Notes to Accounts of JTEKT India Ltd.

Mar 31, 2025

1) Refer note 41 for disclosure of leases under Ind AS 116

2) There is no Restrictions on the realisability of investment property or the remittance of income and proceeds of disposal for the year ended 31 March 2024.

3) There are no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements.

4) The Company''s investment property consist of Land, building and plant and machinery situated at Sanand, Gujarat. The fair value of the Investment property as at 31 March 2024 is Rs. 609.69 lakhs (previous year : Rs 628.52 lakhs) respectively, as per the valuations performed by external property valuers as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. Valuations performed by the valuer were based on future expected cash inflows based on the active market prices, adjusted for any difference in the nature, location or condition of the specific property.

5) During the year ended 31 March 2025, the Company has decided to surrender its vacant leasehold land at Sanand to the lessor. Owing to the said decision, the written down value of the Investment property amounting to Rs 443.51 Lakhs has been derecognised and corresponding lease liability amounting to Rs 412.29 Lakhs has been reversed to profit and loss account. Additionally, amount recovered for the scrap value of the building amounting to Rs. 105.00 lakhs has been credited to the profit and loss account. Accordingly, the Company has recorded the net gain of Rs. 73.78 lakhs on above adjustments as "Exceptional item" (refer note 32).

During the previous year ended 31 March 2024, in terms of Scheme of Amalgamation of JTEKT Fuji Kiko Automotive India Limited with the Company, the Company had allotted 98,00,014 Ordinary (Equity) shares of Re 1 each to the shareholders of JTEKT Fuji Kiko Automotive India Limited other than JTEKT India Limited, in the ratio of 200 (two hundred) Ordinary (Equity) Shares of Re 1 each fully paid-up in the capital of the Company for every 100 (one hundred) fully paid-up Equity Shares of Rs 10 each held in JTEKT Fuji Kiko Automotive India Limited.

The Company has not issued any other equity share capital for consideration other than cash for last five years.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of INR 1 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

# There are no amount due for payment to the Investor Education & Protection Fund under Section 125 of the Companies Act,2013.

The Company''s exposure to currency and liquidity risks related to the above financial liabilities is disclosed in note 48.

* Derivative instruments at fair value through profit or loss reflect the change in fair value of those forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for external currency borrowings.

@ There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at the year end. The information as required to be disclosed in relation to Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company (refer note 20).

a) Disaggregated revenue information

The Company earns its revenue from contracts with automotive customers for sale of steering & drive line products and allied products and rendering of services. The revenue has been diaggregated by major product lines, geographical market (refer segment note no 42) and timing of revenue recognition.

b) Performance obligation

The Company''s contracts with customers includes promises to transfer products and rendering of services to the customer The Company assesses the products/ services promised and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. The Company uses judgement to determine an appropriate selling price for a performance obligation The Company allocates the transaction price to each performance obligation on the basis of the relative selling price of each distinct product or service promised in the contract The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits of significant risks and who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risk and rewards to the customer, acceptance of delivery by the customer etc. Based on the above assessment performance obligation is satisfied at point in time. Company have payment terms of 32 days to 90 days in case of domestic customers and 130 days in case of export customers.

Contract assets is the right to consideration in exchange for goods or services transferred to the customer. Contract liability is the entity''s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer in advance. Contract assets (unbilled receivables) are transferred to receivables when the rights become unconditional and contract liabilities are recognised as and when the performance obligation is satisfied.

**During the year ended 31 March 2024, the Company has sold the land parcel at a consideration of INR 780.00 lakhs having net book value of Rs. 21.14 lakhs. Consequently, gain on the sale of land amounting to INR 739.26 lakhs (after netting off related selling expenses of Rs 19.60 lakhs) has been recognized as an ''Exceptional item.

**During the current year ended 31 March 2025, the Company has decided to surrender its vacant leasehold land at Sanand to the lessor. Owing to the said decision, the written down value of the Investment property amounting to Rs 443.51 Lakhs has been charged to profit and loss account and corresponding lease liability amounting to Rs 412.29 Lakhs has been reversed to profit and loss account. Additionally, amount recovered for the scrap value of the building amounting to Rs. 105.00 lakhs has been credited to the profit and loss account. Accordingly, the Company has recorded the net gain of Rs. 73.78 lakhs on above adjustments as ""Exceptional item"".

37. Merger information

The Board of Directors of the Company, based on the recommendation of Audit Committee, in its meeting held on 6 July 2022, have considered and approved the Scheme of Amalgamation ("Scheme") for merger of its subsidiary company namely JTEKT Fuji Kiko Automotive India Limited ("Amalgamating Company") with the Company, pursuant to Sections 230 to 232 of the Companies Act, 2013, with effect from Appointed Date i.e. 1 April 2022. The Scheme was filed with National Company Law Tribunal ("NCLT") on 26 November 2022 and was approved by NCLT on 12 December 2023. A certified copy of the Order was filed with the Registrar of Companies on 1 January 2024 and the scheme became effective. Pursuant to the Scheme, all the assets, liabilities, reserves and surplus of amalgamating company have been vested in the Company with effect from 1 April 2022 at the carrying values in financial statements of amalgamated company in accordance with Appendix C of IND AS 103.

(a) Accounting treatment

(1) Upon the Scheme being effective, the Amalgamated Company has accounted for the amalgamation at carrying value in accordance with "Pooling of Interest Method" of accounting as laid down in Appendix C of Indian Accounting Standard 103 on Business Combination and other Indian Accounting Standards, as applicable and notified under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India.

(2) All assets and liabilities of the Amalgamating Company have been transferred to and vested in Amalgamated Company pursuant to the Scheme and have been recorded by Amalgamated Company at their carrying values as appearing in the books of the Amalgamating Company.

(3) The identity of the reserves has been preserved and the Amalgamated Company has recorded the reserves of the Amalgamating Company at the carrying amount as appearing in the books of the Amalgamating Company.

(4) The Company has issued 98,00,014 Ordinary (Equity) shares of Re 1 each to the shareholders of JTEKT Fuji Kiko Automotive India Limited other than JTEKT India Limited, in the ratio of 200 (two hundred) Ordinary (Equity) Shares of Re 1 each fully paid-up in the capital of the Company for every 100 (one hundred) fully paid-up Equity Shares of Rs 10 each held in JTEKT Fuji Kiko Automotive India Limited.

(5) The value of the investments in the shares of the Amalgamating Company held by the Amalgamated Company inter-se shall stand cancelled without further act or deed.

(6) The inter-company balances between the Amalgamated Company and the Amalgamating Company appearing in the books of accounts of either the Amalgamated Company or the Amalgamating Company if any, stand cancelled.

(7) The difference arising after taking the effect of above has been transferred to "Capital Reserve Account" in the financial statements of the Amalgamated Company.

1) Pursuant to the Order, the difference between the book value of the assets and liabilities and reserves transferred to the Company and the Carrying amount of investments in amalgamating company and Share Capital issued to the shareholder of amalgamating company has been transferred to "capital reserve".

2) The financial information in the financial statement of year ended 31 March 2024 including notes and disclosure in respect of prior periods (i.e. period as at 31 March 2023 and prior to that) have been restated as if the business combination had occurred from the beginning of the preceding period presented in those financial statements in accordance with Appendix C of Indian Accounting Standard 103 on Business Combination.

(i) Contribution to provident fund

Pursuant to judgement by the Hon''ble Supreme Court dated 28 February 2019, it was held that basic wages, for the purpose of provident fund, to include special allowances which are common for all employees. However, there is uncertainty with respect to the applicability of the judgement and period from which the same applies. Owing to the aforesaid uncertainty and pending clarification from the authority in this regard, the Company has not recognised any provision for the previous years ended 31 March 2019. Further, management also believes that the impact of the same on the Company will not be material

# The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

* Additionally, the Company is involved in other disputes, lawsuits, claims and/or regulatory inspections including commercial matters that arise from time to time in ordinary course of business. The Company believes that none of these matters, either individually or in aggregate, are expected to have any material adverse effect on its financial statements.

39 Employee benefit obligations A Defined Contribution Plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident Fund, Punjab Labour Welfare Fund (PLWF), Employee State Insurance scheme (''ESI'') and National Pension Scheme (NPS) which are collectively defined as defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrued. The amount recognized as an expense includes following:

B Defined benefit plan

The employees'' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company made annual contributions to the LIC of India of an amount advised by the LIC.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant.

Sensevities due to mortality and withdrawals are not material and hence impact of change is not calculated. Sensivity as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy not applicable being a lump sum benefit on retirement.

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

C Other long-term employee benefits

During the year ended 31 March 2025, the Company has created provision for compensated absences towards earned leave amounting to INR 498.92 lakhs (previous year expense of INR 220.11 lakhs). The Company has reversed provision towards sick leave amounting to INR Nil (previous year INR 8.27 lakhs). The Company determines the expense for compensated absences basis the actuarial valuation of present value of the obligation, using the Projected Unit Credit Method.

40. Related party disclosures

For the purpose of these financial statements, parties are considered to be related to the Company, if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

*Loans of INR 4,498.18 lakhs (31 March 2024: INR 7,501.67 lakhs) against the corporate guarantee given by the holding company, JTEKT Corporation, Japan.

# Net of warranty claims INR 290.66 Lakhs ( Previous Year INR 20.29 lakhs)

All transactions with these related parties are priced on an arm''s length basis

41 Lease related disclosures

The Company has leases for land, office buildings, warehouses and related facilities, cars and other office equipments. With the exception of short-term leases, leases of low-value underlying assets and leases with variable lease payments, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets.

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublease the asset to another party, the right-of-use asset can only be used by the Company. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and other premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Company is required to pay maintenance fees in accordance with the lease contracts.

G Lease liabilities movement at the beginning of the year to end of the year (refer the table of lease liability movement under Cash Flow Statement).

42 Segment information

The Company is engaged in the business of manufacturing and assembling of automotive components. The Board of Directors being the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by industry classes. All operating segments'' operating results are reviewed regularly by CODM to make decisions about resources to be allocated to the segments and assess their performance. CODM believes that these are governed by same set of risk and returns hence CODM reviews as one balance sheet component. Further, the economic environment in which the company operates is significantly similar and not subject to materially different risk and rewards. The revenues, total expenses and net profit as per the Statement of Profit and Loss represents the revenue, total expenses and the net profit of the sole reportable segment.

Geographical information

The Company''s revenue from operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

43 Debtors written off

During the previous year ended 31 March 2024, management have identified some unusual adjustments posted to Trade receivables account by an employee. These entries were appearing in Trade receivables from prior period and were not recoverable. Accordingly, the amount of INR 771.20 lakhs has been charged to Statement of Profit and Loss as "Other expenses". Management has performed an independent investigation through an external consultant and does not expect any further impact on the financial statements for the year ended 31 March 2024. During the year ended 31 March 2025, the Management has taken necessary actions and implemented appropriate controls to prevent the re-occurrence of such events.

44 Dividend

The board of directors of the Company in its meeting held on 23 May 2025, proposed a dividend of INR 1,779.96 lakhs (INR 0.70 per share) {previous year INR 1,525.68 lakhs (INR 0.60 per share) to the equity shareholders of JTEKT India Limited}. The dividend will be remitted post the approval of shareholders in the ensuing Annual General Meeting (''AGM'').

46 Fair value disclosures

i) Fair values hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial statements 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 three levels prescribed under the accounting standard.

All financial instruments for which fair value is recognised or disclosed are categorised with in the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole

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

Level 2: i nputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices).

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

a. Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

b. Fair value of non-current financial assets and liabilities have not been disclosed as there is no significant differences between carrying value and fair value.

c. Fair value of borrowing is considered to be the same as its carrying value, as there is an no change or are at the market rates.

d. Fair value of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The model incorporate various inputs include the credit quality of counter-parties and foreign exchange forward rates.

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2025 and 31 March 2024.

47 Other Statutory Information

i) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions

(Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder

ii) The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the

Companies Act, 1956.

iii) There are no charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

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

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

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

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

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

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

vii) The Company does not have any such transaction which are not recorded in the books of accounts and has been surrendered or

disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other

relevant provisions of the Income Tax Act, 1961)

viii) The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender.

ix) The Company has complied with the number of layers for its holding in downstream companies prescribed under clause (87) of section

2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.

x) The Company has not revalued its Property, Plant and equipments and intangible assets and Investment property including Right-of-

use assets.

xi) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year, other than the scheme of amalgamation between JTEKT India Limited and its subsidiary company namely JTEKT Fuji Kiko Automotive India Limited (also refer note 37).

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

The Company''s risk management is carried out by a central treasury department (of the Company) under policies approved by the board of directors. The board of directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

The Company is primarily engaged in the manufacturing of steering systems and other auto components for passenger and utility vehicle manufactures. The Company''s principal financial liabilities, comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support the Company''s operations. The Company''s principal financial assets include investments in equity, trade and other receivables, security deposits, cash and employee advances that derive directly from its operations. The Company also enters into derivative transactions viz. Cross Currency Interest Rate Swap and Principal and Interest Swaps as required.

The Company has exposure to the following risks arising from financial instruments

- Credit risk (see (A));

- Liquidity risk (see (B); and .

- Market risk (see (C)).

Risk Management Framework

The Company''s activities makes it susceptible to various risks. The company has taken adequate measures to address such concerns by developing adequate systems and practices. The Company''s overall risk management program focuses on the unpredictability of markets and seeks to manage the impact of these risks on the Company''s financial performance.

The Company''s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The board provides assurance to the shareholders 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 Company''s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and company''s activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

A) Credit risk

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

Trade receivables

credit losses are measured at an amount equal to the 12 months 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.

Company''s exposure to customers is diversified and more than 90% revenue is recognised from OEM''s. However there was no default on account of these customers in the history of Company.

Before accepting any new customer, the Company assesses the potential customer''s credit quality and defines credit limits to customer. Limits and scoring attributed to customers are reviewed on periodic basis.

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Credit risk from balances with banks and financial institutions is managed by the Corporate finance department in accordance with the Company''s policy. Investments of surplus funds are made only in schemes of alternate investment fund/or other appropriate avenues including term and recurring deposits with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

The Company places its cash and cash equivalents and term deposits with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts ongoing evaluation of the credit worthiness of the banks with which it does business. Given the high credit ratings of these banks, the Company does not expect these banks to fail in meeting their obligations. The maximum exposure to credit risk for the components of the balance sheet at 31 March 2025 and 31 March 2024 is represented by the carrying amount of each financial asset.

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

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, buyers credit and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders

C) 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 following types of risk: interest rate risk, currency risk and price risk. Financial instruments affected by market risk include loans and borrowings, deposits, advances and derivative financial instruments

The sensitivity analysis in the following sections relate to the position as at 31 March 2025 and 31 March 2024. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of floating to fixed interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2024

The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions.

The following assumptions have been made in calculating the sensitivity analysis:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2025 and 31 March 2024.

a) Foreign currency risk

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

The Company manages its foreign currency risk by entering into derivatives. When a derivative is entered into for the purpose of hedging, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.

Sensitivity analysis

Any changes in the exchange rate of foreign currency against INR is not expected to have significant impact on the Company''s profit due to the short credit period. Accordingly, a 1% appreciation/depreciation of the INR as indicated below, against the foreign currencies would have increased/reduced profit by the amounts shown below. This analysis is based on the foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variable remains constant.

(ii) Foreign exchange derivative contracts

The Company tries to mitigate foreign exchange risk by entering into appropriate hedging instruments as considered necessary from time to time. Depending on the future outlook on currencies, the Company may keep the exposures unhedged or hedged only as a part of the total exposure. The Company does not enter into a foreign exchange derivative transactions for speculative purposes.

b) 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 the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with fixed interest rates.

(i) Liabilities

The Company''s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2025, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company''s investments in Fixed Deposits are all at fixed interest rates.

(ii) Assets

The Company''s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

49. Capital management

i) The Company''s capital management objectives are

The Board policy is to maintain a strong capital base so as to maintain the confidence of investor, creditor and market and to sustain future development of the business. The Board of Directors monitors the return on capital employed, as well as the level of dividends to equity shareholders. The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary. The Company uses debt ratio as a capital management index and calculates the ratio as Net debt divided by total equity. Net debt and total equity are based on the amounts stated in the financial statements.

50. 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.

51. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act, 1961. The Company is in the process of updating the documentation of the international transactions entered into with the associated enterprises from April 2023 and expects such records to be in existence latest by October 2025 as required by law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Mar 31, 2024

q) Provisions (Other than employee benefits) General Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects

some or all of a provision to be reimbursed the expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Warranty provisions

Provision for warranty related costs are recognized when the product is sold or service provided and is based on historical experience. The provision is based on technical evaluation/ historical warranty data and after weighting of all possible outcomes by their associated probabilities. The estimate of such warranty related costs is revised annually. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Contingent liability

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 arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

Employee benefits

i. Short-term employee benefits

All employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid, if the Company has a present legal or constructive

obligation to pay the amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.

ii. Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions to a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions to the Regional Provident Fund Commissioner towards provident fund, superannuation fund scheme, National Pension Scheme and employee state insurance scheme (''ESI''). Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in the Statement of Profit and Loss in the periods during which the related services are rendered by employees. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

iii. Defined benefit plans

The Company operates a defined benefit gratuity plan, which requires contributions to be made to LIC of India. There are no other obligations other than the contribution payable to the respective trust.

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method, which recognizes each year of service as giving rise to additional unit

of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, are based on the market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate determined by reference to market yields at the end of the reporting period on government bonds. This rate is applied on the net defined benefit liability (asset), both as determined at the start of the annual reporting period, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

iv. Other long term employee benefits Compensated absences

The employees can carry forward a portion of the unutilized accrued compensated absences and utilize it in future service periods or receive cash compensation on termination of employment or during the course of employment in certain grade of employees. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method. Further, a certain portion of compensated absence obligation is classified as current liability based on the independent actuarial valuation.

s) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Recognition and initial measurement

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit and loss (''FVTPL''), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at:

- Amortized cost;

- fair value through other comprehensive income (FVOCI) - debt investment;

- fair value through other comprehensive income (FVOCI) - equity investment, or

- fair value through profit and loss (FVTPL)

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss. This category generally applies to trade and other receivables. Company has recognized financial assets viz. security deposit, trade receivables, employee advances at amortized cost.

A debt instrument is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

Debt instruments included within the FVOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognized in OCI is re-classified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVOCI debt instrument is reported as interest income using the EIR method.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- t he stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Company''s management;

- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest

For the purpose of this assessment ''Principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Company considers:

- contingent events that would change the amounts or timings of cash flows;

- terms that may adjust the contractual coupon rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Company''s claim to cash flows from specified assets (e.g. non - recourse features)

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount

outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, as feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets: Subsequent measurement and gains and losses

Financial assets These assets are subsequently

at FVTPL measured at fair value. Net gains

and losses, including any interest or dividend income, are recognized in profit or loss.

Financial assets These assets are subsequently

at amortized measured at amortized cost using

cost the effective interest method. Interest

income, foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

Debt These assets are subsequently

investment at measured at fair value. Interest income

FVOCI under the effective interest method,

foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity These assets are subsequently

investment at measured at fair value. Dividends are

FVOCI recognized as income in profit or loss

unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are not reclassified to profit or loss.

Financial liabilities: Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest

method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

Derecognition

Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognized.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Derivative financial instruments and hedge accounting

The Company uses derivative instruments such as foreign exchange forward contracts and currency swaps to hedge its foreign currency and interest rate risk exposure. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are generally recognized in profit and loss.

Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on:

- Financial assets measured at amortized cost; and

- Financial assets measured at FVOCI - debt instruments.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt instruments at FVOCI are credit-impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit - impaired includes the following observable data:

For recognition of impairment loss on financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.

Measurement of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).

Presentation of allowance for expected credit losses in the balance sheet

Loss allowance for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

For debt securities at FVOCI, the loss allowance is charged to Statement of the Profit and Loss and is recognized in OCI.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate

sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with Company''s procedures for the recovery of amount due.

Impairment of financial instruments

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for the measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a. Financial assets that are debt instruments, and are measured at amortized cost e.g., deposits and advances

b. Trade receivables that result from transactions that are within the scope of Ind AS 115

c. Financial guarantee contracts that are not measured as at FVTPL.

The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

â¢ All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial

instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

â¢ Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss. The balance sheet presentation for various financial instruments is described below:

â¢ Financial assets measured as at amortized cost and contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

â¢ Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a liability.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

t) Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and cheques on hand, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash at bank, cash on hand and cheques on hand as they are considered an integral part of the Company''s cash management.

u) Cash dividend and non-cash distribution to equity holders of the parent

The Company recognizes a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.

v) Corporate Social Responsibility ("CSR") expenditure

CSR expenditure incurred by the Company is charged to the Statement of the Profit and Loss.

w) Research and development

Expenditure on research and development activities is recognized in the Statement of Profit and Loss as incurred.

Development expenditure is capitalized as part of cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses, if any.

x) Business combination

Business Combination under common control are accounted as per Appendix C in Ind AS 103 - Business

combinations, at carrying amount of assets and liabilities acquired and any excess of consideration issued over the net assets acquired is recognised as capital reserve on common control business combination.

y) Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are aggregated.

z) Recent accounting pronouncements

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

b) Performance obligation

The Company''s contracts with customers includes promises to transfer products and rendering of services to the customer. The Company assesses the products/services promised in identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. The Company uses judgement to determine an appropriate selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative selling price of each distinct product or service promised in the contract. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits of significant risks and who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risk and rewards to the customer, acceptance of delivery by the customer etc. Based on the above assessment performance obligation is satisfied at point in time. Company have payment terms of 32 days to 65 days in case of domestic customers and 90 days in case of export customers.

37. Merger information

The Board of Directors of the Company, based on the recommendation of Audit Committee, in its meeting held on 6 July 2022, have considered and approved the Scheme of Amalgamation ("Scheme") for merger of its subsidiary company namely JTEKT Fuji Kiko Automotive India Limited ("Amalgamating Company") with the Company, pursuant to Sections 230 to 232 of the Companies Act, 2013, with effect from Appointed Date i.e. 1 April 2022. The Scheme was filed with National Company Law Tribunal ("NCLT") on 26 November 2022 and was approved by NCLT on 12 December 2023. A certified copy of the Order was filed with the Registrar of companies on 1 January 2024 and the scheme became effective. Pursuant to the Scheme, all the assets, liabilities, reserves and surplus of amalgamating company have been vested in the Company with effect from 1 April 2022 at the carrying values in financial statements of amalgamated company in accordance with Appendix C of IND AS 103.

(a) Accounting treatment

(4) The Company has issued 98,00,014 Ordinary (Equity) Shares of INR 1 each to the shareholders of JTEKT Fuji Kiko Automotive India Limited other than JTEKT India Limited, in the ratio of 200 (two hundred) Ordinary (Equity) Shares of INR 1 each fully paid-

up in the capital of the Company for every 100 (one hundred) fully paid-up Equity Shares of INR 10 each held in JTEKT Fuji Kiko Automotive India Limited.

(5) The value of the investments in the shares of the Amalgamating Company held by the Amalgamated Company inter-se shall stand cancelled without further act or deed.

(7) The difference arising after taking the effect of above has been transferred to "Capital Reserve Account" in the financial statements of the Amalgamated Company.

41. Lease related disclosures

43. Debtors written off

During the current year ended 31 March 2024, management has identified some unusual adjustments posted to Trade receivables account by an employee. These entries were appearing in Trade receivables from prior period and were not recoverable. Accordingly, the amount of INR 771.20 lakhs has been charged to statement of Profit and Loss as ''Other expenses''. Management has performed an independent investigation through an external consultant and does not expect any further impact on the financial statements for the year ended 31 March 2024. The management has taken necessary actions and is in process of implementing appropriate controls to prevent the re-occurrence of such events.

44. Dividend

The Board of Directors of the Company in its meeting held on 30 May 2024, proposed a dividend of INR 1525.68 lakhs (INR 0.60 per share) (previous year INR 1,222.40 lakhs (INR 0.50 per share) to the equity shareholders of JTEKT India Limited and INR 572.37 lakhs (INR 11.68 per share) to the equity shareholder of JTEKT Fuji Kiko Automotive India Limited (having non-controlling interest). The dividend will be remitted post the approval of shareholders in the ensuing Annual General Meeting (''AGM'').

46. Fair value disclosures

i) Fair values hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial statements 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.

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

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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

47. Other Statutory Information

i) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.

ii) The Company has no transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.

iii) There are no charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

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

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

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

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

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

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

viii) The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender.

ix) The Company has complied with the number of layers for its holding in downstream companies prescribed under clause (87) of Section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.

x) The Company has not revalued its Property, Plant and equipments and intangible assets and Investment property.

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

48. Financial risk management

The Company''s risk management is carried out by a central treasury department (of the Company) under policies approved by the Board of Directors. The Board of Directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

The Company is primarily engaged in the manufacturing of steering systems and other auto components for passenger and utility vehicle manufactures. The Company''s principal financial liabilities, comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to support the Company''s operations. The Company''s principal financial assets include investments in equity, trade and other receivables, security deposits, cash and employee advances that derive directly from its operations. The Company also enters into derivative transactions viz. Cost Currency Interest Rate Swap and Principal and Interest Swaps as required.

The Company has exposure to the following risks arising from financial instruments

- Credit risk (see (A));

- Liquidity risk (see (B); and .

- Market risk (see (C)).

Risk Management Framework

The Company''s activities makes it susceptible to various risks. The Company has taken adequate measures to address such concerns by developing adequate systems and practices. The Company''s overall risk management program focuses on the unpredictability of markets and seeks to manage the impact of these risks on the Company''s financial performance.

The Company''s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The Board provides assurance to the shareholders 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 Company''s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

A) Credit risk

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of balance sheet position whether a financial asset or a company of financial assets is impaired. 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 months 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.

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

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

C) 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 following types of risk: interest rate risk, currency risk and price risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits, advances and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at 31 March 2024 and 31 March 2023. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of floating to fixed interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2023.

The analysis exclude the impact ofmovements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions.

The following assumptions have been made in calculating the sensitivity analysis:

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023.

a) Foreign currency risk

The Company enters Cross Currency Interest Rate Swaps to manage its Forex and interest rate risk, in which it agrees to exchange at specified intervals, the difference between floating and fixed rate interest amounts calculated by reference to an agreed-upon notional principal amount.

(i) Liabilities

The Company''s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2024, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company''s investments in Fixed Deposits are all at fixed interest rates.

Interest rate risk exposure

Below is the overall exposure of the Company to interest rate risk:

The Company''s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

49. Capital management

i) The Company'' s capital management objectives are

51. Transfer pricing :

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act, 1961. The Company is in the process of updating the documentation of the international transactions entered into with the associated enterprises from April 2023 and expects such records to be in existence latest by November 2024 as required by law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors of

Chartered Accountants JTEKT India Limited

ICAI Firm Registration no. : 101248W/W-100022

Shashank Agarwal Hitoshi Mogi Hiroko Nose

Partner Chairman & Managing Director Independent Director

Membership no. : 095109 DIN 08741355 DIN 06389168

Rajiv Chanana Saurabh Agrawal

Director and Chief Financial Officer Company Secretary

DIN 02630192 Membership no.: 36163

Place : Gurugram Place : Gurugram

Date : 30 May 2024 Date : 30 May 2024

Mar 31, 2023

*(i). During the previous year ended 31 March 2022, the Company has shifted its operations at Sanand facility to other locations. The building, leasehold land and plant and machinery at Sanand facility are planned to be leased out. Accordingly, the Company has reclassified these assets as investment property. Also refer note 32.

(ii). Building at Sanand (Gross block) as at 31 March 2022 amounting to INR 1,374.04 lakhs, net block as at 31 March 2022 INR 1,060.73 lakhs is constructed on leasehold land. Same has been transferred to Investment property as at 31 March 2022.

$ There are no projects in capital-work-in progress as at 31 March 2023 and 31 March 2022, whose completion is overdue or cost has exceeded in comparision to its original plan.

# Title deed of immovable property as at 31 March 2023 and 31 March 2022

1) Refer note 41 for disclosure of leases under Ind AS 116.

2) (i). During the previous year ended 31 March 2022, the Company has shifted its operations at Sanand facility to other locations.

The building, leasehold land and plant and machinery at Sanand facility are planned to be leased out. Accordingly, the Company has reclassified these assets as investment property. Also refer note 32.

3) There is no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal.

4) There are no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements.

5) The Company''s investment property consist of Land, building and plant and machinery situated at Sanand, Gujarat. The fair value of the Investment property as at 31 March 2023 is INR 628.52 lakhs (previous year : INR 677.79 lakhs) respectively, as per the valuations performed by external property valuers as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. Valuations performed by the valuer were based on future expected cash inflows based on the active market prices, adjusted for any difference in the nature, location or condition of the specific property.

During the previous year ended 31 March 2019, in terms of Scheme of Amalgamation of JTEKT Sona Automotive India Limited with the Company, the Company had allotted 45,738,637 Ordinary (Equity) shares of INR 1/- each to JTEKT Corporation, Japan in the ratio of 1,582 (one thousand five hundred and eighty two) Ordinary (Equity) Share of INR 1/- each fully paid-up in the capital of the Company for every 1,000 (one thousand) fully paid-up Equity Shares of INR 1/- each held in JTEKT Sona Automotive India Limited.

b) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of INR 1/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

The capital reserve is the accumulated surplus not available for distribution of dividend and expected to remain invested permanently. Amount of INR 2,433.80 lakhs has been derived on account of Scheme of Amalgamation adopted between the Company and JTEKT Sona Automotive India Limited. The amalgamation had been accounted during the year ended 31 March 2019 under the ''pooling of interests'' method in accordance with Appendix C of Ind AS 103 ''Business Combinations''.

# There are no amount due for payment to the Investor Education & Protection Fund under Section 125 of the Companies Act,2013.

The Company''s exposure to currency and liquidity risks related to the above financial liabilities is disclosed in note 48.

* Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for external currency borrowings.

a) The provision for warranties relates mainly to inventories sold during the year ended 31 March 2023 and 31 March 2022. The provision is based on estimates made from historical warranty data associated with similar products and also includes specific warranty claim received by the Company from its customers. The Company expects to incur the related expenditure over the next few years.

b) Pursuant to a recent judgement by the Hon''ble Supreme Court on a statutory matter, the management has assessed and recognised provision for contingency amounting to INR 563.94 There is an uncertainty involved on the outcome of the matter with the regulatory authorities. The management is in the process of evaluating the necessary legal course of action in this regard.

b) Performance obligation

Company considers indicators such as how customer consumes benefits of significant risks and who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risk and rewards to the customer, acceptance of delivery by the customer etc. Based on the above assessment performance obligation is satisfied at point in time. Company have payment terms of 32 days to 65 days in case of domestic customers and 90 days in case of export customers.

* During the year ended 31 March 2023 and 31 March 2022, a voluntary retirement scheme (''VRS'') was offered to the workmen and the Company has incurred cost of INR 326.01 lakhs and INR 153.68 lakhs respectively. Accordingly, the Company has recorded the VRS cost as an exceptional item.

** During the year ended 31 March 2022, the Company has shifted its manufacturing opertations at Sanand facility to other locations. Owing to the said relocation, the Company has evaluated the recoverable value for the assets at the facility and recognised an impairment loss of INR 492.34 lakhs based on expected cash inflows and relocation expenses of INR 31.50 lakhs in the year ending 31 March 2022 as an exceptional item.

Contribution to provident fund

Pursuant to judgement by the Hon''bte Supreme Court dated 28 February 2019, it was held that basic wages, for the purpose of provident fund, to include special allowances which are common for all employees. However, there is uncertainty with respect to the applicability of the judgement and period from which the same applies. Owing to the aforesaid uncertainty and pending clarification from the authority in this regard, the Company has not recognised any provision for the previous years ended 31 March 2019. Further, management also believes that the impact of the same on the Company will not be material.

# The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

* Does not include certain Labour related claims which are disputed by the Company. Management does not expect any material liability on this account as they feel that the claims raised on the company are not tenable in law.

39. Employee benefit obligationsA. Defined Contribution Plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident Fund, Superannuation Fund, Punjab Labour Welfare Fund (PLWF), Employee State Insurance scheme (''ESI'') and National Pension Scheme (NPS) which are collectively defined as defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrued. The amount recognized as an expense includes following:

B. Defined benefit plan

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations.

The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

(vii) Actuarial assumptionsa. Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis. Valuation assumptions are as follows which have been selected by the company :

Sensitivities due to mortality and withdrawals are not material and hence impact of change is not calculated. Sensitivity as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy not applicable being a lump sum benefit on retirement.

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

(x) Enterprise best estimate of contribution during next year is INR 181.40 lakhs (previous year INR 291.78 lakhs).

C. Other long-term employee benefits

During the year ended 31 March 2023, the Company has created provision for compensated absences towards earned leave amounting to INR 206.34 lakhs (previous year expense of INR 292.32 lakhs). The Company has created provision towards sick leave amounting to INR 0.00 lakhs (previous year INR 0.70 lakhs). The Company determines the expense for compensated absences basis the actuarial valuation of present value of the obligation, using the Projected Unit Credit Method.

40. Related party disclosures

For the purpose of these standalone financial statements, parties are considered to be related to the Company, if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

42. Segment information

The Company is engaged in the business of manufacturing and assembling of automotive components. The Board of Directors being the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by industry classes. ALL operating segments'' operating results are reviewed regularly by CODM to make decisions about resources to be allocated to the segments and assess their performance. CODM believes that these are governed by same set of risk and returns hence CODM reviews as one balance sheet component. Further, the economic environment in which the company operates is significantly similar and not subject to materially different risk and rewards. The revenues, total

expenses and net profit as per the Statement of Profit and Loss represents the revenue, total expenses and the net profit of the sole reportable segment.

Geographical information

The Company''s revenue from operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

43. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income-tax Act, 1961. The Company is in the process of updating the documentation of the international transactions entered into with the associated enterprises from April 2022 and expects such records to be in existence latest by November 2023 as required by law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

44. Dividend

The board of directors of the Company in its meeting held on 22 May 2023, proposed a dividend of INR 1,222.40 lakhs (INR 0.50 per share) (previous year INR 977.92 lakhs (INR 0.40 per share)) to the equity shareholders. The dividend will be remitted post the approval of shareholders in the ensuing Annual General Meeting (''AGM'').

i) Fair values hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial statements 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.

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

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

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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

b. Fair value of non-current financial assets and liabilities have not been disclosed as there is no significant differences between carrying value and fair value.

c. Fair value of borrowing is considered to be the same as its carrying value, as there is an no change in the lending rates.

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2023 and 31 March 2022.

47. Other Statutory Information

i) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.

ii) The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.