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Notes to Accounts of KDDL Ltd.

Mar 31, 2023

Contingent liabilities and contingent assets

A contingent liability exists when there is a possible
but not probable obligation, or a present obligation
that may, but probably will not, require an outflow
of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do
not warrant provisions, but are disclosed unless the
possibility of outflow of resources is remote.

Contingent assets usually arise from unplanned or other
unexpected events that give rise to the possibility of an
inflow of economic benefits to the entity. Contingent
assets are recognised when the realisation of income
is virtually certain, then the related asset is not a
contingent asset and its recognition is appropriate.

A contingent asset is disclosed where an inflow of
economic benefits is probable.

h. Commitments

Commitments include the amount of purchase order
(net of advances) issued to parties for completion of
assets. Provisions, contingent liabilities, contingent
assets and commitments are reviewed at each
reporting date.

i. Revenue from contract with customer

Revenue from contracts with customers is recoganised
when the control of the goods or services are
transferred to the customer at an amount that reflects
the consideration to which the Company expects to be
entitled in exchange for those goods or services. The
Company has generally concluded that it is the principal
in its revenue arrangement because it typically controls
goods or services before transferring them to the
customers.

Revenue from sale of goods is recognised based on a
5-Step Methodology which is as follows:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligation in contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the

performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity

satisfies a performance obligation

Revenue is measured based on transaction price,
which is the fair value of the consideration received or
receivable, stated net of discounts, returns and value
added tax. Transaction price is recognised based on
the price specified in the contract, net of the estimated
sales incentives/ discounts. Also, in determining the
transaction price for the sale of products, the Company
considers the effects of variable consideration, the
existence of significant financing components, noncash
consideration, and consideration payable to the
customer (if any).

The Company disaggregates revenue from contracts
with customers by geography.

Sale of services

The Company offers services in fixed term contracts
and short term arrangement. Revenue from service is
recognised when obligation is performed or services
are rendered.

Export benefits

Export incentive entitlements are recognised as income
when the right to receive credit as per the terms of the
scheme is established in respect of the exports made,
and where there is no significant uncertainty regarding
the ultimate collection of the relevant export proceeds.
Contract balances
Trade Receivable

A receivable is recognised if an amount of consideration
that is unconditional (i.e., only the passage of time
is required before payment of the consideration is
due). Refer to accounting policies of financial assets
in section of Financial instruments - initial recognition
and subsequent measurement.

Contract liabilities

A contract liability is recognised if a payment is received
or a payment is due (whichever is earlier) from a
customer before the Company transfers the related
goods or services. Contract liabilities are recognised
as revenue when the Company performs under the
contract (i.e., transfers control of the related goods or
services to the customer).

j. Recognition of interest income or expense

Interest income or expense is accrued on a time basis
and recognised using the effective interest method.

The ''effective interest rate'' is the rate that exactly
discounts the estimated future cash payments or
receipts through the expected life of the financial
instrument to:

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to
the amortised cost of the liability. However, for financial
assets that have become credit-impaired subsequent
to initial recognition, interest income is calculated by
applying the effective interest rate to the amortised
cost of the financial asset. If the asset is no longer
credit-impaired, then the calculation of interest income
reverts to the gross basis.

k. Borrowing costs

Borrowing costs are interest and other costs (including
exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an
adjustment to interest costs) incurred by the Company
in connection with the borrowing of funds. Borrowing
costs directly attributable to acquisition or construction
of an asset which necessarily take a substantial period of
time to get ready for their intended use are capitalised
as a part of cost of the asset. Other borrowing costs are
recognised as an expense in the period in which they
are incurred. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to
the borrowing costs.

l. Taxes

Income tax comprises current and deferred tax. It is
recognised in Statement of Profit and Loss except to
the extent that it relates to a business combination
or an item recognised directly in equity or in other
comprehensive income.

Current income tax

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in
respect of previous years. Current income tax assets
and liabilities are measured at the amount expected to
be paid or received after considering the uncertainty,
if any, related to income taxes. It is measured using tax
rates (and tax laws) enacted or substantively enacted
by the reporting date.

Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

Current income tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either
in other comprehensive income (OCI) or in equity).
Current tax items are recognised in correlation to
the underlying transaction either in OCI or directly in
equity. Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject to
interpretation and considers whether it is probable
that a taxation authority will accept an uncertain tax
treatment. The Company shall reflect the effect of
uncertainty for each uncertain tax treatment by using

either most likely method or expected value method,
depending on which method predicts better resolution
of the treatment.

Deferred tax

Deferred tax is provided using the liability method on
temporary differences between the carrying amounts
of the assets and liabilities for financial reporting
purposes and the corresponding amounts used for
taxation purposes.

Deferred tax liabilities are recognised for all temporary
differences, except when the deferred tax liability
arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or
loss and In respect of taxable temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the
reversal of the temporary differences can be controlled
and it is probable that the temporary differences will
not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can
be utilised, except when the deferred tax asset relating
to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, affects neither the accounting profit
nor taxable profit or loss and In respect of deductible
temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures,
deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will
be available against which the temporary differences
can be utilised.

The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are
re-assessed at each reporting date and are recognised
to the extent that it has become probable that future

taxable profits will allow the deferred tax asset to be
recovered.

In assessing the recoverability of deferred tax assets,
the Company relies on the same forecast assumptions
used elsewhere in the financial statements and in other
management reports.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.

The Company offsets deferred tax assets and deferred
tax liabilities if and only if it has a legally enforceable
right to set off current tax liabilities and assets and the
deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authorities.
Sales/value added taxes/GST paid on acquisition of
assets or on incurring expenses

Expenses and assets are recognised net of the amount
of sales/ value added taxes/GST paid, except:

- When the tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as
part of the expense item, as applicable

- When receivables and payables are stated with
the amount of tax included

The net amount of tax recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the balance sheet.

m. LeasesCompany as a lessee

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

Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the

underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted

for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement
date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the
shorter of the lease term and the estimated useful lives
of the assets, as follows:

Plant and equipment 3- 5 Years

Building 1- 10 Years

Leasehold land 99 Years

If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation
is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
Refer to the accounting policies in section (o)
Impairment of non-financial assets.

Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
insubstance fixed payments) less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments
also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the
lease term reflects the Company exercising the option
to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses
(unless they are incurred to produce inventories) in the
period in which the event or condition that triggers the
payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured

if there is a modification, a change in the lease term, a
change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate
used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying
asset.

Short term leases and leases of low-value assets

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

Company as a lessor

Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases.
Rental income arising is accounted for on a straight-line
basis over the lease terms. Initial direct costs incurred
in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
Investment property

Investment property comprises of the sub lease portion
of the right-of-use asset which is initially measured at
cost. Subsequent to initial recognition, investment
property is stated at cost less depreciation less
impairment loss, if any. The cost includes an equivalent
amount as reduced from the right-of-use asset at the
time of commencement of the lease. The Company
depreciates the investment property over the period of
sub lease term.

n. 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.

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value

plus, in the case of financial assets not recorded at fair

value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation
or convention in the market place (regular way trades)
are recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other
comprehensive income (FVOCI)

• Debt instruments, derivatives and equity
instruments at fair value through profit or loss
(FVPL)

• Equity instruments measured at fair value through
other comprehensive income (FVOCI)

Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost
if the asset is held within a business model whose
objective is to hold assets for collecting contractual cash
flows, and contractual terms of the 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 amortised cost using the
effective interest rate (EIR) method. The effective
interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected
life of the financial instrument to the gross carrying
amount of the financial asset or the amortised cost
of the financial liability. Amortised 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 other
income in the Statement of Profit and Loss. The
losses arising from impairment are recognised in the
Statement of Profit and Loss.

Debt instrument at FVOCI

A ''debt instrument'' is classified as at the FVOCI if
the objective of the business model is achieved both
by collecting contractual cash flows and selling the
financial assets, and the asset''s contractual cash flows
represent SPPI.

Debt instruments included within the FVOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in the
other comprehensive income (OCI). On derecognition of
the asset, cumulative gain or loss previously recognised
in OCI is reclassified to the Statement of Profit and Loss.
Interest earned whilst holding FVTOCI debt instrument
is reported as interest income using the EIR method.
Debt instrument at FVPL

FVPL is a residual category for debt instruments. Any
debt instrument, which does not meet the criteria
for categorisation as at amortised cost or as FVOCI, is
classified as at FVPL. In addition, at initial recognition,
the Company may irrevocably elect to designate a debt
instrument, which otherwise meets amortised cost
or FVOCI criteria, as at FVPL. However, such adoption
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred to
as ''accounting mismatch'').

Debt instruments included within the FVPL category
are measured at fair value with all changes recognised
in the Statement of Profit and Loss.

Equity investments

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading and contingent consideration
recognised by an acquirer in a business combination
to which Ind AS 103 applies are classified as at FVPL.
For all other equity instruments, the Company may
make an irrevocable adoption to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such adoption on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument
as at FVOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in the
OCI. There is no recycling of the amounts from OCI to
profit or loss, even on sale of investment. However, the
Company may transfer the cumulative gain or loss to
retained earnings.

Equity instruments included within the FVPL category
are measured at fair value with all changes recognised
in the Statement of Profit and Loss.

Impairment of financial assets

The Company recognises loss allowances for expected
credit loss on financial assets measured at amortised

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

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

- significant financial difficulty of the borrower or
issuer;

- the breach of contract such as a default or being
past due for 90 days or more;

- the restructuring of a loan or advance by the
Company on terms that the Company would not
consider otherwise;

- it is probable that the borrower will enter
bankruptcy or other financial re-organisation; or

- the disappearance of active market for a security
because of financial difficulties.

The Company measures loss allowances at an amount
equal to lifetime expected credit losses, except for the
following, which are measured as 12 month expected
credit losses:

- Bank balances for which credit risk (i.e. the risk
of default occurring over the expected life of
the financial instrument) has not increased
significantly since initial recognition.

Loss allowances for trade receivables are always
measured at an amount equal to lifetime expected
credit losses. Lifetime expected credit losses are the
expected credit losses that result from all possible
default events over the expected life of a financial
instrument.

12-month expected credit losses are the portion of
expected credit losses that result from default events
that are possible within 12 months after the reporting
date (or a shorter period if the expected life of the
instrument is less than 12 months). In all cases, the
maximum period considered when estimating expected
credit losses is the maximum contractual period over
which the Company is exposed to credit risk.

When determining whether the credit risk of a financial
asset has increased significantly since initial recognition
and when estimating expected credit losses, the
Company considers reasonable and supportable
information that is relevant and available without

undue cost or effort. This includes both quantitative
and qualitative information and analysis, based on the
Company''s historical experience and informed credit
assessment and including forward looking information.
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. difference
between the cash flow due to the Company in
accordance with the contract and the cash flow that
the Company expects to receive).

Presentation of allowance for expected credit losses in
the balance sheet

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

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 debtors
do not have assets or sources of income that could
generate sufficient cash flows to repay the amount
subject to the write-off. However, financial assets that
are written off could still be subject to enforcement
activities in order to comply with the Company''s
procedure for recovery of amounts due.

Derecognition of financial assets
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from
the Company''s balance sheet) when:

- The rights to receive cash flows from the asset
have expired, or

- The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
''pass-through'' arrangement; and either (a) the
Company has transferred substantially all the
risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred its rights to receive
cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent
it has retained the risks and rewards of ownership.
When it has neither transferred nor retained
substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the Company
continues to recognise the transferred asset to the
extent of the Company''s continuing involvement. In
that case, the Company also recognises an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights
and obligations that the Company has retained.
Financial liabilities

Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or loss,
loans and borrowings, payables as appropriate.

All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts and derivative
financial instruments.

Subsequent measurement

For purposes of subsequent measurement, financial
liabilities are classified in two categories:

• Financial liabilities at fair value through profit or
loss (FVPL)

• Financial liabilities at amortised cost (loans and
borrowings)

A financial liability is classified as at FVPL 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
FVPL are measured at fair value and net gains and
losses, including any interest expense, are recognised
in Statement of Profit and Loss.

Other financial liabilities are subsequently measured
at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses
are recognised in Statement of Profit and Loss. Any gain
or loss on derecognition is also recognised in Statement
of Profit and Loss.

Derecognition of financial liabilities
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another

from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or modification is treated
as the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
Statement of Profit and Loss.

Derivative financial instruments
The Company uses various types of derivative financial
instruments to hedge its currency and interest risk
etc. Such derivative financial instruments are initially
recognised at fair value on the date on which a
derivative contract is entered into and are subsequently
re-measured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as
financial liabilities when the fair value is negative.
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.

o. Impairment of non-financial assets

The Company''s non-financial assets other than
inventories and deferred tax assets, are reviewed at
each reporting date to determine if there is indication
of any impairment. If any such indication exists,
then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate
independent cash flows are grouped together into
cash generating units (CGUs). Each CGU represents the
smallest Company of assets that generate cash inflows
that are largely independent of the cash inflows of
other assets or CGUs.

The recoverable amount of as CGU (or an individual
asset) is the higher of its value in use and fair value
less cost to sell. Value in use is based on the estimated
future cash flows, discounted to their present value
using a pre-tax discount rate that reflects current
assessments of the time value of money and the risks
specific to the CGU (or the asset).

The Company''s corporate assets (e.g., central office
building for providing support to CGU) do not generate
independent cash inflows. To determine impairment of
a corporate asset, recoverable amount is determined
for the CGUs to which the corporate asset belongs.

An impairment loss is recognised whenever the
carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. Impairment losses
are recognised in Statement of Profit and Loss. An
impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable
amount. Such a reversal is made only to the extent
that the asset''s carrying amount does not exceed the
carrying amount that would have been determined net
of depreciation or amortisation, if no impairment loss
had been recognised.

p. Operating Segments

An operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any
of the Company''s other components, and for which
discrete financial information is available. All operating
segments'' operating results are reviewed regularly by
the Company''s Chief Operating Decision Maker (CODM)
to make decisions about resources to be allocated to
the segments and assess their performance.

q. Cash and cash equivalents

Cash and cash equivalents in the balance sheet
include cash at banks and on hand, other short-term
highly liquid investments with original maturities of
three months or less that are readily convertible to
known amounts of cash and 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 and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of the
Company''s cash management.

r. Cash flow statement

Cash flows are reported using the indirect method,
whereby profit for the year 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 item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the
Company are segregated.

s. Government grants

Government grants are recognised where there is
reasonable assurance that the grant will be received,

and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as
income on a systematic basis over the periods that the
related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the
expected useful life of the related asset.

t. Cash dividend

The Company recognises a liability to pay dividend to
equity holders of the Company when the distribution
is authorised and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is
recognised directly in equity.

u. Earnings per share

Basic earnings/ (loss) per share are calculated by
dividing the net profit/ (loss) for the year attributable to
equity shareholders by the weighted average number
of equity shares outstanding during the year. The
weighted average number of equity shares outstanding
during the year is adjusted for events of bonus issue
and share split. For the purpose of calculating diluted
earnings/ (loss) per share, the net profit or loss for
the year attributable to equity shareholders and the
weighted average number of shares outstanding during
the year are adjusted for the effects of all dilutive
potential equity shares.

v. Foreign currencies

The standalone Ind AS financial statements are
presented in I NR, which is also the Company''s functional
currency. Functional currency is the currency of the
primary economic environment in which a Company
operates and is normally the currency in which the
Company primarily generates and expends cash.
Transactions and balances
Initial recognition

Transactions in foreign currencies are initially recorded
by the Company at their respective functional currency
spot rates at the date the transaction first qualifies for
recognition.

Measurement at the reporting date
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency
spot rates of exchange at the reporting date. Exchange

differences arising on settlement or translation of
monetary items are recognised in statement of profit
and loss.

Non-monetary assets and liabilities that are measured
at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value is
determined. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the
dates of the initial transactions.

w. Fair value measurement

A number of the Company''s accounting policies and
disclosures require measurement of fair values, for
both financial and non-financial assets and liabilities.
The Company has an established control framework
with respect to measurement of fair values. This
includes the top management division which is
responsible for overseeing all significant fair value
measurements, including Level 3 fair values. The top
management division regularly reviews significant
unobservable inputs and valuation adjustments. If
third party information, is used to measure fair values,
then the top management division assesses the
evidence obtained from the third parties to support the
conclusion that these valuations meet the requirement
of Ind AS, including the level in the fair value hierarchy
in which the valuations should be classified.

Fair values are categorised into different levels in a
fair value hierarchy based on the inputs used in the
valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active
markets for identical assets and 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)

When measuring the fair value of an asset or liability,
the Company uses observable market data as far as
possible. If the inputs used to measure the fair value
of an asset or liability fall into different levels of the
fair value hierarchy, then the fair value measurement
is categorised in its entirely in the same level of the
fair value hierarchy as the lowest level input that is
significant to the entire measurement.

The Company recognises transfers between levels of
the fair value hierarchy at the end of the reporting
period during which the changes have occurred.
Further information about the assumptions made
in measuring fair values used in preparing these
standalone financial statements is included in the
respective notes.

2.3 Changes in accounting policies and disclosures
New and amended standards

The Ministry of Corporate Affairs has notified Companies
(Indian Accounting Standard) Amendment Rules 2022 dated
23rd March 2022, to amend the following Ind AS which were
effective from 1st April 2022.

(i) Onerous Contracts - Costs of Fulfilling a Contract -
Amendments to Ind AS 37

An onerous contract is a contract under which the
unavoidable costs of meeting the obligations under
the contract (i.e., the costs that the Company cannot
avoid because it has the contract) exceed the economic
benefits expected to be received under it.

The amendments specify that when assessing whether
a contract is onerous or loss-making, an entity needs
to include costs that relate directly to a contract to
provide goods or services including both incremental
costs (e.g., the costs of direct labour and materials)
and an allocation of costs directly related to contract
activities (e.g., depreciation of equipment used to fulfil
the contract and costs of contract management and
supervision). General and administrative costs do not
relate directly to a contract and are excluded unless
they are explicitly chargeable to the counterparty
under the contract.

(ii) Property, Plant and Equipment: Proceeds before
Intended Use - Amendments to Ind AS 16

The amendments modified paragraph 17(e) of Ind AS
16 to clarify that excess of net sale proceeds of items
produced over the cost of testing, if any, shall not be
recognised in the profit or loss but deducted from the
directly attributable costs considered as part of cost of
an item of property, plant, and equipment.

(iii) Ind AS 109 Financial Instruments - Fees in the ''10 per
cent'' test for derecognition of financial liabilities
The amendment clarifies the fees that an entity
includes when assessing whether the terms of a new
or modified financial liability are substantially different

from the terms of the original financial liability. These
fees include only those paid or received between the
borrower and the lender, including fees paid or received
by either the borrower or lender on the other''s behalf.

(iv) Reference to the Conceptual Framework -
Amendments to Ind AS 103

The amendments replaced the reference to the ICAI''s
"Framework for the Preparation and Presentation
of Financial Statements under Indian Accounting
Standards" with the reference to the "Conceptual
Framework for Financial Reporting under Indian
Accounting Standard" without significantly changing its
requirements.

(v) Ind AS 101 First-time Adoption of Indian Accounting
Standards - Subsidiary as a first-time adopter

The amendment permits a subsidiary that elects to
apply the exemption in paragraph D16(a) of Ind AS
101 to measure cumulative translation differences for
all foreign operations in its financial statements using
the amounts reported by the parent, based on the
parent''s date of transition to Ind AS, if no adjustments
were made for consolidation procedures and for
the effects of the business combination in which the
parent acquired the subsidiary. This amendment is
also available to an associate or joint venture that uses
exemption in paragraph D16(a) of Ind AS 101.

(vi) Ind AS 41 Agriculture - Taxation in fair value
measurements

The amendment removes the requirement in paragraph
22 of Ind AS 41 that entities exclude cash flows for
taxation when measuring the fair value of assets within
the scope of Ind AS 41.

All aforesaid amendments had no impact on the standalone
financial statement of the Company for the year ended 31st
March 2023.

2.4 Significant accounting judgements, estimates and
assumptions

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

a) Revenue from contracts with customers

• The Company''s contracts with customers could
include promises to transfer multiple products
and services to a customer. The Company assesses
the products / services promised in a contract 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.

• Judgement is also required to determine the
transaction price for the contract. The transaction
price could be either a fixed amount of customer
consideration or variable consideration with
elements such as volume discounts and
performance bonuses. The transaction price is
also adjusted for the effects of the time value
of money if the contract includes a significant
financing component. Any consideration payable
to the customer is adjusted to the transaction
price, unless it is a payment for a distinct product
or service from the customer. The estimated
amount of variable consideration is adjusted in
the transaction price only to the extent that it is
highly probable that a significant reversal in the
amount of cumulative revenue recognised will
not occur and is reassessed at the end of each
reporting period. The Company allocates the
elements of variable considerations to all the
performance obligations of the contract unless
there is observable evidence that they pertain to
one or more distinct performance obligations.

• The Company uses judgement to determine
an appropriate standalone selling price for a
performance obligation. The Company allocates
the transaction price to each performance
obligation on the basis of the relative standalone
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 as services are
rendered or 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 risks and rewards to the customer,
acceptance of delivery by the customer, etc.

• Revenue for fixed-price contract is recognised
using percentage-of-completion method. The
Company uses judgement to estimate the future
cost-to-completion of the contracts which is used
to determine the degree of completion of the
performance obligation.

• Contract fulfilment costs are generally expensed
as incurred except for certain expenses which
meet the criteria for capitalisation. Such costs
are amortised over the contractual period. The
assessment of this criteria requires the application
of judgement, in particular when considering if
costs generate or enhance resources to be used
to satisfy future performance obligations and
whether costs are expected to be recovered.

b) Determining the lease term of contracts with renewal
and termination options - Company as lessee

The key assumptions concerning the future and other
key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year. The Company
based its assumptions and estimates on parameters
available when the financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the Company. Such changes are reflected in
the assumptions when they occur.

c) Defined benefit plans

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

The parameter most subject to change is the discount
rate. In determining the appropriate discount rate for
plans operated in India, the management considers
the interest rates of government bonds in currencies
consistent with the currencies of the post-employment

benefit obligation. The mortality rate is based on
publicly available mortality tables for the specific
countries. Those mortality tables tend to change only
at interval in response to demographic changes. Future
salary increases, and gratuity increases are based
on expected future inflation rates for the respective
countries.

d) Taxes

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

e) Property, plant and equipment

Refer note 2.2(b) for the estimated useful life of
property, plant and equipment. The carrying value of
property, plant and equipment has been disclosed in
note 3.

f) Intangible assets

Refer note 2.2(c) for the estimated useful life of
intangible assets. The carrying value of intangible
assets has been disclosed in note 4.

g) Contingencies

Refer note 2.2(g) and 36 for contingencies.

h) Impairment of financial assets

Refer note 2.2(n) for the policy to estimate the
impairment of financial assets.

i) Impairment of non-financial assets

Refer note 2.2(o) for the policy to estimate the
impairment of non-financial assets.

j) Leases - Estimating the incremental borrowing rate

The Company cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (IBR) to measure lease liabilities. The
IBR is the rate of interest that the Company would
have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects
what the Company ''would have to pay'', which requires
estimation when no observable rates are available or
when they need to be adjusted to reflect the terms and
conditions of the lease. The Company estimates the IBR
using observable inputs (such as market interest rates)
when available and is required to make certain entity-
specific estimates.


Mar 31, 2021

(a) This includes Rs. 14.51 (31 March 2020: Rs. 14.51) which represents fair value of financial guarantees given to Ethos Limited.

(b) This includes Rs. 36.07 (31 March 2020: Rs. 36.07) which represents dividend on investment in preference shares of Ethos Limited which has been waived by the Company and is considered as quasi equity contribution as it is no longer payable by Ethos Limited.

(c) During the year ended 31 March 2020, the Company invested an amount of Rs 2,100 by way of preferential allotment in fully paid up 7,19,176 equity shares of Rs. 10 each of Ethos Limited (a subsidiary company) at a premium of Rs. 282 per share. Further, Ethos Limited (a subsidiary company) converted its 14% Cumulative Compulsorily Convertible Preference Shares into 19,230 equity shares of Rs. 10 each.

(d) During the current year, the Company has purchased 2,77,000 equity shares of Rs. 10 each amounting to Rs 692.50 of Ethos Limited (a subsidiary company), pursuant to exercise of put option by existing shareholders of Ethos Limited.

(ii) Rights, preferences and restrictions attached to shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets on winding up. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

(v) Bonus shares, shares buyback and issue of shares for consideration other than in cash (during five years immediately preceding 31 March 2021)

During the five years immediately preceding 31 March 2021, neither any bonus shares have been issued nor any shares have been bought back. Further, no shares have been issued for consideration other than cash except during the year ended 31 March 2020, 16,500 equity shares of Rs. 10 each was issued under employee stock option plans for which only exercise price had been received in cash.

(vi) Employee stock option plan

Terms attached to stock options granted to employees of the Company are described in note 37D regarding share based payments.

16 Other equity

(also refer to Statement of Changes in Equity)

(i) Securities premium

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

(ii) General reserve

The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the Statement of Profit and Loss.

(iii) Employee stock options outstanding reserve

The fair value of the equity settled share based payment transactions with employees was recognised in Statement of Profit and Loss with corresponding credit to share based payment reserve.

(iv) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

Remeasurements of defined benefit obligation comprises actuarial gains and losses and return on plan assets (excluding interest income).

(a) - Vehicle loans from banks amounting to Rs. 33.63 (31 March 2020: Rs. 48.61) carrying interest rate in the range of 7.50% to 10.50% (previous year 7.50% to 10.50%) per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equal monthly installments.

(b) - Term loan from Tata Capital Financial Services Limited amounting to Rs. 11.30 (31 March 2020: Rs. 101.45) carrying interest rate equal to LTLR less 7% (presently 10%) (previous year 10.25%) is secured by way of first pari passu charge over the project leasehold immovable property and over movable fixed assets of Eigen, situated at plot no. 55-A (Aerospace sector) Hitech, Devanahalli, Bengaluru (except for specific vehicles pledged against respective loan). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 21 monthly installments of Rs. 11.30 as per the repayment schedule in equal annual installments commencing from 25 April 2018. The last instalment would be repaid on 25 April 2021.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 0.82 (31 March 2020: Rs. Nil) carrying interest rate equal to LTLR less 7% (presently 10%) (previous year Nil) is secured by way of first pari passu charge over the project leasehold immovable property and over movable fixed assets of Eigen, situated at plot no. 55-A (Aerospace sector) Hitech, Devanahalli, Bengaluru (except for specific vehicles pledged against respective loan). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 4 equal monthly installments of Rs. 0.82 as per the repayment schedule commencing from 25 January 2021. The last instalment would be repaid on 25 April 2021.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 67.50 (31 March 2020: Rs. 157.50) carrying interest rate equal to LTLR less 7.25% (presently 10%) (previous year 10.25%) is secured by way of exclusive charge by way of mortgage over the freehold land & building of the borrower situated at plot number 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Bengaluru and exclusive charge by way of hypothecation over the plant & machineries & other movable assets of KHAN II, situated at 408, 4th Main, 11th Cross, Peenya Industrial Area, Bangalore 560058 (Karnataka) (except for specific vehicles pledged against respective loan). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 11 quarterly installments of Rs. 22.50 as per the repayment schedule in equal annual installments commencing from 8 April 2018. The last instalment would be repaid on 8 December 2021.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 27.72 (31 March 2020: Rs. Nil) carrying interest rate equal to 10% (previous year Nil) is secured by way of exclusive charge by way of mortgage over the freehold land & building of the borrower situated at plot number 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Bengaluru and exclusive charge by way of hypothecation over the plant & machineries & other movable assets of KHAN II, situated at 408, 4th Main, 11th Cross, Peenya Industrial Area, Bangalore 560058 (Karnataka) (except for specific vehicles pledged against respective loan). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 2 monthly installments of Rs. 13.86 as per the repayment schedule in equal installments commencing from 08 January 2022. The last instalment would be repaid on 08 February 2022.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 467.72 (31 March 2020: Rs. 583.65) carrying interest rate equal to LTLR less 8.75% (presently 10%) (previous year 10.25%) is secured by way of exclusive charge by way of mortgage over the freehold land & building of the borrower situated at plot number 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Bengaluru 560058 (Karnataka). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 52 monthly installments of Rs. 14.65 as per the repayment schedule in equal annual installments commencing from 30 July 2018. The last instalment would be repaid on 20 November 2023.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 18.77 (31 March 2020: Rs. Nil) carrying interest rate equal to 10% (previous year Nil) is secured by way of exclusive charge by way of mortgage over the freehold land & building of the borrower situated at plot number 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Bengaluru 560058 (Karnataka). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 4 monthly installments of Rs. 4.69 as per the repayment schedule in equal installments commencing from 20 August 2023. The last instalment would be repaid on 20 November 2023.

- Term loan from Bajaj Finance Limited amounting to Rs. 885.02 (31 March 2020: Rs. 1,321.69) carrying interest rate of 8.75% (previous year 10%) is secured by pari passu charge by way of hypothecation of equipment procured out of the term loan, Mortgage of leasehold Land & building at Bengaluru ( Plot No. 55-A, Aerospace Sector) Hitech, Aerospace and Defence Park, Devanahalli, Bengaluru. The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan of Rs. 1,200 is to be repaid in 43 instalments of Rs. 25.04 as per the repayment schedule and last instalment would be paid on 5 January 2023. The loan of Rs. 1,000 is to be repaid in 46 monthly installments of Rs. 20.83 as per the repayment schedule in equal monthly installments commencing from 05 January 2018. The last

instalment would be repaid on 5 March 2023.

- Term loan from Bajaj Finance Limited amounting to Rs. 678.76 (31 March 2020: Rs. 873.17) carrying interest rate of 8.75% (previous year 10%) is secured by way of first pari passu charge over movable fixed assets of the Company (except for specific vehicles pledged against respective loan and movable assets of KHAN II). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 48 instalments of Rs. 20.83 as per the repayment schedule in equal monthly installments commencing from 05 September 2019. The Last instalment would be paid on 5 December 2023.

- Term loan from Bajaj Finance Limited amounting to Rs. 886.91 (31 March 2020: Rs. 997.04) carrying interest rate of 8.75% (previous year 9.20%) is secured by way of first pari passu charge over movable fixed assets of the Company (except for specific vehicles pledged against respective loan and movable assets of KHAN II) and cross collateralization with other loans of Bajaj Finance Limited. The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 18 instalments of Rs. 55.55 as per the repayment schedule in equal quarterly installments commencing from 05 September 2020. The Last instalment would be paid on 05 March 2025.

- Term loan from Bajaj Finance Limited amounting to Rs. 513.00 (31 March 2020: Rs. Nil) carrying interest rate of 8% is secured by way of second pari passu charge over leasehold Land & building at Bengaluru ( Plot No. 55-A, Aerospace Sector) Hitech, Aerospace and Defence Park, Devanahalli, Bengaluruover movable fixed assets, current assets and movable fixed assets of the Company. The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 36 instalments as per the repayment schedule commencing from 05 April 2022 with one year of moratorium from the drawdown. The last instalment would be paid on 05 March 2025.

- Vehicle loans from Daimler Financial Services, Kotak Mahindra Prime Limited and Toyota Financial Services India Limited amounting to Rs. 69.27 (31 March 2020: Rs. 26.21) carrying interest rate in range of 7.43% to 9.50% (previous year 7.75% to 9.50%) per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equal monthly installments.

(c) Deposits from shareholders and directors amounting to Rs. 2,486.71 (31 March 2020: Rs. 2,142.24) carrying interest rates in the range of 9.75% to 11.25% (previous year 9.50% to 11.50%) per annum are repayable in 1 years to 3 years from the respective dates of deposit.

(a) Working capital borrowings from banks amounting to Rs. 1,264.31 (31 March 2020: Rs. 1,433.21) carrying interest rate varying from 8.45% to 10.20% (previous year 9.00% to 10.20%) per annum are secured by hypothecation of stocks of stores and spares, raw materials and components, finished goods and stock-inprocess and book debts and other assets of the Company (both present and future), on pari passu basis and are further secured by a second charge on the entire fixed assets of the Company. These loans are also guaranteed by the Chairman & Managing Director of the Company and is repayable on demand.

(b) Working capital borrowing from others amounting to Rs. 300 (31 March 2020: Rs. 300) carrying interest rate of 8.00% (previous year 9.15%) per annum is secured by first pari passu charge on current assets. The loan is also personally guaranteed by the Chairman & Managing Director of the Company and is repayable on demand.

(c) Deposits from shareholders and directors amounting to Rs. 58.73 (31 March 2020: Rs. 191.82) carrying interest rates in the range of 9% to 10% (previous year 8.50% to 10%) per annum are repayable within 1 year from the respective dates of deposit.

The Reserve Bank of India vide its circular dated 27 March 2020 permitted the lenders to allow a moratorium for three months of EMI (Equated Monthly Instalments) including interest, falling due between 31 March 2020 and 31 May 2020 (later extended by an additional three months up to 31 August 2020) for various categories of loans. The Company had availed the permitted moratorium for some of its borrowings and interest thereon. The Company has paid all its due EMI''s within the extended moratorium period.

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondences with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of amounts payable to such enterprises as at the year end has been made in the financial statements based on information available with the Company as under :

* The Central Government of India has announced a new scheme on Remission of Duties or Taxes on Export Products (RoDTEP) which has replaced erstwhile Merchandise Exports from India Scheme (MEIS) w.e.f. 01 January 2021. As the rates under RoDTEP scheme have not been announced till date, the income on account of benefits under the new scheme has not recognized for the period 01 January 2021 to 31 March 2021 in the financial statements. As and when the rates are notified, the impact of the export benefits will be considered in the books of accounts.

Revenue disaggregation as per industry vertical and geography has been included in segment information (refer to note 39).

(i) The fair value in respect of the unquoted equity investments cannot be reliably estimated. The Company has currently measured them at net book value as per the latest audited financial statements available.

(ii) Fair value of non-current financial assets and non- current financial liablilites has not been disclosed as there is no significant differences between carrying value and fair value.

(iii) 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.

(iv) The fair value of borrowings is based upon a discounted cash flow analysis that used the aggregate cash flows from principal and finance costs over the life of the debt and current market interest rates.

(v) The fair value of derivative financial instrument has been determined using valuation techniques with market observable input. The model incorporate various input include the credit quality of counter-parties and foreign exchange forward rate.

(vi) There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2021 and 31 March 2020.

B. Financial risk management

(i) Risk Management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to effect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain discipline and constructive control environment in which all employees understand their roles and obligations.

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

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

- credit risk (see (ii))

- liquidity risk (see (iii))

- market risk (see (iv))

(ii) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk exposure and arises principally from the Company''s receivable from customers and loans.

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties. The Company enters into derivative contracts with bank and financial institutions having high credit ratings.

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the Statement of Profit and Loss within other expenses.

The following table provides information about the exposure to credit risk and expected credit loss for trade receivables.

Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. Investments mainly include investments made by the Company in its subsidiary companies and associates. The loans primarily represents security deposits given and loans given to employees and related parties. The management believes these to be high quality assets with negligible credit risk. The management believes the parties to which these deposits and loans have been given have strong capacity to meet the obligations and where the risk of default is negligible or nil and accordingly no provision for expected credit loss has been provided on these financial assets. Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies.

(iii) Liquidity Risk

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

The Company believes that its liquidity position, including total cash and cash equivalents and other bank balances anticipated future internally generated funds from operations will enable it to meet its future known obligations in the ordinary course of business. However, if a liquidity needs were to arise, the Company believes it has access to financing arrangements, value of unencumbered assets, which should enable it to meet its ongoing capital, operating, and other liquidity requirements. The Company will continue to consider various borrowing or leasing options to maximize liquidity and supplement cash requirements as necessary.

(iv) Market Risk

Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(i) Interest rate risk

Interest rate risk is the risk that the 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 borrowings with floating interest rates.

Exposure to interest rate risk

The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees with a mix of fixed and floating rates of interest. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The exposure of the Company''s borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:

(iii) In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial condition.

(iv) Pursuant to recent judgement by Hon''ble Supreme Court dated 28 Februrary 2019, it was held that basic wages, for the purpose of provident fund, to include special allowance 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 periods prior to 28 February 2019. Further, management also believes that the impact of the same on the Company will not be material.

B. Defined Benefit Plan

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employees who have completed at least five years of service are entitled to specific benefit. The level of benefit provided depends on the member''s length of service and salary retirement age. The employee is entitled to a benefit equivalent to 15 days salary last drawn salary for each completed year of service with part thereof in excess of six months. The same is payable on termination of service or retirement or death whichever is earlier. The present value of the obligation under such defined benefit plan is determined based on an actuarial valuation as at the reporting date 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 obligations are measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans is based on the market yields on Government bonds as at the date of actuarial valuation. Remeasurement gains and losses (net of tax) are recognised immediately in the Other Comprehensive Income (OCI).The employees'' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. 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:

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.

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. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

D. Share based payments

The Company established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') which was approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP were exercisable for equity shares. The Company planned to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

Fifty percent of the options which have been granted under ESOP 2011 were vested on 1 April 2014 (''first tranche''). These opfions were exercised by the employees and accordingly 39,750 shares were issued during the previous years to the eligible employees. The balance opfions vested in the year 2019-20 when the turnover (excluding excise duty thereon) of the Company of 2018-19 was exceeded Rs. 15,000.00 (''second tranche''). These opfions were exercised by the employees and accordingly 16,500 shares were issued during the previous year to the eligible employees. The outstanding opfions as at 31 March 2021 are Nil (31 March 2020: Nil).

The fair value at grant date was determined using the Black Scholes Model which took into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the opfions and the inputs used in the measurement of the grant-date fair values of the equity-settled share based payment plan were as follows:

* Guarantees taken by the Company includes personal guarantees of Mr. Yashovardhan Saboo for working capital borrowings and term loans. The original sanctioned limits of working capital borrowings and term loans by the continuing banks has been disclosed above. However, at the reporting date, the balance amount of term loans in respect of which personal guarantees have been given stands at Rs. 5,121.83 (31 March 2020: Rs 5,770.01) of Mr. Yashovardhan Saboo.

f) Other transations

1. The Company has given security for certain loans taken by Ethos Limited (subsidiary company) from IDBI Bank Limited by providing exclusive mortgage and charge on all the immovable fixed assets of the tool room unit (Eigen) of the Company at Bangalore.

2. The Company has given security for certain loans taken by Ethos Limited (subsidiary company) from The Jammu & Kashmir Bank Limited by providing exclusive first charge on assets of Ornapac unit at Chandigarh of the Company. Also, these are further secured by the first and exclusive charge over land and building, machinery and office equipment of the Parwanoo unit of the Company.

g) Terms and conditions of transactions with related parties

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

39 Operating segments

(a) Basisforsegmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chairman and Managing Director to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Company''s strategic business units. These business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the business units, the Company''s Chairman and Managing Director reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in each of the Company''s reportable segments: (b) Information about reportable segments

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Company''s Chairman and Managing Director. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm''s length basis.

(e) Major customer

Revenue from two customers of the Company''s Precision and watch components segment is Rs. 4,663.12 (Year ended 31 March 2020: Rs. 5,927.74) which individually constitute more than 10 percent of the Company''s total revenue.

40 The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under 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 income tax expense and that of provision for taxation.

41 Company as a lessee

The Company has lease contracts for various items of plant and equipment, building and land used in its operations. Leases of plant and equipment generally have lease terms between 3-5 years, while buildings generally have lease terms between 1-10 years, while leasehold land has lease term of 99 years. The Company obligations under its leases are secured by the lessor''s title to the leased assets.

The Company has certain leases with lease terms of 12 months or less and certain leases with low value. The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for these leases. The carrying amounts of right-of-use assets recognised and the movements during the year:

44 Impairment indicators were identified in relation to investment made in equity shares of a foreign subsidiary of the Company, Kamla International Holdings SA. As on 31 March 2021, the Company is carrying investment of Rs. 1,097.66 in said subsidiary. An impairment assessment has been carried out by comparing the carrying value of the investment in subsidiary to its recoverable amount to determine whether an impairment provision was required to be recognised. The recoverable amount was determined to be the higher of the fair value less cost of disposal, and the value in use, determined by discounting future cash flows, as a result no impairment provision was required to be made in relation to this investment.

45 The Company''s operations, revenue and consequently profit during the year ended 31 March 2021 were impacted due to COVID-19. Further, second wave of COVID-19 pandemic has hit India recently. Currently, the State Governments have implemented regional lockdowns based on situation in individual states/regions. The Company has made detailed assessment of its liquidity position and the recoverability of carrying value of its assets comprising property, plant and equipment, intangible assets, right-of-use assets, investments, inventory and trade receivables. Based on current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets. The impact of the pandemic in the subsequent period is highly dependent on the situations as they evolve and hence may be different from that estimated at the date of approval of these standalone Ind AS financial statements.

46 With respect to Amalgamation of wholly owned subsidiary company namely Satva Jewellery and Design Limited with the Company and pursuant to the order of Hon''ble National Company Law Tribunal (NCLT), Chandigarh Bench, dated 15 October 2019 directing both the Companies that the Scheme should be considered as per the procedure laid down in Section 232 of the Companies Act, 2013 (“the Act"), the Company has filed new Scheme under Section 232 of the Act on 20 August 2020 with NCLT and the same is under consideration. The proposed appointed date has been fixed as 01 April 2019 under the new Scheme.

During the year ended 31 March 2021, the shareholders, secured and unsecured creditors of the Company at their respective meetings held on 19 December 2020 approved the Scheme pursuant to the order of the NCLT dated 10 November 2020. The Scheme is now pending for approval with the NCLT and the next hearing is scheduled on 23 July 2021. Hence, the accounting will be done once the Scheme is approved by the NCLT and becomes effective.

47 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come 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 when the Code becomes effective.

48 The meeting of the Board of Directors of the Company and Funds Raising Committee held on 23 March 2021 and 26 March 2021 respectively, approved the offer and issue of 10,86,956 fully paid-up equity shares of the Company by way of a rights issue to eligible shareholders of the Company as on the record date in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure requirements) Regulations, 2018, as amended and other applicable laws, at a price of INR 230 per share including premium of INR 220 per share. Subsequent to the year end, pursuant to the finalisation of the basis of allotment of the Issue in consultation with National Stock Exchange of India Limited (the designated stock exchange for the Issue), the Lead Manager to the issue and the Registrar to the issue, the Fund Raising Committee at its meeting held on 17 May 2021 considered and approved the allotment of 10,86,956 Rights Equity Shares of face value of INR 10 each, at an issue price of INR 230 per Rights Equity Share, including a premium of INR 220 per Rights Equity Share to the eligible applicants in the Issue. The Company has so far incurred share issue expenses of Rs. 27.95 (including Rs. 18.00 paid to statutory auditors towards various rights issue related jobs) as at 31 March 2021 in connection with aforesaid Rights Issue. The aforementioned amount shall be adjusted against securities premium to the extent permissible under Section 52 of the Companies Act, 2013.

The accompanying notes form an integral part of the standalone Ind AS financial statements


Mar 31, 2018

Notes:

(a) - Corporate loan from IDBI Bank amounting to Rs. 81.99 (31 March 2017: Rs. 194.35, 1 April 2016: Rs 248.67) carrying interest rate of 3% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of Derabassi unit (KDER), tool room division at Bengaluru (EIGEN) and hands division at Bengaluru (KHAN-1) and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. Term loans from IDBI Bank Limited amounting to Rs. Nil (31 March 2017: Rs. 106.80, 1

April 2016: Rs. 118.90) carried interest rate of 2.5% over the bank base rate. The term loan is further secured by way of first pari passu mortgage charge on freehold land and building of KDER. The term loans are also personally guaranteed by the Chairman & Managing Director of the Company. The Corporate loan is repayable in 2 equal quarterly installments of Rs 28.12 each commencing from 31 May 2018 . The last installment of Rs. 26.71 would be due on 30 November 2018.

- Vehicle loans from banks amounting to Rs. 67.62 (31 March 2017: Rs. 29.72, 1 April 2016: Rs. 53.90) carrying interest rate in the range of 9.51% per annum to 11.00% per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equal monthly installments.

- Term loans from Bank of India amounting to Rs. Nil (31 March 2017: Rs. 186.29, 1 April 2016: Rs. 552.32) carried interest rate of 2.95% over the bank MCLR are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of the Company excluding the fixed assets installed at packaging division at Parwanoo (KPAC), hands division at Bengaluru (KHAN-2), and the plant and machinery and furniture and fixtures of dials division at Parwanoo (TTPA) acquired before 31 March 2005 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on freehold land and building of dials division at Derabassi (KDER). The term loans are also personally guaranteed by the Chairman Emeritus and Chief Executive Officer (CEO) of the Company.

- Term loan from Corporation Bank amounting to Rs. Nil (31 March 2017: Rs. Nil, 1 April 2016: Rs. 230.89) carried interest rate of 5.5% over the bank base rate, was secured by way of first exclusive charge on all the plant and machinery and furniture and fixtures of KHAN-2 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The loan is further secured by exclusive mortgage charge on freehold land and building of KHAN-1, situated at Bengaluru.

(b) - Term loan from Intec Capital limited amounting to Rs. 42.46 (31 March 2017: Rs. 64.34, 1 April 2016: Rs. 83.53) carrying fixed interest rate of 11.75% is secured by way of hypothecation of the specific asset purchased out of proceeds of the loan. The loan is also personally guaranteed by Chairman Emeritus and Chairman & Managing Director of the Company. The loan is to be repaid in 32 monthly installments as per the repayment schedule in equal annual installments commencing from 1 April 2016. The last installment would be repaid on 1 November 2019.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 369.63 (31 March 2017: Rs. 504.87, 1 April 2016: Rs. 536.50) carrying interest rate equal to LTLR less 7% (presently 10.50%) is secured by way of first pari passu charge over the project leasehold immovable property and over movable fixed assets of Eigen III, situated at plot no. 55-A (Aerospace sector) Hitech, Devanahalli, Bengaluru. The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 33 monthly installments of Rs. 11.30 as per the repayment schedule in equal annual installments commencing from 25 April 2018. The last installment would be repaid on 25 November 2020.

- Term loan from Tata Capital Financial Services Limited amounting to Rs. 337.50 (31 March 2017: Rs. 427.51, 1 April 2016: Rs. Nil) carrying interest rate equal to LTLR less 7.25% (presently 10.50%) is secured by way of exclusive charge by way of mortgage over the freehold land & building of the borrower situated at plot number 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Bengaluru and

exclusive charge by way of hypothecation over the plant & machineries & other movable assets of KHAN II, situated at 408, 4th Main, 11th Cross, Peenya Industrial Area, Bangalore 560058 (Karnataka). The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan is to be repaid in 15 quarterly installments of Rs. 22.50 as per the repayment schedule in equal annual installments commencing from 8 April 2018. The last installment would be repaid on 8 October 2021.

- Term loan from Bajaj Finance Limited amounting to Rs. 2161.77 (31 March 2017: Rs. 395.79, 1 April 2016: Rs. Nil) carrying interest rate of 9.60% is secured by pari passu charge by way of hypothecation of equipment procured out of the term loan, Mortgage of leasehold Land & building at Bengaluru ( Plot No. 55-A, Aerospace Sector) Hitech, Aerospace and Defence Park, Devanahalli, Bengaluru. The loan is also personally guaranteed by Chairman & Managing Director of the Company. The loan of Rs. 1,200 is to be repaid in 55 instilments of Rs.21.13 and last installment would be paid on 5th October, 2022. The loan of Rs. 1,000 is to be repaid in 48 monthly installments of Rs. 20.83 as per the repayment schedule in equal monthly installments commencing from 05 January 2019. The last installment would be repaid on 5 December 2022.

- Vehicle loans from Daimler financial services amounting to Rs. 26.63 (31 March 2017: Rs. Nil, 1 April 2016: Rs. Nil) carrying interest rate in the range of 9.51% per annum to 11.00% per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equal monthly installments.

(c) Deposits from shareholders carrying interest rates in the range of 8.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

Notes:

(a) Working capital borrowings from banks amounting to Rs. 1,451.62 (31 March 2017: Rs. 247.72, 1 April 2016: Rs. 1,092.57) carrying interest rate varying from 9.10% per annum to 10.90% per annum are secured by hypothecation of stocks of stores and spares, raw materials and components, finished goods and stock-in-process and book debts and other assets of the Company (both present and future), on pari passu basis except packaging unit (KPAC) and are further secured by a second charge on the entire fixed assets of the Company. These loans are also guaranteed by the Chairman & Managing Director of the Company and is repayable on demand.

(b) Working capital borrowings from others amounting to Rs. 300.00 (31 March 2017: Rs. 300.00, 1 April 2016: Rs. Nil) carrying interest rate of 9.15% per annum are secured by first pari passu charge on current assets.

The loan is also personally guaranteed by the Chairman & Managing Director of the Company and is repayable on demand

(c) Deposits from shareholders amounting to Rs. 23.98 (31 March 2017: Rs. 28.72, 1 April 2016: Rs. 104.01) carrying interest rates in the range of 8.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

(d) Inter corporate deposits taken from Dream Digital Technology Limited amounting to Rs. 100.00 (31 March 2017: Rs. Nil, 1 April 2016 : Rs. Nil) carrying interest rate of 9% p.a is repayable within one year.

(e) Buyers credit from Bank of India amounting to Rs. 84.69 (31 March 2017: Rs. 79.81, 1 April 2016: Rs. Nil) carrying interest rate 6 month libor plus 0.75% is secured against hypothecation of inventory and receivables is repayable on demand. Buyers credit from IDBI amounting to Rs. 295.13 (31 March 2017: Rs. 194.00, 1 April 2016: Rs. 77.07) carrying interest rate varying from 3 month libor plus 0.90% to 6 month libor plus 1.00% is secured against hypothecation of inventory and receivables is repayable on demand. Buyers credit from Corporation Bank amounting to Rs. Nil (31 March 2017: Rs. Nil, 1 April 2016: Rs. 136.14) carrying interest rate varying from 6 month libor plus 1.17% to 6 month libor plus 1.59% is secured against hypothecation of inventory and receivables is repayable on demand.

A provision for warranties is recognized when the underlying products are sold. The provision is based on historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when the claim will arise. Any recovery of cost incurred in netted off against the relevant cost.

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondences with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of amounts payable to such enterprises as at the yearend has been made in the financial statements based on information available with the Company as under :

34 Explanation to transition to Ind AS

As stated in Note 2(a)(i), these are the Company''s first financial statements prepared in accordance with Ind AS. For all periods up to and for the period ended 31 March 2017, the Company had prepared its financial statements in accordance with the Companies (Accounts) Rules, 2014, as notified under section 133 of the Companies Act 2013, and other relevant provisions of the Act (Previous GAAP).

The accounting policies set out in Note 2 have been applied in preparing these financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 01 April 2016.

In preparing its Ind AS balance sheet as at 01 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

A. Optional exemptions availed

(i) Deemed cost for property, plant and equipment and intangible assets

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

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value. Information relating to gross carrying amount of assets and accumulated depreciation as on the transition date as per previous GAAP is as follows:

(ii) Investments in subsidiaries, associates and joint ventures

The Company has elected to measure its investments in subsidiaries, associates and joint ventures at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.

(iii) Share-based payments

As permitted by Ind AS 101, the Company has elected not to apply Ind AS 102 Share-Based Payment, to equity instruments that vested prior to the date of transition to Ind AS.

B. Mandatory exceptions

(i) Estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS (i.e. 1 April 2016) or at the end of the comparative information period presented in the entity''s first Ind AS financial statements (i.e. 31 March 2017), shall be consistent with estimates made for the same date in accordance with previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any difference in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that exist at the transition date or at the end of the comparative period.

The Company''s estimates under Ind AS are consistent with the above requirement. The key estimates considered in preparation of financial statements that was not required under previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVTPL

- Determination of the discounted value for financial instruments carried at amortized cost

- Impairment of financial assets based on expected credit loss model

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of the facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

(iii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transaction to Ind AS. However, Ind AS 101 allows a first time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from the date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financials assets and liabilities derecognized as a result of past transaction was obtained at the time of initially accounting for those transactions.

As permitted by Ind AS 101, the Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

(d) Loans to employees

Under the previous GAAP, loans to employees are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the company has fair valued the loans to employees under Ind AS.

(e) Security deposit

Under the previous GAAP, interest free security deposits are recorded at their transaction value. On transition to Ind AS, these security deposits are remeasured at amortized cost using the effective interest rate method. The difference between the transaction value of the deposit and amortized cost is regarded as prepaid rent and recognized as expenses uniformly over the lease period. Interest income, measured by the effective interest rate method is accrued.

(f) Employee stock options outstanding reserve

Under the previous GAAP, the cost of equity-settled employee share based plan were recognized using the intrinsic value method. Under Ind AS, the cost of equity settled share based plan is recognized based on the fair value of the options as at the grant date.

(i) Reversal of lease equalization reserve

Under Previous GAAP, lease rentals on operating leases were required to be recognized as expense on straight line basis over the lease term by recognizing corresponding lease equalization reserve. Under Ind AS, there is no such requirement unless specific circumstances as specified under Ind AS.

(k) Defined Benefit Plans

Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets on the net defined benefit obligation are recognized in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year. As a result of this change, actuarial loss (net of tax) amounting to Rs. 2.69 (net of tax) has been recognized in other comprehensive income instead of profit or loss. There is no impact on the total equity as at 1 April 2016 and 31 March 2017.

B. Financial risk management

(i) Risk Management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to effect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain discipline and constructive control environment in which all employees understand their roles and obligations.

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

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

-credit risk (see (ii))

- liquidity risk (see (iii))

- market risk (see (iv))

(ii) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk exposure and arises principally from the Company''s receivable from customers and loans.

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties.

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognized in the Statement of Profit and Loss within other expenses.

The following table provides information about the exposure to credit risk and expected credit loss for trade receivables.

Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments. Investments mainly include investments made by the Company in its subsidiary companies and associates. The loans primarily represents security deposits given and loans given to employees and related parties. The management believes these to be high quality assets with negligible credit risk. The management believes the parties to which these deposits and loans have been given have strong capacity to meet the obligations and where the risk of default is negligible or nil and accordingly no provision for expected credit loss has been provided on these financial assets. Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies.

(iii) Liquidity Risk

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

The Company believes that its liquidity position, including total cash and cash equivalents and other bank balances anticipated future internally generated funds from operations will enable it to meet its future known obligations in the ordinary course of business. However, if a liquidity needs were to arise, the Company believes it has access to financing arrangements, value of unencumbered assets, which should enable it to meet its ongoing capital, operating, and other liquidity requirements. The Company will continue to consider various borrowing or leasing options to maximize liquidity and supplement cash requirements as necessary.

The following table provides details regarding the contractual maturities of significant financial liabilities:

(i) Interest rate risk

Interest rate risk is the risk that the 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 borrowings with floating interest rates.

Exposure to interest rate risk

The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The exposure of the Company''s borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:

Interest rate sensitivity analysis

A reasonably possible change of 0.50 % in interest rates at the reporting date would have affected the profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant

(ii) Foreign currency risk

Foreign currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company''s operating, investing and financing activities.

Unhedged foreign currency exposure

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against below currencies at 31 March 2018 and 31 March 2017 would have affected the measurement of financial instruments denominated in foreign currency and affected Statement of Profit and Loss by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

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:

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 specialized team of Life Insurance Corporation of India.

(i) Funding

Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by LIC. The assets managed are highly liquid in nature and the Company does not expect any significant liquidity risks.

C. Defined Contribution Plan

The Company makes contribution towards employees'' provident fund, superannuation fund and employees'' state insurance plan scheme. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the scheme, to these defined contribution schemes. The expense recognized towards contribution of these plans is as follows:

D. Share based payments

The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company planned to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company. The outstanding options as at 31 March 2018 are 21,000 (31 March 2017: 21,000, 1 April 2016: 24,750).

Fifty percent of the options which have been granted under ESOP 2011 were vested on 1 April 2014 (''first tranche''). These options were exercised by the employees and accordingly 39,750 shares were issued during the previous years to the eligible employees. The balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 15,000.00 (''second tranche''). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options and the inputs used in the measurement of the grant-date fair values of the equity-settled share based payment plan are as follows:

(ii) Expense recognized in statement of profit and loss

The expenses arising from share-based payment transaction recognized in statement of profit and loss as part of employee benefit expense / (income) for the year ended 31 March 2018 and 31 March 2017, were Rs. Nil and Rs. (2.76) respectively on account of expiry of share options on resignation by certain employees.

(iii) The fair value of the options has been determined under the Black-Scholes model and the inputs used in the measurement of the grant-date fair

*Expected volatility has been based on an evaluation of the historical volatility of the Company''s share price, particularly over the historical period commensurate with the expected term.

39 Related parties:

a) Related parties and nature of relationship where control exists:

Name of party Description of relationship

Pylania SA Subsidiary

Kamla International Holdings SA Subsidiary

Ethos Limited Subsidiary

Mahen Distribution Limited Subsidiary

Satva Jewellery and Design Limited* Subsidiary

Cognition Digital LLP Subsidiary of Ethos Limited

(b) List of related parties with whom transactions have taken place during the year

Kamla Tesio Dials Limited Associate

Cadrafin GmbH Associate of Kamla International Holdings SA

(c) Key managerial personnel (KMP) of the Company, their close family members and related entities

(i) Names of KMP Names of their close family members**

- Mr. R.K. Saboo (Chairman) Mrs. Usha Devi Saboo (spouse),

(Chairman till 30 November 2016) Mr. Yashovardhan Saboo (son)

Mrs. Asha Devi Saboo (brother''s spouse)

- Mr. Yashovardhan Saboo (Chairman and Managing Director) Mr. R.K. Saboo (father),

Mrs. Anuradha Saboo (spouse)

Mr. Pranav Shankar Saboo (Son),

Mrs. Malvika Singh (son''s spouse)

Ms. Satvika Saboo (daughter)

- Mr. Sanjeev Kumar Masown Mrs. Neeraj Masown (spouse),

(Chief Financial Officer and Whole Time Director) Mr. Lal Chand Masown (father)

- Mr. Dinesh Agarawal (Chief Operating Officer till 31 March 2016) Mrs. Shashi Agarwal (spouse)

(ii) Related entities of KMP

- Vardhan Properties & Investments Limited

- Saboo Coatings Private Limited

- VBL Innovations Private Limited

- Dream Digital Technology Limited

- KDDL Ethos Foundation

- Saboo Ventures LLP

- Tara Chand Mahendra Kumar HUF

(iii) Independent Directors

- Mr. Anil Khanna

- Mr. Jagesh Khaitan

- Ms. Ranjana Agarwal

- Mr. Praveen Gupta

- Mr. Vishal Sati''nder Sood

- Mr. Jai Vardhan Saboo

- Mr. Sanjiv Sachar

*Satva Jewellery and Design Limited (''Satva'') ceased to be joint venture of the Company and became wholly owned subsidiary of KDDL Limited pursuant to purchase of remaining shares of the other venturer in the joint venture vide agreement dated 23 December 2016. Accordingly, transactions during the year with Satva upto 23 December 2016 have been disclosed as transactions with joint venture and transactions incurred after 23 December 2016 have been disclosed as transactions with subsidiary company.

** With respect to the key managerial personnel, disclosure has been given for those relatives with whom the Company has made transactions during the year.

40 Operating segments

(a) Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chairman and Managing Director to make decisions about resources to be allocated to the segments and assess their performance.

The Company has three reportable segments, as described below, which are the Company''s strategic business units. These business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the business units, the Company''s Chairman and Managing Director reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in each of the Company''s reportable segments:

Precision and watch components Manufacturing and distribution of dials, watch hands and precision

components

Others Manufacturing and distribution of packaging boxes

(b) Information about reportable segments

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Company''s Chairman and Managing Director. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm''s length basis.

(d) Major customer

Revenue from two customers of the Company''s Precision and watch components segment is Rs. 3,910.36 (Year ended 31 March 2017: Rs. 3,857.42) which individually constitute more than 10 percent of the Company''s total revenue.

1 Operating leases:

The Company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. The Company is a lessee under various cancellable and non-cancellable operating leases. The lease rental recognized in the Statement of Profit and Loss for the period in respect of the aforementioned leases is Rs. 156.84 (31 March 2017: Rs. 227.10, 1 April 2016: Rs. 229.94). Expected future

*For the purpose of this disclosure, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E) dated 8 November 2016.

2. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under 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 income tax expense and that of provision for taxation.


Mar 31, 2017

1. Shares reserved for issue under options and other commitments

As on 31 March 2017, 21,000 (previous year: 24,750) equity shares have been reserved for issue under the Employee Stock Plan of the company (Refer note 41).

2. Utilization of proceeds received pursuant to issue of equity shares and shares warrants

During the current year, the Company has issued 754,716 equity shares of Rs 10 each on preferential allotment of shares issued at the rate of Rs 265 per share (including security premium of Rs 255 each). The Company has also received Rs. 251 lacs (twenty five percent of issue price) of 377,356 equity shares warrants of Rs 10 each issued at the rate of Rs 265 per share warrant (including security premium of Rs 255 each). The amount received has been utilized as follows:

3. Shares issued for consideration other than cash

The Company has not issued any shares pursuant to a contract without payment being received in cash in the current year and preceding five years. The Company has not issued any bonus shares nor has there been any buy-back of shares in the current year and preceding five years.

4. During the year the company issued 377,356 shares warrant to be converted in to 377,356. Equity share of the face value of Rs. 10/- each. There warrant were issued at Rs. 265 per warrant (including security premium of Rs. 255) Rs. 66.25 per warrant has been paid by the allotte Each share warrant is convertible in to one equity share of Rs. 10/- each on the payment of remaining consideration or before eighteen fee months from the date of allotment of warrants.

5. Details of security and terms of repayment of term loans from banks

Term loans from banks amounting to Rs 48,883,817 (previous year Rs 115,427,377) are secured as under:

-Term loans from Bank of India amounting to Rs 18,629,247 (previous year Rs 55,231,759) carrying interest rate of 2.95% over the bank MCLR are secured by way of first pari passu charge on all the plant and

machinery and furniture and fixtures of the Company excluding the fixed assets installed at packaging division at Chandigarh (KPAC), hands division at Bangalore (KHAN-2), and the plant and machinery and furniture and fixtures of dials division at Parwanoo (TTPA) acquired before 31 March 2005 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of dials division at Derabassi (KDER). The loan includes construction loan for dials unit at Parwanoo (TTPA) which is secured by first pari passu charge on land and building of TTPA. The term loans are also personally guaranteed by the Chairman Emeritus and Chief Executive Officer (CEO) of the Company.

- Term loans from IDBI Bank Limited amounting to Rs 10,708,000 (previous year Rs 12,110,411) carrying interest rate of 2.5% over the bank base rate and Corporate loan amounting to Rs 19,546,570 (previous year Rs 24,996,000) carrying interest rate of 3% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of KDER, tool room division at Bengaluru (EIGEN) and hands division at Bengaluru (KHAN-1) and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of KDER. The term loans are also personally guaranteed by the Chairman Emeritus and Chief Executive Officer (CEO) of the Company.

- Term loan from Corporation Bank amounting to Nil (previous year Rs 23,089,207) carrying interest rate of 5.5% over the bank base rate, are secured byway of first exclusive charge on all the plant and machinery and furniture and fixtures of KHAN-2 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The loan is further secured by exclusive mortgage charge on land and building of KHAN-1.

Repayment terms of term loans from banks (including the current maturities of long-term debt as referred to in note 12) are given as under:

-Term loan from Bank of India amounting to Rs 18,629,248 is repayable in 9 equal quarterly installments of Rs 18,75,000 each and last installment of Rs 17,54,248 commencing from 30 June 2017. The last installment would be due on 30 September 2019.

- Corporate Loan from IDBI Bank Limited amounting to Rs 10,708,000 is repayable in 2 equal quarterly installments of Rs 3,572,000 each and last installment of Rs 35,64,000 commencing from 30 June 2016. The last installment would be due on 31 December 2017.

- Corporate Loan from IDBI Bank Limited amounting to Rs 19,564,570 is repayable in 6 equal quarterly installments of Rs 2,812,500 each and last installment of Rs. 2,671,570 commencing from 31 May 2017. The last installment would be due on 30 November 2018.

6. Details of security amounting to Rs. 140,082,781 (previous year Rs 62,673,685) and terms of repayment of term loans from others

Term loan from Intec Capital limited amounting to Rs. 6,473,378 (previous year Rs. 8,423,685) carrying fixed interest rate of 11.75% is secured by way of hypothecation of the specific asset purchased out of proceeds of the loan. The loan is also personally guaranteed of Chairman Emeritus and Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 32 monthly installments as per the repayment schedule in exuviated annual installments commencing from 1 April 2016. The last installment would be repaid on 1 November 2019.

''Term loan from Tata Capital Financial Services Limited amounting to Rs. 50,859,400 ( previous year Rs. 54,250,000) carrying interest rate equal to LTLR less 7% (presently 11.25%) is secured by way of first pari passu charge over the project immovable property and over movable fixed assets of Eigen III, situated at plot no. 55-A (Aerospace sector) Hitech, Devanahalli, Bangalore. The loan is also personally guaranteed by Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 45 monthly installments of Rs. 1,130,200 and last installment of Rs. 1,130,600 as per the repayment schedule in exuviated annual installments commencing from 25 April 2017. The last installment would be repaid on 25 November 2020.

''Term loan from Tata Capital Financial Services Limited amounting to Rs. 42,750,000 ( previous year Nil) carrying interest rate equal to LTLR less 7.25% (presently 11%) is secured by way of exclusive charge by way of mortgage over the factory land & building of the borrower situated at 296 & 297 (South western Portion) 5th Main, 4th Phase, Peenya Industrial Area, Peenya, Bangalore and exclusive charge by way of hypothecation over the plant & machineries & other movable assets of KHAN II, situated at 408,4th Main, 11th Cross, Peenya Industrial Area, Bangalore 560058 (Karnataka). The loan is also personally guaranteed by Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 19 quarterly installments of Rs. 22,50,000 as per the repayment schedule in exuviated annual installments commencing from 8 April 2017. The last installment would be repaid on 8 October 2021.

''Term loan from Bajaj Finance Limited amounting to Rs. 40,000,000 (previous year Nil) carrying interest rate of 10.75% is secured by pari passu charge by way of hypothecation of equipment procured out of the term loan, Mortgage of Land & building at Bangalore ( Plot No. 55-A, Aerospace Sector) Hitech, Aerospace and Defense Park, Devanahalli, Bengaluru District. The loan is also personally guaranteed by Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 50 monthly installments of Rs. 833,334 and last installment of Rs. 6,25,000 as per the repayment schedule in equivated annual installments commencing from 5 October 2017. The last installment would be repaid on 5 November 2021.

7. Vehicle loans from banks carrying interest rate in the range of 9.51% per annum to 12.25% per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equivated annual installments.

8. Public deposits carrying interest rates in the range of 8.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

9. Defined benefit plan/ other long term benefit plans

10. Gratuity

11. Compensated absences

The following table set out the status of the plan for gratuity and compensated absences as required under Accounting Standard (AS) -15 (R) - Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:

12. The discount rate is based on the prevailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.

13. The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.

14. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

15. Plan assets mainly comprise funds managed by the insurer i.e. Life Insurance Corporation of India. (''LIC'')

16. For Gratuity, the Company makes annual contributions to the LIC of an amount advised by them.

17. Details of security of short-term secured loans

- Working capital borrowings from banks carrying interest rate varying from 9.10% p.a. to 13.50% p.a. are secured by hypothecation of stocks of stores and spares, raw materials and components, finished goods and stock-in-process and book debts and other assets of the Company (both present and future), on pari passu basis except packaging unit (KPAC) and are further secured by a second charge on the entire fixed assets of the Company. These loans are also guaranteed by the Chairman Emeritus and Chief Executive Officer (CEO) of the Company and is repayable on demand.

- Working capital borrowings from others carrying interest rate of 10.75% p.a. are secured by first pari passu charge on current assets. The loan is also personally guaranteed by the Chief Executive Officer (CEO) of the Company and is repayable on demand.

- Buyers credit from Bank of India amounting to Rs 7,981,221 carrying interest rate 6 month libor plus .75% is secured against hypothecation of inventory and receivables is repayable on demand.

- Buyers credit from IDBI amounting to Rs 19,399,800 carrying interest rate varying from 3 month libor plus .90% to 6 month libor plus 1.00% is secured against hypothecation of inventory and receivables is repayable on demand.

- Public deposits carrying interest rates in the range of 8.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

18. Dues to micro and small enterprises pursuant to section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006

On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:

19. Cash and cash equivalents include Rs 1,968,945 (previous year Rs 2,520,578) held in dividend accounts which is not available for use by the Company.

20. Rs 63,836,968 (previous year Rs.40,745,992) has been placed as fixed deposits with banks for repayment of deposits as required under section 73 of the Companies Act, 2013 and margin money for working capital and term loans.

21. Rs. 20,000,000 (previous year Nil) has been placed as fixed deposits with banks as security for term loan facility availed by the subsidiary company Ethos Limited.

22. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility(CSR) Committee.

23. In terms with the provisions of the said Act, the Company had to spend a sum of Rs 1,767,293 towards CSR activities during the year ended 31 March 2017.

24. KDDL Employee Stock Option Plan- 2011 (''ESOP 2011'')

25. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company planned to grant up to 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company. The outstanding options as on 31 March 2017 are 21,000.

26. Fifty percent of the options which have been granted under ESOP 2011 were vested on 1 April 2014 (''first tranche''). These options were exercised by the employees and accordingly 39,750 shares were issued during the previous years to the eligible employees. The balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs 1,500,000,000 (''second tranche''). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

27. Proforma Accounting for Stock option Grants

The company applies the intrinsic value based method of accounting for determining compensation cost for its stock based compensation plans. Had the compensation cost been determined using fair value approach, the company''s net income and basic/diluted earnings per share as reported would have reduced to the performa amounts as indicated:

28. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

29. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of appointing independent consultants for conducting a Transfer Pricing Study (the ''Study'') to confirm that the transaction with associate enterprises undertaken during the financial year are on "arms length basis".

Management is of the opinion that the company''s transactions are at arm''s length and that the results of the proposed study will not have any impact on the financial statements and that they do not expect any transfer pricing adjustments.

30. Disclosure of details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016:


Mar 31, 2016

a. The Company has only one class of equity shares having a par value of Rs 10 each. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. Shares reserved for issue under options and other commitments

As on 31 March 2016, 24,750 (previous year : 39,750) equity shares have been reserved for issue under the Employee Stock Plan of the company (Refer note 41).

e. Utilization of proceeds received pursuant to issue of shares

During the current year, the Company has issued 1,008,400 equity shares of Rs 10 each on account of private placement of equity shares issued at Rs 297.50 each (including securities premium of Rs 287.50 each). Consequent to the said allotment, the Company received Rs 299,999,000 which have been utilised as follows:

a. Details of security and terms of repayment of term loans from banks

Term loans from banks amounting to Rs 115,427,377 (previous year Rs 161,638,987) are secured as under:

- Term loans from Bank of India amounting to Rs 55,231,759 (previous year Rs 78,373,720) carrying interest rate of 3.20% and 2.95% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of the Company excluding the fixed assets installed at packaging division at Chandigarh (KPAC), hands division at Bengaluru (KHAN-2), and the plant and machinery and furniture and fixtures of dials division at Parwanoo (TTPA) acquired before 31 March 2005 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of dials division at Derabassi (KDER). The loan includes construction loan for dials unit at Parwanoo (TTPA) which is secured by first pari passu charge on land and building of TTPA. The term loans are also personally guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company.

- Term loans from IDBI Bank Limited amounting to Rs 12,110,411 (previous year Rs 3,780,000) carrying interest rate of 2.5% over the bank base rate and Corporate loan amounting to Rs 24,996,000 (previous year Rs 39,284,000) carrying interest rate of 3% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of KDER, tool room division at Bengaluru (EIGEN) and hands division at Bengaluru (KHAN-1) and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of KDER. The term loans are also personally guaranteed by the Chairman and

Chief Executive Officer (CEO) of the Company.

- Term loan from Corporation Bank amounting to Rs 23,089,207 (previous year Rs 40,201,267) carrying interest rate of 5.5% over the bank base rate, are secured by way of first exclusive charge on all the plant and machinery and furniture and fixtures of KHAN-2 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The loan is further secured by exclusive mortgage charge on land and building of KHAN-1.

Repayment terms of term loans from banks (including the current maturities of long-term debt as referred to in note 11) are given as under :

- Term loan from Bank of India amounting to Rs 8,922,325 is repayable in 2 equal quarterly installments of Rs 3,125,000 each and last installment of Rs 2,672,325 commencing from 30 April 2016. The last installment would be due on 31 October 2016.

- Term loan from Bank of India amounting to Rs 11,941,754 is repayable in 6 equal quarterly installments of Rs 1,718,750 each and last installment of Rs 1,629,254 commencing from 30 June 2016. The last installment would be due on 31 December 2017.

- Term loan from Bank of India amounting to Rs 26,129,248 is repayable in 13 equal quarterly installments of Rs 1,875,000 each and last installment of Rs 1,754,248 commencing from 30 June 2016. The last installment would be due on 30 September 2019.

- Term loan from Bank of India amounting to Rs 8,238,432 is repayable in 6 equal quarterly installments of Rs 1,250,000 each and last installment of Rs 738,432 commencing from 30 April 2016. The last installment would be due on 31 October 2017.

- Corporate Loan from IDBI Bank Limited amounting to Rs 24,996,000 is repayable in 6 equal quarterly installments of Rs 3,572,000 each and last installment of Rs 35,64,000 commencing from 30 June 2016. The last installment would be due on 31 December 2017.

- Corporate Loan from IDBI Bank Limited amounting to Rs 12,110,411 (sanctioned term loan amounting to Rs 45,000,000) is repayable in 16 equal quarterly installments of Rs 2,812,500 commencing from 31 August 2016. The last installment would be due on 31 May 2020.

- Term loan from Corporation Bank amounting to Rs 5,089,207 is repayable in 1 quarterly installments of Rs 2,778,000 and last installment of Rs 2,311,207 commencing from 30 June 2016. The last installment would be due on 30 September 2016.

- Term loan from Corporation Bank amounting to Rs 18,000,000 is repayable in 12 equal quarterly installments of Rs 1,500,000 commencing from 30 June 2016.The last installment would be due on 31 March 2019.

b. Details of security and terms of repayment of term loans from others

Term loan from Intec Capital Limited amounting to Rs 8,423,685 (previous year Rs 10,160,134) carrying fixed interest rate of 11.75% is secured by way of hypothecation of the specific asset purchased out of proceeds of the loan. The loan is also personally guaranteed of Chairman and Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 44 monthly installments as per the repayment schedule in equated annual installments commencing from 1 April 2016. The last installment would be due on 1 November 2019.

Term loan from Tata Capital Financial Services Limited amounting to Rs 54,250,000 (previous year Nil) carrying interest rate equal to long-term lending rates (LTLR) less 7% (presently 11.25%) is secured by way of exclusive first charge over the project immovable and movable fixed assets of Eigen III, situated at plot no. 55-A (Aerospace sector) Hitech, Devanahalli, Bangalore. The loan is also personally guaranteed by Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 48 monthly installments as per the repayment schedule in equated annual installments commencing from 25 January 2017.The last installment would be due on 25 December 2020.

c. Vehicle loans from banks carrying interest rate in the range of 9.51% per annum to 12.25% per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equated monthly installments.

d. Public deposits carrying interest rates in the range of 8.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

(ii) Defined benefit plan/other long-term benefit plans

a. Gratuity

b. Compensated absences

The following table set out the status of the plan for gratuity and compensated absences as required under Accounting Standard (AS) - 15 (R) - Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:

Notes :

1) The discount rate is based on the prevailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.

2) The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.

3) The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

4) Plan assets mainly comprise funds managed by the insurer i.e. Life Insurance Corporation of India (''LIC'').

5) For Gratuity, the Company makes annual contributions to the LIC of an amount advised by the LIC.

a. Details of security of short-term secured loans

- Working capital borrowings from banks carrying interest rate varying from 11.10% to 14.35% are secured by hypothecation of stocks of stores and spares, raw materials and components, finished goods and stock-in-process and book debts and other assets of the Company (both present and future), on pari passu basis except packaging unit (KPAC) and are further secured by a second charge on the entire fixed assets of the Company. These loans are also guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company (except Corporation Bank) and is repayable on demand.

- Buyers credit from corporation bank amounting to Rs 13,613,556 carrying interest rate varying 6 month libor plus 1.17% to 6 month libor plus 1.59% is secured against hypothecation of inventory and receivables and is repayable on demand.

- Buyers credit from IDBI amounting to Rs 7,707,040 carrying interest rate varying 6 month libor plus 1.03% to 6 month libor plus 1.62% is secured against hypothecation of inventory and receivables and is repayable on demand.

a. Dues to micro and small enterprises pursuant to section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006

On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:

Notes:

a) Cash and cash equivalents include Rs 2,520,578 (previous year Rs 1,420,904) held in dividend accounts which is not available for use by the Company.

b) Rs 40,745,992 (previous year Rs 34,536,375) has been placed as fixed deposits with banks for repayment of deposits as required under section 73 of the Companies Act, 2013 (corresponding to section 58A of the Companies Act, 1956) and margin money for working capital and term loans.

19. Short-term loans and advances

(Unsecured, considered good, unless otherwise stated)

* During the year ended 31 March 2015, the Company has provided for other than temporary diminution in the value of its investment in its joint venture, Satva Jewellery and Design Limited amounting to Rs 1,396,171 considering the erosion of their net worth based on the their financial results as per management estimate and future projections.

*With respect to the key management personnel, disclosure has been given for those relatives with whom the Company has made transactions during the year

* Guarantees taken by the Company includes personal guarantees of Mr. R.K.Saboo and Yashovardhan Saboo for working capital borrowings and term loans. The original sanctioned limits of working capital borrowings and term loans by the continuing banks has been disclosed above. However, at the reporting date, the sanctioned limits of working capital borrowings and the balance amount of term loans in respect of which personal guarantees have been given stands at Rs 216,716,562 of Mr. R.K.Saboo and Rs 297,390,248 of Mr. Yashovardhan Saboo.

1. Leases

Operating leases

The Company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. Rental income for operating leases for the years ended 31 March 2016 and 31 March 2015 aggregate to Rs 4,985,890 and Rs 4,229,884 respectively.

The Company is a lessee under various cancellable and non-cancellable operating leases. Rental expense for operating leases for the years ended 31 March 2016 and 31 March 2015 was Rs 22,993,871 and Rs 19,193,021 respectively. The Company has executed non-cancelable operating leases. Expected future minimum lease payments in respect of such leases are as follows:

2. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee.

(a) In terms with the provisions of the said Act, the Company had to spend a sum of Rs 1,200,687 towards CSR activities during the year ended 31 March 2016.

3. KDDL Employee Stock Option Plan- 2011 (''ESOP 2011'')

(a) The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company planed to grant up to 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company. The outstanding options as on 31 March 2016 are 24,750.

(b) Fifty percent of the options which have been granted under ESOP 2011 have been vested on 1 April 2014 (''first tranche''). These options were exercised by the employees and accordingly 39,750 shares were issued during the year to the eligible employees. The balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 1,500,000,000 (''second tranche''). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

* The options under second tranche shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs 1,500,000,000. Accordingly, the weighted average remaining contractual life (years) has been considered to be not applicable.

(d) Proforma Accounting for Stock option Grants

The company applies the intrinsic value based method of accounting for determining compensation cost for its stock based compensation plans. Had the compensation cost been determined using fair value approach, the company''s net income and basic/diluted earnings per share as reported would have reduced to the performa amounts as indicated :

* The options under second tranche shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs 1,500,000,000. The management of the Company has revised the expected life to achieve the turnover of Rs 1,500,000,000 from 29 months in previous year to 88 months in current year starting from 2011.

** The volatility of the options is based on historical volatility of share prices since the company''s share are publicly traded, which may be shorter than the terms of the options.

4. Segment information, as required under AS-17"Segment Reporting”, has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

5. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of appointing independent consultants for conducting a Transfer Pricing Study (the ''Study'') to confirm that the transaction with associate enterprises undertaken during the financial year are on "arms length basis". Management is of the opinion that

the company''s transactions are at arm''s length and that the results of the proposed study will not have any impact on the financial statements and that they do not expect any transfer pricing adjustments.

6. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2015

1. Background and nature of operations

KDDL Limited (the "Company") incorporated in January 1981 is engaged in the business of manufacturing dials, watch hands and precision components. Currently, the Company has manufacturing facilities, at Parwanoo (Himachal Pradesh) and Derabassi (Punjab) - dial manufacturing, Bangalore (Karnataka) - hands and precision components manufacturing.

2.Contingent liability not provided for exists in respect of:

a) Bank guarantees outstanding 47,767,670 39,513,050

b) Bonds in favour of central excise and customs authorities 1.425,000 1,425,000

c) Guarantee given to scheduled banks and non-banking financial company (NBFC) in relation to cash-credit and non-fund based facilities of Rs.516,000,000 (previous year Rs.386,000,000) and term loans of Rs.145,100,000 (previous year Rs.145,100,000) provided by banks and NBFC to subsidiary companies. Overdraft outstanding as of 31 March 2015 is Rs.405,866,925 (previous year Rs.323,951,146) and term loan Rs. 78,972,751 (previous year Rs.101,346,634) respectively against the facilities availed by subsidiary companies. The Company has also created charge over its various fixed assets with respect to such loans availed by its subsidiary.

d) Demand raised for Service Tax against which appeals have been filed 219,309 219,309

e) Demand raised by Punjab State Electricity Board for payment of penalty for usage of additional power against sanctioned load. Amount paid under protest Rs.372,818 (previous year Rs.372,818) 372,818 372,818

f) Demand raised for Income tax (assessment year 2004-05 to assessment year 2011-12) 77,753,538 77,753,538

g) Demand made by central excise authority. 8,164,882 8,164,882

h) Surety bonds in favour of sales tax department. 100,000 100,000

i) Custom duty saved against EPCG Licences, pending redemption 12,370,089 19,123,038

j) Claims against the company filed by employees not acknowledged as debt 2,033,525 1,155,420 (to the extent ascertainable)

3.Related party disclosures A. Relationships

I. Subsidiary companies Pylania S.A. Kamla International Holdings SA Ethos Ltd

Mahen Distribution Limited

II. Associates : Kamla Tesio Dials Limited

III. Joint venture : Satva Jewellery and Design Limited

IV. Entities over which significant influence is exercised by the company /key management personnel (either individually or with others) :

Jan Seva Trust Y Saboo (HUF) Smt. Kamla Devi Saboo Charitable Trust Vardhan Properties & Investments Limited Saboo Coatings Limited

VBL Innovations Private Limited Vardhan International Limited Shri M.K. Saboo Charitable Trust Tara Chand Mahendra Kumar (HUF)

Saveeka Family Trust; and Dream Digital Technology Limited

V. Key management personnel (KMP) : Relatives

a. Mr. R.K. Saboo (Chairman) Ms. U. Saboo (spouse), Mr. Y. Saboo (son), Ms. Asha Devi Saboo (brother's spouse)

b. Mr. Y. Saboo Mr. R.K. Saboo (father), (Chief Executive Officer ) Ms. A. Saboo (spouse), Ms. Malvika Singh (son's spouse)

c. Dinesh Agrawal Ms Shashi Agrawal (spouse) (Chief Operating Officer)

*With respect to the key management personnel, disclosure has been given for those relatives with whom the Company has made transactions during the year.

* The loans and gaurantees given by the Company during the year have been utilised by the subsidiaries for meeting their working capital requirements. B. The following transactions were carried out with related parties in the ordinary course of business of the year ended 31 March, 2014

4. The information required by paragraph 5 of general instructions for preparation of the statement of profit and loss as per revised schedule III of Companies Act, 2013

5. Leases

Operating leases

The Company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. Rental income for operating leases for the years ended 31 March 2015 and 31 March 2014 aggregate to Rs. 4,229,884 and Rs. 744,000 respectively.

The Company is a lessee under various cancellable and non-cancellable operating leases. Rental expense for operating leases for the years ended 31 March 2015 and 31 March 2014 was Rs. 19,193,021 and Rs. 17,832,377 respectively. The Company has executed non-cancelable operating leases. Expected future minimum lease payments in respect of such leases are as follows:

6. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee.

(a) In terms with the provisions of the said Act, the Company had to spend a sum of Rs 1,519,217 towards CSR activities during the year ended 31 March 2015.

(b) The details of amount actually spent by the Company are:

7 KDDL Employee Stock Option Plan- 2011 ('ESOP 2011')

(a) The Company has established an Employee Stock Option Plan ('ESOP') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('Guidelines') which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company planed to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company. The outstanding options as on 31 March 2015 are 39,750.

(b) Fifty percent of the options which have been granted under ESOP 2011 have been vested on 1 April 2014 ('first tranche').These options were exercised by the employees and accordingly 39,750 shares were issued during the year to the eligible employees. The balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 1,500,000,000 ('second tranche'). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant.

(d) Proforma Accounting for Stock option Grants

The company applies the intrinsic value based method of accounting for determining compensation cost for its stock based compensation plans. Had the compensation cost been determined using fair value approach, the company's net income and basic/diluted earnings per share as reported would have reduced to the performa amounts as indicated :

The volatility of the options is based on historical volatility of share prices since the company's share are publicly traded, which may be shorter than the terms of the options.

(f) Details of the weighted average exercise price and fair value of the stock options granted at price below market price :

8. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

9. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm's length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of appointing independent consultants for conducting a Transfer Pricing Study (the 'Study') to confirm that the transaction with associate enterprises undertaken during the financial year are on "arms length basis". Management is of the opinion that the company's transactions are at arm's length and that the results of the proposed study will not have any impact on the financial statements and that they do not expect any transfer pricing adjustments.

10. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2014

1. Background and nature of operations

KDDL Limited (the "Company") incorporated in January 1981, under the Companies Act 1956, is engaged in the business of manufacturing dials, watch hands and precision components. Currently, the Company has manufacturing facilities, at Pawanoo (Himachal Pradesh) and Derabassi (Punjab) - dial manufacturing, Bangalore (Karnataka) - hands and precision components manufacturing.

As at As at 31 March 2014 31 March 2013

2. Contingent liability not provided for exists in respect of:

a) Bank guarantees outstanding 39,513,050 2,164,700

b) Bonds in favour of central excise and customs authorities 1,425,000 1,425,000

c) Guarantee given to scheduled banks and non banking financial company (NBFC) in relation to cash-credit and non-fund based facilities of Rs.386,000,000 (previous year Rs.423,500,000) and term loans of Rs.145,100,000 (previous year Rs.95,000,000) provided by banks and NBFC to subsidiary companies. Overdraft outstanding as of 31 March 2014 is Rs.323,951,146 (previous year Rs.299,118,186) and term loan Rs.101,346,634 (previous year Rs.101,160,314) respectively against the facilities availed by subsidiary companies. The Company has also created charge over its various fixed assets with respect to such loans availed by its subsidiary.

d) Demand raised for Service Tax against which appeals have been filed 219,309 1,204,891

e) Demand raised by Punjab State Electricity Board for payment of penalty for usage of additional power against sanctioned load. Amount paid under protest Rs.372,818 372,818 372,818 (previous year Rs.372,818)

f) Income tax (AY 2005-06 to AY 2011-12) 73,707,430 35,746,450 Case for AY 2005-06, for which a demand of Rs.13,203,431 (previous year Rs.13,203,431) was raised by the income tax department, was decided by the Commissioner of Income Tax (Appeals) in favour of the Company. However, the income tax department has preferred an appeal with Income Tax Appellate Tribunal. Demands raised by Income Tax Authorities in respect of disallowancs for AY 2006-07 to 2011-12 (except for AY 2010-11for which loss claimed by the Company has been decreased by the assessing authority) are identical to AY 2005-06, which have been challenged by the Company before Income Tax Authorities (Income Tax Appellate Tribunal for AY 2006-07 and Commissioner of Income Tax (Appeals) for AY 2007-08 to AY 2011-12) and the Company had deposited Rs.29,533,221 (previous year Rs.18,919,847) under protest.

g) Demands raised by the income tax authority for AY 2004-05 against which appeals have been 4,046,108 4,046,108 filed. Amount paid under protest Rs.4,046,108 (previous year Rs.4,046,108)

h) Demand made by central excise authority 8,164,882 8,256,222

i) Surety bonds in favour of sales tax department 100,000 100,000

j) Custom duty saved against EPCG Licences, pending redemption. 19,123,038 30,569,347

36. Related party disclosures

A. Relationships

I. Subsidiary companies

Pylania S.A.

Kamla International Holding AG

Ethos Limited

Mahen Distribution Limited

II. Associates

Kamla Tesio Dials Limited

III. Joint venture Satva Jewellery and Design Limited

IV. Entities over which significant influence is exercised by the company /key management personnel (either individually or with others)

Saboo Coatings Limited., Dream Digital Technology Limited

VBL Innovations Private Limited, Vardhan Properties &

Investments Limited, Vardhan International Ltd, Smt. Kamla Devi Saboo

Charitable Trust, Shri M.K. Saboo Charitable Trust,

Tara Chand Mahendra Kumar (HUF), Y Saboo (HUF),

Saveeka Family Trust, Jan Seva Trust

V. Key management personnel Relatives **

a. Mr. R.K. Saboo (Chairman) Ms. U. Saboo (wife),

Mr. Y. Saboo (son), Ms. Asha Devi Saboo (brother''s wife)

b. Mr. Y. Saboo Mr. R.K. Saboo (father), Ms. A. Saboo (Wife) (Chief Executive Officer) Ms. Malvika Singh (son''s wife)

c. Dinesh Agrawal (Chief Operating Officer) Ms. Shashi Agrawal (Wife) ** Only those relatives of key management personnel with whom the Company had transactions during the year, have been given.

3. The information required by paragraph 5 of general instructions for preparation of the statement of profit and loss as per revised schedule VI of the Companies Act, 1956.

4. Leases

Operating leases

The Company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. Rental income for operating leases for the years ended 31 March 2014 and 31 March 2013 aggregate to Rs. 744,000 and Rs. 612,000 respectively.

5. KDDL Employee Stock Option Plan-2011 (''ESOP 2011'')

a. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company plans to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

b. Fifty percent of the options which have been granted under ESOP 2011 shall vest with the guarantee on 1 April 2014 (''first tranche'') and the balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 1,500,000,000 (''second tranche''). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant. The Company has granted 100,500 options upto 31 March 2014.

d. Pro forma accounting for stock option grants

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using fair value approach, the Company''s net income and basic/diluted earnings per share as reported would have reduced to the pro forma amounts as indicated:

6. Merger of Himachal Fine Blanks Limited and KDDL Limited

A wholly owned subsidiary of KDDL Limited (''Transferee Company''), namely, Himachal Fine Blank Limited (''HFBL'' or ''Transferor Company'') has merged with the transferee company vide order dated 27 December 2012 of the Hon''ble High Court of Himachal Pradesh, with appointed date 1 April 2011. Such order was filed with the Registrar of Companies on 8 January 2013. The effect of merger had been given during the year ended 31 March 2013 as per the scheme of merger approved by the Hon''ble High Court.

The aforementioned merger has been accounted for in the financial statements using "pooling of interest method" as prescribed under Accounting Standard-14 "Accounting for Amalgamations" issued pursuant to the Companies (Accounting Standard) Rules, 2006, by taking all the assets and liabilities of the transferor company with those of the transferee company at the book values.

7. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

8. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of appointing independent consultants for conducting a Transfer Pricing Study (the ''Study'') to confirm that the transaction with associate enterprises undertaken during the financial year are on "arms length basis". Management is of the opinion that the company''s transactions are at arm''s length and that the results of the proposed study will not have any impact on the financial statments and that they do not expect any transfer pricing adjustments.

9. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2013

1. Related party disclosures A. Relationships

I. Subsidiary companies

Pylania S.A.

Kamla International Holding AG

Ethos Limited

Mahen Distribution Limited

II. Associates Kamla Tesio Dials Limited

III. Joint venture Satva Jewellery and Design Limited

IV. Entities over which significant Saboo Coatings Limited., Dream Digital Technology Ltd influence is exercised by the VBL Innovations Private Limited, Vardhan Properties & company /key management Investments Limited., Vardhan International Ltd, Smt. Kamla Devi Saboo personnel (either individually or Charitable Trust, Shri M.K. Saboo Charitable Trust with others) Tara Chand Mahendra Kumar (HUF), Y Saboo (HUF) Saveeka Family Trust

V. Key management personnel Relatives **

a. Mr. R.K. Saboo (Chairman) Ms. U. Saboo (wife),

Mr. Y. Saboo (son), Ms. Asha Devi Saboo (brother''s wife)

b. Mr. Y. Saboo Mr. R.K. Saboo (father), Ms. A. Saboo (Wife) (Chief Executive Officer and Vice Chairman)

c. Dinesh Agrawal (Chief Operating Officer) Ms Shashi Agrawal (Wife)

** Only those relatives of key management personnel with whom the Company had transactions during the year, have been given.

2. Leases

Operating leases

The Company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. Rental income for operating leases for the years ended 31 March 2013 and 31 March 2012 aggregate to Rs. 612,000 and Rs. 612,000 respectively.

The Company is a lessee under various operating leases. Rental expense for operating leases for the years ended 31 March 2013 and 31 March 2012 was Rs. 14,211,609 and Rs. 10,279,567 respectively. The Company has not executed any non- cancelable operating leases. Expected future minimum lease payments in respect of leases are as follows:

3. KDDL Employee Stock Option Plan-2011 (''ESOP2011'')

a. The Company has established an Employee Stock Option Plan (''ESOP'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. Acompensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOP. All options under the ESOP are exercisable for equity shares. The Company plans to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

b. Fifty percent of the options which have been granted under ESOP 2011 shall vest with the guarantee on 1 April 2014 (''first tranche'') and the balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 1,500,000,000 (''second tranche''). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant. The Company has granted 100,500 options upto 31 March 2013.

c. The movement in the scheme is set out as under:

d. Pro forma accounting for stock option grants

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using fair value approach, the Company''s net income and basic/diluted earnings per share as reported would have reduced to the pro forma amounts as indicated:

4. Merger of Himachal Fine Blanks Limited and KDDL Limited

A wholly owned subsidiary of KDDL Limited (Transferee Company''), namely, Himachal Fine Blank Limited (''HFBL'' or Transferor Company'') has merged with the transferee company vide order dated 27 December 2012 of the Hon''ble High Court of Himachal Pradesh, with appointed date 1 April 2011. Such order was filed with the Registrar of Companies on 8 January 2013. The effect of merger has been given during the year ended 31 March 2013 as per the scheme of merger approved by the Hon''ble High Court. Accordingly, the financial statements of the Company for the year ended 31 March 2013 are not strictly comparable with those of the previous year ended 31 March 2012.

The aforementioned merger has been accounted for in the financial statements using "pooling of interest method" as prescribed under Accounting Standard-14 "Accounting for Amalgamations" issued pursuant to the Companies (Accounting Standard) Rules, 2006, by taking all the assets and liabilities of the transferor company and combining them with those of the transferee company at the book values, aftertaking effect of the inter-company eliminations.

5. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

6. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of appointing independent consultants for conducting a Transfer Pricing Study (the ''Study'') to confirm that the transactions with associate enterprises undertaken during the financial year are on an "arms length basis". Management is of the opinion that the Company''s transactions are at arm''s length and that the results of the proposed study will not have any impact on the financial statements and that they do not expect any transfer pricing adjustments.

7. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2012

1. As at As at 31 March 2012 31 March 2011

Estimated amount of contracts remaining to be executed on 2,672,359 2,578,164 capital account and not provided for (net of advances)

2. Contingent liability not provided for exists in respect of:

a) Bank guarantees outstanding 1,262,500 1,216,500

b) Bonds in favour of central excise and customs authorities 5,000,000 5,000,000

c) Guarantee given to a scheduled bank in relation to cash-credit and non-fund based facility of Rs. 290,000,000 (previous year Rs. 329,000,000) and term loanofRs. 95,000,000 (previous year Rs. 90,000,000) provided by the bank to subsidiary companies. Amount of over draft out standing as on 31 March 2012 isRs. 323,718,175 (previous year Rs. 283,277,266) and term loan Rs. 102,255,677 (previous year Rs.50,266,850) respectively

The Company has also created charge over its various fixed assets with respect to such loans availed by its subsidiary.

d) Demand raised for Service Tax against which appeals have been filed 1,204,891 1,204,891

e) Demand raised by Punjab State Electricity Board for payment of penalty for usage of additional power 504,443 504,443 against sanctioned load. Amount paid under protest Rs. 296,000 (previous year Rs. 296,000)

f) Case for AY 2005-06, for which a demand of Rs.13,203,431 (previous year Rs.13,203,431) was raised by the 35,746,450 24,063,220 income tax department and the Company had deposited Rs. Nil (previous year Rs.10,916,620) under protest, was decided by the Commissioner of Income Tax (Appeals) in favour of the Company and the amount deposited has been adjusted against dues for subsequent assessment years. However, the income tax department has preferred an appeal with Income Tax Appellate Tribunal. Demands raised by Income Tax Authorities in respect of disallowances for AY 2006-07, 2007-08 and 2008-09 are identical to AY 2005-06, which have been challenged by the Company before Income Tax Authorities (Income Tax Appellate Tribunal for AY 2006-07 and Commissioner of Income Tax (Appeals) for AY 2007-08 and 2008-09) and the Company had deposited Rs.17,419,847 (previous year Rs. Nil) under protest.

g) Demands raised by the income tax authority for AY 2004-05 against which appeals have been filed. 4,046,108 4,046,108 Amount paid under protest Rs.4,046,108 (previous year Rs. 1,577,440)

h) Demand made by central excise authority 8,256,222 8,256,222

i) Surety bonds in favour of sales tax department 100,000 -

3. KDDL Employee Stock Option Plan-2011 ('ESOP2011')

a. The Company has established an Employee Stock Option Plan ('ESOP') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, which has been approved by the Board of Directors and the shareholders. A compensation committee comprising promoter executive and independent non-executive members of the Board of Directors administer the ESOPs. All options under the ESOPs are exercisable for equity shares. The Company plans to grant upto 110,000 options to eligible employees and directors of the Company and subsidiaries of the Company.

b. Fifty percent of the options which have been granted under ESOP 2011 shall vest with the guarantee on 1April 2014 ('first tranche') and the balance options shall vest on the date when the turnover (excluding excise duty thereon) of the Company would exceed Rs. 1,500,000,000 ('second tranche'). The exercise period for the options is within six months from the date of vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price of share determined with respect to the date of grant. The Company has granted 100,500 optionsupto31March 2012.

4. The Board of Directors in its meeting heldon30September 2010 approved the Scheme of amalgamation (the 'scheme') under section 391-394 of the Companies Act, 1956, of Himachal Fine Blank Limited and KDDL Limited, with the Company, effective from 1 April 2011. The approval for the scheme of amalgamation is pending at Honorable High Court of Himachal Pradesh. Since the scheme is pending approval, no effect of the amalgamation has been given in these financial statements in accordance with Accounting Standard - 14, 'Accounting for Amalgamation'.

5. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

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


Mar 31, 2011

(Amount in Rupees)

As at As at 31 March 2011 31 March 2010

1. Contingent liability not provided for exists in respect of:

a) Bank guarantees outstanding. 1,216,500 144,400

b) Bonds in favour of central excise and customs authorities 5,000,000 5,000,000

c) Guarantee given to a scheduled bank in relation to overdraft facility of Rs 329,000,000 (previous year Rs.305,000,000) and term loan of Rs.90,000,000 (previous year Rs.34,000,000) provided by the bank to subsidiary companies. Amount of overdraft outstanding as on 31 March 2011 is Rs.283,277,266 (Previous year Rs.240,494,686) and term loan Rs.50,266,850 (previous year Rs. 15,663,761) respectively. The Company has created charge over its various fixed assets with respect to such loans availed by its subsidiary.

d) Demand raised for service tax against which appeals have been filed. 1,204,891 1,661,899

e) Demand raised by Punjab State Electricity Board for payment of penalty for 372,818 372,818 usage of additional power against sanctioned load. (Amount paid under protest Rs. 372,818 (previous year Rs. 372,818)

f) Case for AY 2005-06, for which a demand of Rs.13,203,431 (previous year Rs.Nil) 24,063,220 - was raised by the income tax department and the Company had deposited Rs.10,916,620 (previous year Rs.Nil) under protest, was decided by the Commissioner of Income Tax (Appeals) in favour of the Company. However, the income tax department has preferred an appeal with Income Tax Appellate Tribunal. Demands raised by Income tax Authorities in respect of disallowances for AY 2006-07 and 2007-08, are identical to AY 2005-06 have been challanged by the company before Income Tax Appellate Tribunal.

g) Demands raised by the income tax authority for AY 2004-05 against which 4,046,108 4,046,108 appeals have been filed. Amount paid under protest Rs. 1,577,440 (previous year Rs. 400,000)

h) Demand made by central excise authority 8,256,222 4,187,217

i) Demand of house tax made by Municipal Commissioner - Derabassi - 5,551,447

2. During the year, the Company issued 1,687,600 equity share warrants on preferential basis upon payment of a consideration of Rs. 10.25 per warrant. Each share warrant is convertible into one equity share of Rs. 10 each at a premium of Rs. 31 per share on payment of remaining consideration. Holders of such warrants have the option to convert these warrants into equity shares upon payment of aforesaid consideration on or before eighteen months from the date of allotment of warrants, viz., 02 November 2010. During the year, holders of 421,950 equity share warrants excercised the option of conversion of warrants into equity shares. Amount outstanding as at the year end and disclosed as equity share warrants money constitutes Rs. 10.25 per warrant received from the holders of remaining 1,265,650 share warrants.

3. During the year, Mahen Boutiques Limited (MBL) was merged with Kamla Retail Limited (KRL) in terms with the scheme of arrangement under section 391 to 394 of the Companies Act, 1956, which was approved by the Hon'ble High Court of Himachal Pradesh on 3 March 2011 and became effective on 13 May 2011 on filing of certified copy of the order of the Hon'ble High Court in the office of the Registrar of Companies by KRL. The appointed date of the scheme was 01 April 2009. Accordingly, KRL shall issue equity shares to KDDL Limited (the shareholders of MBL) in the following proportions:

-1 fully paid up equity share of the face value of Rs. 10 each of KRL at par for 1 fully paid up equity share of the face value of Rs. 10 held in MBL. -2 fully paid up equity share of the face value of Rs. 10 each of KRL at par for 3 partly paid up equity share (paid up value Rs. 6.75 per share) of the face value of Rs. 10 held in MBL.

Based on above, KDDL Limited was allotted 1,383,333 equity shares of Rs.10 each in KRL subsequent to the year end. As at 31 March 2011, these shares were considered as held in share suspense account by KRL.

4. Related Party disclosures

A. Relationships

I. Subsidiary Companies Himachal Fine Blank Ltd.

Pylania S.A.

Kamla Retail Limited

Mahen Boutiques Limited

Mahen Distribution Limited

II. Associates Kamla Tesio Dials Limited

Taratec SA

III. Joint Venture Satva Jewellery and Design Limited

IV. Entities over which significant influence is exercised by the company /key management personnel (either individually or with others)

Saboo Coatings Ltd., Krypton Outsourcing Limited,

VBL Innovations Pvt. Limited, Vardhan Properties &

Investments Ltd., Vardhman International Ltd., Smt. Kamla Devi Saboo

Charitable Trust, Shri M.K. Saboo Charitable Trust,

Tara Chand Mahendra Kumar (HUF)

V Key Management Personnel Relatives **

a. Mr. R.K. Saboo (Chairman) Ms. U. Saboo (wife),

Mr. Y Saboo (son), Mr. J. Saboo (son), Ms. R Saboo (daughter in law), Ms. Asha Devi Saboo (brother's wife)

b. Mr. Y Saboo (Chief Executive Officer) Mr. R.K. Saboo (father), Ms. A. Saboo (wife)

Mr. RS. Saboo (son), Ms. S.Suri (daughter)

c. Mr. Dinesh Agrawal Ms. Shashi Agrawal (wife) (Chief Operating Officer)

* Refer note 7 of schedule 18.

"Relatives of key management personnel with whom the Company had transactions during the year.

5. Leases

Operating leases

The company is a lessee under various operating leases. Rental expense for operating leases for the years ended 31 March 2011 and 31 March 2010 was Rs.8,202,648 and Rs.7,624,518 respectively. The company has not executed any non-cancelable operating leases. The company has leased some of its premises and some of its fixed assets to a third party under a lease agreement that qualifies as an operating lease. Rental income for operating leases for the years ended 31 March 2011 and 31 March 2010 aggregate to Rs.600,000 and Rs.600,000 respectively.

6. During the year, the shareholders of Pylania S.A. approved the scheme of capital reduction, pursuant to which, the Company has written off investments aggregating to Rs. 12,345,435 which were earlier provided for as other than temporary diminution in its value.

7. Segment information, as required under AS-17 "Segment Reporting", has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

8. Previous year figures have been regrouped /recasted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on 2,230,500 232,007 capital account and not provided for (net of advances).

2. Contingent liability not provided for exists in respect of:

a) Bank guarantees outstanding. 144,400 1,035,400

b) Bonds in favour of central excise and customs authorities 5,000,000 10,125,000

c) Guarantee given to a scheduled bank in relation to overdraft facility of Rs. 305,000,000 (previous year Rs. 255,000,000) and termloan of Rs.34,000,000 (previous year 34,000,000) provided by the bank to subsidiary companies. Amount of overdraft outstanding as on 31 March 2010 is Rs. 240,494,686 (previous year Rs. 215,587,159) and term loan Rs. 15,663,761 (previous year Rs. 24,164,166) respectively.

d) Demand raised for service tax against which appeals have been filed. 1,661,899 2,302,693

e) Demand raised by Punjab State Electricity Board for payment of penalty for 372,828 372,828 usage of additional power against sanctioned load. (Amount paid under protest Rs. 372,828 (previous year Rs. 372,828)

f) Demands made by the income tax authorities against which 4,046,108 17,399,539 appeals have been filed. Amount paid under protest Rs. 400,000 (previous year Rs. 2,900,000)

g) Demand made by central excise authority 4,187,217 4,187,217 h)Demand of House tax made by Municipal Commissioner - Derabassi 5,551,447 5,551,447

3. a) Amount due to a subsidiary companies 14,172,472 6,276,883

b) Amount due to entities covered under Micro, Small and Medium

Enterprises as defined in the Micro, Small, Medium Enterprises Development Act, 2006, have been identified on the basis of information available with the Company. There was no amount due to any such entities which needs to be disclosed. This has been relied upon by the auditors.

4. A. Related Party disclosures Relationships

I. Subsidiary Company

Himachal Fine Blank Ltd.

Pylania S.A.

Kamla Retail Limited

Mahen Boutiques Limited

Mahen Distribution Limited (incorporated on 28 May 2009)

II. Associates

Kamla Tesio Dials Limited

Taratec SA

III. Joint Venture

Satva Jewellery and Design Limited

IV. Entities over which significant influence is Saboo Coatings Ltd., Krypton Outsourcing Limited, exercised by the company /key management VBL Innovations Pvt. Limited, Vardhan Properties & personnel (either individually or with others) Investments Ltd., Smt. Kamla Devi Saboo Charitable Trust, Shri M.K. Saboo Charitable Trust, Tara Chand Mahendra Kumar (HUF)

V Key Management Personnel Relatives **

a. Mr. R.K. Saboo (Chairman) Ms. U. Saboo (wife),

Mr. Y. Saboo (son) , Mr. J. Saboo (son), Ms. R Saboo (daughter in law), Ms. Asha Devi Saboo (brothers wife)

b. Mr. Y. Saboo (Chief Executive Officer) Mr. R.K. Saboo (father), Ms. A. Saboo (wife)

Mr. RS. Saboo (son), Ms. S. Saboo (daughter)

c. Mr. Dinesh Agrawal Ms. Shashi Agrawal (wife) (Chief Operating Officer (North))

**Relatives of key management personnel with whom the Company had transactions during the year.

The Company made annual contributions to the LIC of India of an amount advised by the LIC.The Company was not informed by LIC of the investment made by the LIC or the break-down of plan assets by investment type.

Toe Company makes annual contribution to the LIC of India for gratuity benefits as amount advised by the LIC. An amount of Rs. 276,946 (excluding taxes, etc. of Rs. 96,645) paid by the Company on 30 March 2010 had not been considered by LIC as contributions received as at 31 March 2010, though, the same has been considered as contributions made above.

5. During the year, the Company has recognised provision for other than temporary diminution in value of investment in Pylania SA of Rs. 12,345,435 pursuant to the capital reduction approved by the shareholders of Pylania SA subsequent to the year end. The management has ascertained that there is no impairment of assets as on the balance date.

6. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.

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