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Notes to Accounts of Nelco Ltd.

Mar 31, 2023

Note 3(b) : Right-of-use assets and lease liabilities 3(b)(i) The Company as lessee

- Asset acquired on finance lease represents Leasehold land. The total lease term is 95 years, remaining lease term is 61 years as on March 31,2023. The Company does not have an option to purchase the land at the end of the lease term. Company has taken premises on lease along with certain equipment for term of 5 years to 10 years.

- Also Company has taken motor vehicle on lease which have lease term varying from 2 years to 5 years.

- The effective interest rate for lease liabilities is from 8.00% to 9.95%.

- The Company is restricted from assigning and subleasing the leased assets.

(iii) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 10 /- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.

The Board of directors have recommended dividend of '' 2.00 per equity share for the year ended March 31, 2023. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

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 general reserve will not be reclassified subsequently to the statement of profit and loss. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve and also considering the provisions of the Companies Act, 2013.

Retained earnings

The same reflects surplus/ (deficit) after taxes in the Statement of Profit and Loss. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve and also considering the requirements of the Companies Act, 2013.

Reserve for FVOCI equity instruments

This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earning when those assets have been disposed off.

Note on dividend:-

*For financial year ended March 31,2022, the Board of Directors had recommended a dividend of 18% (March 31,2021: 12%) which was ''1.80 (March 31, 2021: ''1.20) per equity share of ''10/- each, which is approved by shareholders in the Annual General Meeting of the Company held on July 8, 2022.

For financial year ended March 31,2023, the Board of Directors have recommended a dividend of 20% (March 31,2022: 18%) which is ''2.00 (March 31,2022: ''1.80) per equity share of ''10/- each. This is subject to approval at the annual general meeting by the members and liability is not recognised as at March 31,2023.

Note 29 : Scheme of internal restructuinga) Description

(A) The Company vide its letter dated September 1,2017 informed the stock exchange about the approval of the Board of Directors to

(i) transfer by way of slump sale on a going concern basis, for a lump sum consideration to its wholly owned subsidiary, Nelco Network Products Ltd (NNPL) of the following:

(a) Integrated Security and Surveillance Solution (''ISSS'') business and

(b) Very Small Aperture Terminals ("VSAT") hardware business and allied services consisting of network management, project management, infrastructure services, turnkey solutions for satellite communication systems, and co-location services to customers other than Tatanet Services Ltd (TNSL); and

(ii) the amalgamation of TNSL with the Company, through a composite scheme of Arrangement and Amalgamation (Proposed Scheme).

(B) The Proposed Scheme was approved by National Company Law Tribunal (''NCLT'') on November 2, 2018. During the quarter ended June 2021 the Company has received approval from Department of Telecommunications (DoT) on June 9, 2021 on Proposed Scheme. The scheme was effective from appointment date i.e. April 1, 2017. Pursuant to approval, the Proposed Scheme was accounted for as follows:

â¢ Discontinued operations was transferred to NNPL in accordance with IND AS 105. Considering the materiality and convenience reason, demerger impact was given from June 1,2021; and

â¢ TNSL merger was accounted in accordance with Appendix C of IND AS 103 "Business Combination" and accordingly, results of all the previous periods were restated by including results of the Transferor Company from the beginning of the previous year i.e. April 1,2020.

c) TNSL merger

Tatanet Services Limited (TNSL) as part of internal restructuring amalgamated with the Company. The Company has acquired assets and liabilities of TNSL and accounted for the same as per IND AS 103 business combination from the 1^st April 2020 and accordingly Company has restated numbers for March 2021.

Note 30 : Fair value of financial assets and financial liabilities

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

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation technique which maximise the use of observable market data and rely as little as possible on entity -specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(ii) Valuation technique used to determine fair value

a) Specific valuation technique used to value financial instruments include:

- The use of quoted market price or dealer quotes for similar instruments.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

b) During the current year, there is no significant movement in the items of fair value measurements categorised within Level 3 of the fair value hierarchy.

c) The Fair value for investment in unquoted equity share were calculated based on risk adjusted discounted rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

(iii) Valuation processes

The finance department of the Company performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. Discussions of valuation processes and results are held between the CFO, Audit Committee and the finance team at least once every three months, in line with Company''s quarterly reporting periods.

The carrying amounts of cash and cash equivalent, other bank balances, other financial assets, trade payables are considered to be the same as their fair values, due to their short-term nature.

The Fair value of loans, trade receivables, borrowings and other financial liabilities were calculated based on cash flows discounted using a current deposit rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

Significant estimates

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. For details of the key assumptions used and the impact of changes to these assumptions see (ii) and (iii) above.

Note 31 : Financial Risk Management

The company''s activities expose it to market risk, liquidity risk and credit risk.

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

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

(A) Credit Risk

Credit risk is the risk that counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily trade receivables), deposits with bank and financial institution, Loans and deposits with third party and other financial instruments / assets.

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. It considers reasonable and supportive forwarding-looking information such as: adverse changes in business, changes in the operating results of the counterparty, change to the counterparty''s ability to meet its obligations etc. Financial assets are written off when there is no reasonable expectation of recovery.

(i) Credit Risk Management Financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, security deposits with counterparties, loans to third parties. Individual risk limits are set for each counter-party based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company.

The Company''s maximum exposure to credit risk as at March 31,2023 and March 31,2022 is the carrying value of each class of financial assets as disclosed in the standalone financial statements.

Trade receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forwardlooking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables.

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

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

Four customer as at March 31, 2023 and five customers as at March 31, 2022 individually contributed to more than 5% of the total balance of trade receivables. Receivable from these customers was ''1,453 Lakhs and ''980 Lakhs as at March 31,2023 and March 31,2022 respectively.

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

Other than trade receivables and financial assets.

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

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

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due through rolling cash flow forecast. Also, the Company has unutilized credit limits with banks.

The Bank has an unconditional right to cancel the undrawn/ unused/ unavailed portion of the loan/ facility sanctioned at any time during the period of the loan/ facility, without any prior notice to the Company.

(ii) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, trade payables, deposits, investments, trade receivables, other financial assets and derivative financial instruments.

(i) Foreign currency risk

Company is exposed to foreign exchange risk arising from direct transactions in foreign currency and also indirectly through transactions denominated in foreign currency though settled in functional currency (INR), primarily with respect to the US Dollar (USD). Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR).

The risk is measured through a forecast of highly probable foreign currency cash flows.

(ii) Interest Rate Risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the company to cash flow interest rate risk.

Note 32 : Capital Management Risk Management

The Company''s objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Loan covenants

Under the terms of the major borrowing and facilities, the Company is required to comply with the following financial covenants

Exclusive charge over the VSAT''s related assets with minimum security cover of 1.25x at all times.

Company has complied with the above covenants throughout the reporting period.

Company has regularly filed statements with banks from whom loans are taken and there are no deviation from books of accounts. (refer note 43).

Note 33 : Offsetting Financial Assets And Financial Liabilities

There are no financial assets and liabilities which are eligible for offset under any arrangement.

Note 34 : Assets pledged As Security Collateral against borrowings

Current assets and property, plant and equipment''s of the Company are pledged as security against debt facilities from the lender i.e. land and building, plant and machinery situated at Mahape, Maharashtra and Dehradun, Uttarakhand.

The Company has pledged financial instruments as collateral against a number of its borrowings. Refer to note no. 13 for information on borrowings.

Note 35 : Employee benefit obligations

a. Short-term employee benefits

These benefits include salaries and wages, including other monetary and non-monetary benefits, compensated absences which are either non-accumulating or accumulating and expected to be availed within twelve months after the end of the reporting period.

ii) Defined Benefit Plans

The Company operates the following funded/unfunded defined benefit plans:

- Provident Fund (Funded):

The Company makes Provident Fund contributions to defined benefit plans for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Rules of the Company''s provident fund administered by the Trust requires that if the Board of Trustees are unable to pay interest at the rate declared by Central Government under para 60 of the Employees'' Provident Fund Scheme, 1952 then the shortfall shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any shortfall in the foreseeable future.

In terms of guidance note issued by the Institute of Actuaries of India, the Actuary has provided a valuation of Provident fund liability based on the assumptions listed and determined that there is no shortfall as at March 31,2023 and March 31,2022, respectively.

Provident Fund Assessment as per recent Supreme court Judgment

Recent Supreme Court judgement in case of Vivekananda Vidyamandir and Others (February 2019) lays down principles to exclude a particular allowance from the definition of "basic wages" for the purposes of computing the deduction towards provident fund contributions. A review petition have been filed against the said order by other Companies and await clarification from Provident Fund Commissioner/ Supreme Court. Based on the initial assessment and recently concluded inspections by Provident Fund authorities, management does not expect any material impact on the financial statements.

Gratuity (funded)

Till March 31,2021 gratuity was unfunded. In the year ended March 31,2022 the Company has created a gratuity trust. The Company has a funded defined benefit gratuity plan. The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed five years or more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to the employees. The gratuity fund has been approved by respective Income Tax authorities. The liability in respect of gratuity and other post employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.

The following table sets out the status of the defined benefit scheme and the amount recognised in the standalone financial statements:

The discount rate is based on the prevailing market yields of Government of India securities as at the

balance sheet date for the estimated term of the obligations.

This plan typically exposes the Company to actuarial risks such as:

a) Interest rate risk - A decrease in the bond interest rate will increase the plan liability.

b) 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.

c) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion,

increments and other relevant factors.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

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

iii) Other employee benefits

Compensated absences which are accumulated and not expected to be availed within twelve months after the end of the reporting period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date. Compensated absences is recognised as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.

a) An amount of '' 22 Lakhs (March 31,2022: '' 44 Lakhs) has been charged to the Statement of Profit and Loss for the year ended March 31,2023 towards Compensated absences.

b) Provision for compensated absences has been made on the basis of actuarial valuation carried out as at the Balance sheet date.

c) Net liability recognised in the Balance Sheet as at March 31,2023 is '' 101 Lakhs (March 31, 2022: '' 90 Lakhs).

a) Provision for disputes represents estimates made for probable liabilities arising out of pending assessment proceedings with various Government Authorities and others. The information usually required by Ind AS 37 -"Provisions, Contingent Liabilities and Contingent Assets", is not disclosed on grounds that it can be expected to prejudice the interests of the Company. The timing of the outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law and hence, the Company is not able to reasonably ascertain the timing of the outflow (refer note 39).

Future cash outflows in respect of the above matters are determinable only on receipt of judgments/decisions pending at various forums / authorities.

The above figures for contingent liabilities do not include amounts towards certain additional penalties/interest that may devolve on the Company in the event of an adverse outcome as the same is subjective and not capable of being presently quantified. Unless otherwise stated below, the management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable, further outflow of resources is not probable in either cases.

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

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

Note 46 : There are no Micro and Small Enterprises to whom the company owes dues, which are outstanding as at March 31,2023. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company.

Note 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 into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Note 48: Events after the reporting period

The Company has evaluated subsequent events from the balance sheet date through April 24, 2023 the date at which the financial statements were available to be issued, and determined that there are no material items to be disclosed other than those disclosed above.

Note 49: Previous year''s figures have been regrouped/reclassified , wherever necessary, to conform to the current year''s classification.

Mar 31, 2022

1. Trade receivables are dues in respect of goods sold and services rendered in the normal course of business.

2. Trade receivables are non-interest bearing and are generally on terms of 0 to 60 days.

3. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a detailed analysis of trade receivables.

4. There are no dues by directors or other officers of the Company or any of them either severally or jointly with

any other person or debts due by firms or private companies respectively in which any director is a partner or a director is a member.

(iii) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of ''10 /- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.

The Board of directors have recommended dividend of '' 1.80 per equity share for the year ended March 31, 2022. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

General reserve

Retained earnings

Reserve for FVOCI equity instruments

Note on dividend:-

*For financial year ended March 31,2021, the Board of Directors had recommended a dividend of 12% (2020: 12%) which was ''1.20/- (2020: ''1.20/-) per equity share of ''10/- each, which was approved by shareholders in the Annual General Meeting of the Company held on August 13, 2020.

For financial year ended March 31,2022, the Board of Directors recommended a dividend of 18% (2021: 12%) which is '' 1.80/- (2021: '' 1.20/-) per equity share of ''10/- each, which is subject to approval at the annual general meeting and are not recognised as a liability as at March 31, 2022.

Loan covenants

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net Borrowings to EBITDA ratio and debt service coverage ratio. The limitation on indebtedness covenant gets suspended if the Company meets certain prescribed criteria. The debt covenant related to limitation on indebtedness remained suspended as of the date of the authorisation of the financial statements. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan.

Note 29 : Scheme of internal restructuinga) Description

(A) The Company vide its letter dated September 1,2017 informed the stock exchange about the approval of the Board of Directors to

(i) transfer by way of slump sale on a going concern basis, for a lump sum consideration to its wholly owned subsidiary, Nelco Network Products Ltd. (NNPL) of the following :

(a) Integrated Security and Surveillance Solution (''ISSS'') business and

(ii) the amalgamation of TNSL with the Company, through a composite scheme of Arrangement and Amalgamation (Proposed Scheme).

(B) The Proposed Scheme has been approved by National Company Law Tribunal (''NCLT'') on November 2, 2018. During the quarter ended June 2021 the Company has received approval from Department of Telecommunications (DoT) on June 9, 2021 on Proposed Scheme. The scheme is effective from appointment date i.e. April 1,2017. Pursuant to approval, the Proposed Scheme has been accounted for as follows:

â¢ Discontinued operations has been transferred to NNPL in accordance with IND AS 105. Considering the materiality and convenience reason, demerger impact is given from June 1,2021; and

â¢ TNSL merger has been accounted in accordance with Appendix C of IND AS 103 "Business Combination" and accordingly, results of all the previous periods have been restated by including results of the Transferor Company from the beginning of the previous year i.e. April 1,2020.

Note: Pursuant to the above, the Company has received consideration from NNPL Rs 2,591 and made the payment to NNPL Rs 1,859 as per the Scheme.

C) TNSL merger

Tatanet Services Limited (TNSL) as part of internal restructuring amalgamated with the Company. The Company has acquired assets and liabilities of TNSL and accounted for the same as per IND AS 103 business combination from the 1st April 2020 and accordingly Company has restated numbers for March 2021.

Note 30: Financial Instruments

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

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

Note 31 : Fair value of financial assets and financial liabilities

(i) Fair value hierarchyValuation technique and significant unobservable inputs:

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

During the year there have been no transfer between level 1 and level 2.

Level 1 - Level 1 hierarchy includes financial instruments measured using quoted price. This includes listed equity instruments, traded bonds, mutual funds that have quoted price.

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(ii) Valuation technique used to determine fair valuea) Specific valuation technique used to value financial instruments include:

- The use of quoted market price or dealer quotes for similar instruments.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

b) During the current year, there is no significant movement in the items of fair value measurements categorised within Level 3 of the fair value hierarchy.

(iii) Valuation processes

The carrying amounts of cash and cash equivalent, other bank balances, other financial assets, trade payables are considered to be the same as their fair values, due to their short-term nature.

The Fair value of Loans, Trade Receivables, Borrowings and Other financial liabilities were calculated based on cash flows discounted using a current deposit rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

Significant estimates

Note 32 :Financial Risk Management

The company''s activities expose it to market risk, liquidity risk and credit risk.

(A) Credit Risk

(i) Credit Risk ManagementFinancial assets

Credit limits and concentration of exposures are actively monitored by the Company.

Trade receivables

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

Five customer as at March 31,2022 and three customers as at March 31, 2021 individually contributed to more than 5% of the total balance of trade receivables. Receivable from these customers was '' 980 Lakhs and '' 454 Lakhs as at March 31, 2022 and March 31,2021 respectively.

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

Other than trade receivables and financial assets.

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

(B) Liquidity Risk

(ii) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non derivative financial liabilities.

(i) Foreign currency risk

The risk is measured through a forecast of highly probable foreign currency cash flows.

(iii) Price Risk

The Company doesn''t have any financial instruments which are exposed to change in price.

Note 33 : Capital Management Risk Management

There are no financial covenants attached with Companies borrowings.

Company has regularly filed statements with banks from whom loans are taken and there are no deviation from books of accounts. (refer note 44).

Note 34 : Offsetting Financial Assets And Financial Liabilities

There are no financial assets and liabilities which are eligible for offset under any arrangement.

Collateral against borrowings

Current Assets and Fixed Assets of the Company are pledged as security against debt facilities from the lender i.e. land and building, plant and machinery situated at EL-6, TTC Industrial Area, MIDC, Electronic Zone, Mahape, Navi Mumbai . For carrying amount of assets pledged as security refer note 3.

The Company has pledged financial instruments as collateral against a number of its borrowings. Refer to note no. 35 for further information on financial and non-financial collateral pledged as security against borrowings.

Note 36 : Employee benefit obligationsa. Short-term employee benefits

These benefits include salaries and wages, including other monetary and non-monetary benefits, compensated absences which are either non-accumulating or accumulated and expected to be availed within twelve months after the end of the reporting period.

ii) Defined Benefit Plans

The Company operates the following funded/unfunded defined benefit plans:

-Provident Fund (Funded):

The company contributed Rs 64 Lakhs and Rs 59 Lakhs during the year ended March 31,2022 and March 31,2021 respectively and the same has been recognized in the Statement of Profit and Loss.

Provident Fund Assessment as per recent Supreme court Judgment

- Gratuity (funded)

Till March 31,2021 gratuity was unfunded. During the year the Company has created gratuity trust. The Company has a funded defined benefit gratuity plan. The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The gratuity plan is governed by the Payment of Gratuity Act, 1972.Under the Act, every employee who has completed five years or more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to the employees. The gratuity fund has been approved by respective Income Tax authorities. The liability in respect of gratuity and other post employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.

The following table sets out the status of the defined benefit scheme and the amount recognised in the standalone financial statements:

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

This plan typically exposes the Company to actuarial risks such as:

a) Interest rate risk - A decrease in the bond interest rate will increase the plan liability.

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

iii) Other employee benefits

a) An amount of ''44 Lakhs (FY 2021 : ''42 Lakhs) has been charged to the Statement of Profit and Loss for the year ended March 31, 2022 towards Compensated absences.

b) Provision for compensated absences has been made on the basis of actuarial valuation carried out as at the Balance sheet date.

c) Net liability recognised in the Balance Sheet as at March 31, 2022 is ''90 Lakhs (FY 2021 : ''72 Lakhs).

Note 37: Disclosure as required by Ind AS 37 - "Provisions, Contingent Liabilities and Contingent Assets" as at year end are as follows:

Future cash outflows in respect of the above matters are determinable only on receipt of judgments/decisions pending at various forums / authorities.

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

Note 47 : As a part of transition to Goods Services Tax (GST) in June 2017, the Company carried forward the Cenvat/ Service tax/Sales tax input credit balance of ''31 Lakhs as on March 31, 2022 for future set-off against GST payable. However, due to technical glitch on the GSTN portal, the Company could not file the Tran 1 Form within the prescribed period including the extended filing period. A writ petition filed by the Company in the Hon''ble High Court of Bombay for allowing the carry forward of the input credit balances was dismissed vide its order dated March 20, 2020. Thereby the petition and the claim of the Company of ''31 Lakhs was disallowed. The Company has filed Special Leave Petition in Hon''ble Supreme Court and which is admitted by Supreme Court. In addition, Similar writ petition was filed by the subsidiary company (TNSL) which merged with the Company pursuant to the Scheme, for an amount of ''85 Lakhs which is pending for hearing at Hon''ble High Court of Bombay. In view of the multiple judgements by various High Courts in India on this matter which supports the Company''s claim and based on the advice received from independent legal counsel, the Company expects to recover total input credit balance of ''116 Lakhs. In view of this, no provision has been made in the books of account against the recoverability of these balances.

Note 48 : There are no Micro and Small Enterprises to whom the company owes dues, which are outstanding as at March 31,2022. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the company.

Note 49: The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Note 50: Previous year''s figures have been regrouped/reclassified, wherever necessary, to conform to the current year''s classification, also refer note 29.

Mar 31, 2019

Notes:

i) The carrying amount of financial and non-financial assets pledged as security for current borrowings (refer note 32).

Note 1: Discontinued operations a) Description

The Company vide its letter dated September 1, 2017 informed the stock exchange about the approval of the Board of Directors to (i) transfer by way of slump sale on a going concern basis, for a lump sum consideration to its wholly owned subsidiary, Nelco Network Products Ltd (NNPL) of the following : (a) Integrated Security and Surveillance Solution (''ISSS'') business and (b) Very Small Aperture Terminals ("VSAT") hardware business and allied services consisting of network management, project management, infrastructure services, turnkey solutions for satellite communication systems, and co-location services to customers other than Tatanet Services Ltd (TNSL); and (ii) the amalgamations of TNSL with the Company, through a composite scheme of Arrangement and Amalgamation (Proposed scheme). The Proposed scheme has been approved by National Company Law Tribunal ("NCLT") on November 2, 2018 and necessary steps for obtaining approvals from Department of Telecommunications ("DOT") are being taken. Considering the management''s intent to transfer the business as noted in (i) above, these businesses / operations have been classified as discontinued operations in accordance with IND AS 105 "Non-Current Assets held for sale and discontinued operations."

As per the NCLT Order, this Scheme is effective only on receiving the written approval from the Department of Telecommunications (DoT) for transfer of licenses. The NCLT Order required the Company to file the Order with the Registrar of Companies (RoC) within 30 days. Upon filing, RoC updated the records to reflect the Scheme as effective and TNSL as "amalgamated" even though DoT approval is yet to be received. Based on legal advice, the Company has approached NCLT to direct the RoC to amend their records to reinstate TNSL to its earlier status and cancel the effect of the scheme with immediate effect. The decision of NCLT is awaited. Pending necessary approvals, the Scheme has not been given effect to in the financial statements for the year ended March 31, 2019.

During the current year, the management has re-assessed the allocation of its costs and related liabilities between continuing and discontinued operations considering the change in business circumstances and accordingly has given effect in this year. The financial parameters in respect of the activities attributable to the business referred to in (i) above are as follows:

(i) Fair value hierarchy

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

Except for those financial assets/liabilities mentioned in the above table, the Company considers that the carrying amounts of financial assets / liabilities recognized in the financial statements approximate their fair values due to their short-term nature. For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1 - Level 1 hierarchy includes financial instruments measured using quoted price. This includes listed equity instruments, traded bonds, mutual funds that have quoted price.

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation technique which maximize the use of observable market data and rely as little as possible on entity -specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(ii) Valuation technique used to determine fair value

a) Specific valuation technique used to value financial instruments include:

- The use of quoted market price or dealer quotes for similar instruments.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

b) During the current year, there is no significant movement in the items of fair value measurements categorized within level 3 of the fair value hierarchy.

(iii) Valuation processes

Significant estimates

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. For details of the key assumptions used and the impact of changes to these assumptions see (ii) and (iii) above.

Note 2 :Financial Risk Management

The Company''s activities expose it to market risk, liquidity risk and credit risk.

This note explain the sources of risk which the entity is exposed to and how the entity manage the risk.

(A) Credit Risk

Credit risk is the risk that counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), deposits with bank and financial institution, loans and deposits with third party and other financial instruments/assets.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. It considers reasonable and supportive forward looking information such as: adverse changes in business, changes in the operating results of the counter party, change to the counter party''s ability to meet its obligations etc. Financial assets are written off when there is no reasonable expectation of recovery.

(i) Credit Risk Management

Financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, security deposits with counter-parties, loans to third parties. Individual risk limits are set for each counterparty based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company.

The Company''s maximum exposure to credit risk as at March 31, 2019 and March 31, 2018 is the carrying value of each class of financial assets as disclosed in the standalone financial statements.

Trade receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forward looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables.

One customer as at March 31, 2019 and as at March 31, 2018 individually contributed to more than 5% of the total balance of trade receivables. Receivable (Gross) from these customers was Rs, 981 Lakhs and Rs, 868 Lakhs as at March 31, 2019 and March 31, 2018 respectively.

The Bank has an unconditional right to cancel the undrawn/ unused/ unveiled portion of the loan/ facility sanctioned at any time during the period of the loan/ facility, without any prior notice to the Company.

(ii) Maturities of financial liabilities

The tables below analyses the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Market Risk

(i) Foreign currency risk

Company is exposed to foreign exchange risk arising from direct transactions in foreign currency and also indirectly through transactions denominated in foreign currency though settled in functional currency (''), primarily with respect to the US Dollar (USD). Foreign currency risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company''s functional currency ('').

The risk is measured through a forecast of highly probable foreign currency cash flows.

During the FY 2019 and FY 2018, continue operations of the Company doesn''t have any transactions in foreign currency. Foreign currency exposure of discontinued operations are given below:

(b) Sensitivity

The Sensitivity of profit or loss to changes in the exchange rates arises mainly currency denominated financial instrument.

(ii) Interest Rate Risk

The Company doesn''t have any long term borrowing at variable rate of interest, therefore Company is not exposed to any interest rate risk.

(iii) Price Risk

The Company doesn''t have any financial instruments which are exposed to change in price.

Note 3 : Capital Management Risk Management

The Company''s objectives when managing capital are to

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

Notes annexed to and forming part of Standalone Financial Statements for the year ended March 31, 2019

Loan covenants

Under the terms of the major borrowing facilities, the Company is required to comply with the following financial covenants:

Standalone net worth to remain positive.

Standalone Debt Equity ratio of maximum 4:1

Standalone Fixed Asset coverage ratio should be greater than or equal to 1.17 Consolidated net debt to EBIDTA ratio should be less than 4 up to FY 2020 and 3 after FY 2020 Consolidated debt services coverage ratio (DACR) should be greater than 1.10 Company has complied with the above covenants throughout the reporting period

Note 4 : Offsetting financial assets and financial liabilities

There are no financial assets and liabilities which are eligible for offset under any arrangement.

Collateral against borrowings

The Company has pledged financial instruments as collateral against a number of its borrowings. Refer to note no. 32 for further information on financial and non-financial collateral pledged as security against borrowings.

Note 5 : Assets pledge as security

The carrying amounts of assets pledged as security for current and non-current borrowings are:

Note 6 : Segment reporting

The Company has presented data relating to its segment based on its Consolidated Financial Statements. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard 108 (IND AS -108) " Operating Segments", no disclosure related to segments are presented in the Standalone Financial Statements.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

This plan typically exposes the Company to actuarial risks such as:

a) Interest rate risk - A decrease in the bond interest rate will increase the plan liability.

b) 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.

c) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

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

Sensitivity

Sensitivity of the defined benefit obligation to changes in the weighted principal assumptions (while holding all other assumptions constant) is:

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

iii) Other long-term employee benefits

Compensated absences which are accumulated and not expected to be availed within twelve months after the end of the reporting period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date. Compensated absences is recognized as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.

a) An amount of Rs, 45 Lakhs (FY 2018 : Rs, 47 Lakhs) has been charged to the statement of profit and loss for the year ended March 31, 2019 towards compensated absences.

b) Provision for compensated absences has been made on the basis of actuarial valuation carried out as at the balance sheet date.

c) Expenses recognized in statement of profit and loss includes Rs, 22 Lakhs (FY 2018 : Rs, 13 Lakhs) in respect of discontinued operations.

d) Net liability recognized in the balance sheet as at March 31, 2019 includes Rs, 116 Lakhs (FY 2018 : Rs, 90 Lakhs) in respect of discontinued operations.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

Note 7 : Disclosure as required by Ind AS 37 - "Provisions, Contingent Liabilities and Contingent Assets" as at year end

are as follows:

a) Provision for disputes represents estimates made for probable liabilities arising out of pending assessment proceedings with various Government Authorities. The information usually required by Ind AS 37 - "Provisions, Contingent Liabilities and Contingent Assets", is not disclosed on grounds that it can be expected to prejudice the interests of the Company. The timing of the outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law and hence, the Company is not able to reasonably ascertain the timing of the outflow. (refer note 40)

b) Provision for warranty relates to warranty provision made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under free warranty period ranging from one to three years.

c) Provision for future losses pertains to certain onerous contracts where the unavoidable costs of meeting the obligations as per the contracts exceed the economic benefits expected to be received from it.

*Provision for warranties recognized in the balance sheet as at March 31, 2019 of Rs, 58 Lakhs (FY 2018 : Rs, 49 Lakhs) in respect of discontinued operations.

# Provision for Future foreseeable losses on contracts recognized in the balance sheet as at March 31, 2019 of Rs, Nil Lakhs (previous year Rs, 23 Lakhs) in respect of discontinued operations.

Note 8 : Related party disclosure

(a) Promoter of holding Company

Tata Sons Limited

(b) Parent Company / Holding Company:

The Company is controlled by the following entity

Future cash outflows in respect of the above matters are determinable only on receipt of judgments/decisions pending at various forums / authorities.

Note 9 : Changes in accounting policies

The Company applied Ind AS 115 for the first time by using modified retrospective method of adoption with the date of initial application of April 1, 2018. The company does not have any impact to the opening balance of retained earning as at April 1, 2018 or on profits earned for the current year. Comparative prior period has not been adjusted.

Entities applying the modified retrospective method can elect to apply the revenue standard only to contracts that are not completed as at the date of initial application (that is, they would ignore the effects of applying the revenue standard to contracts that were completed prior to the date of initial application). However, the Company elected to apply the standard to all contracts as at April 1, 2018.

There is no impact on the financial statements line item of statement of profit and loss and balance sheet by application of Ind AS 115.

Note 10 : Lease 42.1 Finance lease liabilities

The Company as Lessee a Leasehold land

(1) Asset acquired on finance lease represents Leasehold land. The lease term is 95 years and the Company does not have an option to purchase the land at the end of the lease term.

(2) There are no minimum lease rentals payable in respect of asset acquired under finance lease.

(3) No contingent rent recognized /(adjusted) in the Statement of Profit and Loss in respect of finance lease.

b) Office Equipment (VSAT)*

During the previous year, the Company sold certain office equipment (VSAT) and leased it back for 5 years on market terms. The Company classified these leases as finance leases under IND AS 17, because the present value of the lease payments amounted to substantially all of the fair value of the asset.

11 Operating Lease²

The Company as Lessor

(1) Operating leases related to VSAT''s given on lease, owned by the Company with lease terms between 3 to 7 years.

(2) The lessee does not have an option to purchase the VSAT''s at the expiry of the lease period.

(3) No refundable deposits are taken and the lease rentals recognized in the statement of profit and loss for the year included under sale of services under revenue from operations aggregate to Rs, 1325 Lakhs (Previous Year Rs, 621 Lakhs)

Notes related to discontinued operations.

Note 12 : There are no Micro and Small Enterprises to whom the Company owes dues, which are outstanding as at March 31, 2019. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company.

Mar 31, 2018

General Information

Nelco Limited (Formerly known as National Ekco Radio & Engineering Co Ltd) herein after referred to as âthe Companyâ was established in 1940. The Company is subsidiary of The Tata Power Company Limited.

The Company is engaged in business of providing systems and solutions in the areas of VSAT connectivity and Integrated Security & Surveillance. The Company offers a range of innovative and customized solutions for businesses and government institutions under one roof.

Equity shares of the Company are listed in India on the Bombay Stock Exchange (âBSEâ) and The National Stock Exchange (âNSEâ). The registered office of the Company is located at EL-6, TTC Industrial Area, MIDC, Electronic Zone, Mahape, Navi Mumbai - 400710, CIN: L32200MH1940PLC003164.

The standalone financial statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company. The standalone financial statements were authorised for issue by the directors on April 27, 2018.

1.1 Critical estimates and judgements and key sources of estimation uncertainty: -

In the application of the Companyâs accounting policies, which are described in note 1 above, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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

In the following areas the management of the Company has made critical judgements and estimates.

a) Useful lives of property, plant and equipment and Intangible assets

The Company reviews the useful lives and carrying amount of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods.

b) Estimation of defined benefit obligation

The Company has defined benefit plans for its employees which are actuarially valued. Such valuation is based on many estimates and other factors, which may have a scope of causing a material adjustment to the carrying amounts of assets and liabilities.

c) Recognition of deferred tax assets

Deferred tax asset is recognised for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. The management assumes that taxable profits will be available while recognising deferred tax assets.

d) Recognition and measurement of construction contract revenue

Unbilled receivables are for services provided but not yet billed. When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably, and its receipt is considered probable.

e) Estimation of provision for warranty claims

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the managementâs best estimate of the expenditure required to settle the Companyâs obligation.

f) Expected Credit Loss on trade receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forward-looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables. (Refer Note 29)

g) Estimation of Provisions & Contingent Liabilities

The Company exercises judgment in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision or contingent liability. (Refer Note 40)

1.2 Recent accounting pronouncements - Standards issued but not yet effective:

The Ministry of Corporate Affairs (âMCAâ) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 (the âRulesâ) on March 28, 2018. The rules notify the new revenue standard Ind AS 115, Revenue from contracts with customers and also bring in amendments to existing Ind AS. The rules shall be effective from reporting periods beginning on or after April 1, 2018 and cannot be early adopted.

a. Ind AS 115, Revenue from contracts with customers

Ind AS 115, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers. Revenue is recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices.

A new five-step process must be applied before revenue can be recognised:

1. identify contracts with customers

2. identify the separate performance obligation

3. determine the transaction price of the contract

4. allocate the transaction price to each of the separate performance obligations, and

5. recognise the revenue as each performance obligation is satisfied.

The new standard is mandatory for financial years commencing on or after April 1, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.

The Company is evaluating the requirements of the new revenue standard (IND AS 115) and the effect on the financial statements, if any.

b. Appendix B to Ind AS 21 Foreign currency transactions and advance consideration

The MCA has notified Appendix B to Ind AS 21, Foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.

For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt.

The appendix can be applied:

- retrospectively for each period presented applying Ind AS 8;

- prospectively to items in scope of the appendix that are initially recognised

a) on or after the beginning of the reporting period in which the appendix is first applied (i.e. April 1, 2018 for entities with March year-end); or

b) from the beginning of a prior reporting period presented as comparative information (i.e. April 1, 2017 for entities with March year-end).

The Company is evaluating the requirements of the amendment and the effect on the financial statements, if any.

c. Amendments to Ind AS 40 Investment property - Transfers of investment property

The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence. A change in use occurs when the property meets, or ceases to meet, the definition of investment property. A change in intention alone is not sufficient to support a transfer. The list of evidence for a change of use in the standard was re-characterised as a non-exhaustive list of examples and scope of these examples have been expanded to include assets under construction/development and not only transfer of completed properties.

The amendment provides two transition options. Entities can choose to apply the amendment:

- Retrospectively without the use of hindsight; or

- Prospectively to changes in use that occur on or after the date of initial application (i.e. April 1, 2018 for entities with March year-end). At that date, an entity shall reassess the classification of properties held at that date and, if applicable, reclassify properties to reflect the conditions that exist as at that date.

The Company is evaluating the requirements of the amendment and the effect on the financial statements, if any.

d. Amendments to Ind AS 12 Income taxes regarding recognition of deferred tax assets on unrealised losses

The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base. They also clarify certain other aspects of accounting for deferred tax assets set out below:

- A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.

- The estimate of future taxable profit may include the recovery of some of an entityâs assets for more than its carrying amount if it is probable that the entity will achieve this. For example, when a fixed-rate debt instrument is measured at fair value, however, the entity expects to hold and collect the contractual cash flows and it is probable that the asset will be recovered for more than its carrying amount.

- Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.

- Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used to evaluate the recoverability of those assets. This is to avoid double counting the deductible temporary differences in such assessment.

An entity shall apply the amendments to Ind AS 12 retrospectively in accordance with Ind AS 8. However, on initial application of the amendment, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity.

The Company is evaluating the requirements of the amendment and the effect on the financial statements, if any.

Notes;

1. Change in the companyâs ownership interest in an associate

In March 2017, the Company disposed off a 9.95% interest in Nelito Systems Limited to a third party for sale proceeds of Rs.380 Lakhs, thus reducing the percentage holding to 12.30 % of the equity share capital of Nelito Systems Ltd.

2. Although the Company holds less than 20% of the equity shares of Nelito Systems Limited, and it has less than 20% of the voting power at shareholder meetings, the Company exercises significant influence by virtue of its contractual right to appoint two out of seven directors to the board of directors of that company.

1. Trade receivables are dues in respect of goods sold and services rendered in the normal course of business.

2. The Normal credit period allowed by the Company ranges from 0 to 60 days.

3. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a detailed analysis of trade receivables.

4. There are no dues by directors or other officers of the Company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member.

Details of Specified Bank notes (SBNâs) as defined in the MCA notification GSR 308(E) dated March 30, 2017

a) The reporting on disclosure relating to Specified Bank Note is not applicable to Company for the year ended March 31, 2018.

b) The details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 are given below :-

General Reserve

Retained Earnings

Reserve for FVOCI Equity Instruments

The Company has brought forward unabsorbed tax depreciation and business loss for the year ended March 31, 2017, due to which the company did not have any current tax expenses for the year ended March 31, 2017.

2 (c) Tax Losses

The details of carried forward tax losses and unabsorbed depreciation for which no deferred tax asset is recognised is as follows:

Note 3. Unattended Ground Sensors Business (Discontinued Operations)

a. The Company vide its letter dated April 3, 2014 had informed the Stock Exchange about the approval of the Board of Directors to restructure the operations of Companyâs Integrated Security & Surveillance Solutions business (ISSS business) which inter alia, includes the business of Unattended Ground Sensors (UGS) and forms part of the Automation & Control segment. As part of such restructuring, the Board of Directors of the Company at its meeting held on January 28, 2015 accepted an offer made by The Tata Power Company Limited (TPCL), for its Strategic Engineering Division to purchase the business of UGS as a going concern on a slump sale basis at a consideration of Rs.831 Lakhs with effect from October 1, 2014. The shareholders by postal ballot on June 25, 2015 approved the transaction. The Business Transfer Agreement (BTA) was signed on August 5, 2015. During the quarter ended December 31, 2016, all the conditions precedent were satisfied and a joint letter confirming the same was signed subsequently on January 2, 2017.

b. The assets attributable to the UGS business have been impaired as at October 1, 2014 to the tune of Rs.166 Lakhs.

The same has been adjusted against opening reserves in earlier year.

c. The financial parameters in respect of the ordinary activities attributable to the UGS business are as follows:

* includes Rs.Nil Lakhs (Previous year Rs.78 Lakhs) expenses attributable to UGS business.

# The transfer being concluded during the quarter ended December 31, 2016, effective from October 1, 2014, the results of operation for the year ended March 31, 2017, represents transactions performed on behalf of TPCL. The settlement for these transactions have been done during the quarter ended March 31, 2017.

@ At the request of TPCL, the Company has continued with certain operations of the transferred business, during the quarter ended March 31, 2017, pending assignment of certain contracts by the customer to TPCL. Accordingly, Sale of Products (Previous year Rs.137 Lakhs) and Purchase of stock- in-trade (Previous year Rs.137 Lakhs) in respect of these contracts have been included above, under the respective heads.

Note 4 : Discontinued operations

a) Discription

The Company vide its letter dated September 1, 2017 had informed the stock exchange about the approval of the Board of Directors to (i) transfer by way of slump sale on a going concern basis, for a lump sum consideration to its wholly owned subsidiary, Nelco Network Products Ltd (NNPL) of the following : (a) Integrated Security and Surveillance Solution (âISSSâ) business and (b) Very Small Aperture Terminals (âVSATâ) hardware business and allied services consisting of network management, project management, infrastructure services, turnkey solutions for satellite communication systems, and co-location services to customers other than Tatanet Services Ltd (TNSL); and (ii) the amalgamations of TNSL with the Company, through a composite scheme of Arrangement and Amalgamation (Proposed scheme). The Proposed scheme has been approved by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Securities Exchange Board of India (SEBI) and is subject to further approvals and consents. Considering the management intent to transfer the business as noted in (i) above, the noted businesses / operations have been classified as discontinued operations in accordance with IND AS 105 âNon Current Assets held for sale and discontinued operationsâ. The financial parameters in respect of the activities attributable to the business referred to in (i) above are as follows.

(i) Fair value hierarchy

Except for those financial assets/liabilities mentioned in the above table, the Company considers that the carrying amounts of financial assets / liabilities recognised in the financial statements approximate their fair values due to their short-term nature. For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1 - Level 1 Hierarchy includes financial instruments measured using quoted price. This includes listed equity instruments, traded bonds, mutual funds that have quoted price.

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation technique which maximize the use of observable market data and rely as little as possible on entity -specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(ii) Valuation technique used to determine fair value

a) Specific valuation technique used to value financial instruments include:

- The use of quoted market price or dealer quotes for similar instruments.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

b) During the current year, there is no significant movement in the items of fair value measurements categorised within Level 3 of the fair value hierarchy.

d) The fair value of borrowings were calculated based on discounted cash flow using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to inclusion of unobservable inputs including own credit risk.

(iii) Valuation processes

Significant estimates

Note 5 :Financial Risk Management

The companyâs activities expose it to market risk, liquidity risk and credit risk.

This note explain the sources of risk which the entity is exposed to and how the entity manage the risk.

(A) Credit Risk

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. It considers reasonable and supportive forwarding-looking information such as: adverse changes in business, changes in the operating results of the counterparty, change to the counterpartyâs ability to meet its obligations etc. Financial assets are written off when there is no reasonable expectation of recovery.

(i) Credit Risk Management Financial Assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, Security deposits with counterparties, loans to third parties. Individual risk limits are set for each counter-party based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company.

The Companyâs maximum exposure to credit risk as at March 31, 2018 and March 31, 2017 is the carrying value of each class of financial assets as disclosed in the standalone financial statements.

Trade receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forward-looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables.

One customer as at March 31, 2018 and Five customers as at March 31, 2017 individually contributed to more than 5% of the total balance of trade receivables. Receivable (Gross) from these customers was Rs.867 Lakhs and Rs.1,710 Lakhs as at March 31, 2018 and March 31, 2017 respectively.

* Loss allowance provision on Trade Receivable as at March 31, 2018 pertains to discontinued operations.

(B) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has unutilized credit limits with banks.

(ii) Maturities of financial liabilities

The tables below analyse the companyâs financial liabilities into relevant maturity groupings based on their contractual maturities for all non derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Market Risk

(i) Foreign currency risk

The risk is measured through a forecast of highly probable foreign currency cash flows.

(a) Foreign currency risk exposure:

The Companyâs exposure to foreign currency risk at the end of the reporting period are as follows

During the FY 2018, the Company does not have any transactions in foreign currency. Hence, the Company is not exposed to foreign currency risk.

(ii) Interest Rate Risk

The company does not have any long term borrowings at variable rate of interest. Therefore company is not exposed to any interest rate risks.

(iii) Price Risk

The company does not have any financial instrument which is exposed to change in price.

Note 30 : Capital Management Risk Management

The Companyâs objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

Loan covenants

Under the terms of the major borrowing facilities, the company is required to comply with the following financial covenants:

Standalone net worth to remain positive.

Current ratio of at least 1:1 Debt Equity ratio of maximum 4:1

Company has generally complied with the above covenants except for the requirement of current ratio. Current ratio of company as on March 31, 2018 and March 31, 2017 is 0.70:1 and 0.61:1 respectively.

The company may be liable for penal interest, if any. The financial arrangements for which the above covenant is not complied with is cash credit facility and management has intimated the same to the banking partner.

Note 6 : Offsetting Financial Assets And Financial Liabilities

There are no financial assets and liabilities which are eligible for offset under any arrangement.

Collateral against borrowings

First Pari Passu charge on entire current assets by way of Hypothecation and second Pari Passu charge on all present and future fixed assets of the company.

Note 7 : Assets Pledge As Security

The carrying amounts of assets pledged as security for current and non-current borrowings are :

Note 8 : Segment reporting

The Company has presented data relating to its segment based on its Consolidated Financial Statements. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard 108 (IND AS -108) â Operating Segmentsâ, no disclosure related to segments are presented in the Standalone Financial Statements.

Note 9 : Employee benefit obligations

a. Short-term Employee Benefits

b. Long-term Employee Benefits

i) Defined contribution plans

Companyâs contribution paid/payable during the period to superannuation fund and ESIC contribution are recognised as an expense and included in Note 22 under the heading âContributions to provident and other fundsâ are as under:

ii) Defined Benefit Plans

The Company operates the following funded/unfunded defined benefit plans:

-Provident Fund (Funded):

The Company makes Provident Fund contributions to defined benefit plans for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Rules of the Companyâs provident fund administered by the Trust requires that if the Board of Trustees are unable to pay interest at the rate declared by Central Government under para 60 of the Employeesâ Provident Fund Scheme, 1952 then the shortfall shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any shortfall in the foreseeable future.

The company contributed Rs.65 Lakhs and Rs.58 Lakhs during the year ended March 31, 2018 and March 31, 2017 respectively and the same has been recognized in the Statement of Profit and Loss. The amount relating to continuing operations Rs.48 Lakhs for year ended March 31, 2018 and Rs.40 Lakhs for year ended March 31, 2017 are disclosed under the employee benefit expenses.

-Gratuity (Unfunded)

The following table sets out the status of the defined benefit scheme and the amount recognised in the standalone financial statements:

* figures are below rounding of norm adopted by the company

Total remeasurement losses recognised in OCI includes Rs.8 Lakhs (Previous year Rs.7 Lakhs) in respect of discontinued operations.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

This plan typically exposes the Company to actuarial risks such as:

a) Interest rate risk - A decrease in the bond interest rate will increase the plan liability.

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

Sensitivity

Sensitivity of the defined benefit obligation to changes in the weighted principal assumptions (while holding all other assumptions constant) is:

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

Defined benefit liability and employers contributions

The weighted average duration of the projected benefit obligation is 8 years ( 2017- 7 years). The expected maturity analysis of undiscounted gratuity is as follows:

iii) Other Long-term Employee Benefits

a) An amount of Rs.47 Lakhs (previous year Rs.51 Lakhs) has been charged to the Statement of Profit and Loss for the year ended March 31, 2018 towards Compensated absences.

b) Provision for compensated absences has been made on the basis of actuarial valuation carried out as at the Balance sheet date.

c) Expenses recognized in statement of Profit and loss includes Rs.13 Lakhs (Previous year Rs.15 Lakhs) in respect of discontinued operations.

d) Net liability recognized in the Balance Sheet as at March 31, 2018 includes Rs.90 Lakhs in respect of discontinued operations.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

Note 10 : During the year ended March 31, 2017, the Company had implemented a Voluntary Retirement Scheme (VRS).

Accordingly, VRS expenditure of Rs.159 Lakhs had been debited to the Statement of Profit and Loss for the year ended March 31, 2017.

Note 11 : Related party disclosure

(A) Promotor of holding company

Tata Sons Limited

(B) Parent Entities:

The Company is controlled by the following entity

(E) Key Managerial Personnel

(i) Executive Directors

Mr.PJ. Nath (Managing Director and CEO)

(ii) Independent and Non-Executive Directors

Mr. R.R Bhinge (Non-Executive Director)

Mr. Sowmyan Ramakrishnan (Non-Executive Director) Ms. Hema Hattangady (Independent Director)

Mr. Kailasam Raghuraman (Independent Director)

Mr. Krishnan Ramachandran (Independent Director)

Future cash outflows in respect of the above matters are determinable only on receipt of judgements/decisions pending at various forums / authorities

Disclosure as required by Ind AS 37 - âProvisions, Contingent Liabilities and Contingent Assetsâ as at period end are as follows:

a) Provision for disputes represents estimates made for probable liabilities arising out of pending assessment proceedings with various Government Authorities. The information usually required by Ind AS 37 - âProvisions, Contingent Liabilities and Contingent Assetsâ, is not disclosed on grounds that it can be expected to prejudice the interests of the Company. The timing of the outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law and hence, the Company is not able to reasonably ascertain the timing of the outflow.

* Provision for warranties recognised in the balance sheet as at March 31, 2018 of Rs.49 Lakhs (previous year Rs.99 Lakhs) in respect of discontinued operations.

# Provision for Future foreseeable losses on contracts recognised in the balance sheet as at March 31, 2018 of Rs.23 Lakhs (previous year Rs.89 Lakhs) in respect of discontinued operations.

Note 12 : Lease

12.1) Finance lease liabilities

The Company as Lessee

Leasehold land

(1) Asset acquired on finance lease represents Leasehold land. The lease term is 95 years and the company does not have as option to purchase the land at the end of the lease term.

(2) There are no minimum lease rentals payable in respect of asset acquired under finance lease.

(3) No contingent rent recognised /(adjusted) in the Statement of Profit and Loss in respect of finance lease.

12.2) Operating Lease

The Company as Lessor

(1) Operating leases related to VSATs given on lease, owned by the Company with lease terms between 3 to 7 years.

(2) The lessee does not have an option to purchase the VSATs at the expiry of the lease period.

(3) No refundable deposits are taken and the lease rentals recognised in the statement of Profit and Loss for the year ended March 31, 2017 under revenue from Operations aggregate to Rs.274 Lakhs.

Note 13 : There are no Micro and Small Enterprises to whom the company owes dues, which are outstanding as at March 31, 2018. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the company.

Signature to Notes forming part of the Standalone Financial Statements â1â to â43â

Mar 31, 2016

Notes forming part of the Financial Statements

iii) The company has issued only one class of equity shares having a par value of Rs.10 /- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note:

(i) Cash credit from Banks are secured by hypothecation of all tangible moveable assets, including stocks of raw materials, finished goods, goods-in-process, book debts, monies receivable and a second charge on fixed assets of the Company.

(ii) Term Loans from The Zoroastrian Co-operative Bank Limited are secured by pari-passu first charge both on the present and future fixed assets, (all tangible moveable machinery and plant) of the company.

*Represents payment of Rs. 8.63 lakhs (Previous year Rs. 7.00 lakhs) for taxation matters to an affiliated firm in view of the networking arrangement which is registered with the Institute of Chartered Accountants of India.

1.a) The Company vide its letter dated 3rd April, 2014 had informed the Stock Exchange about the approval of the Board of Directors to restructure the operations of Company''s Integrated Security & Surveillance Solutions business (ISSS business) which inter alia, includes the business of Unattended Ground Sensors (UGS) and forms part of the ''Automation & Control'' segment. As part of such restructuring, the Board of Directors of the Company at its meeting held on 28th January, 2015 accepted an offer made by The Tata Power Company Limited, for its Strategic Engineering Division to purchase the business of UGS as a going concern on a slump sale basis at a consideration of Rs. 831 Lakhs with effect from 1st October 2014. The shareholders by postal ballot on 25th June, 2015 approved the transaction. The Business Transfer Agreement (BTA) was signed on 5th August, 2015. This shall be subject to concluding various approvals and consents yet to be received.

Notes forming part of the Financial Statements

b) The assets attributable to the UGS business have been impaired during the eighteen months ended 31st March, 2016 to the tune of Rs. 166.00 Lakhs and the same has been included in âDepreciation and amortization expenseâ below.

* includes Rs. 142.00 Lakhs (Previous year Rs 209.00 Lakhs) expenses attributable to UGS business.

The transfer being effective from 1st October, 2014, the results of operation for the eighteen months ended 31st March, 2016, includes a portion attributable to The Tata Power Company Limited which will be given effect to on completion of transaction.

2. a) Further, as part of restructuring, the Board of Directors of the Company at its meeting held on 18th March, 2015 accepted the offer received from a company for the transfer of Managed Services business (MS Business) forming part of Network System segment as a going concern on a slump sale basis at a consideration of Rs.210 Lakhs with effect from 1st April, 2015. The shareholders by postal ballot on 25th June, 2015 have approved the transaction. The said transaction is concluded on 31st August, 2015 after entering into definitive agreement and after obtaining various approvals as required under applicable laws. The said transaction was given effect during the current period with effect from 1st April, 2015. An amount of Rs.162.00 Lakhs is accounted as Profit on Sale of this business in current period as disclosed under exceptional item.

* includes Rs. 51.00 Lakhs (Previous year Rs 554.00 Lakhs) expenses attributable to MS business.

** includes Loss after tax of Rs.11.68 Lakhs in respect of MS business run on behalf of other company for the period from 1st April, 2015 to 31st August, 2015.

3. The Company has accumulated losses as at 31st March, 2016 which has substantially eroded the Company''s net worth and has incurred a net loss during the current eighteen months period. Notwithstanding this, these audited financial statements have been prepared on going concern basis in view of support letter from the parent company.

For the method used to determine the contract revenue recognized and the stage of completion on contract in progress, refer note 1.10

4. Pursuant to the enactment of the Companies Act 2013 (the ''Act''), the Company has, effective 1st October 2014, reviewed and revised the estimated useful lives of its fixed assets, in accordance with the provisions of Schedule II to the Act. Consequently, the depreciation charge for the eighteen months ended 31st March 2016 is higher by Rs 302.26 Lakhs and on account of transition provision Rs.104.40 Lakhs (net of tax Rs. 46.68 Lakhs) has been adjusted to Reserves and surplus as on 1st October, 2014.

5. EMPLOYEE BENEFIT PLAN :

I. Defined Contribution Plans

Company''s contribution paid/payable during the period to provident fund, superannuation fund and ESIC contribution are recognized as an expense and included in note 22 under the heading âContributions to provident fund, superannuation fund, etc.â and are as under:

Provident Fund:

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trust formed by the Company. The Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefit.

The Rules of the Company''s provident fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared by Central Government under para 60 of the Employees'' Provident Fund Scheme, 1952 then the shortfall shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any shortfall in the foreseeable future.

Note:

1) Includes Rs 11.57 Lakhs (Previous year Rs 11.72 Lakhs) in respect of Discontinuing Operations.

III. Long Term Employee Benefit - Compensated Absences

Provision for compensated absences has been made on the basis of actuarial valuation report as at the Balance Sheet date. The charge for the period of Rs 69.84 Lakhs (Previous Year: Rs. 41.42 Lakhs) has been made in the Statement of Profit and Loss.

6. Segment Reporting:

The Company has presented data relating to its segment based on it Consolidated Financial Statements. Accordingly, in terms of paragraph 4 of the Accounting Standard 17 (AS-17) âSegment Reportingâ, no disclosure related to segments are presented in the Standalone Financial Statements.

7. Related Party Disclosure:

I. Holding company - The Tata Power Company Limited.

II. Related Parties where control exists

a. Subsidiary - Tatanet Services Limited.

III. Other parties with whom transactions have taken place during the period a. Associate - Nelito Systems Limited.

IV. Key Management Personnel

a. Mr. P. J. Nath- Executive Director and CEO

8. Disclosure as required by Accounting Standard 29 - âProvisions, Contingent Liabilities and Contingent Assetsâ as at period end are as follows:

a) Provision for Warranty relates to warranty provision made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under free warranty period ranging from one to three years.

b) Provision for future losses pertains to certain onerous contracts where the unavoidable costs of meeting the obligations as per the contracts exceed the economic benefits expected to be received from it.

Notes forming part of the Financial Statements Note :-

i) Ministry of Corporate Affairs vide its letter dated 6th January, 2016 has approved remuneration of Rs. 84.00 Lakhs per annum for the period of 3 years from 13th June, 2015 to 12th June, 2018. The Company has represented to the Central Government to increase this limit on various grounds, the response of which is awaited. Meanwhile, the Company has restricted the remuneration to Rs. 84.00 lakhs while making the payment of remuneration for the period from 13th June, 2015 to 31st March, 2016.

ii) Above excludes charge for gratuity, provision for leave encashment as separate actuarial valuation figures are not available.

iii) Managerial Remuneration above excludes Director''s sitting fees of Rs. 18.18 Lakhs (Previous Year Rs.11.85 Lakhs) paid to Non Whole time Directors during the eighteen months ended 31st March, 2016.

9. During the current period, the Company has surrendered its factory license, as the Company does not intend to carry out any manufacturing activity.

10. Micro, Small and Medium enterprises have been identified by the Company on the basis of the information available. This information has been relied upon by the Auditors. There are no outstanding dues of Micro, Small and Medium Enterprises, which are outstanding for more than the stipulated period. There is no amount of interest due and payable.

Foreign currency exposures in respect of payable that have been hedged by a forward exchange contracts as at the period-end USD 10.63 Lakhs (Previous Year: USD 7.89 Lakhs).

Notes forming part of the Financial Statements

11. In the year 2006, the Company had filed arbitration proceedings against Jawaharlal Nehru Port Trust (JNPT) for enforcement of its claim in respect of the additional work carried out, wrongful deduction of liquidated damages and encashment of bank guarantee by JNPT. The Arbitration award was passed in favour of the Company on 6th February, 2012. The said award, however, was challenged by JNPT in the Hon''ble Bombay High Court which dismissed the plea on 6th February, 2014 and awarded the claim to the Company. JNPT paid Rs. 1,240.90 Lakhs as decretal dues in June 2014 quarter.

12. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification / disclosure.

Signature to Notes forming part of financial statements â 1â to â45â

Sep 30, 2014

Note 1

A. Background

The Company was formed in the year 1940 as National Ekco Radio & Engineering Co Ltd (JV between E K Cole & Fazalbhoy). The Company became "Nelco Limited" in 1969.

In 1969, the Company was pre-dominantly the manufacturer of audio-visual appliances like Television, calculator, Servo Voltage Stabilizers and such other office equipment. In late 90''s the Company entered in Automation business (SCADA, Traction & Drives), which was divested in 2010. In 1995 the Company through its subsidiary, Tatanet Services Limited (TNSL) first installed VSAT captive hub for Tata Group Companies connectivity and in 2003 it entered into the public domain in VSAT services.

Nelco is today focused in providing systems and solutions in the areas of VSAT connectivity & Managed Services. It also provides solutions in the area of Integrated Security & Surveillance

The Company offers a range of innovative and customized solutions for businesses and government institutions under one roof.

The financial year of the Company is from 1st October -30th September.

(iii) The company has issued only one class of equity shares having a par value of Rs. 10 /- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

Note: (i) Cash credit with banks are secured by hypothecation of all tangible moveable assets, including stocks of raw materials, finished goods, goods-in-process, book debts, monies receivable and a second charge on fixed assets of the Company.

(ii) Term Loans from The Zoroastrian Co-operative Bank Limited are secured by pari-passu first charge both on the present and future fixed assets, (all tangible moveable machinery and plant) of the company.

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

(i) Other Trade receivables include Rs. 620.71 lakhs (Previous year: Rs.1,043.66 lakhs), which in accordance with the terms of contracts, were not due for payment as at the year end.

*represents payment of Rs. 7.00 lakhs (Previous year Rs. 3.35 lakhs ) for taxation matters to an affiliated firm in view of the networking arrangement which is registered with the Institute of Chartered Accountant of India.

2. The Board of Directors of the Company at its meeting held on April 03, 2014, inter alia, has approved the restructuring of the Company''s Automation & Control segment , by restricting operations and reducing expenditure with a view to minimize losses. This will be subject to necessary approvals / consents / permissions. However, the Company will continue to focus on building its position in the Network Systems segment.

3. The Company has accumulated losses as at 30th September,2014 which has substantially eroded the Company''s net worth. Notwithstanding this, these financial have been prepared on going concern basis in view of support letter from the parent company and the business plan of the Company.

4. In the year 2006, the Company filed arbitration proceedings against Jawaharlal Nehru Port Trust (JNPT) for enforcement of its claim in respect of the additional work carried out, wrongful deduction of liquidated damages and encashment of bank guarantee by JNPT. The Arbitration award was passed in favour of the Company on 06th February, 2012. The said award, however, was challenged by JNPT in the Hon''ble Bombay High Court which dismissed the plea on 06th February, 2014 and awarded the claim to the Company. JNPT paid in June, 2014 Rs 1,303.40 lakhs as decretal dues (including interest and costs) to the Company (of which Rs 62.50 lakhs is included in other income as provision no longer required written back).

5. In respect of equipments given on operating leases, no refundable deposits are taken and the lease rentals for the year of Rs. 244.43 lakhs (Previous Year: Rs. 319.14 lakhs) recognized in the Statement of Profit and Loss are included under Income from Services Rendered.

6. Contingent Liabilities (Rs. in Lakhs)

Particulars 2013-141 2012-73

a) Guarantees issued by the company on behalf of its subsidiary (amount of loan outstanding 2,000.00 2,000.00 against this guarantee is Rs. 371.00 lakhs (Previous year: Rs. 335.70 lakhs ))

b) Claims against the company not acknowledged as debt comprises of:

i) Excise duty, sales tax and service tax claims disputed by the company relating to 654.77 362.46 issues of applicability and classification

ii) Custom duty (excluding claims where amounts are not ascertainable) 29.28 29.28

c) Taxation matters

Demand against the company not acknowledged as debt and not provided for, relating 631.33 - to issues of deductibility and taxability in respect of which company is in appeal Future cash outflows in respect of the above matters are determinable only on receipt of judgments/decisions pending at various forums / authorities Provident Fund:

The Company makes contribution towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trust formed by the Company. The Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefit.

The Rules of the Company''s provident fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared by Central Government under para 60 of the Employees'' Provident Fund Scheme, 1952 then the shortfall shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any shortfall in the foreseeable future.

III. Long Term Employee Benefit - Compensated Absences

Provision for Compensated Absences has been made on the basis of actuarial valuation report as at the Balance Sheet date. The charge for the year of Rs. 41.42 lakhs (Previous Year: Rs. 15.61 lakhs)has been included in the Statement of Profit and Loss.

* Considered to the extent that there are compensating timing differences, reversal of which will result in sufficient income against which this can be realized.

7 Notes:

The consumption in value has been ascertained on the basis of opening stock plus purchases less closing stock and includes adjustment in respect of write-off of obsolete raw materials and components.

8. The tax year for the company being the year ending 3 1st March, the provision for taxation for the period is the aggregate of the provision made for the six months ended 3 1st March, 2014 and the provision based on the figures for the remaining six months up to 30th September, 2014, the ultimate tax liability of which will be determined on the basis of the figures for the period 1st April, 2014 to 31st March, 2015.

9. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

Sep 30, 2013

A Background

The Company was formed in the year 1940 as National Ekco Radio & Engineering Co Ltd (JV between E K Cole &Fazalbhoy). The Company became "Nelco Limited" in I969.

In I 969, the Company was pre-dominantly the manufacturer of audio-visual appliances like Television, calculator, Servo Voltage Stabilizers and such other office equipment. In late 90''s the Company entered in Automation business (SCADA, Traction & Drives), which was divested in 20I0. In I995 the Company through its subsidiary, Tatanet Services Limited (TNSL) first installed VSAT captive hub for Tata Group companies'' connectivity and in 2003 it entered into the public domain in VSAT services.

Nelco is today focused in offering solutions in the areas of Integrated Security & Surveillance, VSAT connectivity & Managed Services. The Company offers a range of innovative and customized solutions for businesses and government institutions under one roof.

(i) The company has issued only one class of equity shares having a par value of Rs.I0 /- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

Note: (i) Cash credit with banks and Buyer''s line of credit are secured by hypothecation of all tangible moveable assets, including stocks of raw materials, finished goods, goods-in-process, book debts, monies receivable and a second charge on fixed assets of the Company.

(ii) Term Loans from The Zoroastrian Co-operative Bank Limited are secured by pari-passu first charge both on the present and future fixed assets, (all tangible moveable machinery and plant) of the company.

1 In an earlier year, the Company had transferred the Traction electronics, Supervisory Control and Data Acquisition (SCADA) and Industrial drives businesses (together referred to as "Businesses")to Crompton Greaves Limited (CGL).

The Company entered into a final settlement agreement with CGL considering all claims and differences that CGL had on account of all the associated risks and liabilities of the transferred Businesses under the Original Agreement and the effects of these were given to in the financial statement for the year ended September 30, 20II. Further, during the previous year, the Company had received Rs.267.89 lakhs on account of recovery of the liquidated damages in respect of these businesses.

2 In respect of equipments given on operating leases, no refundable deposits are taken and the lease rentals recognised in the Statement of Profit and Loss for the period included under Income from Services Rendered under Income from Operations aggregate to Rs. 3I9.I4 lakhs (Previous Year: Rs. 343.0I Lakhs).

3 Contingent Liabilities (Rs. in Lakhs)

Particulars 2012-13 2011-12

a) Guarantees issued by the company on behalf of its subsidiary 2,000.00 2,000.00 (amount of loan outstanding against this guarantee is Rs. 335.70 lakhs

(Previous year: Rs. II6.00 lakhs))

b) Claims against the company not acknowledged as debt comprises of:

i) Excise duty, sales tax and service tax claims disputed by the company 362.46 4I6.29 relating to issues of applicability and classification

ii) Other matters (excluding claims where amounts are not ascertainable) 29.28 29.28

Future cash outflows in respect of the above matters are determinable only on receipt of judgments/decisions pending at various forums / authorities

* above excludes charge for gratuity, provision for leave encashment as separate actuarial valuation figures are not available.

The above information regarding micro enterprises and small enterprises has been determined on the basis of information available with the company. This has been relied upon by the auditors.

Provident Fund:

The Company makes contribution towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trust formed by the Company. The Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefit.

The Rules of the Company''s provident fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared by Central Government under para 60 of the Employees'' Provident Fund Scheme,I952 then the shortfall shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any shortfall in the foreseeable future.

Note: The above disclosure is made to the extent of information given by the actuaries.

III. Long Term Employee Benefit - Compensated Absences

Provision for Compensated Absences has been made on the basis of actuarial valuation report as at the Balance Sheet date. The charge for the year of Rs.I5.6I lakhs (Previous Year: Rs. 45.22 lakhs) has been included in the Statement of Profit and Loss.

* Considered to the extent that there are compensating timing differences, reversal of which will result in sufficient income against which this can be realized.

Note : Figures in brackets pertain to the previous year

4 The Company has incurred loss for the year and the accumulated losses as at 30th September,2013 has substantially eroded the Company''s net worth. Notwithstanding this, these financial statements have been prepared on going concern basis in view of the financial support of the parent company and the business plan of the Company.

5 The tax year for the company being the year ending 3Ist March, the provision for taxation for the period is the aggregate of the provision made for the six months ended 3Ist March, 20I3 and the provision based on the figures for the remaining six months up to 30th September, 20I3, the ultimate tax liability of which will be determined on the basis of the figures for the period Ist April, 20I3 to 3Ist March, 20I4.

6 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

Sep 30, 2010

1. During the previous year, the Company had extended its financial year to eighteen months to end on September 30, 2009. The Current financial year is for 12 months ended September 30, 2010.

2. On April 29, 2010, the Board of Directors approved the transfer of Traction Electronics, SCADA and Industrial Drives businesses (sub-divisions of Automation and Control segment) (together referred to as "Businesses") to Crompton Greaves Limited (CGL). The transfer is consistent with the Companys long-term strategy to focus on building its position in Strategic Electronics and Network Systems (Tatanet) and to pursue further synergistic opportunities in related areas.

On July 28, 2010 (being the Closing date), the Company transferred these Businesses as a "going concern" to CGL on a slump sale basis for a total consideration of Rs. 8,100 lakhs. Additional Rs. 1,100 lakhs has not been received as the financial parameters to be met by September 30, 2010 were not achieved by the company.

3. However, at the request of Crompton Greaves Limited, the company has continued with certain operations of the transferred businesses, pending assignment of certain contracts by customers to CGL. Consequently Sales, Income from Service rendered, Raw material consumed and sub-contracting expenses in respect of these contracts during the period July 28,2010 to September 30,2010 have been included under the respective head in these financial statements.

Particulars Rupees (000)

Sales 39,513

Income from Service rendered 7,164

Raw Material Consumed 39,128

Sub-contracting expenses 7,164

4. Consequent to the reasons stated in note 2, 3 and 4 above, figures for current year are not comparable with previous period.

* Represents payments of Rs.275 (000) (Previous Year: Rs. 1,385) (excluding service tax) for taxation matters to an affiliated firm in view of the networking arrangement which is registered with Institute of Chartered Accountants of India.

5. Sundry Debtors includes Rs. 383,677 (000) (Previous Year: Rs. 749,283 (000)), which in accordance with the terms of the contracts, were not due for payments as at 30th September, 2010 (30th September, 2009).

6. The tax year for the company being the year ending 31st March, the provision for taxation for the period is the aggregate of the provision made for the six months ended 31st March, 2010 and the provision based on the figures for the remaining six months up to 30th September, 2010, the ultimate tax liability of which will be determined on the basis of the figures for the period 1st April, 2010 to 31st March, 2011.

II. Defined Benefit Plan

a) Provident Fund

The company makes monthly contributions to Provident Fund managed by a trust administered by the company for qualifying employees. Under the schemes, the company is required to contribute a specified percentage of the payroll costs to fund the benefits. During the year the company has contributed Rs. 9,167 (000) (Previous Year: Rs. 13,466 (000)) to the Provident Fund Trust.

In keeping with the Guidance on implementation of Accounting Standard (AS) 15 (Revised) on Employees Benefits notified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trust are treated as Defined Benefit Plans, since the company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the Management, the Actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in the absence of guidance from the Actuarial Society of India. Accordingly, the company is currently not in position to provide other related disclosures as required by the aforesaid AS-15 read with the Accounting Standards Board Guidance. Having regard to the assets of the fund and the return on investments, the entity does not expect any deficiency in the foreseeable future. Accordingly, no provision is required towards the guarantee given for notified interest rates.

III. Long Term Employee Benefit - Compensated Absences

Provision for Compensated Absences has been made on the basis of actuarial valuation report as at the Balance Sheet date. The charge for the year of Rs. 4,713 (000) (Previous Year: Rs. 7,857 (000)) has been made in the Profit and Loss Account.

7. (a) The aggregate lease rentals in respect of operating leases for the period charged as Lease Rentals in the Profit and Loss Account aggregate to Rs. 10,421 (000) (Previous Year: Rs. 6,048 (000)).

(b) In respect of equipments given on operating leases, no refundable deposits are taken and the lease rentals recognised in the Profit and Loss Account for the period included under Income from Services Rendered under Income from Operations aggregate to Rs.29,386 (000) (Previous Year: Rs. 40,642 (000)).

8. Provision for Warranty

Provision for Warranty relates to warranty provision made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under free warranty period ranging from one to three years.

9. Additional information pursuant to the Provisions of Paragraphs 3(i)(a) and (ii), 4C and 4D, of Part II of Schedule VI to the Companies Act, 1956.

10. Related Party Disclosure:

I. Holding company - The Tata Power Company Limited

II. Related Parties where control exists

a. Subsidiary - Tatanet Services Limited

III. Other parties with whom transactions have taken place during the year

a. Fellow Subsidiary - Af-taab Investment Company Limited

b. Associate - Nelito Systems Limited

IV. Key Management Personnel

a. Executive Directors - Mr. K . A. Mahashur

Mr. Z. J. Engineer (Retired on July 29, 2010)

11. Previous years figures have been regrouped wherever necessary.

Sep 30, 2009

1. Sundry Debtors includes Rs. 749,283 (000) (Previous Year: Rs. 368,207 (000)), which in accordance with the terms of the contracts, were not due for payments as at 30th September, 2009 (31st March, 2008).

2. The tax year for the company being the year ending 31 st March, the provision for taxation for the period is the aggregate of the provision made for the twelve months ended 31 st March, 2009 and the provision based on the figures for the remaining six months up to 30th September, 2009, the ultimate tax liability of which will be determined on the basis of the figures for the period 1st April, 2009 to 31st March, 2010.

3. The company has revised its accounting policy in respect of Pension payments which are part of the voluntary retirement compensation with effect from 1st April, 2008. The compensation on this account is now amortised equally upto the financial year ending 31st March, 2010 in line with Accounting Standard 15 "Employee Benefits" which were hitherto being amortised as and when they accrued in terms of the respective Voluntary Retirement Schemes. Consequently deferred revenue expenditure (Voluntary Retirement Scheme) for the eighteen months period ended 30th September, 2009 is higher by Rs. 19,304 (000) and the profit after tax for the eighteen months period ended is lower by Rs. 12,742 (000).

4. The company has revised its accounting policy in respect of valuation of car park/ property under development disclosed under Inventories.These inventories which were hitherto being valued at market value on the basis of the Valuers Report are now being valued in terms of the Accounting Standard 2 "Valuation of Inventories" at cost or net realisable value, whichever is lower. Consequently the carrying value of such inventories has been reduced and the increase in Finished Products and work-in-progress for the eighteen months period ended 30th September, 2009 is lower by Rs.3,803 (000) and the profit after tax for the eighteen months period ended is lower by Rs. 3,803 (000) respectively.

5. Contingent Liabilities

(Rupees 000)

2008-09 2007-08 Eighteen Twelve months months

a) Guarantees issued by the company on behalf of its subsidiary 100,000 60,000

b) Claims against the company not acknowledged as debt comprises of:

i) Excise duty, sales tax and service tax claims disputed by the 229,434 229,434 company relating to issues of applicability and classification.

ii) Arbitration proceeding initiated for non payment of royalty and 47,404 -- interest thereon under the technical knowhow agreement

iii) Other matters (excluding claims where amounts are not ascertainable) 10,756 10,756

c) Taxation Matters

Demand against the company not acknowledged as debt and not provided for, relating to issues of deductibility and taxability in respect of which company is in appeal and exclusive of the effects of similar matters in respect of assessments remaining to be completed. 36,656 27,517

6. EMPLOYEE BENEFITS

II. Defined Benefit Plan

a) Provident Fund

The company makes monthly contributions to Provident Fund managed by a trust administered by the company for qualifying employees. Under the schemes, the company is required to contribute a specified percentage of the payroll costs to fund the benefits. During the year the company has contributed Rs.13,466 (000) (Previous Year: Rs. 8,894 (000)) to the Provident Fund Trust.

In keeping with the Guidance on implementation of Accounting Standard (AS) 15 (Revised) on Employees Benefits notified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trust are treated as Defined Benefit Plans, since the company is obligated to meet interest shortfall, if any, with respect to covered employees. According to the Management, the Actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in the absence of guidance from the Actuarial Society of India. Accordingly, the company is currently not in position to provide other related disclosures as required by the aforesaid AS-15 read with the Accounting Standards Board Guidance. Having regard to the assets of the fund and the return on investments, the entity does not expect any deficiency in the foreseeable future. Accordingly, no provision is required towards the guarantee given for notified interest rates.

III. Long Term Employee Benefit - Compensated Absences

Provision for Compensated Absences has been made on the basis of actuarial valuation report as at the Balance Sheet date. The charge for the year of Rs.7,857 (000) (Previous Year: Rs. 7,912 (000)) has been made in the Profit and Loss Account.

7. (a) The aggregate lease rentals in respect of operating leases for the period charged as Lease Rentals in the Profit and Loss Account aggregate to Rs.6,048 (000) (Previous Year: Rs. 6,870 (000)).

8. Related Party Disclosure:

I. Holding company - The Tata Power Company Limited

II. Related Parties where control exists

a. Subsidiary - Tatanet Services Limited

III. Other parties with whom transactions have taken place during the year

a. Fellow Subsidiary - Af-taab Investment Company Limited

b. Associate - Nelito Systems Limited

IV. Key Management Personnel

a. Executive Directors - Mr. K . A. Mahashur

Mr. Z. J. Engineer

9. The company has changed its financial accouting year from April - March to October - September. The current financial period is for eighteen months commencing on 1st April, 2008 and ending on 30th September, 2009. Consequently, the figures for the current period are not comparable with the previous year.

10. Previous years figures have been regrouped wherever necessary.

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