets pertaining to the long term contracts as of January 01,2021) has been reclassified to trade receivables upon billing to customers on completion of milestones.

During the year, the Company has recognised revenue of ? 77.31 Crores arising from opening billing in excess of contract revenue as of April 01,2022 (January 1,2021 is ? 345.92 Crores).

c) No significant adjustments are expected in contract price for revenue recognised in statement of profit and loss.

d) Performance Obligation

Information about the Company’s performance obligations are summarised below:

i.) Long term (Construction type) contracts - The long term contracts are ordinarily presumed to consist of combined obligations which are not distinct in the context of the contract (i.e., single performance obligation). This is highly attributed to the long-term construction nature of the projects, whereby deliverables are typically highly interrelated and combined. The typical scope of turnkey contracts arrangements includes engineering,

manufacturing, shipment, delivery installation, testing, erection and commissioning and civil works. Although there are several components to the overall scope of the contract, the turnkey contracts are generally considered one performance obligation.

ii.) Products manufacturing and erection, commissioning and installation contracts - These contracts comprising of two performance obligations of supply of products and erection and commissioning thereof. When the manufacturing stage is complete, factory acceptance testing procedures are performed to ensure the equipment meets customer specifications and may involve the customer physically observing the testing procedures. Revenue from contracts, where the performance obligations are satisfied over time and other consideration, is recognized as per the percentage of completion method. The Company uses the percentage of completion method based on the costs expended to the date as a proportion of the total costs to be expended.

Company as part of its contracts, provides warranties of the equipment for defects arising out of poor workmanship, inferior material or manufacturing. Such warranty provided is in the nature of assurance warranty and is not accounted for as a separated performance obligation.

e) Remaining performance obligations

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.

The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31,2023 is ? 7,070.91 Crores (March 31,2022 is ? 4,672.29 Crores). The conversion to revenue is highly dependent on meeting the delivery schedules, contractual terms and conditions with customers, availability of customer sites, changes/ variation in scope/ prices etc. In view of these, it is not practical to define the accurate percentage of conversion to revenue. However, it will be in a range of 1 to 3 years.

f) There was no revenue recognised in the current year ended March 31,2023 from performance obligations satisfied (or partially satisfied) in previous periods on account of significant changes in transaction price.

39. Exceptional items

Reimbursement of reorganisation expenses

During the period ended March 31,2022, Hitachi Energy Ltd (formerly known as Hitachi ABB Power Grids Ltd), had made one time payment of ? 45.64 Crores to the Company towards reimbursement of reorganization costs incurred/ to be incurred by the Company consequent to the separation of Power Grids business. Such reimbursement is pursuant to the global arrangement between ABB Ltd, Switzerland (‘ABB’), and Hitachi Ltd, Japan (‘Hitachi’) being the shareholders of Hitachi Energy India Limited Accordingly, the reimbursement of ? 35.85 Crore received towards the expenditure already incurred by the Company, after separation, had been disclosed as an exceptional item in the statement of profit and loss and balance reimbursements received of ? 9.79 Crores had been accounted as advances towards liability to be incurred in the subsequent years.

43. The Company is in the process of conducting a transfer pricing study as required by the transfer pricing regulations under the Income Tax Act, 1961 (‘regulations’) to determine whether the transactions entered during the year ended March 31, 2023, with the associated enterprises were undertaken at “arm’s length price”. The management confirms that all the transactions with associate enterprises are undertaken at negotiated prices on usual commercial terms and is confident that the aforesaid regulations will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

44. The spread of COVID-19 has severely impacted businesses around the globe. In many countries, including India, there has been severe disruption to regular business operations due to lockdowns, disruptions in transportation, supply chain, travel bans, quarantines, social distancing and other emergency measures. The Company has evaluated its liquidity position and of recoverability and carrying values of its assets/ liabilities and has concluded that no material adjustments are required at this stage in these financial statements.

45. Additional regulatory information

- No funds have been advanced or loaned or invested either from borrowed funds or share premium or any other sources or kind of funds by the Company to or in any other person or entity, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

- There are no funds received by the Company from any person or entity, including foreign entities (“Funding Party”) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

- No transactions to report against Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

- 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).

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

46. Subsequent events

The Board of directors have recommended dividend of ? 3.40 per equity share, which translates to a total dividend of ? 14.41 Crores, for the year ended March 31, 2023. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

47. Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the financial statements have been rounded off or truncated as deemed appropriate by the management of the Company.

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Mar 31, 2022

Notes:

i) There are no property, plant and equipment given on operating lease.

ii) Freehold land, Leasehold land, Factory buildings and other buildings transferred to the Company, pursuant to the scheme of arrangement, as detailed in note 16(g) is in the process of being registered in the name of the Company.

iii) The net block of Leasehold land of Rs. 8.75 crores (Gross block - Rs. 9.53 crores and accumulated depreciation - Rs.0.78 crores) has been reclassified to “Right of Use” assets on account of adoption of Ind AS 116 “Leases”. Refer note 36(b).

iv) Reimbursement of capital expenditure: During the period ended March 31,2022, Hitachi Energy Ltd (formerly known as Hitachi ABB Power Grids Ltd) entered into an agreement with the Company towards reimbursement of Rs. 26.41 crore pertaining to capital expenditure incurred by the Company post separation of Power Grids business as such cost was not to be incurred by the Company, pursuant to global arrangement with ABB Ltd, Switzerland (‘ABB’) and Hitachi Ltd, Japan(‘Hitachi’) (being the shareholders of Hitachi Energy Ltd). Accordingly, the reimbursement of Rs 26.41 Crore receivable has been reduced from the gross block of property, plant and equipment with a consequent impact on accumulated depreciation as on March 31,2022 amounting to Rs. 5.39 crore which has been adjusted against the current period depreciation in the statement of profit and loss

Goodwill impairment testing

The carrying amount of goodwill as at March 31,2022 and as at December 31,2020 has been attributed to power grids business as a cash generating unit (‘CGU’) . The Company tests whether goodwill has suffered any impairment on an annual basis or in case of any indicator. The recoverable amount of a CGU is determined based on value-in-use calculations which require the use of assumptions. The calculations use pre-tax cash flow projections based on financial budgets approved by the management. An average of the range of each assumption used as at March 31,2022 and as at December 31,2020 is mentioned below.

Growth rate	5% - 6%
Operating margins	6% - 13%
Discount rate	7.5% - 10%

The above discount rate is based on the Weighted Average Cost of Capital (WACC) which represents the weighted average return attributable to all the assets of the CGU. These estimates are likely to differ from future actual results of operations and cash flows.

Based on the above assessment, there has been no impairment of goodwill.

f. During the year ended December 31,2020, an open offer for acquisition of upto 10,595,419 fully paid equity shares of face value of INR 2/- each of the Company from Public Shareholders was made by ABB Switzerland Ltd along with Hitachi, Ltd., Hitachi ABB Power Grids Ltd (name changed to Hitachi Energy Ltd w.e.f. June 30, 2021, previously named ABB Management Holding AG) and ABB Ltd and acting in their capacity as persons acting in concert with the Acquirers.

As set out in the Letter of Offer dated September 2, 2020, while Hitachi, Ltd. had acquired indirect control over the Company on and from July 1, 2020, the ownership interest of 75% of equity shares of the Company was continued to be held by ABB Asea Brown Boveri Ltd, until the transfer of such ownership interest to Hitachi ABB Power Grids Ltd (name changed to Hitachi Energy Ltd w.e.f. June 30, 2021, previously named ABB Management Holding AG and majority shareholding of which is owned by Hitachi, Ltd.), as part of a delayed closing of the transaction in India. Such delayed closing and transfer of the 75% of equity shares of the Company to Hitachi ABB Power Grids Ltd took place on February 5, 2021.

179 Equity shares (0.0004% of paid up share capital) tendered in the open offer that concluded on September 2020 were acquired by ABB Switzerland Limited. Out of 179 shares tendered in the open offer, 1 share in physical form was transferred to ABB Switzerland Limited during the year ended December 31,2020.

During the period ended March 31,2022, the said Equity share which was held in physical form as on December 31,2020 has been converted into demat form and credited into demat form and credited into demat account of ABB Switzerland Limited. Further, ABB Switzerland Ltd, one of the promoters of the Company divested 179 (one hundred and seventy nine) equity shares, in accordance with the requirements of Rule 19(2)(b) and Rule 19(A) of the Securities Contracts (Regulation) Rules, 1957 and Regulation 38 of the SEBI (Listing Obligations and Disclosures requirements) Regulations, 2015 read with paragraph 2(a) and paragraph (3) of the SEBI Circular No. SEBI/HO/CFD/CMD/CIR/P/43/2018 dated February 22, 2018 (“SEBI Circular”) in order for the Company to ensure compliance with the minimum public shareholding requirements specified under law.

Consequent to such divestment, the promoter shareholding is 31,786,256 equity shares and public shareholding is 10,595,419 equity share as on March 31,2022 which is equivalent to 75% and 25% of the total paid up capital of the Company respectively.

g. Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date

The Board of directors of ABB India Limited on March 5, 2019 approved the Scheme of Arrangement under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (‘the Scheme’) between ABB India Limited (‘transferor Company’), ABB Power Products and Systems India Limited (“‘Resulting Company’ or, ‘APPSIL’’’) and their respective shareholders and creditors for the demerger of Power Grid business from ABB India Limited into the Company. The appointment date for the Scheme was April 01,2019. The Scheme was approved by National Company Law Tribunal (NCLT), Bengaluru Bench vide its order dated. November 27, 2019 and a certified copy has been filed by the Company with the Registrar of Companies, Bengaluru, on December 1,2019 (effective date). Pursuant to the aforesaid Scheme, on December 24, 2019 , the Company issued 42,381,675 number of fully paid equity shares having face value of Rs. 2 each to the existing equity shareholders of ABB India Limited in the proportion of 1 share for every 5 shares held. Further, 50,000 number of shares issued to the ABB India Limited at the time of incorporation of the Company was cancelled as per the aforesaid Scheme.

Nature and purpose of other reservesa) Securities premium

Securities premium acquired pursuant to scheme of arrangement shall be utilised in accordance with the provisions of Companies Act, 2013.

b) Retained earnings

Retained earnings are the profits of the Company earned till date net of appropriations/distributions, includes amount acquired pursuant to scheme of arrangement and other adjustments permitted as per the applicable regulations and accounting standards.

c) Amalgamation adjustment deficit account

Amalgamation adjustment deficit account is the deficit between the carrying value of assets, liabilities and reserves transferred to the Company and the consideration discharged by way of the New Equity Shares issued to the shareholders of ABB India Limited pursuant to the demerger of Power Grid Business from ABB India Limited. (refer note 16(g)).

d) Capital reserve

Capital reserve is acquired pursuant to scheme of arrangement.

e) General reserve

General reserve is acquired pursuant to scheme of arrangement. The Company can use this reserve for payment of dividend and issue of fully paid-up shares. As General reserve is created by transfer of one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be subsequently reclassified to statement of profit and loss.

The above disclosures are provided by the Company based on the information available with the Company in respect of the registration status of its vendors/suppliers.

As at March 31,2022, trade payables amounting to Rs. 64.00 crores (includes Rs. 1.35 crores which are payable from more than 3 years), net of subsequent payment, towards purchase of goods and services, which are outstanding beyond permissible time period stipulated under the Master Circular on Import of Goods and Services and Master Circular on Export of Goods and Services issued by Reserve Bank of India (‘the RBI’), which states that payments against imports of goods are required to be made within 180 days from date of shipment. Considering that the balances are outstanding for more than the stipulated time, the Company is in the process of intimating the appropriate regulatory authorities and seeking requisite approvals for extensions. The management is confident that required approvals would be received and penalties, if any that may be imposed on the Company would not be material. Accordingly, no adjustments have been made by the management to these financial statements in this regard.

Nature of provisions:

i Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii Loss orders: A provision for expected loss on construction contracts is recognised when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

32. Post-employment benefit plan Gratuity plan:

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company’s scheme, whichever is higher. The plan assets were held by Asea Brown Boveri Ltd Employees Gratuity Fund on behalf of the Company. During the period ended March 31, 2022, the aforesaid funds has been transferred to the APPSIL Employees Gratuity Trust (The said trust was duly set up by Company on September 1,2020 and the same has been approved on February 22, 2021 by Hon’ble Commissioner of Income Tax).

Under the Payment of Gratuity Act, 1972, every employee who has completed five years or more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The level of benefits provided depends on the member’s length of service and salary at retirement age. The Gratuity scheme provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit.

Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

33. Financial instruments

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liabilities and equity instrument are disclosed in the financial statements.

A Fair value of financial assets and financial liabilities

The carrying amount of all financial assets and liabilities appearing in the financial statements is reasonable approximation of fair value. The following tables presents the carrying value and fair value / amortised cost of each category of financial assets and liabilities:

Valuation technique and significant unobservable inputs:

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

i) The management assessed the trade receivables, trade payables, loans, cash and cash equivalents, borrowings, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

ii) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

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

iv) Lease liabilities are carried at disocunted value using incremental borrowing rate.

v) The Company enters into derivative financial instruments with banks/financial institutions. Foreign currency forward contracts are valued using valuation techniques which employs the use of market observable inputs using present value calculations. The model incorporates various inputs including the deal specific fundamental, market conditions, maturity period, transaction size, comparable trades, foreign currency spot and forward rates.

vi) Embedded foreign currency are measured similarly to the foreign currency forward contracts. The embedded derivatives are foreign currency forward contracts which are separated from long-term sales contracts and purchase contracts where the transaction currency differs from the functional currencies of the involved parties. These contracts require physical delivery and will be held for the purpose of the delivery of the commodity in accordance with the buyers’ expected sale requirements. These contracts have embedded foreign exchange derivatives that are required to be separated.

Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, foreign currency risk, liquidity risk and credit risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by a Risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk management committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(i) 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, trade payables, deposits, investments, trade receivables, other financial assets and derivative financial instruments.

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. The Company’s risk management policy is to hedge foreign currency exposures above certain thresholds.

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not Company’s functional currency (INR).

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding Payable to Bank of America. and working capital facility obtained from banks.

The above loan carries an interest rate of 4.05%. The interest rate is fixed, hence there is no interest rate risk applicable for the Company.

(iv) 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. Financial instruments that are subject to credit risk and concentration thereof principally consist of loan receivables, trade receivables, derivatives, cash and cash equivalents, bank balances and other financial assets of the Company, as well as credit exposure to customers.

The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

a) Trade receivables and financial assets

Trade receivables consists of a large number of customers spread across diverse industries.

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivable. Under the simplified approach, the Company tracks changes in credit risk. Further, it recognizes impairment loss allowance based on lifetime expected credit loss (“”ECL””) at each reporting date, right from initial recognition.

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At year end, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the statement of profit and loss within other expenses.

Specific allowance for loss has also been provided by the management based on expected recovery on individual customers.

The provision provided in books for trade receivables overdue:

Management does not expect any significant loss from non-performance by counterparties on credit granted during the financial year that has not been provided for.

(b) Other than trade receivables and financial assets

Management believes that the parties from which the receivables are due have strong capacity to meet the obligations and risk of default is negligible or nil, accordingly only specific allowance is made and no expected credit loss has been recorded.

c) Credit risk from balances with bank and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy.

(v) Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.

34. Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the shareholders of the Company. Net debt includes borrowings, trade payables, lease liabilities and other financial liabilities net of cash and cash equivalents. 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. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

The Company does not have any contingent assets at the balance sheet date.

a) The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities/ courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position.

b) In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgement pending at various forums/ authorities.

c) The Supreme court of India in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision for provident fund contribution pursuant to the judgement only from the date of Supreme Court Order. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject, the Company does not expect any material impact of the same.

d) 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. 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.

(b) Leases

Effective January 1,2020, the Company adopted Ind AS 116, Leases (which replaces the earlier Lease standard) under the modified retrospective approach. Accordingly, the Company recorded the lease liability at the present value of the remaining lease payments discounted at the incremental borrowing rate as on the date of transition and measured right of use asset at an amount equal to lease liability, adjusted for any related prepaid and accrued lease payments previously recognised. There was an impact of Rs. 1.06 crores (net of tax Rs. 0.34 crores) on transition to Ind AS 116 on opening retained earnings as on January 1,2020.

The Company has lease contracts for building, leasehold land and vehicles used in its operations. Leases of building have lease terms between 2 and 15 years, land is 98 years and motor vehicles have lease terms between 4 and 5 years. The Company‘s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets and some contracts require the Company to maintain certain financial ratios. Some of the lease agreements have escalation clause ranging from 0% to 6% (December 31,2020: 0% to 6%). There are several lease contracts that include extension and termination options and variable lease payments.

The Company also has certain leases of machinery/Computer equipments with lease terms of 12 months or less and with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. The Company applied a single discount rate to leases of similar economic environment with a similar end date and excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

37. Segment information

An operating segment is a component that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the other components, whose operating results are regularly reviewed by the Company’s Chief Operating Decision Maker (CODM) to make decisions about resource allocation and performance assessment and for which discrete financial information is available. The Company is engaged in the business relating to products, projects and services for electricity transmission and related activities. Accordingly, the Company’s activities and business is reviewed regularly by the chief operating decision maker from an overall business perspective, rather than reviewing its products/services as individual standalone components. Thus, the Company has only one operating segment, and has no reportable segment in accordance with Ind AS- 108 ‘Operating Segments’.

A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer and hence is not a financial instrument. In Company’s contracts with customers, since the contractual right to payment arises only upon achievement of milestones specified in the contract, it is believed that the performance completed until the achievement of a particular milestone should be recorded as a contract asset under non-financial assets.

During the period Rs. 111.03 crores of contract assets pertaining to the long term contracts as of January 1, 2021 (January 1,2020 is Rs. 113.02 crores)has been reclassified to trade receivables upon billing to customers on completion of milestones.

During the period, the Company has recognised of Rs. 345.92 crores arising from opening billing in excess of contract revenue as of January 1,2021 (January 1,2020 is Rs. 222.03 crores).

c) No significant adjustments are expected in contract price for revenue recognised in statement of profit and loss.d) Performance Obligation

Information about the Company’s performance obligations are summarised below:

i) Long term (Construction type) contracts - The long term contracts are ordinarily presumed to consist of combined obligations which are not distinct in the context of the contract (i.e., single performance obligation). This is highly attributed to the long-term construction nature of the projects, whereby deliverables are typically highly interrelated and combined. The typical scope of turnkey contracts arrangements includes engineering, manufacturing, shipment, delivery installation, testing, erection and commissioning and civil works. Although there are several components to the overall scope of the contract, the turnkey contracts are generally considered one performance obligation.

ii) Products manufacturing and erection, commissioning and installation contracts - These contracts comprising of two performance obligations of supply of products and erection and commissioning thereof. When the manufacturing stage is complete, factory acceptance testing procedures are performed to ensure the equipment meets customer specifications and may involve the customer physically observing the testing procedures. Revenue from contracts, where the performance obligations are satisfied over time and other consideration, is recognized as per the percentage of completion method. The Company uses the percentage of completion method based on the costs expended to the date as a proportion of the total costs to be expended.

Company as part of its contracts, provides warranties of the equipment for defects arising out of poor workmanship, inferior material or manufacturing. Such warranty provided is in the nature of assurance warranty and is not accounted for as a separated performance obligation.

e) Remaining performance obligations

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.

The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2022 is Rs. 4,672.29 crores (December 31, 2020 is Rs. 4,954.76 crores). The conversion to revenue is highly dependent on meeting the delivery schedules, contractual terms and conditions with customers, availability of customer sites, changes/ variation in scope/ prices etc. In view of these, it is not practical to define the accurate percentage of conversion to revenue. However, it will be in a range of 1 to 3 years.

f) There was no revenue recognised in the current period ended March 31,2022 from performance obligations satisfied (or partially satisfied) in previous periods due to no significant changes in transaction price.

39 Exceptional itemsa) Reimbursement of reorganisation expenses

During the period ended March 31,2022, Hitachi Energy Ltd (formerly known as Hitachi ABB Power Grids Ltd), has made one time payment of Rs. 45.64 Crores to the Company towards reimbursement of reorganization costs incurred/ to be incurred by the Company consequent to the separation of Power Grids business. Such reimbursement is pursuant to the global arrangement between ABB Ltd, Switzerland (‘ABB’), and Hitachi Ltd, Japan(‘Hitachi’) being the shareholders of Hitachi Energy Ltd. Accordingly, the reimbursement of Rs 35.85 Crore received towards the expenditure already

incurred by the Company, after separation, has been disclosed as an exceptional item in the statement of profit and loss and balance reimbursements received of Rs 9.79 Crores has been accounted as advances as at March 31,2022 towards liability to be incurred in the subsequent years.

b) Provision towards doubtful customer receivables and additional project cost

During the year ended December 31,2020, the Company had re-evaluated its claims/ dues in respect of certain old, slow moving contracts. Whilst the Company was actively pursuing its dues from these customers, in view of significant delays by customers and based on the analysis of the customer’s ability to pay, the Company had made additional provisions aggregating to Rs 28.07 crores and the same was disclosed as an exceptional item in the statement of profit and loss for the year ended December 31,2020.

c) Demerger expenses

During the year ended December 31,2020, the Company had incurred professional charges of Rs. 7.43 crores pursuant to the scheme of demerger and the same was disclosed as an exceptional item in the statement of profit and loss for the year ended December 31,2020.

42. The Company is in the process of conducting a transfer pricing study as required by the transfer pricing regulations under the Income Tax Act, 1961 (‘regulations’) to determine whether the transactions entered during the year ended March 31, 2022, with the associated enterprises were undertaken at “arm’s length price”. The management confirms that all the transactions with associate enterprises are undertaken at negotiated prices on usual commercial terms and is confident that the aforesaid regulations will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

43. The spread of COVID-19 has severely impacted businesses around the globe. In many countries, including India, there has been severe disruption to regular business operations due to lockdowns, disruptions in transportation, supply chain, travel bans, quarantines, social distancing and other emergency measures. The Company has evaluated its liquidity position and of recoverability and carrying values of its assets/ liabilities and has concluded that no material adjustments are required at this stage in these financial statements.

44. Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the financial statements have been rounded off or truncated as deemed appropriate by the management of the Company.