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Notes to Accounts of Rane (Madras) Ltd.

Mar 31, 2019

1. Summary of significant accounting policies, critical judgements and Key estimates

General Information

Rane (Madras) Limited (The "Company") is a public limited Company incorporated in India with its registered office in Chennai, Tamilnadu, India. The Company is listed on the Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited, Mumbai.

The Company is engaged in the manufacture of Steering and Suspension Linkage Products, Steering Gear Products and High Precision Aluminium Die Casting Products. The Company is a significant supplier to major manufacturers of passenger cars, utility vehicles and Farm tractors across the Globe and as such operates in a single reportable business segment of ''components for transportation industry''. The Company is having six manufacturing facilities at Tamilnadu, Puducherry, Karnataka, Uttarakhand and Telangana.

Impairment tests for Goodwill

Goodwill has been allocated for impairment testing purposes to the identified cash-generating units.

The Company tests whether Goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management.

Based on the assessment, management has concluded that there is no indicator of impairment for Goodwill.

2.1 The Company values the shares of the subsidiary annually in order to assess the possibility of any impairment. To carry out the above assessment, projections of future cash flows based on the most recent long-term forecasts, including selling price as well as volumes are estimated over the next five years. The estimation of sales volumes is based on management''s assessment of probability of securing the new businesses in the future. Based on the valuation as per the current projections, it has been concluded that there is no impairment of the investments made in/loans and guarantees given to Rane Precision Die Casting Inc.,USA the wholly owned step down subsidiary (either directly or through the intermediate subsidiary, Rane (Madras) International Holdings B.V) aggregating to Rs. 96.83 Crores. The valuation is dependent on successfully securing new businesses and is also subject to fluctuations in the market demand.

* Refer Note 40 for details of closing inventories of raw materials, work-in-progress and finished goods The cost of inventories recognised as an expense during the year is as per Note No. 24.

The cost of inventories recognised as an expense includes Rs. 0.10 (during 2017-18:'' Nil) in respect of write-downs of inventory to net realisable value, and has been reduced by '' Nil (during 2017-18:Rs. 0.31) in respect of the reversal of such write-downs.

The mode of valuation of inventories has been stated in note 1.17

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The range of provision created as a percentage of outstanding under various age groups below 120 days past due comes to 0% - 10%. The Company as a policy provides for 100% for outstanding above 120 days past due.

Rights, preferences and restrictions attached to Shares mentioned above :

The Company has one class of equity share having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.

Additions during the year represents fresh issue of equity shares to Rane Holdings Limited on Preferential allotment.

2.2 Details of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date

During the year ended March 31, 2014, 3,46,504 equity shares of Rs. 10 each fully paid up were allotted to shareholders of Rane Holdings Limited (Holding Company) in the proportion of one equity share of Rs. 10 each in the Company for every 30 equity shares of Rs. 10 each held in the transferor Company (Rane Diecast Limited) pursuant to the Scheme of Arrangement between Rane Diecast Limited and the Company.

The Companies Act requires that where a Company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to the redemption of preference shares issued in current and earlier years.

The amount that can be distributed by the Company as dividend to its equity shareholders is determined based on the separate financial statements of the Company and also considering the requirements of the Companies Act, 2013.

In respect of the year ended March 31, 2019, the Board had declared and paid an interim dividend on equity shares at Rs. 4.00 per equity share amounting to Rs. 5.76 Crores inclusive of Dividend Distribution Tax of Rs. 0.98 Crores (For year ended March 31, 2018 Rs. 4.50 per equity share amounting to Rs. 6.29 Crores inclusive of Dividend Distribution Tax of Rs. 1.06 Crores). The Directors propose that a final dividend of Rs. 4.50 per share (For year ended March 31, 2018 Rs. 7.50 per share) be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 5.39 Crores along with Dividend Distribution tax of Rs. 1.11 Crores (For the year ended March 31, 2018 Rs. 8.71 Crores along with Dividend Distribution tax of Rs. 1.79 Crores).

The cumulative effective portion of gain or losses arising on changes in the fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit and loss or are included as an adjustment to the cost of the related non-financial hedged item.

The Company has designated certain foreign currency contracts as cash flow hedges in respect of foreign exchange risks.

Summary of borrowing arrangements

Secured loans include loan from banks. The Secured Loans outstanding as at March 31, 2019 are secured by a charge created on the Company''s fixed assets both present and future (excluding Velachery and Mysuru properties).

(i) Information about individual provisions and significant estimates Provision for leave encashment

The provision for employee benefits includes annual leave and vested long service leave entitlements accrued.

*Note

(i) Consequent to introduction of Goods and Services Tax (GST) w.e.f July 2017, revenue for the year ended March 31, 2019 and March 31, 2018 are presented net of GST in compliance with Indian Accounting Standard (Ind AS) 18 - âRevenueâ. The revenue from operations for the year ended March 31, 2018 are inclusive of excise duty till June 2017, and hence are not comparable with the revenue from operations for the year ended March 31, 2019 to that extent.

(ii) The Company has applied Ind AS 115 âRevenue from contracts with customersâ with effect from April 1, 2018. The performance obligations under all sales contracts are satisfied at a point of time. Ind AS 115 did not have a material impact on the amount or timing of recognition of reported revenue.

3.1 Disaggregation of the revenue Information

The table below presents disaggregated revenues from contracts with customers which is recognised based on goods transferred at a point of time by geography and offerings of the Company.

As per the management, the below disaggregation best depicts the nature, amount, timing and uncertainty of how revenues and cash flows are affected by industry, market and other economic factors.

3.2 Trade Receivables

The Company classifies the right to consideration in exchange for deliverables as receivable.

A receivable is a right to consideration that is unconditional upon passage of time. Revenue is recognized as and when the related goods are delivered to the customer.

Trade receivable are presented net of impairment in the Balance Sheet.

3.3 Transaction price allocated to the remaining performance obligation

Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity''s performance completed to date, typically those contracts where invoicing is on time and material basis.

4. Financial instruments

4.1 Capital management

For the purpose of the Companyâs capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company.

The Companyâs capital management is intended to create value for shareholders by achieving the long term and short term goals of the Company, maintain the Company as a going concern and maintain optimal structure.

The Company determines the amount of capital required on the basis of annual operating plan coupled with long term and strategic investment and expansion plans. The funding needs are met through cash generated from operations, long term and short term bank borrowings and issue of non-convertible debt securities as and if the need arises.

The Company monitors the capital structure on the basis of debt to equity, debt to capital employed etc. and the maturity profile of the overall debt portfolio of the Company.

Net debt includes interest bearing borrowings less cash and cash equivalents, other bank balances (including non-current earmarked balances) and current investments.

* Fair Value Hierarchy (Level 1,2,3)

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This consists of listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques 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. This is the case for unlisted equity securities and deposits included in level 3.

4.2 Financial risk management objectives

The Company''s activities expose it to a variety of financial risks : market risk, credit risk and liquidity risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk is influenced mainly by the individual credit profile of each customer and the concentration of risk from the top few customers.

The risk management objective of the Company is to hedge risk of change in the foreign currency exchange rates associated with it''s direct & indirect transactions denominated in foreign currency. Since most of the transactions of the Company are denominated in its functional currency (INR), any foreign exchange fluctuation affects the profitability of the Company and its financial position. Hedging provides stability to the financial performance by estimating the amount of future cash flows and reducing volatility.

(a) Market risk

The Company operates on a global platform and a portion of the business is transacted in multiple currencies. Consequently, the Company is exposed to foreign exchange risk through its sales in the United States, European Union and other parts of the world, and purchases from overseas suppliers in different foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign Currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange and option contracts.

Foreign Currency sensitivity analysis

The Company is mainly exposed to US Dollar and EURO currencies. The following table details the Company''s sensitivity to a 5% increase and decrease against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes loans to foreign operations within the Company where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A positive number below indicates an increase in profit or equity where the Indian Rupee strengthens by 5% against the relevant currency. For a 5% weakening of the Indian Rupee against the relevant currency, there would be a comparable impact on the profit or equity.

In management''s opinion, the sensitivity analysis is not a complete reflection of the inherent foreign exchange risk considering the fact that the exposure at the end of the reporting period does not reflect the exposure during the year.

Derivative Financial Instruments

The Company operates on a global platform and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows, both incoming and outgoing.

The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. It is the policy of the Company to enter into forward foreign exchange and option contracts to cover specific foreign currency payments and receipts within a specific range. The Company also enters into forward foreign exchange contracts to manage the risk associated with anticipated sales and purchase transactions ranging from 6 months to one year by covering a specific range of exposure generated. Adjustments are made to the initial carrying amount of non-financial hedged items when the anticipated sale or purchase transaction takes place.

The Company has designated foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedge reserve are expected to occur and reclassified to revenue in the Statement of Profit and loss within 3-12 months.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instruments, including whether the hedging instruments is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

(b) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, investments carried at cost value and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

(i) Expected credit loss for investments, loans and security deposits

The estimated gross carrying amount at default is Nil (March 31, 2018: Nil) for Investments, loans and deposits. Consequently there are no expected credit loss recognised for these financial assets.

The credit risk on derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(ii) Expected credit loss for trade receivables under simplified approach

Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Company has adopted a policy of only dealing with creditworthy counterparties, where appropriate, as a means of mitigating the risk of financial loss from defaults.

In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and percentage used in the provision matrix.

(c) Liquidity risk management

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Companyâs liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.

Liquidity and interest risk tables

The following tables detail the Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

In addition, the Company is exposed to liquidity risk in relation to Corporate guarantees given to banks provided by the Company. The Company''s maximum exposure in this respect is the maximum amount the Company would have to pay if the guarantee is invoked. These Corporate guarantees have been issued to banks under the financing facilities agreements entered into its subsidiaries companies. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided. (Refer note 37)

5. Segment reporting

The Company is engaged in the activities related to manufacture and supply of auto components for transportation industry. The Chief Operating Decision Maker (Board of Directors) review the operating results as a whole for purposes of making decisions about resources to be allocated and assess its performance, the entire operations are to be classified as a single business segment, namely components for transportation industry. The geographical segments considered for disclosure are - India and Rest of the World. All the manufacturing facilities are located in India. Accordingly, there is no other reportable segment as per Ind AS 108 Operating Segments.

The geographical segments considered for disclosure are - India and Rest of the World. All the manufacturing facilities are located in India. ** Non-Current assets are used in the operations of the Company to generate revenues both in India and outside India.

5.1 Information about major customers

The Company is a manufacturer of Steering and Suspension Linkage Products, Steering Gear Products, Hydraulic Products, Die casting Products and other auto components for transportation industry.

The Company has three major customers (greater than 10% of total sales) and Revenue from sale of auto components to these major customers aggregated to Rs. 481.40 Crores (March 31,2018, Rs. 448.64 Crores).

6. Employee benefit plans

A. Defined contribution plans

The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.

The major defined contribution plans operated by the Company are as below:

(a) Provident fund

In accordance with the Employeeâs Provident Fund and Miscellaneous Provisions Act, 1952, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary.

The contributions, as specified under the law, are made to the Government.

(b) Superannuation fund

The Company has a superannuation plan for the benefit of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn.

The Company contributes up to 15% of the eligible employeesâ salary to LIC every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.

The total expense recognised in profit or loss of Rs. 7.26 Crores (for the year ended March 31,2018: Rs. 7.40 Crores) represents contributions payable to these plans by the Company at rates specified in the rules of the plans. As at March 31, 2019, contributions of Rs. 1.07 Crores (as at March 31, 2018: Rs. 1.11 Crores) due in respect to 2018-19 (2017-18) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.

B. Defined benefit plans

The defined benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Details of defined benefit obligation and plan assets:

(a) Leave obligations

The leave obligations cover the Companyâs liability for earned leave.

The amount of provision of Rs. 1.33 Crores (March 31, 2018 - Rs. 1.11 Crores) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

(b) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts; funded to LIC. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation.

The current service cost and the net interest expense for the year are included in the ''Employee benefits expense'' line item in the statement of profit and loss.

The remeasurement of the net defined benefit liability is included in other comprehensive income.

(v) Risk Exposure

The Company has invested the plan assets with the insurer managed funds. The insurance Company has invested the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds, Money Market Instruments and Time Deposits. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the Companyâs policy for plan asset management and other relevant factors.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

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.

7. Operating lease arrangements

The Company as lessee Land

The Company has taken land on lease for a periods of ranging from 35 to 90 years (Pantnagar and Singur-90 years, Sanand- 35 years) and the same has been classified as prepayments under other non-current assets. The lease has been considered as operating lease due to indefinite useful life of land.

Vehicles

The Company has taken vehicles under operating lease for a period ranging upto 5 years. The details of the maturity profile of future operating lease payments are furnished below:

Cancellable operating Leases

The Company has cancellable operating leases for business purpose which are renewable on a periodic basis.

The lease payments under cancellable operating lease for the year ended March 31, 2019 amounts to Rs. 0.50 Crores (For the year ended March 31, 2018 Rs. 0.73 Crores).

8. Events after the reporting date

The final dividend amount of Rs. 4.50 per share recommended by the Directors is subject to the approval of shareholders in ensuing Annual General Meeting.

9. Exceptional item

During the quarter ended September 30, 2017, the Company had recorded an aggregate claim of Rs. 10.08 Crores from a customer towards certain product quality issues. The Company has an insurance policy to cover product recall/ guarantee claims/ costs. The claim has been intimated to the insurer and the survey is in progress. This has been considered as insurance claim receivable as the Company is confident of recovering this sum under the insurance policy.

10. Details on Derivative Instruments

I. The following derivative positions are open as at March 31, 2019

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

11. The figures for the previous year have been regrouped wherever necessary to conform to current yearâs classification. Figures have also been rounded off to Crores of rupees.

12. Approval of financial statements

The financial statements were approved for issue by the Board of Directors on May 23, 2019.

Mar 31, 2018

Rights, preferences and restrictions attached to Shares mentioned above :

The Company has one class of equity share having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.

1.1 Details of shares issued for consideration other than cash during the period of five years immediately preceeding the reporting date

During the year ended 31 March, 2014, 3,46,504 equity shares of Rs. 10 each fully paid up were alloted to shareholders of Rane Holdings Limited (Holding Company) in the proportion of one equity share of Rs. 10 each in the Company for every 30 equity shares of Rs. 10 each held in the transferor company (Rane Diecast Limited) pursuant to the Scheme of Arrangement between Rane Diecast Limited and the Company.

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 profit or loss.

Additions during the year represents amounts transferred from retained earnings consequent to repayment of outstanding preference shares to Rane Holdings Limited

In respect of the year ended 31 March, 2018, the board had declared and paid an interim dividend on equity shares at Rs. 4.50 per equity share amounting to Rs. 6.29 crores inclusive of Dividend Distribution Tax of Rs. 1.06 crores (For year ended 31 March, 2017 Rs. 2.00 per equity share amounting to Rs. 2.53 crores inclusive of Dividend Distribution Tax of Rs. 0.43 crores). The directors propose that a final dividend of Rs. 7.50 per share (For year ended 31 March, 2017 Rs. 4.00 per share) be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 8.71 crores along with Dividend Distribution tax of Rs. 1.79 crores (For the year ended 31 March, 2017 Rs. 4.20 crores along with Dividend Distribution tax of Rs. 0.86 crores).

(i) Information about individual provisions and significant estimates Provision for leave encashment

The provision for employee benefits includes annual leave and vested long service leave entitlements accrued. Provision for Warranty Refer Note 1.25

(ii) Movements in provisions

Movements in each class of provision during the financial year, are set out below:

Note :

(i) The deferred revenue comprise the benefit received from government as grant at a subsidised price for setting up business and government grant pertaining to capital goods imported under EPCG Scheme and recognised the same as deferred income with the corresponding impact in Property, Plant and Equipment.

2 Financial Instruments

2.1 Capital management

For the purpose of the Companyâs capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company.

The Company monitors the capital structure on the basis of debt to equity, debt to capital employed etc and the maturity profile of the overall debt portfolio of the Company.

Net debt includes interest bearing borrowings less cash and cash equivalents, other bank balances (including non-current earmarked balances) and current investments.

2.2 Financial risk management objectives

The Companyâs activities expose it to a variety of financial risks : market risk, credit risk and liquidity risk. The Companyâs focus is to forsee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Companyâs exposure to credit risk is influenced mainly by the individual credit profile of each customer and the concentration of risk from the top few customers.

The risk management objective of the company is to hedge risk of change in the foreign currency exchange rates associated with itâs direct and indirect transactions denominated in foreign currency. Since most of the transactions of the company are denominated in its functional currency (INR), any foreign exchange fluctuation affects the profitability of the Company and its financial position. Hedging provides stability to the financial performance by estimating the amount of future cash flows and reducing volatility.

(a) Market Risk

The Company operates on a global platform and a portion of the business is transacted in multiple currencies. Consequently, the Company is exposed to foreign exchange risk through its sales in the United States,European Union and other parts of the world, and purchases from overseas suppliers in different foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign Currency risk management

Foreign Currency sensitivity analysis

The Company is mainly exposed to US Dollar and EURO currencies.The following table details the Companyâs sensitivity to a 5% increase and decrease against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes loans to foreign operations within the Company where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A positive number below indicates an increase in profit or equity where the Indian Rupee strengthens by 5% against the relevant currency. For a 5% weakening of the Indian Rupee against the relevant currency, there would be a comparable impact on the profit or equity.

In managementâs opinion, the sensitivity analysis is not a complete reflection of the inherent foreign exchange risk considering the fact that the exposure at the end of the reporting period does not reflect the exposure during the year.

Derivative Financial Instruments

The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. It is the policy of the Company to enter into forward foreign exchange and option contracts to cover specific foreign currency payments and receipts within a specific range. The Company also enters into forward foreign exchange contracts to manage the risk associated with anticipated sales and purchase transactions ranging from 6 months to One year by covering a specific range of exposure generated. Adjustments are made to the initial carrying amount of non-financial hedged items when the anticipated sale or purchase transaction takes place.

The reconciliation of cash flow hedge reserve for the year ended 31 March, 2018 is as follows :

(b) Credit risk management

(i) Expected credit loss for investments, loans and security deposits

The estimated gross carrying amount at default is Nil (31 March, 2017: Nil, 31 March, 2016: Nil) for Investments, loans and deposits. Consequently there are no expected credit loss recognised for these financial assets.

The credit risk on derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(ii) Expected credit loss for trade receivables under simplified approach

Liquidity and interest risk tables

The following tables detail the Companyâs remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

In addition, the Company is exposed to liquidity risk in relation to Corporate guarantees given to banks provided by the Company. The Companyâs maximum exposure in this respect is the maximum amount the Company would have to pay if the guarantee is invoked. These Corporate guarantees have been issued to banks under the financing facilities agreements entered into its subsidiaries companies. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided. (Refer note 37)

3 Segment Reporting

3.1 Product wise break up - Please refer note no. 41

3.2 Geographical Information

The Companyâs revenue from external customers by location of operations and information about its non current assets** by location of operations are detailed below:

3.3 Information about major customers

Revenue from sale of auto components to largest customers (greater than 10% of total sales) is Rs. 448.64 crores (31 March, 2017, Rs. 329.14 crores).

4 Employee benefit plans

A. Defined contribution plans

The major defined contribution plans operated by the Company are as below:

(a) Provident fund

The contributions, as specified under the law, are made to the Government.

(b) Superannuation fund

The total expense recognised in profit or loss of Rs. 7.40 crores (for the year ended 31 March, 2017: Rs. 6.28 crores) represents contributions payable to these plans by the company at rates specified in the rules of the plans. As at 31 March, 2018, contributions of Rs. 1.11 crores (as at 31 March, 2017: Rs. 0.93 crores) due in respect to 2017-18 (2016-17) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.

B. Defined benefit plans

The defined benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

(a) Leave obligations

The leave obligations cover the Companyâs liability for earned leave.

The amount of provision of Rs. 1.11 crores (31 March, 2017 - Rs. 1.03 crores, 01 April, 2016 - Rs. 0.81 crores) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

The key assumptions used for the calculation of provision for long term compensated absences are as under:

(b) Gratuity

The current service cost and the net interest expense for the year are included in the âEmployee benefits expenseâ line item in the statement of Profit and Loss.

The remeasurement of the net defined benefit liability is included in Other Comprehensive Income.

(v) Risk Exposure

The Company has invested the plan assets with the insurer managed funds. The insurance company has invested the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds, Money Market Instruments and Time Deposits. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the companyâs policy for plan asset management and other relevant factors.

Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 7.7 years (2017-7.9 years, 2016-7.7 years). The expected maturity analysis of undiscounted gratuity is as follows:

5 Operating lease arrangements The Company as lessee Land

The Company has taken land on lease for a period of 90 years (Pantnagar) and 20 years (Sanand) and the same has been classified as prepayments under other non-current assets. The lease has been considered as operating lease due to indefinite useful life of land.

Vehicles

The Company has taken vehicles under operating lease for a period ranging upto 5 years. The details of the maturity profile of future operating lease payments are furnished below:

Cancellable operating leases

The Company has cancellable operating leases for business purpose which are renewable on a periodic basis. The lease payments under cancellable operating leaes for the year ended 31 March, 2018 amounts to Rs. 0.73 crores (For the year ended 31 March, 2017 Rs.0.64 crores)

6 Events after the reporting date

The final dividend amount of Rs. 7.50 per share recommended by the directors is subject to the approval of shareholders in ensuing Annual General Meeting.

7 Exceptional Item

During the quarter ended 30 September, 2017, the Company had recorded an aggregate claim of Rs. 10.08 crores from a customer towards certain product quality issues.The Company has an insurance policy to cover product recall/ guarantee claims/ costs. The claim has been intimated to the insurer and has been considered as insurance claim receivable as the Company is confident of recovering this sum under the insurance policy.

8 Details on Derivative Instruments

I. The following derivative positions are open as at 31 March, 2018

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes, but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

Outstanding forward exchange contracts and option contracts entered into by the Company as on 31 March, 2018

9 Transition to Ind AS

These are the Companyâs first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March, 2018, the comparative information presented in these financial statements for the year ended 31 March, 2017 and in the preparation of an opening Ind AS balance sheet at 01 April, 2016 (the Companyâs date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous Indian GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions A.1.1Deemed cost

The Company has elected to measure all of its Property, Plant and Equipment and intangible assets at their previous GAAP carrying value adjusted for the impact of outstanding government grant relating to purchase of Property Plant and Equipment and use the value so arrived as the deemed cost of the Property, Plant and Equipment and intangible assets.

A.1.2 Leases

The Company has elected to assess whether a contract or arrangement contains a lease on a prospective basis i.e. on the basis of facts and circumstances existing at the date of transition to Ind AS.

A.1.3 Investments in subsidiaries

On transition, Ind AS 101 allows the entity to measure investments in subsidiary either at cost determined in accordance with Ind AS 27 or deemed cost. Accordingly, the Company has elected to treat cost as deemed cost for its investments held in a subsidiary.

A.2 Ind AS mandatory exceptions A.2.1 Estimates

On assessment of estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise such estimates under Ind AS, as there is no objective evidence of an error in those estimates except Impairment of financial asset based on expected credit loss model as the same was not required under previous GAAP.

A.2.2 Classification and measurement of financial assets

The Company has done the assessment of classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

A.2.3 Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

A.2.4 Government Grants and Loans

The Company has applied Ind AS 109 âFinancial Instrumentsâ and Ind AS 20 âAccounting for Government Grants and disclosure of Government Assistanceâ prospectively to Government loans existing at the date of transition and the Company has not recognised the corresponding benefit of the Government loans at the below market rate of interest as a Government grant. Consequently, the Company has used the previous GAAP carrying amount of the Government loans at the date of transition as the carrying amount of these loans in the opening Ind AS Balance Sheet.

Notes to first time adoption :

(i) Government Grants

(a) Under the previous GAAP, Export promotion capital goods (EPCG) benefit received was netted off with the value of related Property, Plant & Equipment (PPE). Under Ind AS, the value of PPE has been grossed up and the EPCG benefit is treated as grant and recognised by way of setting up as deferred income.

(b) Under previous GAAP the Company has recognised the governement grant related to procurement of assets under Capital Reserve. Under Ind AS asset related Government grants are required to be presented as deferred income and amortised over the useful life of the asset.

(ii) Leasehold Land

Under previous GAAP, the Company has taken land on lease for a period of 90 years and capitalised as âleasehold landâ in the books considering the same as Finance lease. Under Ind AS the asset with indefinite useful life should be considered as operating lease only. Hence, the leasehold land is derecognised from Property, Plant and Equipment and classified as prepayments under other non-current assets.

(iii) Goodwill

Under the previous GAAP, Goodwill was amortised over the useful life. As per Ind AS 36 âImpairment of Assetsâ, Goodwill and Intangible assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

(iv) SBLC and Corporate Guarantee

The Company has provided Corporate guarantee to lenders of money to its subsidiary Rane (Madras) International Holdings B.V and its step down subsidiary Rane Precision Die Casting Inc. Under the previous GAAP financial guarantees so provided were disclosed as contingent liability. Under Ind AS, such guarantees are recorded initially at fair value and subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognised less cumulative amortisation, where appropriate.

(v) Deferred tax

Deferred tax has been recognised on the adjustments made on transition to Ind AS.

(vi) Bill Discounting

Under previous GAAP customer bill discounting with recourse is derecognised from Trade receivables and shown as contingent liability. Under Ind AS customer bill discounting with recourse are recognised as Trade receivable with corresponding liability in Borrowings based on assesment of risk and rewards of ownership of receivables discounted.

(vii) Expected Credit Loss

Under previous GAAP, provision for bad and doubtful debts was recognised as per the internal policy of the Company based on ageing of Trade Receivables. Under Ind AS, the impairment loss allowance on account of Trade receivables is created based on a provision matrix computed under the Expected credit loss method.

(viii) Preference shares classification

Under the previous GAAP, preference shares are shown under Share Capital. Under Ind AS the preference shares should be classified as financial liability and measured at amortised cost since the instruments are redeemable and does not evidence any residual interest in the Company.

(ix) Borrowings

Under previous GAAP transaction fees on borrowings were charged off to expense during availment of loan. Under Ind AS the transaction cost is required to be deducted from the carrying amount of the borrowings on the initial recognition. These costs are recognised in the statement of profit and loss over the tenor of the borrowing as part of the interest expense by applying the Effective interest rate method.

(x) Discount and incentives

Under the previous GAAP, discounts in the nature of cash and volume discount have been presented as item of expense in the statement of profit and loss account. However under Ind AS, revenue is to be recognised at the fair value of consideration received or receivable after considering such discounts.

(xi) Actuarial gain and loss

Under previous GAAP, actuarial gains or losses were recognised as Employee Benefit expenses in profit or loss. Under Ind AS, the actuarial gains or losses form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of Profit or Loss.

(xii) Hedging

Under previous GAAP, discount/premium on forward/Option contracts were amortised over the tenor of the forward/Option contract. Under Ind AS, the Company is required to designate Hedge as Fair value Hedge or Cash Flow Hedge. Fair value Hedges are hedges of the fair value of assets or liabilities or a firm commitment and cash flow hedges are hedges of a particular risk associated with the cash flows of highly probable forecast transactions. Accordingly, resulting gain or loss in an effective cash flow hedge has been adjusted in other comprehensive income and ineffective portion has been taken to statement of profit and loss account.

(xiii) Excise Duty

Under previous GAAP, cash discounts and rebates passed on to customers were recorded in other expenses. Under Ind AS, these are reflected as adjustments to revenue for sale of products. Under previous GAAP, excise duty on sale of goods was adjusted in revenue from sale of products whereas under Ind AS, it is considered as a production cost and hence, disclosed seperately as an expense in the statement of profit and loss.

10 Approval of financial statements

The financial statements were approved for issue by the Board of Directors on 30 April, 2018.

Mar 31, 2017

1. Rights, preferences and restrictions attached to Shares mentioned above:

The company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, in proportion to their shareholding.

For the current year, the directors have proposed on 16th May 2017 a dividend of Rs. 4 per share to be paid on equity shares. The equity dividend is subject to approval by shareholders at Annual General Meeting and has not been included as a liability in the financial statements which is in compliance with AS 4 as revised vide MCA notification dated 30th March 2016. The total estimated equity dividend to be paid is Rs. 42,042,596 . The payment of this dividend is estimated to result in payment of dividend distribution tax of Rs. 85,59,032 @ 20.358% on the amount of dividends grossed up for the related dividend distribution tax.

The Preference shares shall have a face value of Rs. 10 and is entitled to receive a cumulative dividend at the rate of 6.74%. The preference share shall have tenure of maximum 20 years. The Preference shares are redeemable before 20 years at the option of the share holders

2. Details on derivative instruments and unhedged Foreign currency exposures

2. The following derivative positions are open as at 31 March 2017

3. Forward exchange contracts and options [being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

4. Outstanding forward exchange contracts entered into by the Company as on 31 March 2017

Note on Disclosures required under Guidance Note on Accounting for Derivative Contracts issued by the ICAI:

5. The Company''s policy provide for a framework for foreign currency exposures both currency risks and interest rate risk. As per the policy, the Company does not participate in pure speculative hedging transactions i.e. hedging transactions that are not supported by underlying inflows / out flows of foreign currency.

6. Derivatives are initially recognized at fair value at the date on which the Derivative contracts are entered into and are subsequently re-measured to their fair value at the end of the reporting period. Fair value of Derivative contracts are determined by Mark to Market valuation.

7. Foreign currency transactions include transactions arising from Exports and Imports of goods / services, payment for professional fee, technical fee, royalty, Letter (s) of credit , Supplier credit and foreign currency loans. A twelve month rolling forecast is made and hedging options exercised as per the forex policy of the Company.

Mar 31, 2016

(vii) Rights, preferences and restrictions attached to Shares mentioned above:

The Company has only one class of equity shares having a par value of Rs, 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, in proportion to their shareholding.

The Preference shares shall have a face value of Rs, 10 and is entitled to receive a cumulative dividend at the rate of 6.74%. The Preference share shall have a tenure of maximum 20 years. The Preference shares are redeemable before 20 years at the option of the share holders.

Additional interest of 0.5% p.a. is paid to employees / retired employees of Rane Group.

In respect of the Fixed Deposits which has not fallen due for repayment as at 31 March 2016 as per the original terms of acceptance of such deposits, aggregating Rs, 1.23 Crores, the Company has in pursuance of MCA Circular dated 28 January 2015 filed an application before the Company Law Board, Chennai (CLB), on 27 March 2015, seeking permission to repay the deposits on the respective maturity dates in accordance with the terms of acceptance of these deposits, as stipulated under Section 74 of the Companies Act 2013. Approval of the CLB has been obtained on 16 September 2015.

* Secured loans include cash credit, packing credit, commercial paper and working capital demand loan from banks and are secured on a pari passu basis by a first charge by way of hypothecation of inventories and book debts and are also secured by a second charge on all immovable properties and movable fixed assets of the Company both present and future.

Employee Benefits

A. Gratuity : In keeping with the Company''s Gratuity Scheme (defined benefit plan) eligible employees are entitled to gratuity benefit (at one half month''s eligible salary for each completed year of service) on retirement/death/incapacitation/ termination etc. Also refer Note 1. 12(b) (iii) for accounting policy relating to gratuity.

* Experience adjustment has been disclosed up to FY 2011-12 based on the information available in the actuarial valuation report.

The Company has invested the plan assets with the insurer managed funds. The insurance company has invested the plan assets in Government Securities, Debt Funds, Equity Shares, Mutual Funds, Money Market Instruments and Time Deposits. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the Company''s policy for plan asset management and other relevant factors.

Note : 1 Previous Year Figures

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

Mar 31, 2015

Corporate Information

The Company is engaged in manufacturing of Steering and suspension linkage products, Steering gear products, and high precision aluminium of die casting products. the company is a significant supplier to major manufacturers of passenger cars, utility vehicles and farm tractors across the globe. the company has manufacturing locations at tamilnadu, pondicherry,Karnataka, Uttarkhand and Hyderabad.

2.1 Rights, preferences and restrictions attached to Shares mentioned above:

The company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. the dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, in proportion to their shareholding.

The preference shares shall have a face value of Rs. 10 and is entitle to receive a cumulative dividend at the rate of 6.74%. the preference share shall have a tenure of maximum 20 years. the preference shares are redemable before 20 years at the option of the share holders.

2.2 Secured

Nature of Security

1. ECB Loans from Standard Chartered Bank (SCB) and DBS Bank Limited (DBS) and an INR term loan from HDFc is secured on a pari passu basis by a first charge created on the company's immovable properties both present and future and are also secured by hypothecation of the company's movable properties both present and future, subject to prior charge on the book debts and inventories in favour of the bankers for working capital facilities. Terms of Repayment

2. The INR Term Loans from ING Vysya and Yes Bank

is secured on a pari passu basis by a first charge created on the company's Diecast Business's immovable properties both present and future and are also secured by hypothecation of the company's Diecast Business's movable properties both present and future, subject to prior charge on the book debts and inventories in favour of the bankers for working capital facilities.

3. rupee loan from Rane TRw Steering Systems limited (RTSSL) is secured on the repective machinery of Diecast business . a) HDFc Bank - INR long term loan amounting Rs. 20 crores is repayable in 8 quarterly instalments commencing from December 2014 with 1 Year of Moratarium along with an interest at the rate of 11.25% per annum ( Base Rate 125 Bps). the Balance outstanding as at 31 march 2015 is Rs. 15 crores (As at 31 march 2014 - Rs. 20 crores).

Terms of REpayment :

a) ScB - EcB loan amounting to Rs.14.45 crores is repayable in 16 equal quarterly installments commencing from February 2012 along with interest at the rate of 8.85 % per annum. The balance outstanding as at 31 March 2015 is Rs. 2.71 crores (As at 31 march 2014 - Rs. 6.33 crores).

b) ScB - EcB loan amounting to Rs.16.80 crores is repayable in 16 equal quarterly installments commencing from December 2012 along with interest at the rate of 7.95% per annum. the balance outstanding as at 31 march 2015 is Rs. 6.30 crores (As at 31 march 2014 - Rs.10.49 crores).

c) DBS - EcB loan amounting to Rs. 15.29 crores is repayable in 8 equal half yearly installments commencing from September 2012 along with interest at the rate of 8.98 % per annum. the balance outstanding as at 31 march 2015 is Rs. 3.82 crores (as at 31 march 2014 - Rs. 7.65 crores).

b) ING vysya Bank - INR long term loan amounting to Rs. 3.20 crores is repayable in 13 Quarterly Instalments commencing from September 2014 with 6 months of moratarium period along with a interest rate of 11.15% per annum. the Balance outstanding as on 31 march 2015 is Rs. 2.70 crores (As at 31 march 2014 - Rs. 2.70 crores).

c) Yes Bank ltd - INR long term loan amounting to Rs. 16 crores is repayable in 12 equal quarterly instalments commencing from September 2011 with 2 years moratarium period along with a interest of 12% per annum. the balance outstanding as on 31 march 2015 is Nil (As at 31 march 2014 - Rs. 1.33 crores).

d) Yes Bank ltd - INR long term loan amounting to Rs. 3.5 crores is repayable in 17 equal quarterly instalments commencing from august 2013 with 9 months moratarium period along with a interest of 12% per annum. the Balance outstanding as on 31 march 2015 is Rs. 2.26 crores (As at 31 march 2014 -Rs. 3.08 crores).

e) Yes Bank ltd- INR long term loan of Rs. 3.00 crores is repayable in 14 equal quarterly instalments commencing from may 2011 with 6 months moratarium period along with a interest of 12% per annum. the balance outstanding as on 31 march 2015 is Nil (As at 31 march 2014 - Rs. 0.44 crores).

f) Kotak mahindra Bank ltd - INR long term loan amounting Rs. 45 crores is repayable in 16 equal quarterly Instalments commencing from September 2015 with 1 Year of moratarium period along with an Interest at the rate of 10.25% per annum ( Base Rate 25 Bps). the Balance outstanding as at 31st march 2015 is Rs. 35.69 crores.

g) canara Bank ltd - INR long term loan amounting Rs. 45 crores is repayable in 20 equal quarterly Instalments commencing from march 2016 with 1.5 Years of moratarium period along with an Interest at the rate of 10.45% per annum ( Base Rate 25 BpS). the Balance outstanding as at 31st march 2015 is Rs. 7.76 crores.

i) RTSSL loan - INR loan from Rane TRw Steering Systems limited amounting to Rs.10 crores which is repayable in 16 equal instalments commencing from September 2013 with an interest of 9% per annum. The balance outstanding as on 31 march 2015 is Rs. 5.90 crores ( As on 31 march 2014 - Rs. 9.15 crores) which is secured on the respective machinery of Diecasting Business.

Unsecured

Nature of Security

1. Term Loan from IDBI Bank Limited amounting to Rs. 1.70 crores 2. Advance from TRw Automotive US LLc amounting to Rs. 2.92 crores (USD 5,50,000 equivalent)

3. long term loan from related party - RHL amounting to Rs. 7.50 crores at the rate of 12 % per annum. The Balance outstanding as at 31st March 2015 is Nil (As at 31 March 2014 - Rs. 4.50 crores).

3. Fixed Deposits Terms of Repayment

it is repayable in 20 equal quarterly installment commencing from october 2010 along with interest at the rate of 14.25 % per annum. the Balance outstanding as at 31 march 2015 is Rs. 0.17 crores (As at 31 march 2014 Rs. 0.51 crores).

It is repayable in 22 Equal instalments commencing from November 2013 with an interest of 1.74% per annum based on the supply forecast. the Balance outstanding as at 31st march 2015 is Rs. 1.05 crores (As at 31 march 2014 - Rs. 2.75 crores). nil

In respect of the Fixed Deposits which has not fallen due for repayment as at 31 march 2015 as per the original terms of acceptance of such deposits, aggregating Rs. 4.62 crores, the company has in pursuance of McA circular dated 28 January 2015 filed an application before the company Law Board, chennai (cLB), on 27 march, 2015, seeking permission to repay the deposits on the respective maturity dates in accordance with the terms of acceptance of these deposits, as stipulated under Section 74 of the companies Act 2013. the approval of the cLB is still awaited.

* Secured loans include cash credit, packing credit, commercial paper and working capital demand loan from banks and are secured on a pari passu basis by a first charge by way of hypothecation of inventories and book debts and are also secured by a second charge on all immovable properties and movable fixed assets of the company both present and future.

* There are no amounts due and outstanding to be credited to investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.

Employee Benefits

A. Gratuity : In keeping with the Company's Gratuity Scheme (defined benefit plan) eligible employees are entitled to gratuity benefit (at one half month's eligible salary for each completed year of service) on retirement/death/incapacitation/ termination etc. Also refer Note 1. 12(b) (iii) for accounting policy relating to gratuity.

* Experience adjustment has been disclosed upto FY 2011-12 based on the information available in the actuarial valuation report.

The company has invested the plan assets with the insurer managed funds. The insurance company has invested the plan assets in Government Securities, Debt Funds, equity shares, Mutual Funds, Money Market instruments and time Deposits. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. the expected rate of return on plan assets is based on the composition of plan assets held (through LiO), historical results of the return on plan assets, the company's policy for plan asset management and other relevant factors.

* include interest paid/payable to Directors @ Net of borrowing cost capitalized ( Refer note 44)

'Amount is below the rounding off norm adopted by the Company.

The company has incurred an amount of Rs.0.60 crores towards corporate Social Responsibility activities during the current year ended 31 March 2015.

Note : 4

Related Party Disclosures

(a) List of related parties where control exists Holding Company

(b) Key Management personnel

(c) Relative of KMp

(d) Enterprises over which KMp or relatives of KMp can exercise significant influence

(e) other related parties where transactions has taken place (Fellow Subsidiaries)

(f) The above information regarding related parties have been determined to the extent such parties have been identified on the basis of information available with the company 2014-15

Rane Holdings limited (RHL) S parthasarathy - Manager under the companies Act, 2013

L Ganesh, chairman

L Lakshman

Meenakshi Ganesh

Aditya Ganesh

Aparna Ganesh

Shanthi Narayan

vanaja aghoram

L Ganesh HUF

Rane Foundation L Lakshman HUF L Ganesh HUF

Rane engine valve Limited (REvL)

Rane Holdings america inc. (RHAI)

Rane Brake Lining Limited (RBL)

2013-14

Rane Holdings Limited (RHL)

S parthasarathy - Manager under the companies AcL 2013

L Ganesh, chairman

L Lakshman

Meenakshi Ganesh

Aditya Ganesh

Aparna Ganesh

Shanthi Narayan

Hema c Kumar

vanaja aghoram

L Ganesh HUF

Rane Foundation

Kar Mobiles Limited

L Lakshman HUF

Rane Engine valve Limited (REvL)

Rane Brake Lining Limited (RBL)

Rane Holdings america inc. (RHAI)

Rs Crores

As at As at 31 March 2015 31 March 2014 Note : 5

Contingent Liabilities, Guarantees and Commitment Contingent Liabilities

Claims against the company not acknowledged as debts:

(i) income Tax matters under appeal by the company 13.43 12.98

(ii) central Excise and Service tax matters under appeal by the company 3.46 1.68

(iii) Labour related matters under appeal by the company 1.67 1.18

(iv) corporate license fee under appeal by the company 0.11 0.11

others

(i) income tax matters under appeal by the 0.31 0.31 Department Future cash flows in respect of the above matters are determinable only on receipts of judgments/decisions pending at various authorities

Guarantees and Letter of Credit outstanding bank 0.79 2.34 guarantees

Letter of credit 2.87 4.40

Bill Discounting

Outstanding 21.28 6.20

Commitment

Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advance Rs.8.77 crores (previous year Rs.6.48 crores)] tangible asset 8.06 11.00

Total 51.98 40.20

The Company's operations comprise of only one business segment viz., components for transportation industry. The geographical segments considered for disclosure are - india and Rest of the world. All the manufacturing facilities are located in india.

Note : 6 Exceptional item

Exceptional items represents amount paid to employees who opted for voluntary retirement scheme extended to employees during the year.

Note: The above expenditure has been incurred by all the units of the company . However deduction under Section 35(2AB) of the income tax act , 1961. is being claimed only for puducherry and velachery unit. in respect of puducherry unit the company has made an applicatio to obtain approval from the Department of Scientific and industrial research in respect of its R&D unit. the approval is awaited

Details on derivative instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March 2015.

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) outstanding forward exchange contracts entered into by the company as on 31 march 2015

Rupees

During the year, pursuant to the notification of Schedule ii to the Companies Act, 2013 with effect from April 1, 2014, the Company has changed its estimated useful life of certain categories of assets to align the useful life with those prescribed in Schedule ii. The details of previously applied and currently adpoted depreciation method, rates / useful life are as follows:

pursuant to the transition provisions prescribed in Schedule ii to the companies act, 2013, the company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on april 1, 2014, and has adjusted an amount of Rs. 63 lakhs (net of deferred tax of Rs. 32 lakhs) against the opening Surplus balance in the Statement of profit and Loss.

The depreciation expense in the Statement of profit and Loss for the year is higher by Rs.306 lakhs consequent to the change in the useful life of the assets.

The position of Chief Financial Officer fell vacant on 30th January 2015 and a new appointment is yet to be made Note : 46

Previous Year Figures

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

Note: N.A- Not Applicable

(i) None of the other directors receive any remuneration from the Company except sitting fees for attending meeting of the Board / committee(s) thereof.

(ii) Mr p Krishnamoorthy, cFo resigned effective January 30, 2015.

(iii) Remuneration of Secretary is part of the secretarial services availed by the company from Rane Holdings Limited.

2. median remuneration of the employees of the company for FY 2014-15 is Rs. 3.43 lakhs. Increase in median remuneration during the year: 15%.

3. number of permanent employees on the rolls of the company as on march 31,2015 was 1018 as against 1022 as on march 31,2014.

4. Relationship between average increase/decrease in remuneration and company performance:

(i) The average remuneration increased by 15%.

(ii) During FY 2014-15, the sales grew by 7.2% and profit before tax (pBT) declined by 14%. the decline in pBT is on account of change in depreciation due to revision in estimated useful life of assets as per companies AcL 2013 and exceptional expenditure incurred towards separation benefits under the voluntary retirement Scheme (vRS).

5. Comparison of remuneration of the Key Managerial Personnel(s) (KMP) against the performance of the Company:

the total remuneration of Key managerial personnel increased by 11% in 2014-15. the details of performance of the company is discussed in 4 (ii) above.

6. Average percentile increase made in salary of employees other than the managerial personnel in last financial year as against percentile increase in managerial remuneration average percentile increase made in salary of employees other than the managerial personnel in last financial year : 7%, the percentile increase in managerial remuneration: 11%. the increase in managerial remuneration is in line with the present industry standards.

7. Ratio of remuneration of the highest paid director to that of employees who are not directors but receive remuneration in excess of highest paid director during the year:

Not applicable. No remuneration is paid to directors except sitting fees for attending meetings of the Board/ committee(s) thereof and commission to chairman (non-executive). Hence, not comparable with the remuneration paid to the employees.

8. Key parameters for any variable component of remuneration availed by the directors

There are no key variable components in the remuneration paid to the non-executive directors except in the case of Chairman (Non-Executive) who is entitled to receive commission on the profits as per the approval of shareholders and decided by the Board of Directors of the company based on the recommendation of the nomination and Remuneration committee.

(ii) Percent increase over/decrease in the market quotations of shares of the company as compared to the rate at which company came out with last public offer: not applicable since the company has not made any public offer and the last issued equity share capital represents shares allotted to the shareholders of demerged company on account of Scheme of arrangement under Section 391-394 of the companies Act, 1956, as sanctioned by the Hon'ble High court of Judicature at Madras vide its order dated April 25, 2005.

9. it is hereby affirmed that the remuneration paid is in accordance with the remuneration policy.

A. Details as per Rule 5 (2) & 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

i. Employed throughout the financial year with remuneration not less than Rs.60 lakhs per annum.

Mar 31, 2013

Note : 1

Segment Reporting

The entire operations of the Company relate only to one segment viz.''Components for Transportation Industry''. Company''s operation in different territories does not have significantly different risks and returns.

Note 2:

Details on derivative instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March 2013.

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(b) Cross Currency interest rate swaps to hedge against fluctuations in exchange rate and fluctuations in interest rate. No. of contracts: 3 (As at 31 March 2013)

Note 3:

Previous Year Figures

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

Mar 31, 2012

Note 1

External Commercial Borrowings and related swap contracts

Yearend balance of foreign currency External Commercial Borrowings (ECBs) amounting to Rs.45.64 Crores are fully hedged through related swap contracts and are accounted as INR loan. The Company has been consistently treating the ECBs and the associated swap contracts as composite transactions.

Consequently,

(i) notional loss on restatement of ECBs aggregating to Rs. 5.03 Crores relating to depreciable fixed assets have not been adjusted to the carrying amount of fixed assets and

(ii) unrealized notional mark to market gain of Rs. 4.49 Crores relating to outstanding swap contracts has not been recognized in the Statement of Profit and Loss

(vi) Kignts, preferences and restrictions attached to equity bhares mentioned above:

The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, in proportion to their shareholding.

Nature of Security

Long-term loans from SCB and DBS are secured on a pari passu basis by a first charge created on the Company's immovable properties both present and future and are also secured by hypothecation of the Company's movable properties both present and future, subject to prior charge on the book debts and inventories in favors of the bankers for working capital facilities.

Terms of Repayment for secured borrowings:

a) SCB - ECB loan availed Rs. 14.45 crores is repayable in 16 equal quarterly installments commencing from February, 2012 along with interest of 8.85 % per annum. Yearend balance is Rs. 13.55 crores (previous year Rs. 14.45 crores).

b) SCB-ECB loan availed Rs. 16.80 crores is repayable in 16 equal quarterly installments commencing from December, 2012 along with interest of 7.95% per annum. Yearend balance is Rs. 16.80 crores (previous year Rs.Nil).

c) SCB - ECB loan availed Rs. 13.64 crores is repayable in 16 equal quarterly installments commencing from April, 2008 along with interest of 3.00 % per annum. Yearend balance is Rs. Nil (previous year Rs. 3.92 crores)

d) DBS - ECB loan availed Rs. 15.29 crores is repayable in 8 equal half yearly installments commencing from September, 2012 along with interest of 8.98 % per annum. Yearend balance is Rs. 15.29 crores (previous year Rs. 15.29 crores).

Terms of Repayment for unsecured borrowings:

a) Term Loan from IDBI Bank Limited availed Rs. 1.70 crores is repayable in 20 equal quarterly installments commencing from October, 2010 along with interest of 14.25 % per annum. Yearend balance is Rs. 1.19 crores (previous year Rs.1.53 crores).

Note : 2

The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

Mar 31, 2011

1 Share Capital

1.1 5,438,125 (previous year - 5,438,125) equity shares of Rs.10 each are held by Rane Holdings Limited, the holding company.

1.2 8,131,316 (previous year-8,131,316) equity shares of Rs.10 each were allotted for consideration other than cash.

2 Secured Loans

2.1 Term loans from Banks are secured (Canara Bank and Standard Chartered Bank)/ to be secured (DBS Bank Limited) on a pari passu basis by a first charge created on the Company's immovable properties both present and future and are also secured by hypothecation of the Company's movable properties both present and future, subject to prior charge on the book debts and inventories in favour of the bankers for working capital facilities.

2.2 Cash credit, packing credit facilities and short term loans are secured on a pari passu basis by a first charge by way of hypothecation of inventories and book debts and are also secured by a second charge on all immovable properties and movable fixed assets of the Company both present and future.

3 Unsecured Loan

3.1 Fixed Deposits maturing within a period of one year amount to Rs.28,470 thousands (previous year - Rs. 18,390 thousands).

3.2 Loan from IDBI Bank repayable within one year is Rs.3,409 thousands (previous year - Rs. 2,557 thousands)

4 Cash and Bank Balances

Current Accounts include Interest Warrant Account Rs.796 thousands (previous year - Rs.1,018 thousands) and Unpaid Dividend Account Rs.765 thousands (previous year - Rs. 746 thousands)

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The expected rate of return on plan assets is based on the composition of plan assets held (through LIC), historical results of the return on plan assets, the Company's policy for plan asset management and other relevant factors.

This being the fourth year of implementation of Accounting Standard 15 on 'Employee Benefits', figures of immediately preceding three years only have been given.

5 Segment Reporting

The entire operations of the Company relate only to one segment viz. 'Components for Transportation Industry'. Company's operation in different territories does not have significantly differing risks and returns.

6 Related Party Disclosures

(a) List of related parties where control exists

Holding Company Rane Holdings Limited (RHL)

(b) Key Management Personnel Harish Lakshman-Manager under the Companies Act, 1956 L Ganesh, Chairman

(c) Relatives of KMP Malavika Lakshman

L Lakshman (including L Lakshman HUF)

Pushpa Lakshman

Vanaja Aghoram

Shanthi Narayan

Aditya Ganesh

(d) Enterprises over which KMP can Rane TRW Steering Systems Limited (RTSSL) exercise significant influence Rane Foundation

Kar Mobiles Limited (KML)

(e) Other Related parties where Rane Engine Valve Limited (REVL) transactions has taken place Rane Diecast Limited (RDL) (Fellow Subsidiaries) Rane Brake Lining Limited (RBL)

(f) The above information regarding related parties have been determined to the extent such parties have been identified on the basis of information available with the Company.

7. Previous year's figures have been regrouped/re-arranged wherever necessary to conform to current year's presentation.

Mar 31, 2010

1 Change in Accounting Estimate

Based on the reassessment of the provisioning norms for debtors and inventory, all debts in excess of 180 days have been provided as doubtful debts as against 270 days in the previous year. In respect of raw materials and finished goods inventory ageing more than one year and semi-finished goods inventory ageing more than three months have been provided as slow-moving inventory as against two years for raw materials, one year for finished goods inventory and six months for semi-finished goods inventory in the previous year. As a result of this change, the provision for doubtful debts and slow moving inventory has increased by Rs. 2,037 thousands and Rs. 15,515 thousands respectively and the profit for the year ended March 31, 2010 has decreased by Rs.17,552 thousands.

2 Share Capital

2.1 5,438,125 equity shares of Rs.10 each are held by Rane Holdings Limited, the holding company.

2.2 8,131,316 equity shares of Rs.10 each were allotted for consideration other than cash.

3 Secured Loans

3.1 Term loans from Banks are secured on a pari passu basis by a first charge created on the Companys immovable properties both present and future and are also secured by hypothecation of the Companys movable properties both present and future, subject to prior charge on the book debts and inventories in favour of the bankers for working capital facilities.

3.2 Cash credit, packing credit facilities and short term loans are secured on a pari passu basis by a first charge by way of hypothecation of inventories and book debts and are also secured by a second charge on all immovable properties and movable fixed assets of the Company both present and future.

4 Unsecured Loan

4.1 Fixed Deposits maturing within a period of one year amount to Rs. 18,390 thousands (previous year -Rs. 8,295 thousands).

4.2 Amount repayable in respect of Interest free sales tax loan within one year is Rs. Nil thousands (previous year- Rs. 2,471 thousands).

5 Cash and Bank Balances

The above information and that given in Schedule L-"Liabilities" regarding Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

6 Capital Commitment

7 Contingent Liabilities

Claims against the Company not acknowledged as debts 74,891 29,341

8 Disclosure as per AS15 revised

9 Managerial Remuneration

* Company follows depreciation rates higher than the rates prescribed under Section 350 and accordingly the same has been considered for the purpose of managerial remuneration.

10 Segment Reporting

The entire operations of the Company relate only to one segment viz. Components for Transportation Industry. As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

11 Related Party Disclosures

(a) List of related parties where control exists

Holding Company Rane Holdings Limited (RHL)

Fellow Subsidiaries Rane Engine Valve Limited (REVL) Rane Diecast Limited (RDL) Rane Brake Lining Limited (RBL)

(b) Key Management Personne l (KMP) Harish Lakshman-Manager under The Companies Act, 1956 L Ganesh, Chairman S Parthasarathy, President

(c) Relatives of KMP Malavika Lakshman L Lakshman Pushpa Lakshman Vanaja Aghoram

(d) Enterprises over which KMP can Rane TRW Steering Systems Limited (RTSSL) exercise significant influence

(e) The above information regarding related parties have been determined to the extent such parties have been identified on the basis of information available with the Company.

12 Previous years figures have been regrouped wherever necessary.

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