Notes to Accounts of Rites Ltd.

Mar 31, 2025

1.13. PROVISION FOR WARRANTY FOR SALE AND
SERVICES RENDERED

Provision for warranties is recognized when products are sold
and services are rendered with warranty as per the contract.
These provisions are estimated by using historical information
on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future
incidence based on corrective actions on product failures.
The timing of outflows will vary as and when warranty claim
will arise or incurred. The initial estimate of warranty-related
costs is revised annually.

As per the terms of the contracts, the Company provides postÂ¬
contract services /warranty support to some of its customers.
The Company accounts for the post-contract support /
provision for warranty on the basis of the information available
with the Management duly taking into account the current
and past estimates.

1.14. LEASES:-COMPANY AS A LESSEE

The Companyâs leased asset primarily consists of leases for
land and buildings.

At the date of commencement of the lease, the Company
recognizes a right-of-use asset (âROUâ) and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (shortÂ¬
term leases) and low value leases. For these short-term and low
value leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over lease term.

The right-of-use assets are initially recognized at cost. The
right-of-use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment losses, if
any and adjusted for any remeasurement of the lease liability.

The right-of-use assets are depreciated using the straight-line
method from the commencement date over the shorter of
lease term or useful life of right-of-use asset. The estimated
useful lives of right-of- use assets are determined on the same
basis as those of property, plant and equipment.

The lease liability is initially measured at amortized cost at the
present value of the future lease payments. Lease liability and
ROU asset have been separately presented in the Balance
Sheet and lease payments have been classified as financing
cash flows.

1.15. LEASES:-COMPANY AS A LESSOR

Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.

For operating leases, rental income is recognized on a straight
line basis/systematic basis over the lease term. However,
reimbursable under the contract are accounted for on accrual
basis. Initial direct cost are added to the carrying amount of the
leased assets and recognized as an expense over the lease term.

1.16. FINANCIAL INSTRUMENTS

1.16.1 Initial Recognition

Company recognizes financial assets and financial liabilities
when it becomes a party to the contractual provisions of
the instrument. All financial assets and financial liabilities are
recognized at fair value on initial recognition except for trade
receivables/ trade payables which are initially measured at
transaction price. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities that are not at fair value through profit and loss are
added or deducted to/from the fair value on initial recognition.

1.16.2 Subsequent Measurement

(a) Financial assets are subsequently measured at amortised
cost if these are held within a business model whose
objective is to hold the assets in order to collect
contractual cash flows and the contractual terms of the
financial assets give rise on specific dates to cash flows
that are solely payments of principal and interest on the
principal amount outstanding using the Effective Interest
Rate (EIR) method. The EIR amortisation is included in
finance income in the Statement of Profit and Loss. The
losses arising from impairment are recognised in the
Statement of Profit and Loss.

(b) Financial assets at fair value through profit or loss.

The financial assets are measured at fair value through
profit or loss unless it is classified at amortised cost.

Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through profit or loss.

All other financial liabilities are subsequently measured
at amortised cost using EIR method. Gains and losses
are recognised in Statement of Profit and Loss when the
liabilities are de-recognised as well as through the EIR
amortisation process.

1.16.3 De-recognition of Financial Instruments

A financial asset is de-recognised when:

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

â¢ the Company has transferred substantially all the risks
and rewards of the asset, or the Company has neither
transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of
the asset.

A financial liability or a part of financial liability is de-recognised
from the Balance Sheet when the obligation specified in the
contract is discharged, cancelled or expired. When an existing
financial liability is replaced by another from the same lender
on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original
liability and the recognition of a new liability. The difference
in the respective carrying amounts is recognised in the
statement of profit or loss.

1.17. GOVERNMENT GRANT

The Company is getting Government Grant as export incentive
under Foreign Trade Policy (FTP) of the Government of India.
The same is recognized/presented following Income Approach
as other operating income when there is a reasonable
assurance that the incentive will be received, and all the
attached conditions have been complied with and the same
will be received.

20.7 FULLY PAID-UP AGGREGATE NUMBER OF EQUITY SHARES ALLOTTED BY WAY OF BONUS SHARES DURING THE YEAR OF FIVE
YEARS IMMEDIATELY PRECEEDING BALANCE SHEET DATE

Company issued 5 crore bonus shares of '' 10 each during 2019-20 amounting to '' 50 crore and 24.03 crore bonus shares of
''10 each during 2024-25 amounting to '' 240.30 crore

20.8 FULLY PAID-UP AGGREGATE NUMBER OF EQUITY SHARES BUY-BACK DURING THE YEAR OF FIVE YEARS IMMEDIATELY
PRECEEDING BALANCE SHEET DATE

The company has bought back 96,98,113 fully paid-up equity shares of '' 10 each from the shareholders on 18^th November,
2020, on proportionate basis by way of tender offer at a price of '' 265 per equity share for an aggregate amount of '' 257
crore. Consequent to the said buy-back, the equity share capital of the company has been reduced by '' 9.70 crore and capital
redemption reserve of an equivalent amount has therefore been created as per the extant provision of the companies act, 2013.

VII) The significant actuarial assumptions for the determination of the defined obligations are discount rate and
expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective
actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other
assumptions constant.

If the discount rate increases/decreases by 1%, the defined obligations would decrease by H10.29 crore / increase
by H 11.09 crore as on 31^st March, 2025 and if the expected salary growth increases /decreases by 1%, the
defined benefit obligations would increase by H 3.92 crore/ decrease by H 4.14 crore as on 31^st March, 2025.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined
benefit obligations would change accordingly.

The company is expected to contribute H6.26 crore to defined benefit plan obligations towards Gratuity during
the year 2025-26.

Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the
year ended 31.03.2025 and 31.03.2024 are H (2.72) crore and H (9.00) crore respectively.

If the discount rate increases /decreases by 1%, the defined obligations would decrease by H 0.83 crore /increase
by H 0.91 crore as on 31^st March, 2025 and if the expected salary growth increases /decreases by 1%, the defined
benefit obligations would increase by H 0.93 crore/ decrease by H 0.85 crore as on 31^st March, 2025.

iii) Provident Fund (Funded)

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests
the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members
as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest
earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented.
Further, contribution to employees pension scheme is paid to the appropriate authorities.

As per the provisions of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952, the Company has
no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the
net surplus of H1.03 crore (previous year H 1.67 crore) determined through actuarial valuation. Accordingly, Company
has not recognized the surplus as assets as it pertains to the provident fund trust and not to the Company.

b) Defined Contribution Plans

i) Post Retirement Benefits (Pension & Medical):

All eligible employees are entitled to benefit under defined contribution plans towards pension under EPFO scheme,
post retirement pension fund and medical schemes as defined contribution plans. The Company has no obligations
other than the contribution payable to such funds/schemes. The Company recognizes such contributions as expenses
when an employee renders the related service.

During the year, Company contributed/ provided H 21.26 crore (previous year H 20.92 crore) towards post retirement
pension fund, H 2.31 crore (previous year H2.32 crore) towards pension under EPFO and H 9.42 crore (previous year
H 1.98 crore) towards medical schemes.

ii) Performance Related Pay:

Eligible employees are entitled to benefit of performance related pay. The provision for performance related pay is
of short-term nature and has been recognized as per the procedure laid by management based on the guidelines of
the Department of Public Enterprises.

c) Foreign Service Contribution

Foreign Service Contribution is recognized on accrual basis in the Statement of Profit and Loss Account as per the deputation
terms with parent organizations in respect of officers taken on deputation from other organizations.

| 41 | INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FOR
GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

The Company is receiving government grant in the form of export incentive on export of Rolling Stock and Spare parts. There are
two types of export incentive i.e duty drawback and RoDTEP (Remission of Duties &Taxes on Exported Products). The Company
has recognized/presented H 4.79 crore (previous year 7 1.69 crore) as export incentive. The export incentive receivable at the
end of the year is 7 0.31 crore (previous year 7 0.32 crore).

| 42 | INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OF
CHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

The amount of exchange differences (net) credited to the statement of profit and loss account during the Financial Year is
7 10.16 crore (Previous Year 7 8.86 crore)

| 46 | INDIAN ACCOUNTING STANDARD (IND AS) 36, DISCLOSURES ON IMPAIRMENT OF ASSETS
ARE AS FOLLOWS:

The Company has carried out the assessment on impairment of assets in terms of Indian Accounting standard (Ind AS) 36,
Impairment of Assets and management does not perceive any impairment in the value of the carrying amount of assets.

The company has already impaired the value of investment in M/s MMG - Metro Management Group Ltd (MMG) and entire
equity investment of H 0.60 crore has been provided for in books of Accounts.

As per the agreements with the customers, warranty years are varying from two to five years, i.e., extending beyond one
year, require discounting to work out net present value of such provisions made towards warranty.

Effect of change in the discount rates

3 years SBI MCLR rate as on 31.03.2025 i.e. 9.10% is used as discount rate during the reporting period. The effect of
change in discount rate i.e. 9.10% for FY 2024-25 vice 8.85% for FY- 2023-24, is H 0.01 crore.

For movement of provision for unspent amount of Corporate Social Responsibility-refer 57(c)(iii).

b) Contingent liabilities and Commitments to the extent not provided for include:

i) Contingent Liabilities

I) Claims (excluding interest) against the Company not acknowledged as debts are H 40.10 crore (previous year
H 27.15 crore).

II) In one of the Building Projects, which the company did as a Project Management Consultant (PMC), The building
is declared unsafe based on third-party evaluation and is required to reconstructed. Cost of Reconstruction is
estimated at H 99.23 Crore (including GST & Contingencies). The contractor, who constructed the said building,
has undergone Insolvency Proceedings under the Insolvency and Bankruptcy Code (IBC).

The likely availability of the amount from insurance claim, Bank Guarantee encashment proceeds, and other
amounts available under the contract is estimated to be H 60.12 crore. Since the project is handled by the company
as PMC, the company does not foresee any outflow from its account. However, as an abundant precaution,
H 39.11 crore (including GST & Contingencies) is being disclosed as contingent liabilities on this account.

III) The Company is subject to legal/arbitration proceeding and claims, which have arisen in the ordinary course of
business. Management does not reasonably expect that when these cases ultimately conclude and determined,
will have any material and adverse effect on the Companyâs results of operations or financial conditions.

IV) Disputed taxes and duty:

A) Demand on account of income tax includes of H 6.96 crore (excluding interest) (previous year 96.66 crore)
which are being contested by the Company. This excludes 9 4.51 crore (previous Year 9 4.51 crore) relating
to cases where Company has already won at different appellate authorities during earlier years, against
which income tax department has gone for appeal at higher appellate authorities. In similar cases of past
years, the appeal of the income tax department has been dismissed.

B) Demand on account of Service Tax, VAT and GST etc. amounting to 9 44.20 crore (previous year
9 11.04 crore) is being contested by the Company at different forums.

V) The company has entered into a contract with the Ministry of Housing & Urban Affairs for purchase of commercial
built up in the complex at Nauroji Nagar New Delhi through NBCC. The company has paid GST under reverse
charge from third demand onward along with the GST on earlier demand excluding interest of 91.40 crore on
delay payment of GST under reverse charge prior to third demand. Company is of the view that liability to pay
GST is with NBCC under Sec 9(1) of CGST Act. AAR (Authority for Advance Ruling) under Sec 37 (1) and Delhi
Appellate Authority also held the same view. As such, the company does not foresee any liability of interest as
on 31.03.2025. However, as an abundant precaution, the same is being disclosed as Contingent Liability.

VI) A number of cases are lying for adjudication at various forums or under arbitration, which Company is contesting
on behalf of Clients. The Company is not subject to any liability that may result pursuant to adjudication /
arbitral award.

VII) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of
service matters & others where amount cannot be quantified.

ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for amounting to
9 24.28 crore (previous year 9 94.17 crore).

c) Contingent Assets

i) In a pre-closed contract in the year 2005-06, Company invokes arbitration for a claim of 9 233.93 crore (previous year
9 233.93 crore) against a client. Client also submits counter claims of 9 469.10 crore (previous year 9 469.10 crore)
before arbitrator. The sole arbitrator awarded 988.31 crore in favour of the Company against the claim of 9233.93
Crore, while rejecting the counter claims of the client. Since the awarded amount is less than the claimed amount,
Company appealed against the aforesaid award. Appellate authority awarded 9 231.68 crore with applicable interest
in favour of the Company. Client filed a petition in the Civil Court for setting aside the aforesaid award, which was
dismissed by the Court on 22.11.2017 and preliminary objections of Company are allowed. Thereafter the Company
filed writ petition before Honâble Jharkhand High Court on 05.07.2018 to issue the direction to client to pay the
awarded amount. The said petition was disposes on 16.02.2024 in favour of company by appointing sole arbitrator
ie Honbâle Justice (Retd.) from Supreme Court of India to adjudicate the dispute between the parties. Thereafter, the
client filed an appeal before Jharkhand High Court on 21.03.2024 to challenge the appointment of Sole Arbitrator,
the same is also dismissed on 07.05.2024. Client filed SLP (Civil) No. 15665 of 2024 before Supreme Court of India
on 19.07.2024 to challenge the appointment of Sole Arbitrator. The same was admitted on 26.07.2024. Next date of
hearing is fixed on 05.08.2025.

ii) In the above contract, executing agency also raised claims (excluding interest) of ?184.41crore (previous year
T 184.41 crore) against the Company before the arbitration tribunal. The Company also submitted a counter claim
of T 644.53 crore (previous year T 644.53 crore) against the executing agency. Both the parties had concluded their
arguments before the Tribunal and award was published on 18^th October 2016 in favour of the Company. As per the
award, Company was to get T 63 crore from executing agency effective from the date of publication of award i.e.,
18^th October 2016. The executing agency had filed two petitions i.e. arbitration appeal before honâble Jharkhand
High Court on 25.05.2017 and commercial revocation to set aside the award before the Commercial Court, Ranchi
on 06.01.2018. The arbitration appeal has already been dismissed by honâble Jharkhand High Court on 11.03.2019.
The commercial revocation has also been dismissed on 29.06.2019. Now RITES limited filed the commercial execution
case no. 03 of 2020 on 16.01.2020 before Commercial Court Ranchi to execute the award amount. Same is pending
and next date of hearing is fixed on 09.05.2025. In view of above, the Company has not recognized the award amount
in the books of account.

Methods & assumptions for valuation:

The Valuation Report is based upon the market price method in which the market value is determined by its location,
amenities availabilities in the area and with more of Middle class commercial cum office use area coupled with enquiries
from the local real estate agents and the neighbourhood. Accordingly, the valuer has collected information through their
technical team during their personal inspection of the plot, upon the prior receipt of detailed particulars of property,
related documents, date and reply of queries. Valuation is carried out by an independent agency on the basis of present
construction / replacement cost of similar structures/constituents without considering the value of furniture, fixtures &
fittings, office equipments etc.

b) Fair value hierarchy & valuation techniques

To provide an indication about the reliability of method used in determining fair value, the Company has classified its
financial instruments into three levels prescribed under the Indian Accounting Standard (Ind AS-113) on fair value measure.

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques
and observable inputs for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: Inputs for the assets or liabilities that are not based on observable market data (observable inputs).

c) Financial Risk Management

The Companyâs activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The Companyâs
focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial
performance. The Companyâs exposure to credit risk is influenced mainly by the individual characteristic of each customer
and the concentration of risk from few customers.

i) Market Risk

The Company operates internationally and a considerable portion of the business is transacted in several currencies
and consequently the Company is exposed to foreign exchange risk for its sales and services in the Middle East, Africa
and South Asian countries. The exchange rates between the rupee and foreign currencies have changed substantially
in recent years which may also fluctuate substantially in the future. However, Company has currency risk management
policy and exchange fluctuations are regularly monitored by the risk management committee to mitigate this risk. Policy
covers various aspects of currency risk management, benchmarking, hedging and risk appetite, permissible instruments,
hedging policy, structure of the risk management committee and treasury group, reporting procedures etc.

For the year ended 31^st March, 2025 and 31^st March, 2024, every percentage increase/decrease in the exchange rate
between the INR & US Dollar has affected the Companyâs incremental margins by approximately 0.30 % (previous
year 0.74%) each. For the year ended 31^st March, 2025 and 31^st March, 2024, every percentage increase/decrease
in the exchange rate between the INR & MUR has an insignificant affect on the Companyâs incremental margins.

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion
into functional currency, due to exchange rate fluctuations between the previous reporting year and the current
reporting year.

The above foreign currency exposure is unhedged as these are covered through foreign currency risk management policy.
ii) Credit Risk

No significant credit risk on cash and bank balances including clientsâ funds amounting to 7 3335.69 crore (previous
year 7 3071.05 crore) is expected as Company parks surplus funds with Scheduled Banks having good capital adequacy
ratio and least NPA as determined by RBI and guidelines of the Company. Company has parked its owned funds in
fixed deposits of 7 826.33 crore (previous year 7 690.11 crore) with Scheduled banks with negligible credit risks.

Non-Strategic Investments primarily include investments in tax-free bonds of 7 20 crore (previous year 7 20 crore)
and liquid mutual fund units of 7 NIL (previous year 7 NIL) issued by Public Sector Undertaking where risk is minimal.

The Company has given House building, multi-purpose loans etc. to the employees which are insured and house
properties/ other assets are mortgaged / hypothecated against these loans in line with the policies of the Company.
The risk of default in respect of these loans is considered negligible.

iii) Liquidity Risk

Companyâs principal sources of liquidity are âcash and bank balancesâ and the cash flow that is generated from
operations. The Company has no outstanding borrowings. The Company has a working capital of 7 1598.54 crore
(previous year 7 1672.05 crore) including cash and bank balance (owned funds) of 7 860.76 crore (previous year
7 698.49 crore) and current investment 7 20.00 crore (previous year 7 Nil). Company believes that the working capital
is sufficient to meet its requirements, accordingly no liquidity risk is perceived by the Company.

Maturities of financial liabilities

The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.

| 50 | INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTS
ARE AS FOLLOWS:

Operating segments are defined as components of an enterprise for which discrete financial information is available which
is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and
assessing performance. The Companyâs chief operating decision maker is the Chairman & Managing Director who is also
Chief Executive Officer.

a) Company has identified four operational reportable segments based on operations being carried out which
are as under:-

â¢ Consultancy Services

â¢ Leasing of railway rolling stock & equipments

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

b) Geographical wise revenue segment is disclosed as under:-

i) Revenue within India from consultancy includes quality assurance & project management services, turnkey construction
projects and domestic lease rental services to clients located inside India.

ii) Revenue from outside India includes services rendered and export sales of rolling stock & spare parts to the clients
located outside India.

c) The accounting principles used in the preparation of the financial statements are consistently applied to record revenue
& expenditure in individual segment, as set out in the note of material accounting policies.

d) Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which
are not directly identifiable to each reporting segment have been allocated on the basis of attributed direct cost. All other
expenses which are not attributable or allocable to the segments have been disclosed as un-allocable expenses.

e) Assets and liabilities used in the Companyâs business are not identified to the reportable segments as these are used
interchangeably between segments. Depreciation, amortization & impairment on Property, Plant & Equipment and Intangible
Assets cannot be allocated to a specific segment. Company believes that it is currently not practicable to provide segmental
disclosure relating to total assets, total liabilities and depreciation, amortization & impairment since a meaningful segregation
of the available data could be onerous.

a) Significant management judgments on Revenue Recognition:

Recognised amounts of contract revenues and related receivables reflect managementâs best estimate of each contractâs
outcome and stage of completion which is determined based on physical progress, efforts, cost incurred to date bear to the
total estimated cost of the transaction, time spent, service performed or any other method that management considered
appropriate. For more complex contracts in particular, costs to complete and contract profitability are subject to significant
estimation and uncertainty.

b) Company has contracts with customers for different services which are given below:-

â¢ Consultancy Services

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

Beside above, Company has contracts with customers for wet leasing which are covered under Indian Accounting Standard
(Ind AS) 116, Leases.

c) Company has recognized revenue either on the basis of over time or point in time depending upon satisfaction of
performance obligation on transferring control of goods or services to customers. Revenue has been recognized by the
Company over time basis if any one of the following condition is met:

â¢ Customer simultaneously receives and consumes the benefits

â¢ Companyâs performance creates or enhances an assets that the customer controls as the assets is created or enhanced

â¢ Companyâs performance does not create with alternative use and Company has enforceable right to payment for
performance completed to date.

In case, none of the above condition is met, revenue recognized by the Company on the basis of point in time.

d) Disaggregation Revenue information:

The below presents Disaggregated Revenues from contract with customer for the year ended 31^st March 2025 from
various streams of revenue. The Company believe that this Disaggregation best depicts how the nature, amount, timing
and uncertainty of our revenues and cash flows are affected by industry, market and other economic factor.

e) Company is rendering many project management consultancy services for and on behalf of clients where fee is due to
Company for professional services.

f) In most of the cases, payments from customers are linked with performance obligations. Wherever on the reporting date
work has been performed and payment is not due as per the contract, in such cases contract assets have been created.
However, where payment has been received including advance but performance has not been completed, in such cases
contract liabilities have been created. Advances received by the Company for execution of work are in the nature of security
i.e. a source of protection and are not for financing the project.

g) Company provides warranty in the nature of assurance for which provisions are made as per the Indian Accounting Standard
(Ind AS) 37, Provisions, Contingent Liabilities and Contingent Assets.

h) During the year, impairment of amount receivable from client for services rendered/goods supplied charged to Statement
of Profit and Loss amounting to 7 5.67 crore (previous year 7 8.63 crore), which includes impairment for lease services
amounting to 7 0.04 crore (previous year 7 1.14 crore).

j) During the year ended March 31^st 2025, 7 137.68 crore and March 31^st 2024, 7 94.28 crore of unbilled revenue as of
April 1^st 2024 and April 1^st 2023 respectively has been reclassified to Trade receivables upon billing to customers on
completion of milestones.

k) During the year ended March 31^st 2025 7 101.14 crore and March 31^st 2024 7 12.45 crore of contract liabilities as of
April 1^st 2024 and April 1^st 2023 has been recognized as revenue after completion of milestones.

l) The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31^st 2025 is
7 8577 crore which pertains to various segment of the Company. Company is likely to recognize this revenue over a period
ranging from one year to three years. The aggregate value of performance obligations that was completely or partially
unsatisfied as at March 31^st 2024 was 75399 crore which pertains to various segment of the Company.

m) Company has not incurred any cost for obtaining contracts except administrative cost required for preparation of offers
and the same is charged to statement of Profit and Loss.

n) Company has recognized unamortized contract assets of 7 Nil (previous year 7 Nil) on account of costs incurred in fulfilling
the contract.

| 52 | INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE AS
FOLLOWS:

a) Company as Lessee:-

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the
lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the
initial measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the
commencement date over the term of useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement
date of the lease. Company has no borrowing, as such 3 year SBI MCLR rate 8.85% and 8.70% has been considered as
weighted average incremental borrowing rate for calculation of present value of lease liability for the FY 2024-25 and
FY 2023-24 respectively.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have
a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated
with these leases are recognised as an expense on a straight-line basis over the lease term.

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are
sufficient to meet the obligations related to lease liabilities as and when they fall due.

vi) During the year ended 31 March 2025, the Company incurred expenses amounting to T 15.02 crore (Previous year
T 13.57 crore) on account of short-term leases and leases of low-value assets. For the year ended 31 March 2025,
the total cash outflows for leases, including short-term leases and low-value assets amounted to T 18.01 crore
(Previous year T 15.70 crore).

vii) ROU Assets includes staff quarters at Liluah Howrah, Kolkata from Indian Railways, for which lease has been expired
in the month of March, 2009. The Company has requested to Indian Railways for surrender of these staff quarters.

viii) The Company does not have any lease restrictions and commitment towards variable lease rent as per the contract.

ix) The Company has no commitments towards Leases yet to be commenced as on 31.03.2025.

x) The Company has not sub-leased any of the assets taken on lease.

Deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current
tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes
levied by the same taxation authority.

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during
the periods in which the temporary differences become deductible. Management considers the scheduled reversals of
deferred income tax liabilities, projected future taxable income and tax planning strategies in making the assessment.

Based on the level of historical taxable income and projections for future taxable income over the periods in which the
deferred income tax assets are deductible, management believes that the group will realize the benefits of those deductible
differences. The amount of deferred income tax assets considered realizable could be reduced in the near term if estimates
of future taxable income during the carry forward period are reduced.

| 56 | CAPITAL MANAGEMENT:

The Companyâs objective for capital management is to maximize shareholders value, safeguard business continuity and support
the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term
and other strategic investment plans. The funding requirements are primarily being met through operating cash flows generated.

| 57 | OTHER DISCLOSURES:

a) Ministry of Railway (MoR) vide letter dated 18.10.2021 has decided in principle for closure of Indian Railway Station
Development Corporation Limited (IRSDC), in which Company has an investment of 248 Crore. Pursuant to requisite
approval of the Board and Shareholders of IRSDC, the process of voluntary liquidation of IRSDC has been initiated. The
Board of M/s IRSDC has resolved to transfer the assets and liabilities to the M/s Rail Land Development Authority (RLDA)
/ MoR for consideration not less than the book value on slump sale basis. IRSDC entered into business transfer agreement
with RLDA on 09.04.2025 and consideration has been released by RLDA to IRSDC on 11.04.2025.

Financial Statement of IRSDC has been prepared on liquidation basis. As at 31.03.2025, IRSDC has reported a net worth
of 2237.52 Crore, out of which 24% share i.e. 257.00 crore belongs to RITES, therefore management does not perceive
any impairment in the value of investment in IRSDC.

* During the year there is no investment Liquid Fund.

# Decrease in Current Ratio is due to increase in current liabilities on account of increase in advance from client for export of rolling stock.

## The Company is Debt Free. Lease Liability recognized as per IND AS 116 has not been considered as debt.

### Decrease in inventory turnover ratio is due to increased inventory for future supply of rolling stock.

####Return on investment is not calculated on strategic investments in subsidiaries, joint ventures and other long term equity instruments.

i) Land for office building at Gomati Nagar Extension, Lucknow allotted by Lucknow Development Authority (LDA) having
a total cost of k 4.22 crore is yet to be registered in the name of the Company due to dispute of stamp duty. However,
physical possession of the land has been with the Company w.e.f. 27^th June 2019.

j) The financial statements are presented in k crore. Those items which are required to be disclosed but canât be presented
in the financial statement due to rounding off to the nearest k crore are given as follows: -

k) Balances shown under trade receivable, advances and trade payables including Indian Railway are subject to confirmation /
reconciliation/adjustment, if any. The Company has been sending letters for confirmation to parties. However, the Company
does not expect any material dispute w.r.t. the recoverability/payment of the same.

In the opinion of the management, the value of current assets, loans and advances on realization in the ordinary course of
business, will not be less than the value at which these are stated in the balance sheet.

l) Information as regard to loans, investments made as required under section 186(4) of the Companies Act, 2013 have been
given vide note no. 7, 8 & 16.

m) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend
or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate
Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

n) No funds have been received by the company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ),
with the understanding, whether recorded in writing or otherwise, that the company shall, directly or indirectly, lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate
Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

p) The Company has an investment of ^0.60 Crore in MMG- Metro Management Group Limited. Pursuant to requisite
approval of Board & Shareholders of MMG-Metro Management Group Limited, the process of voluntary dissolution has
been initiated. The company has already impaired the value of investment in MMG-Metro Management Group Limited.

q) Recent pronouncements

Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025, MCA has notified
Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions
w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on its evaluation has determined
that it does not have any significant impact in the financial statements.

For and on behalf of the Board of Directors

Rahul Mithal Krishna Gopal Agarwal Ashok Mishra

Chairman & Managing Director and Director Finance Company Secretary

Chief Executive Officer & Chief Financial Officer M. No. FCS 6411

DIN:07610499 DIN:10239667

As per our report of even date attached

For Pawan Puri & Associates

Chartered Accountants

Firm Registration No.005950N

Ashish Anand

Partner

Place : Gurugram Membership No.532897

Dated : 14.05.2025 UDIN: 25532897BMJFGH5408

Mar 31, 2024

1.12. PROVISION FOR WARRANTY FOR SALE AND SERVICES RENDERED

Provision for warranties is recognized when products are sold and services are rendered with warranty as per the contract. These provisions are estimated by using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise or incurred. The initial estimate of warranty-related costs is revised annually.

As per the terms of the contracts, the Company provides post-contract services /warranty support to some of its customers. The Company accounts for the post-contract support / provision for warranty on the basis of the information available with the Management duly taking into account the current and past estimates.

1.13. LEASES:-COMPANY AS A LESSEE

The Companyâs leased asset primarily consists of leases for land and buildings.

At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over lease term.

The right-of-use assets are initially recognized at cost. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability.

The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of- use assets are determined on the same basis as those of property, plant and equipment.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

1.14.LEASES:-COMPANY AS A LESSOR

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

For operating leases, rental income is recognized on a straight line basis/systematic basis over the lease term. However, reimbursable under the contract are accounted for on accrual basis. Initial direct cost are added to the carrying amount of the leased assets and recognized as an expense over the lease term.

1.15 FINANCIAL INSTRUMENTS

1.15.1 Initial Recognition

Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and financial liabilities are recognized at fair value on initial recognition except for trade receivables/ trade payables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit and loss are added or deducted to/from the fair value on initial recognition.

1.15.2 Subsequent Measurement

(a) Financial assets are subsequently measured at amortised cost if these are held within a business model whose objective is to hold the assets in order

to collect contractual cash flows and the contractual terms of the financial assets give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding using the Effective Interest Rate (EIR) method. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.

(b) Financial assets at fair value through profit or loss.

The financial assets are measured at fair value through profit or loss unless it is classified at amortised cost.

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

All other financial liabilities are subsequently measured at amortised cost using EIR method. Gains and losses are recognised in Statement of Profit and Loss when the liabilities are de-recognised as well as through the EIR amortisation process.

1.15.3 De-recognition of Financial Instruments

A financial asset is de-recognised when:

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

â¢ the Company has transferred substantially all the risks and rewards of the asset, or the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability or a part of financial liability is derecognised from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

1.16. GOVERNMENT GRANT

The Company is getting Government Grant as export incentive under Foreign Trade Policy (FTP) of the Government of India. The same is recognized/presented following Income Approach as other operating income when there is a reasonable assurance that the incentive will be received, and all the attached conditions have been complied with and the same will be received.

20.7 FULLY PAID-UP AGGREGATE NUMBER OF EQUITY SHARES ALLOTTED BY WAY OF BONUS SHARES DURING THE YEAR OF FIVE YEARS IMMEDIATELY PRECEEDING BALANCE SHEET DATE

Company issued 5 crore bonus shares of '' 10 each during 2019-20 amounting to '' 50 crore.

20.8 FULLY PAID-UP AGGREGATE NUMBER OF EQUITY SHARES BUY-BACK DURING THE YEAR OF FIVE YEARS IMMEDIATELY PRECEEDING BALANCE SHEET DATE

The company has bought back 96,98,113 fully paid-up equity shares of '' 10 each from the shareholders on 18^th November, 2020, on proportionate basis by way of tender offer at a price of '' 265 per equity share for an aggregate amount of '' 257 crore. Consequent to the said buy-back, the equity share capital of the company has been reduced by '' 9.70 crore and capital redemption reserve of an equivalent amount has therefore been created as per the extant provision of the companies act, 2013.

VII) The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases/decreases by 1%, the defined obligations would decrease by ^9.66 crore / increase by ^ 10.38 crore as on 31^st March, 2024 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by ^ 4.01 crore/ decrease by ^ 4.16 crore as on 31^st March, 2024.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The company is expected to contribute ^14.16 crore to defined benefit plan obligations towards Gratuity during the year 2024-25.

Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2024 and 31.03.2023 are ^ (9.00) crore and ^ (8.60) crore respectively.

VII) The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases /decreases by 1%, the defined obligations would decrease by 7 0.73 crore /increase by 7 0.80 crore as on 31^st March, 2024 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by 7 0.82 crore/ decrease by 7 0.76 crore as on 31^st March, 2024.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The Company is expected to contribute 7 1.47 crore to defined benefit plan obligations towards gratuity during the year 2024-25. Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2024 and 31.03.2023 are 70.59 crore and 7 0.85 crore respectively.

iii) Provident Fund (Funded)

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented. Further, contribution to employees pension scheme is paid to the appropriate authorities.

As per the provisions of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of 71.67 crore (previous year 7 3.27 crore) determined through actuarial valuation. Accordingly, Company has not recognized the surplus as assets as it pertains to the provident fund trust and not to the Company.

The Company contributed 7 26.15 crore and 7 24.63 crore to the provident fund during the year ended 31^st March, 2024 and 31^st March, 2023 respectively.

b) Defined Contribution Plans

i) Post Retirement Benefits (Pension & Medical):

All eligible employees are entitled to benefit under defined contribution plans towards pension under EPFO scheme, post retirement pension fund and medical schemes as defined contribution plans. The Company has no obligations other than the contribution payable to such funds/schemes. The Company recognizes such contributions as expenses when an employee renders the related service.

During the year, Company contributed/ provided 7 20.92 crore (previous year 7 20.07 crore) towards post retirement pension fund, 7 2.32 crore (previous year 73.27 crore) towards pension under EPFO and 7 1.98 crore (previous year 7 5.62 crore) towards medical schemes.

ii) Performance Related Pay:

Eligible employees are entitled to benefit of performance related pay. The provision for performance related pay is of short-term nature and has been recognized as per the procedure laid by management based on the guidelines of the Department of Public Enterprises.

c) Foreign Service Contribution

Foreign Service Contribution is recognized on accrual basis in the Statement of Profit and Loss Account as per the deputation terms with parent organizations in respect of officers taken on deputation from other organizations.

41. INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

The Company is receiving government grant in the form of export incentive on export of Rolling Stock and Spare parts. There are two types of export incentive i.e. duty drawback and RoDTEP (Remission of Duties & Taxes on Exported Products). The Company has recognized/presented 7 1.69 crore (previous year 7 23.57 crore) as export incentive. The export incentive receivable at the end of the year is 7 0.32 crore (previous year 7 0.50 crore).

42. INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

The amount of exchange differences (net) credited to the statement of profit and loss account during the Financial Year is 7 8.86 crore (Previous Year 7 40.64 crore)

e) Key Management Personnel

â¢ Chairman & Managing Director (Chief Executive Officer)

Shri Rahul Mithal (DIN: 07610499)

â¢ Whole Time Directors

Shri Arun Kumar Singh (DIN: 09747776) - Director (Projects)

Dr. Deepak Tripathi (DIN: 10090267) - Director (Technical)

Shri Krishna Gopal Agarwal (DIN: 10239667) - Director (Finance) (w.e.f. 01.08.2023)

Shri Bibhu Prasad Nayak (DIN: 08197975)- Director (Finance) (upto 31.07.2023)

â¢ Government Nominee Directors Shri Sandeep Jain (DIN: 09435375)

Shri Raj Kumar Mangla (DIN: 09533985) (upto 29.02.2024)

Shri Shailendra Singh (DIN: 07083410) (w.e.f. 27.03.2024)

â¢ Non-Executive (Independent) Directors

Shri Laxman Tammanna Tapashi (DIN: 01838521)

Dr. Godawari Mishra (DIN: 09394545)

Dr. Dineshananda Goswami (DIN: 09394294)

Shri Likha Togu (DIN: 09470640)

â¢ Chief Financial Officer

Shri Krishna Gopal Agarwal (w.e.f. 01.08.2023)

Shri Bibhu Prasad Nayak (upto 31.07.2023)

â¢ Company Secretary

Shri Ashok Mishra (w.e.f. 28.02.2024)

Shri Nikhil Agarwal (from 12.09.2023 to 28.02.2024)

Shri Joshit Ranjan Sikidar (upto 11.09.2023)

f) Transactions and Balances with Related Parties

Outstanding balances from the related parties are unsecured and considered good which are due towards ordinary course of business and are being realized within reasonable time.

46. INDIAN ACCOUNTING STANDARD (IND AS) 36, DISCLOSURES ON IMPAIRMENT OF ASSETS ARE AS FOLLOWS:

The Company has carried out the assessment on impairment of assets in terms of Indian Accounting standard (Ind AS) 36, Impairment of Assets and management does not perceive any impairment in the value of the carrying amount of assets.

However, during the financial year Management has decided to liquidate investment in M/s. Metro Management Group Ltd (MMG) and entire equity investment of '' 0.60 crore has been provided for in Books of Accounts.

47. INDIAN ACCOUNTING STANDARD (IND AS) 37, DISCLOSURES ON PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS ARE AS FOLLOWS:

a) Provisions include mainly towards warranty which has been made for fulfillment of warranty obligation after export sale of rolling stocks/ locomotives & spares. Estimation of such provision is based on experience, nature of rolling stock exported to various clients and period specified in the agreements with them. Actual expenditure may vary during the warranty period as per the requirements.

b) Contingent liabilities and Commitments to the extent not provided for include:

i) Contingent Liabilities

I) Claims (excluding interest) against the Company not acknowledged as debts are '' 27.15 crore (previous year '' 27.06 crore).

II) In one of the Building Projects, which the company did as a Project Management Consultant (PMC), The building is declared unsafe based on third-party evaluation and is required to reconstructed. Cost of Reconstruction is estimated at '' 99.23 Crore (including GST & Contingencies). The contractor, who constructed the said building, has undergone Insolvency Proceedings under the Insolvency and Bankruptcy Code (IBC).

The likely availability of the amount from insurance claim, Bank Guarantee encashment proceeds, and other amounts available under the contract is estimated to be '' 60.12 crore. Since the project is handled by the company as PMC, the company does not foresee any outflow from its account. However, as an abundant precaution, '' 39.11 crore (including GST & Contingencies) is being disclosed as contingent liabilities on this account.

MI) The Company is subject to legal/arbitration proceeding and claims, which have arisen in the ordinary course of business. Management does not reasonably expect that when these cases ultimately conclude and determined, will have any material and adverse effect on the Companyâs results of operations or financial conditions.

IV) Disputed taxes and duty:

A) Demand on account of income tax includes of 7 6.66 crore (excluding interest) (previous year 76.66 crore) which are being contested by the Company. This excludes 7 4.51 crore (previous Year 7 4.51 crore) relating to cases where Company has already won at different appellate authorities during earlier years, against which income tax department has gone for appeal at higher appellate authorities. In similar cases of past years, the appeal of the income tax department has been dismissed.

B) Demand on account of Service Tax, VAT etc. amounting to 7 11.04 crore (previous year 7 8.87 crore) is being contested by the Company at different forums.

V) The company has entered into a contract with the Ministry of Housing & Urban Affairs for purchase of commercial built up in the complex at Nauroji Nagar New Delhi through NBCC. The company has paid GST under reverse charge from third demand onward along with the GST on earlier demand excluding interest of '' 1.40 crore on delay payment of GST under reverse charge prior to third demand. Company is of the view that liability to pay GST is with NBCC under Sec 9(1) of CGST Act. AAR (Authority for Advance Ruling) under Sec 37 (1) and Delhi Appellate Authority also held the same view. As such, the company does

not foresee any liability of interest as on 31.03.2024. However, as an abundant precaution, the same is being disclosed as Contingent Liability.

VI) A number of cases are lying for adjudication at various forums or under arbitration, which Company is contesting on behalf of Clients. The Company is not subject to any liability that may result pursuant to adjudication / arbitral award.

VII) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where amount cannot be quantified.

ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for amounting to 7 94.17 crore (previous year 7 104.19 crore).

c) Contingent Assets

i) In a pre-closed contract in the year 2005-06, Company invokes arbitration for a claim of 7 233.93 crore (previous year 7 233.93 crore) against a client. Client also submits counter claims of 7 469.10 crore (previous year 7 469.10 crore) before arbitrator. The sole arbitrator awarded 788.31 crore in favour of the Company against the claim of 7233.93 Crore, while rejecting the counter claims of the client. Since the awarded amount is less than the claimed amount, Company appealed against the aforesaid award. Appellate authority awarded 7 231.68 crore with applicable interest in favour of the Company. Client filed a petition in the Civil Court for setting aside the aforesaid award, which was dismissed by the Court on 22.11.2017 and preliminary objections of Company are allowed. Thereafter the Company filed writ petition before Honâble Jharkhand High Court on 05.07.2018 to issue the direction to client to pay the awarded amount. The said petition was disposes on 16.02.2024 in favour of company by appointing sole arbitrator i.e. Honbâle Justice(Retd.) from Supreme Court of India to adjucate the dispute between the parties.Thereafter, the client filed an appeal before Jharkhand High Court on 21.03.2024 to challenge the appointment of Sole Arbitrator, the same is also dismissed on 07.05.2024. Next date of proceeding before Sole Arbitrator is awaited.

ii) In the above contract, executing agency also raised claims (excluding interest) of 7184.41crore (previous year7184.41 crore) against the Company before the arbitration tribunal. The Company also submitted a counter claim of 7 644.53 crore (previous year 7 644.53 crore) against the executing agency. Both the parties had concluded their arguments before the Tribunal and award was published on 18th October 2016 in favour of the Company. As per the award, Company was to get 7 63 crore from executing agency effective from the date of publication of award i.e. 18^th October 2016. The executing agency had filed two petitions i.e. arbitration appeal before honâble Jharkhand High Court on 25.05.2017 and commercial revocation to set aside the award before the Commercial Court, Ranchi on 06.01.2018. The arbitration appeal has already been dismissed by honâble Jharkhand High Court on 11.03.2019. The commercial revocation has also been dismissed on 29.06.2019. Now RITES limited filed the commercial execution case no. 03 of 2020 on 16.01.2020 before Commercial Court Ranchi to execute the award amount. Same is pending and next date of hearing is fixed on 31.05.2024. In view of above, the Company has not recognized the award amount in the books of account.

iii) In July 2021, a Locomotive meant for export to Mozambique was damaged prior to shipment. Insurance claim towards loss of locomotive has been assessed at '' 24.69 crores approx (net of '' 30 lakhs received thorough auction of damaged goods) by the Insurance Surveyor and same has been advised to Insurance Company. Cost of damaged goods amounting to '' 12.47 Crore has been written off during the year, insurance claim has not been recognized in the books of accounts pending approval of claim by Insurance Company.

b) Fair value hierarchy & valuation techniques

To provide an indication about the reliability of method used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the Indian Accounting Standard (Ind AS-113) on fair value measure.

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques and observable inputs for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: Inputs for the assets or liabilities that are not based on observable market data (observable inputs).

Fair value hierarchies of assets and liabilities as on 31stMarch, 2024 are as follows:

c) Financial Risk Management

The Companyâs activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The Companyâs focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Companyâs exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from few customers.

i) Market Risk

The Company operates internationally and a considerable portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk for its sales and services in the Middle East, Africa and South Asian countries. The exchange rates between the rupee and foreign currencies have changed substantially in recent years which may also fluctuate substantially in the future. However, Company has currency risk management policy and exchange fluctuations are regularly monitored by the risk management committee to mitigate this risk. Policy covers various aspects of currency risk management, benchmarking, hedging and risk appetite, permissible instruments, hedging policy, structure of the risk management committee and treasury group, reporting procedures etc.

For the year ended 31^st March, 2024 and 31^st March, 2023, every percentage increase/decrease in the exchange rate between the INR & US Dollar has affected the Companyâs incremental margins by approximately 0.74% (previous year 0.45%) each. For the year ended 31stMarch, 2024 and 31^st March, 2023, every percentage increase/decrease in the exchange rate between the INR & MUR has an insignificant affect on the Companyâs incremental margins.

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting year and the current reporting year.

The above foreign currency exposure is unhedged as these are covered through foreign currency risk management policy.

ii) Credit Risk

Credit Risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. Primarily exposure to the credit risk is from trade receivables amounting to 7 1007.12 crore (previous year 7 993.65 crore) and unbilled revenue amounting to 7 141.36 crore (previous year 7 99.35 crore) which are typically unsecured. Credit risk is being managed by continuously monitoring the outstanding dues from the customers. Trade Receivables towards export sales are generally managed by establishing Letter of Credit with the clients. Further, most of the clients of the Company are Government or Government Undertakings; hence credit risk is bare minimum and Company also does not foresee any impact on credit risk of the Company. Company has impaired, as a prudent measure, the trade receivables and unbilled revenue towards expected credit loss as per Company accounting policy to the extent of 7 126.46 crore (previous year 7 124.73 crore). Keeping in view the nature of business expected credit loss is provided for on case-to-case basis as per the policy on impairment of financial assets.

No significant credit risk on cash and bank balances including clientsâ funds amounting to 7 3071.05 crore (previous year 7 3481.46 crore) is expected as Company parks surplus funds with Schedule Banks having good capital adequacy ratio and least NPA as determined by RBI and guidelines of the Company. Company has parked its owned funds in fixed deposits of 7 690.11 crore (previous year 7 803.60 crore) with Schedule banks with negligible credit risks.

Non-Strategic Investments primarily include investments in tax-free bonds of 7 20 crore (previous year 7 45 crore) and liquid mutual fund units of 7 NIL (previous year 7 NIL) issued by Public Sector Undertaking where risk is minimal.

The Company has given House building, multi-purpose loans etc. to the employees which are insured and house properties/ other assets are mortgaged / hypothecated against these loans in line with the policies of the Company. The risk of default in respect of these loans is considered negligible.

iii) Liquidity Risk

Companyâs principal sources of liquidity are âcash and bank balancesâ and the cash flow that is generated from operations. The Company has no outstanding borrowings. The Company has a working capital of 7 1672.05 crore (previous year 7 1769.45 crore) including cash and bank balance (owned funds) of 7 698.49 crore (previous year 7 837.83 crore) and current investment 7 NIL crore (previous year 7 25 crore). Company believes that the working capital is sufficient to meet its requirements, accordingly no liquidity risk is perceived by the Company.

50. INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTS ARE AS FOLLOWS:

Operating segments are defined as components of an enterprise for which discrete financial information is available which is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. The Companyâs chief operating decision maker is the Chairman & Managing Director who is also Chief Executive Officer.

a) Company has identified four operational reportable segments based on operations being carried out which are as under:-

Â¦ Consultancy Services

Â¦ Leasing of railway rolling stock & equipments

Â¦ Export of rolling stock, equipments and spares

Â¦ Turnkey Construction Projects

b) Geographical wise revenue segment is disclosed as under:-

i) Revenue within India from consultancy includes quality assurance & project management services, turnkey construction projects and domestic lease rental services to clients located inside India.

ii) Revenue from outside India includes services rendered and export sales of rolling stock & spare parts to the clients located outside India.

c) The accounting principles used in the preparation of the financial statements are consistently applied to record revenue & expenditure in individual segment, as set out in the note of material accounting policies.

d) Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of attributed direct cost. All other expenses which are not attributable or allocable to the segments have been disclosed as unallocable expenses.

e) Assets and liabilities used in the Companyâs business are not identified to the reportable segments as these are used interchangeably between segments. Depreciation, amortization & impairment on Property, Plant & Equipment and Intangible Assets cannot be allocated to a specific segment. Company believes that it is currently not practicable to provide segmental disclosure relating to total assets, total liabilities and depreciation, amortization & impairment since a meaningful segregation of the available data could be onerous.

51. INDIAN ACCOUNTING STANDARD (IND AS) 115, DISCLOSURES ON REVENUE FROM CONTRACTS WITH CUSTOMERS ARE AS FOLLOWS:

a) Significant management judgments on Revenue Recognition:

Recognised amounts of contract revenues and related receivables reflect managementâs best estimate of each contractâs outcome and stage of completion which is determined based on physical progress, efforts, cost incurred to date bear to the total estimated cost of the transaction, time spent, service performed or any other method that management considered appropriate. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation and uncertainty.

b) Company has contracts with customers for different services which are given below:-

Â¦ Consultancy Services

Â¦ Export of rolling stock, equipments and spares

Â¦ Turnkey Construction Projects

Beside above, Company has contracts with customers for wet leasing which are covered under Indian Accounting Standard (Ind AS) 116, Leases

c) Company has recognized revenue either on the basis of over time or point in time depending upon satisfaction of performance obligation on transferring control of goods or services to customers. Revenue has been recognized by the Company over time basis if any one of the following condition is met:

Â¦ Customer simultaneously receives and consumes the benefits

Â¦ Companyâs performance creates or enhances an assets that the customer controls as the assets is created or enhanced

Â¦ Companyâs performance does not create with alternative use and Company has enforceable right to payment for performance completed to date.

In case, none of the above condition is met, revenue recognized by the Company on the basis of point in time.

e) Company is rendering many project management consultancy services for and on behalf of clients where fee is due to Company for professional services.

f) In most of the cases, payments from customers are linked with performance obligations. Wherever on the reporting date work has been performed and payment is not due as per the contract, in such cases contract assets have been created. However, where payment has been received including advance but performance has not been completed, in such cases contract liabilities have been created. Advances received by the Company for execution of work are in the nature of security i.e a source of protection and are not for financing the project.

g) Company provides warranty in the nature of assurance for which provisions are made as per the Indian Accounting Standard (Ind AS) 37, Provisions, Contingent Liabilities and Contingent Assets.

h) During the year, impairment of amount receivable from client for services rendered/goods supplied charged to Statement of Profit and Loss amounting to 7 8.63 crore (previous year 7 24.11 crore), which includes impairment for lease services amounting to 7 1.14 crore (previous year 70.22 crore).

j) During the year ended March 31, 2024, 7 94.28 crore and March 31 2023, 7 45.84 crore of unbilled revenue as of April 1st, 2023 and April 1st 2022 respectively has been reclassified to Trade receivables upon billing to customers on completion of milestones.

k) During the year ended March 31, 2024 7 12.45 crore and March 31, 2023 7 59.45 crore of contract liabilities as of April 1, 2023 and April 1,2022 has been recognized as revenue after completion of milestones.

l) The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2024 is 7 5399 crore which pertains to various segment of the Company. Company is likely to recognize this revenue over a period ranging from one year to three years. The aggregate value of performance obligations that was completely or partially unsatisfied as at March 31, 2023 was 75543 crore which pertains to various segment of the Company.

m) Company has not incurred any cost for obtaining contracts except administrative cost required for preparation of offers and the same is charged to statement of Profit and Loss.

n) Company has recognized unamortized contract assets of 7 Nil crore (previous year 7 Nil crore) on account of costs incurred in fulfilling the contract.

52. INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE AS FOLLOWS:

a) Company as Lessee:-

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the term of useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. Company has no borrowing, as such 3 year SBI MCLR rate 8.70% and 7.30% has been considered as weighted average incremental borrowing rate for calculation of present value of lease liability for the FY- 2023-24 and 2022-23 respectively.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

i) The following is the summary of practical expedients applied:

I) The Company has used a single discount rate to a portfolio of leases with similar characteristics.

II) Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application

III) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

57. OTHER DISCLOSURES:

a) Ministry of Railway (MoR) vide letter dated 18.10.2021 has decided in principle for closure of Indian Railway Station Development Corporation Limited (IRSDC), in which Company has an investment of 148 Crore. Closure activities are underway and Board of IRSDC has decided to transfer the assets & liabilities of IRSDC to Rail Land Development Authority on slump sale basis (excluding investment in Subsidiary & Associate of IRSDC) for consideration not less than book value. Financial statement of IRSDC has been prepared on liquidation basis. As at 31.03.2024, IRSDC has reported a net worth of 1231.89 Crore, out of which 24% share i.e. 155.65 crore belongs to RITES, therefore management does not perceive any impairment in the value of investment in IRSDC.

b) Assets and liabilities are classified between current and non-current considering 12 months period as operating cycle.

c) Information on CSR expenditure:

i) Gross amount required to be spent including advances given during the year 2023-24 1 13.30 crore (previous year 2022-23 1 14.10 crore).

ii) Expenditure incurred including advance on CSR during the year on:

k) Balances shown under trade receivable, advances and trade payables including Indian Railway are subject to confirmation / reconciliation/adjustment, if any. The Company has been sending letters for confirmation to parties. However, the Company does not expect any material dispute w.r.t. the recoverability/payment of the same.

In the opinion of the management, the value of current assets, loans and advances on realization in the ordinary course of business, will not be less than the value at which these are stated in the balance sheet.

l) Information as regard to loans, investments made as required under section 186(4) of the Companies Act, 2013 have been given vide note no.7,8, & 16.

m) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

n) No funds have been received by the company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

o) The Code on Social Security, 2020 (âthe Codeâ) 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.

p) During the year company invested of '' 0.60 Cr. as equity in an Associate namely MMG-Metro Management Group Ltd. in Israel with 24.50% share. The other two joint venture partners are Poran Shrem Engineering and Appraisal Ltd (Israel company) with 51% share and DMRC Limited with 24.50% share. Management has decided to liquidate investment in M/s Metro Management Group Ltd (MMG) and entire equity investment of '' 0.60 crore has been provided for in books of Accounts.

q) Recent pronouncements

For and on behalf of the Board of Directors

Rahul Mithal Krishna Gopal Agarwal Ashok Mishra

Chairman & Managing Director Director (Finance) & Chief Financial Officer Company Secretary

and Chief Executive Officer DIN: 10239667 M.No.FCS 6411

DIN:07610499

As per our report of even date attached

For Pawan Puri & Associates

Chartered Accountants

Firm Registration No.005950N

Ashish Anand

Partner

Place : Gurugram Membership No.532897

Dated : 28.05.2024 UDIN: 24532897BKGWPF5597

Mar 31, 2023

VII) The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases/decreases by 1%, the defined obligations would decrease by '' 8.90 crore / increase by '' 9.54 crore as on 31^stMarch, 2023 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by '' 3.40 crore/ decrease by '' 3.59 crore as on 31^st March, 2023.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2023 and 31.03.2022 are '' (8.60) crore and '' (0.95) crore respectively.

VII) The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases /decreases by 1%, the defined obligations would decrease by '' 0.62 crore /increase by '' 0.68 crore as on 31st March, 2023 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by '' 0.69 crore/ decrease by '' 0.64 crore as on 31st March, 2023.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The Company is expected to contribute '' 1.33 crore to defined benefit plan obligations towards gratuity during the year 2023-24. Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2023 and 31.03.2022 are '' 0.85 crore and '' (0.06) crore respectively.

iii) Provident Fund (Funded)

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented. Further, contribution to employees pension scheme is paid to the appropriate authorities.

As per the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of '' 6.76 crore (previous year '' 1.05 crore) determined through actuarial valuation. Accordingly, Company has not recognized the surplus as assets as it pertains to the provident fund trust and not to the Company.

The Company contributed '' 24.54 crore and '' 23.61 crore to the provident fund during the year ended 31st March, 2023 and 31st March, 2022 respectively.

b) Defined Contribution Plansi) Post Retirement Benefits (Pension & Medical):

All eligible employees are entitled to benefit under defined contribution plans towards pension under EPFO scheme, post retirement pension fund and medical schemes as defined contribution plans. The Company has no obligations other than the contribution payable to such funds/schemes. The Company recognizes such contributions as expenses when an employee renders the related service.

During the year, Company contributed/ provided '' 20.07 crore (previous year '' 18.89 crore) towards post retirement pension fund, '' 3.27 crore (previous year '' 3.52 crore) towards pension under EPFO and '' 5.62 crore (previous year '' 5.45 crore) towards medical schemes.

ii) Performance Related Pay:

Eligible employees are entitled to benefit of performance related pay. The provision for performance related pay is of short-term nature and has been recognized as per the procedure laid by management based on the guidelines of the Department of Public Enterprises.

c) Foreign Service Contribution

Foreign Service Contribution is recognized on accrual basis in the Statement of Profit and Loss Account as per the deputation terms with parent organizations in respect of officers taken on deputation from other organizations.

41. INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

The Company is receiving government grant in the form of export incentive on export of Rolling Stock and Spare parts. There are two types of export incentive i.e duty drawback and RoDTEP (Remission of Duties & Taxes on Exported Products). The Company has recognized/presented '' 23.57 crore (previous year '' 21.12 crore) as export incentive. The export incentive receivable at the end of the year is '' 0.50 crore (previous year '' 10.52 crore).

42. INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

The amount of exchange differences (net) credited to the statement of profit and loss account during the Financial Year is '' 40.64 crore (Previous Year '' 17.19 crore).

As per the agreements with the customers, warranty years are varying from two to five years, i.e., extending beyond one year, require discounting to work out net present value of such provisions made towards warranty.

Effect of change in the discount rates

3 years SBI MCLR rate as on 31.03.2023 ie. 8.70% is used as discount rate during the reporting period. The effect of change in discount rate ie. 8.70% for FY 2022-23 vice 7.30% for FY- 2021-22, is '' 0.32 crore.

For movement of provision for unspent amount of Corporate Social Responsibility-refer 57(c)(iii) b) Contingent liabilities and Commitments to the extent not provided for include: i) Contingent Liabilities

I) Claims (excluding interest) against the Company not acknowledged as debts are '' 27.06 crore (previous year '' 27.15 crore).

II) The Company is subject to legal/arbitration proceeding and claims, which have arisen in the ordinary course of business. Management does not reasonably expect that when these cases ultimately conclude and determined, will have any material and adverse effect on the Company''s results of operations or financial conditions.

III) Disputed taxes and duty:

A) Demand on account of income tax includes of '' 6.66 crore (excluding interest) (previous year '' 5.21 crore) which are being contested by the Company. This excludes '' 4.51 crore (previous Year '' 2.31 crore) relating to cases where Company has already won at different appellate authorities during earlier years, against which income tax department has gone for appeal at higher appellate authorities. In similar cases of past years, the appeal of the income tax department has been dismissed.

B) Demand on account of service tax, VAT etc. amounting to '' 8.87 crore (previous year '' 2.85 crore) is being contested by the Company at different forums.

IV) The company has entered into a contract with the Ministry of Housing & Urban Affairs for purchase of commercial built up in the complex at Nauroji Nagar New Delhi through NBCC. The company has paid GST under reverse charge from third demand onward along with the GST on earlier demand excluding interest of '' 1.40 crore on delay payment of GST under reverse charge prior to third demand. Company is of the view that liability to pay GST is with NBCC under Sec 9(1) of CGST Act. AAR (Authority for Advance Ruling) under Sec 37 (1) and Delhi Appellate Authority also held the same view. As such, the company does not foresee any liability of interest as on 31.03.2023. However, as an abundant precaution, the same is being disclosed as Contingent Liability.

V) A number of cases are lying for adjudication at various forums or under arbitration, which Company is contesting on behalf of Clients. The Company is not subject to any liability that may result pursuant to adjudication / arbitral award.

VI) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where amount cannot be quantified.

ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for amounting to '' 104.19 crore (previous year '' 199.97 crore).

c) Contingent Assets

i) In a pre-closed contract in the year 2005-06, Company invokes arbitration for a claim of '' 233.93 crore (previous year '' 233.93 crore) against a client. Client also submits counter claims of '' 469.10 crore (previous year '' 469.10 crore) before arbitrator. The sole arbitrator awarded '' 88.31 crore in favour of the Company against the claim of '' 233.93 crore, while rejecting the counter claims of the client. Since the awarded amount is less than the claimed amount, Company appealed against the aforesaid award. Appellate authority awarded '' 231.68 crore with applicable interest in favour of the Company. Client filed a petition in the Civil Court for setting aside the aforesaid award, which was dismissed by the court on 22.11.2017and preliminary objections of Company are allowed. Thereafter the Company filed writ petition before Hon''ble Jharkhand High court on 05.07.2018 to issue the direction to client to pay the awarded amount. Hearing in the matter is yet to be scheduled.

ii) In the above contract, executing agency also raised claims (excluding interest) of '' 184.41crore (previous year '' 184.41 crore) against the Company before the arbitration tribunal. The Company also submitted a counter claim of '' 644.53 crore (previous year '' 644.53 crore) againstthe executing agency. Both the parties had concluded their arguments before the Tribunal and award was published on 18^th October 2016 in favour of the Company. As per the award, Company was to get '' 63 crore from executing agency effective from the date of publication of award i.e., 18^thOctober 2016. The executing agency had filed two petitions i.e. arbitration appeal before hon''ble Jharkhand high court on 25.05.2017 and commercial revocation to set aside the award before the commercial court, Ranchi on 06.01.2018. The arbitration appeal has already been dismissed by hon''ble Jharkhand high courton 11.03.2019. The commercial revocation has also been dismissed on 29.06.2019. Now RITES limited filed the commercial execution case no. 03 of 2020 on 16.01.2020 before commercial court Ranchi to execute the award amount. Same is pending and next date of hearing is fixed on 16.06.2023. In view of above, the Company has not recognized the award amount in the books of account.

b) Fair value hierarchy & valuation techniques

To provide an indication about the reliability of method used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the Indian Accounting Standard (Ind AS-113) on fair value measure.

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques and observable inputs for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: Inputs for the assets or liabilities that are not based on observable market data (observable inputs).

c) Financial Risk Management

The Company''s activities are exposed 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 minimize potential adverse effects on its financial performance. The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from few customers.

i) Market Risk

The Company operates internationally and a considerable portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk for its sales and services in the Middle East, Africa and South Asian countries. The exchange rates between the rupee and foreign currencies have changed substantially in recent years which may also fluctuate substantially in the future. However, Company has currency risk management policy and exchange fluctuations are regularly monitored by the risk management committee to mitigate this risk. Policy covers various aspects of currency risk management, benchmarking, hedging and risk appetite, permissible instruments, hedging policy, structure of the risk management committee and treasury group, reporting procedures etc.

For the year ended 31^st March, 2023 and 31^st March, 2022, every percentage increase/decrease in the exchange rate between the INR & US Dollar has affected the Company''s incremental margins by approximately 0.45% (previous year 0.52%) each. For the year ended 31^stMarch, 2023 and 31^st March, 2022, every percentage increase/decrease in the exchange rate between the INR & MUR has an insignificant affect on the Company''s incremental margins.

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting year and the current reporting year.

The above foreign currency exposure is unhedged as these are covered through foreign currency risk management policy.

ii) Credit Risk

Credit Risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. Primarily exposure to the credit risk is from trade receivables amounting to '' 993.65 crore (previous year '' 783.19 crore) and unbilled revenue amounting to '' 99.35 crore (previous year '' 50.75 crore) which are typically unsecured. Credit risk is being managed by continuously monitoring the outstanding dues from the customers. Trade Receivables towards export sales are generally managed by establishing Letter of Credit with the clients. Further, most of the clients of the Company are Government or Government Undertakings; hence credit risk is bare minimum and Company also does not foresee any impact on credit risk of the Company. Company has impaired, as a prudent measure, the trade receivables and unbilled revenue towards expected credit loss as per Company accounting policy to the extent of '' 124.73 crore (previous year '' 102.34 crore). Keeping in view the nature of business expected credit loss is provided for on case-to-case basis as per the policy on impairment of financial assets.

No significant credit risk on cash and bank balances including clients'' funds amounting to '' 3481.46 crore (previous year '' 3398.58 crore) is expected as Company parks surplus funds with Schedule Banks having good capital adequacy ratio and least NPA as determined by RBI and guidelines of the Company. Company has parked its owned funds in fixed deposits of '' 803.60 crore (previous year '' 743.31 crore) with Schedule banks with negligible credit risks.

Non-Strategic Investments primarily include investments in tax-free bonds of '' 45 crore (previous year '' 95 crore) and liquid mutual fund units of '' NIL (previous year '' 25.92 crore) issued by Public Sector Undertaking where risk is minimal.

The Company has given House building, multi-purpose loans etc. to the employees which are insured and house properties/ other assets are mortgaged / hypothecated against these loans in line with the policies of the Company. The risk of default in respect of these loans is considered negligible.

iii) Liquidity Risk

Company''s principal sources of liquidity are "cash and bank balancesâ and the cash flow that is generated from operations. The Company has no outstanding borrowings. The Company has a working capital of '' 1769.45 crore (previous year '' 1562.16 crore) including cash and bank balance (owned funds) of '' 837.83 crore (previous year '' 674.23 crore) and current investment '' 25 crore (previous year '' 75.92 crore). Company believes that the working capital is sufficient to meet its requirements, accordingly no liquidity risk is perceived by the Company.

50. INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTS ARE AS FOLLOWS:

Operating segments are defined as components of an enterprise for which discrete financial information is available which is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. The Company''s chief operating decision maker is the Chairman & Managing Director who is also Chief Executive Officer.

a) Company has identified four operational reportable segments based on operations being carried out which are as under:-

â¢ Consultancy Services

â¢ Leasing of railway rolling stock & equipments

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

b) Geographical wise revenue segment is disclosed as under:-

i) Revenue within India from consultancy includes quality assurance & project management services, turnkey construction projects and domestic lease rental services to clients located inside India.

ii) Revenue from outside India includes services rendered and export sales of rolling stock & spare parts to the clients located outside India.

c) The accounting principles used in the preparation of the financial statements are consistently applied to record revenue & expenditure in individual segment, as set out in the note of significant accounting policies.

d) Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of attributed direct cost. All other expenses which are not attributable or allocable to the segments have been disclosed as un-allocable expenses.

e) Assets and liabilities used in the Company''s business are not identified to the reportable segments as these are used interchangeably between segments. Depreciation, amortization& impairment on Property, Plant & Equipment and Intangible Assets cannot be allocated to a specific segment. Company believes that it is currently not practicable to provide segmental disclosure relating to total assets, total liabilities and depreciation, amortization& impairment since a meaningful segregation of the available data could be onerous.

51. INDIAN ACCOUNTING STANDARD (IND AS) 115, DISCLOSURES ON REVENUE FROM CONTRACTS WITH CUSTOMERS ARE AS FOLLOWS:a) Significant management judgments on Revenue Recognition:

Recognised amounts of contract revenues and related receivables reflect management''s best estimate of each contract''s outcome and stage of completion which is determined based on physical progress, efforts, cost incurred to date bear to the total estimated cost of the transaction, time spent, service performed or any other method that management considered appropriate. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation and uncertainty.

b) Company has contracts with customers for different services which are given below:-

â¢ Consultancy Services

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

Beside above, Company has contracts with customers for wet leasing which are covered under Indian Accounting Standard (Ind AS) 116, Leases

c) Company has recognized revenue either on the basis of over time or point in time depending upon satisfaction of performance obligation on transferring control of goods or services to customers. Revenue has been recognized by the Company over time basis if any one of the following condition is met:

â¢ Customer simultaneously receives and consumes the benefits

â¢ Company''s performance creates or enhances an assets that the customer controls as the assets is created or enhanced

â¢ Company''s performance does not create with alternative use and Company has enforceable right to payment for performance completed to date.

In case, none of the above condition is met, revenue recognized by the Company on the basis of point in time.

d) Disaggregation Revenue information:

The below presents Disaggregated Revenues from contract with customer for the year ended 31st March 2023 from various streams of revenue. The Company believe that this Disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factor.

e) Company is rendering many project management consultancy services for and on behalf of clients where fee is due to Company for professional services.

f) In most of the cases, payments from customers are linked with performance obligations. Wherever on the reporting date work has been performed and payment is not due as per the contract, in such cases contract assets have been created. However, where payment has been received including advance but performance has not been completed, in such cases contract liabilities have been created. Advances received by the Company for execution of work are in the nature of security i.e a source of protection and are not for financing the project.

g) Company provides warranty in the nature of assurance for which provisions are made as per the Indian Accounting Standard (Ind AS) 37, Provisions, Contingent Liabilities and Contingent Assets.

h) During the year, impairment of amount receivable from client for services rendered/goods supplied charged to Statement of Profit and Loss amounting to '' 24.11 crore (previous year '' 10.89 crore), which includes impairment for lease services amounting to '' 0.22 crore (previous year '' 0.05 crore).

j) During the year ended March 31st, 2023, '' 45.84 crore and March 31st 2022, '' 74.96 crore of unbilled revenue as of April 1st, 2022 and April 1st 2021 respectively has been reclassified to Trade receivables upon billing to customers on completion of milestones.

k) During the year ended March 31, 2023''59.45 crore and March 31, 2022''195.81 crore of contract liabilities as of April 1, 2022 and April 1,2021 has been recognized as revenue after completion of milestones.

l) The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2023 is '' 5543 crore which pertains to various segment of the Company. Company is likely to recognize this revenue over a period ranging from one year to three years. The aggregate value of performance obligations that was completely or partially unsatisfied as at March 31, 2022 was '' 4621 crore which pertains to various segment of the Company.

m) Company has not incurred any cost for obtaining contracts except administrative cost required for preparation of offers and the same is charged to statement of Profit and Loss.

n) Company has recognized unamortized contract assets of '' Nil crore (previous year '' Nil crore) on account of costs incurred in fulfilling the contract.

52. INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE AS FOLLOWS:a) Company as Lessee:

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the term of useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. Company has no borrowing, as such 3 year SBI MCLR rate 8.70% and 7.30% has been considered as weighted average incremental borrowing rate for calculation of present value of lease liability for the FY- 2022-23 and 2021-22 respectively.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

i) The following is the summary of practical expedients applied:

I) The Company has used a single discount rate to a portfolio of leases with similar characteristics.

II) Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application

III) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to

meet the obligations related to lease liabilities as and when they fall due.

vi) During the year ended 31 March 2023, the Company incurred expenses amounting to '' 14.78 crore (Previous year '' 12.73 crore) on accounts of short-term leases and leases of low-value assets. For the year ended 31 March 2023, the total cash outflows for leases, including short-term leases and low-value assets amounted to '' 17.71 crore (Previous year '' 15.37 crore).

vii) ROU Assets includes staff quarters at Liluah Howrah, Kolkata from Indian Railways, for which lease has been expired in the month of March, 2009. The extension has been sought from Indian Railways.

viii) The Company does not have any lease restrictions and commitment towards variable lease rent as per the contract.

ix) The Company has no commitments towards Leases yet to be commenced as on 31.03.2023.

x) The Company has not sub-leased any of the assets taken on lease.

Deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the year in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making the assessment.

Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the group will realize the benefits of those deductible differences. The amount of deferred income tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

57. OTHER DISCLOSURES:

a) Ministry of Railway (MoR) vide letter dated 18.10.2021 has decided in principle for closure of Indian Railway Station Development Corporation Limited (IRSDC), in which Company has an investment of '' 48 crore. Closure activities are underway and Board of IRSDC has decided to transfer the assets & liabilities of IRSDC to Rail Land Development Authority on slump sale basis (excluding investment in Subsidiary & Associate of IRSDC) for consideration not less than book value. Financial statement of IRSDC has been prepared on liquidation basis. As at 31.03.2023, IRSDC has reported a net worth of '' 225 crore, out of which 24% share i.e. '' 54 crore belongs to RITES, therefore management does not perceive any impairment in the value of investment in IRSDC.

b) Assets and liabilities are classified between current and non-current considering 12 months period as operating cycle.

c) Information on CSR expenditure:

i) Gross amount required to be spent including advances given during the year 2022-23 '' 14.10 crore (previous year 2021-22''13.87 crore).

iv) Short fall other than ongoing projects of CSR - Nil (Previous Year- Nil)

(i) Reasons for short fall other than ongoing projects of CSR - Not Applicable.

(ii) Nature of CSR Activities: The primary focus of CSR activity is on creation of necessary infrastructure, and avenues for employment and income generation, and empowering the people by inclusion in economic mainstream and facilitating sustainable development of marginalized and under privileged sections of the society in and around areas of Company''s operations and in backward regions or such other areas as may be defined by the Board. These infrastructure assets then can be taken over by local community/ NGOs/ SHGs for day-to-day operations and maintenance.

k) Balances shown under trade receivable, advances and trade payables including Indian Railway are subject to confirmation / reconciliation/adjustment, if any. The Company has been sending letters for confirmation to parties. However, the Company does not expect any material dispute w.r.t. the recoverability/payment of the same.

In the opinion of the management, the value of current assets, loans and advances on realization in the ordinary course of business, will not be less than the value at which these are stated in the balance sheet.

l) Information as regard to loans, investments made as required under section 186(4) of the Companies Act, 2013 have been given vide note no.7,8, & 16.

m) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

n) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

p) During the year company has created a joint venture namely MMG-Metro Management Group Ltd. in Israel with 24.50% share. The other two joint venture partners are Poran Shrem Engineering and Appraisal Ltd (Israel company) with 51% share and DMRC Limited with 24.50% share. During the year the company has not made any capital contribution. However, group company has committed to subscribe 2450 number of ordinary shares of NIS (New Israel Shekel) 1/- each.

q) Recent pronouncements

Ministry of Corporate Affairs ("MCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:

Ind AS 1 - Presentation of Financial Statements- This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company does not expect the amendments to have any significant impact in its financial statement.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors- This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company does not expect the amendments to have any significant impact in its financial statement.

Ind AS 12 - Income Taxes- This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company does not expect the amendments to have any significant impact in its financial statement.

Mar 31, 2022

\ The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions have been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant

If the discount rate increases/decreases by 1%, the defined obligations would decrease by H 9.46 crore / increase by H 9.99 crore as on 31^st March, 2022 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by H 4.12 crore/ decrease by H 4.28 crore as on 31^st March, 2022.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The Company is expected to contribute H 0.77 crore to defined benefit plan obligations towards gratuity during the year 2022-23. Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2022 and 31.03.2021 are H (0.95) crore and H (6.58) crore respectively.

\ The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions has been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases /decreases by 1%, the defined obligations would decrease by H 0.48 crore /increase by H0.53 crore as on 31^st March, 2022 and if the expected salary growth increases /decreases by 1%, the defined benefit obligations would increase by H 0.53 crore/ decrease by H 0.49 crore as on 31^st March, 2022.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The Company is expected to contribute H 0.05 crore to defined benefit plan obligations towards gratuity during the year 2022-23. Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2022 and 31.03.2021 are H (0.06) crore and H (0.18) crore respectively.

Provident Fund (Funded)

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented. Further, contribution to employees pension scheme is paid to the appropriate authorities.

As per the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of H 1.05 crore (previous year H 0.03 crore) determined through actuarial valuation. Accordingly, Company has not recognized the surplus as assets as it pertains to the provident fund trust and not to the Company.

The Company contributed H23.61 crore and H 22.84 crore to the provident fund during the year ended 31^st March, 2022 and 31^st March, 2021 respectively.

b) Defined Contribution Plans

i) Post Retirement Benefits (Pension & Medical):

All eligible employees are entitled to benefit under defined contribution plans towards pension under EPFO scheme, post retirement pension fund and medical schemes as defined contribution plans. The Company has no obligations other than the contribution payable to such funds/schemes. The Company recognizes such contributions as expenses when an employee renders the related service.

During the year, Company contributed/ provided H18.89 crore (previous year H 19.03 crore) towards post retirement pension fund, H3.52 crore (previous year H3.69 crore) towards pension under EPFO and H5.45 crore (previous year H5.31 crore) towards medical schemes.

ii) Performance Related Pay:

Eligible employees are entitled to benefit of performance related pay. The provision for performance related pay is of short term nature and has been recognized as per the procedure laid by management based on the guidelines of the Department of Public Enterprises.

c) Foreign Service Contribution

Foreign Service Contribution is recognized on accrual basis in the Statement of Profit and Loss Account as per the deputation terms with parent organizations in respect of officers taken on deputation from other organizations.

41. Indian Accounting Standard (Ind AS-20), Disclosures on Accounting for Government Grants and Disclosure of Government Assistanceare as follows:

The Company is receiving government grant in the form of export incentive on export of Rolling Stock and Spare parts. There are two types of export incentive i.e duty drawback and Merchandise Exports from India Scheme (MEIS) Scrips. The Company has recognized H21.12 crore (previous year H 3.57 crore) as export incentive. The export incentive receivable at the end of the year is H 10.52 crore (previous year H 1.40 crore).

42. Indian Accounting standard (Ind AS) 21, Disclosures on The Effects of Changes in Foreign Exchange Rates are as follows:

The amount of exchange differences (net) credited to the statement of profit and loss account during the Financial Year is H 17.19 crore (Previous Year H 5.89 crore)

The Company has bought back 96,98,113 fully paid-up equity shares of H 10 each from the shareholders on 18^th November, 2020 on proportionate basis by way of tender offer at a price of H265 per equity share for an aggregate amount of H257 crore. As per Indian Accounting Standard (Ind AS)-33 due to buy back, earnings per share (basic and diluted) for the year ending 2020-21 have been computed on the basis of weighted average number of equity shares.

46. Indian Accounting Standard (Ind AS) 36, Disclosures on Impairment of Assets are as follows:

The Company has carried out the assessment on impairment of assets in terms of Indian Accounting standard (Ind AS) 36, Impairment of Assets and management does not perceive any impairment in the value of the carrying amount of assets.

As per the agreements with the customers, warranty years are varying from two to five years, i.e., extending beyond one year, require discounting to work out net present value of such provisions made towards warranty.

Effect of change in the discount rates

3 years SBI MCLR rate as on 31.03.2022 ie. 7.30% is used as discount rate during the reporting period. The effect of change in discount rate, FY 2021-22 ie. 7.30% vice 5.68% for FY 2020-21, is H 0.57 crore.

Commitments pertain to estimated expenditure to be incurred for removing the defects in connection with construction/PMC projects and estimated period for utilization of provision for commitments is less than one year.

For movement of provision for unspent amount of Corporate Social Responsibility-refer 57(d)(iii)

b) Contingent liabilities and Commitments to the extent not provided for include:

i) Contingent Liabilities

I) Claims (excluding interest) against the Company not acknowledged as debts are H27.15 crore (previous year H 27.15 crore).

III) Disputed taxes and duty:

A) Demand on account of income tax includes of H5.21 crore (excluding interest) (previous year H5.77 crore) which are being contested by the Company. This excludes H2.31 crore (previous Year H 3.52 crore) relating to cases where Company has already won the same at different appellate authorities during earlier years, against which income tax department has gone for appeal at higher appellate authorities. In similar cases of past years, the appeal of the income tax department has been dismissed.

B) Demand on account of service tax, VAT etc. amounting to H 2.85 crore (previous year H 2.45 crore) which are being contested by the Company at different forums.

C) Stamp duty of H.1.17 crore (previous year H1.17 crore) against alternative land at Gomati Nagar Extension, Lucknow allotted by Lucknow Development Authority (Refer note 57(j)).

IV) The Company has issued indemnity bond to the official Liquidator of RITES Infrastructure Service Limited for indemnifying the claimants in future against all lawful claims and liabilities arise or observed even after the dissolution of RITES Infrastructure Services Limited and losses that may arise pursuant to dissolution of RITES Infrastructure Services Limited. However, Company does not foresee any liability on this account as on 31.03.2022.

VI) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where amount cannot be quantified.

ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for amounting to H 199.97 crore (previous year H 218.44 crore).

c) Contingent Assets

i) In a pre-closed contract in the year 2005-06, Company invokes arbitration for a claim of H 233.93 crore (previous year H 233.93 crore) against a client. Client also submits counter claims of H 469.10 crore (previous year H 469.10 crore) before arbitrator. The sole arbitrator awarded H 88.31 crore in favour of the Company against the claim of H233.93 crore, while rejecting the counter claims of the client. Since the awarded amount is less than the claimed amount, Company appealed against the aforesaid award. Appellate authority awarded H 231.68 crore with applicable interest in favour of the Company. Client filed a petition in the Civil Court for setting aside the aforesaid award, which was dismissed by the court on 22.11.2017and preliminary objections of Company are allowed. Thereafter the Company filed writ petition before Hon''ble Jharkhand High court on 05.07.2018 to issue the direction to client to pay the awarded amount. Hearing in the matter is yet to be scheduled.

ii) In the above contract, executing agency also raised claims (excluding interest) of H184.41crore (previous year H 184.41 crore) against the Company before the arbitration tribunal. The Company also submitted a counter claim of H 644.53 crore (previous year H 644.53 crore) against the executing agency. Both the parties had concluded their arguments before the Tribunal and award was published on18^th October 2016 in favour of the Company. As per the award, Company was to get H 63 crore from executing agency effective from the date of publication of award i.e., 18^th October 2016. The executing agency had filed two petitions i.e. arbitration appeal before hon''ble Jharkhand high court on 25.05.2017 and commercial revocation to set aside the award before the commercial court, Ranchi on 06.01.2018. The arbitration appeal has already been dismissed by hon''ble Jharkhand high court on 11.03.2019. The commercial revocation has also been dismissed on 29.06.2019. Now RITES limited filed the commercial execution case no. 03 of 2020 on 16.01.2020 before commercial court Ranchi to execute the award amount. Same is pending and next date of hearing is fixed on 30.06.2022. In view of above, the Company has not recognized the award amount in the books of account.

Fair Value

Market value of investment property as on 31.03.2022 is H 2.96 crore based on valuations performed by an external independent valuer and management considered no significant change in the value.

Methods & assumptions for valuation:

The valuation is carried out by an Independent agency on the basis of present construction/replacement cost of similar structures/ constituents without considering the value of furniture, fixture & fitting, office equipments etc.

There is no capital commitment in respect of investment property.

Fair value hierarchy & valuation techniques

To provide an indication about the reliability of method used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the Indian Accounting Standard (Ind AS-113) on fair value measure.

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques and observable inputs for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: Inputs for the assets or liabilities that are not based on observable market data (observable inputs).

*Equity shares of H 0.04 crore of GPCL Consulting Services Limited and H 0.0016 crore of Elicius Energy Private Limited which are not tradable and amount of investment in the entity is immaterial, hence investment is recognized at cost and same is considered as its fair value.

** The carrying amounts of trade receivables, trade payables, short term loans, other current financial assets and liabilities are considered to be same as their fair value due to their short-term nature.

Financial Risk Management

Market Risk

The Company operates internationally and a considerable portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk for its sales and services in the Middle East, Africa and South Asian countries. The exchange rates between the rupee and foreign currencies have changed substantially in recent years which may also fluctuate substantially in the future. However, Company has currency risk management policy and exchange fluctuations are regularly monitored by the risk management committee to mitigate this risk. Policy covers various aspects of currency risk management, benchmarking, hedging and risk appetite, permissible instruments, hedging policy, structure of the risk management committee and treasury group, reporting procedures etc.

For the year ended 31^st March, 2022 and 31^st March, 2021, every percentage increase/decrease in the exchange rate between the INR & US Dollar has affected the Company''s incremental margins by approximately 0.52% (previous year 0.22%) each. For the year ended 31^st March, 2022 and 31^st March, 2021, every percentage increase/decrease in the exchange rate between the INR & MUR has an insignificant affect on the Company''s incremental margins.

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting year and the current reporting year.

The above foreign currency exposure is unhedged as these are covered through foreign currency risk management policy.

i Credit Risk

Credit Risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. Primarily exposure to the credit risk is from trade receivables amounting to H 783.19 crore (previous year H 675.74 crore) and unbilled revenue amounting to H 50.75 crore (previous year H 79.14 crore) which are typically unsecured. Credit risk is being managed by continuously monitoring the outstanding dues from the customers. Trade Receivables towards export sales are generally managed by establishing Letter of Credit with the clients. Further, most of the clients of the Company are Government or Government Undertakings; hence credit risk is bare minimum and Company also does not foresee any impact on credit risk of the Company. Company has impaired, as a prudent measure, the trade receivables and unbilled revenue towards expected credit loss as per Company accounting policy to the extent of H102.34 crore (previous year H 107.74 crore). Keeping in view the nature of business expected credit loss is provided for on case-to-case basis as per the policy on impairment of financial assets.

No significant credit risk on cash and bank balances including clients'' funds amounting to H3398.58 crore (previous year H 3365.51 crore) is expected as Company parks surplus funds with Schedule Banks having good credit adequacy ratio and least NPA as determined by RBI and guidelines of the Company. Company has parked its owned funds in fixed deposits of H 743.31 crore (previous year H 852.23 crore) with Schedule banks with negligible credit risks.

Non-Strategic Investments primarily include investments in liquid mutual fund units of H 25.92 crore (previous year H 85.77) and tax-free bonds of H95 crore (previous year H 120 crore) issued by Public Sector Undertaking where risk is minimal.

The Company has given House building, multi-purpose loans etc. to the employee which are insured, and are mortgage against house properties in line with the policies of the Company. The risk of default in respect of these loans is considered negligible.

iii) Liquidity Risk

Company''s principal sources of liquidity are "cash and bank balancesâ and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company has a working capital of H 1562.16 crore (previous year H 1670.41 crore) including cash and bank balance (owned funds) of H 674.23 crore (previous year H 889.39 crore) and current investment H 75.92 crore (previous year H 110.77 crore). Company believes that the working capital is sufficient to meet its requirements, accordingly no liquidity risk is perceived by the Company.

50. Indian Accounting Standard (Ind AS) 108, Disclosures on Operating Segments are as follows:

Operating segments are defined as components of an enterprise for which discrete financial information is available which is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. The Company''s chief operating decision maker is the Chairman & Managing Director who is also Chief Executive Officer.

a) Company has identified four operational reportable segments based on operations being carried out which are as under:-

â¢ Consultancy Services

â¢ Leasing of railway rolling stock & equipments

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

b) Geographical wise revenue segment is disclosed as under:-

i) Revenue within India from consultancy includes quality assurance & project management services, turnkey construction projects and domestic lease rental services to clients located inside India.

ii) Revenue from outside India includes services rendered and export sales of rolling stock & spare parts to the clients located outside India.

c) The accounting principles used in the preparation of the financial statements are consistently applied to record revenue & expenditure in individual segment, as set out in the note of significant accounting policies.

d) Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of attributed direct cost. All other expenses which are not attributable or allocable to the segments have been disclosed as un-allocable expenses.

e) Assets and liabilities used in the Company''s business are not identified to the reportable segments as these are used interchangeably between segments. Depreciation, amortization & impairment on Property, Plant & Equipment and Intangible Assets cannot be allocated to a specific segment. Company believes that it is currently not practicable to provide segmental disclosure relating to total assets, total liabilities and depreciation, amortization & impairment since a meaningful segregation of the available data could be onerous.

51. Indian Accounting Standard (Ind AS) 115, Disclosures on Revenue from Contracts with Customers are as follows:

a) Significant management judgments on Revenue Recognition:

b) Company has contracts with customers for different services which are given below:-

â¢ Consultancy Services

â¢ Export of rolling stock, equipments and spares

â¢ Turnkey Construction Projects

Beside above, Company has contracts with customers for wet leasing which are covered under Indian Accounting Standard (Ind AS) 116, Leases

c) Company has recognized revenue either on the basis of over time or point in time depending upon satisfaction of performance obligation on transferring control of goods or services to customers. Revenue has been recognized by the Company over time basis if any one of the following condition is met:

â¢ Customer simultaneously receives and consumes the benefits

â¢ Company''s performance creates or enhances an assets that the customer controls as the assets is created or enhanced

â¢ Company''s performance does not create with alternative use and Company has enforceable right to payment for performance completed to date.

In case, none of the above condition is met, revenue recognized by the Company on the basis of point in time.

d) Disaggregation Revenue information:

The below presents Disaggregated Revenues from contract with customer for the year ended 31^st March 2022 from various streams of revenue. The Company believe that this Disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factor.

e) Company is rendering many project management consultancy services for and on behalf of clients where fee is due to Company for professional services.

f) In most of the cases, payments from customers are linked with performance obligations. Wherever on the reporting date work has been performed and payment is not due as per the contract, in such cases contract assets have been created. However, where payment has been received including advance but performance has not been completed, in such cases contract liabilities have been created. Advances received by the Company for execution of work are in the nature of security i.e a source of protection and are not for financing the project.

g) Company provides warranty in the nature of assurance for which provisions are made as per the Indian Accounting Standard (Ind AS) 37, Provisions, Contingent Liabilities and Contingent Assets.

h) During the year, impairment of amount receivable from client for services rendered/goods supplied charged to Statement of Profit and Loss amounting to H 12.45 crore (previous year H 9.08 crore), which includes impairment for lease services amounting to H 0.05 crore (previous year H 0.22 crore).

j) During the year ended March 31^st, 2022, H74.96 crore and March 31^st 2021, H107.56 crore of unbilled revenue as of April 1^st, 2021 and April 1^st, 2020 respectively has been reclassified to Trade receivables upon billing to customers on completion of milestones.

k) During the year ended March 31, 2022 H 195.81 crore and March 31, 2021 H 14.65 crore of contract liabilities as of April 1, 2021 and April 1, 2020 has been recognized as revenue after completion of milestones.

l) The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2022 is H 4722 crore which pertains to various segment of the Company. Company is likely to recognize this revenue over a period ranging from one year to three years. The aggregate value of performance obligations that was completely or partially unsatisfied as at March 31, 2021 was H6074 crore which pertains to various segment of the Company.

m) Company has not incurred any cost for obtaining contracts except administrative cost required for preparation of offers and the same is charged to statement of Profit and Loss.

n) Company has recognized unamortized contract assets of H Nil crore (previous year H 5.63 crore) on account of costs incurred in fulfilling the contract. The unamortized contract cost will be charged to statement of Profit and Loss on completion of performance obligations.

52. Indian Accounting Standard (Ind AS-116): Disclosures on Leases are as follows:

a) Company as Lessee:-

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the term of useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. Company has no borrowing, as such 3 year SBI MCLR rate 7.30% and 8.05% has been considered as weighted average incremental borrowing rate for calculation of present value of lease liability for the FY 2021-22 and 2020-21 respectively.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

i) The following is the summary of practical expedients applied:

I) The Company has used a single discount rate to a portfolio of leases with similar characteristics.

II) Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application

III) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.

vi) During the year ended 31 March 2022, the Company incurred expenses amounting to H12.73 crore (Previous year H 11.42 crore) on accounts of short-term leases and leases of low-value assets. For the year ended 31 March 2022, the total cash outflows for leases, including short-term leases and low-value assets amounted to H15.37 crore (Previous year H 17.24 crore).

viii) The Company does not have any lease restrictions and commitment towards variable lease rent as per the contract.

ix) The Company has no commitments towards Leases yet to be commenced as on 31.03.2022.

x) The Company has not sub-leased any of the assets taken on lease.

b) Company as a lessor:-

i) Operating Lease: As Lessor

I) The Company has leasing arrangement of locomotives in domestic market mainly on cancelable basis which includes providing services of its experts for maintenance of these locomotives for which lease rent is received from the clients as per terms of the contracts.

53. Indian Accounting Standard (Ind AS) 12, Disclosures on Income Taxes are as follows:

The Company opted to exercise the option permitted under section 115BAA of the Income Tax Act, 1961 as promulgated by the GOI vide the Taxation Laws (Amendment) Ordinance, 2019 and accordingly Corporate tax rate of 25.168% (Income tax 22% Surcharge10% Higher Education Cess 4%) has been considered for the purpose of provision for taxes and measuring the deferred tax assets / liabilities in the books of accounts.

Deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.

Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the group will realize the benefits of those deductible differences. The amount of deferred income tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

56. Capital Management:

The Company''s objective for capital management is to maximize shareholders value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are primarily being met through operating cash flows generated.

57. Other Disclosures:

a) Impact of COVID-19:

The Company has considered the possible effects that may result from COVID-19 on the carrying amounts of financial assets, inventory, receivables, loans and advances, property, plant and equipment, intangibles etc as well as liabilities accrued. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Company has used internal and external information. Having reviewed the underlying data and based on current estimates, Company does not expect any material impact on the carrying amount of these assets and liabilities The Company will continue to closely monitor any material changes in future economic conditions due COVID-19.

b) Ministry of Railway (MoR) vide letter dated 18.10.2021 has decided in principle for closure of Indian Railway Station Development Corporation Limited (IRSDC), in which Company has an investment of H48 crore. Closure activities are underway and Board of IRSDC has decided to transfer the assets & liabilities of IRSDC to Rail Land Development Authority on slump sale basis (excluding investment in Subsidiary & Associate of IRSDC) for consideration not less than book value. Financial statement of IRSDC has been prepared on liquidation basis. As at 31.03.2022, IRSDC has reported a net worth of H221 crore, out of which 24% share i.e. H53 crore belongs to RITES, therefore management does not perceive any impairment in the value of investment in IRSDC.

c) Assets and liabilities are classified between current and non-current considering 12 months period as operating cycle.

d) Information on CSR expenditure:

i) Gross amount required to be spent including advances given during the year 2021-22 H13.87 crore (previous year 2020-21 H 13.40 crore).

iv) Short fall other than ongoing projects of CSR - Nil (Previous Year- Nil)

(v) Reasons for short fall other than ongoing projects of CSR - Not Applicable.

(vi) Nature of CSR Activities: The primary focus of CSR activity is on creation of necessary infrastructure, and avenues for employment and income generation, and empowering the people by inclusion in economic mainstream and facilitating sustainable development of marginalized and under privileged sections of the society in and around areas of Company''s operations and in backward regions or such other areas as may be defined by the Board. These infrastructure assets then can be taken over by local community/ NGOs/ SHGs for day-to-day operations and maintenance.

# The company is debt free. Lease liability recognized as per Ind-AS 116 has not been considered as debt.

## Return on Investment is not calculated on strategic investments in subsidiaries, joint ventures and other long term equity instruments.

Tmprovement in current ratio due to reduction in liability mainly on account of adjustment of advance from client against export during FY 2021-22 ** The lower inventory turnover ratio due to higher inventory as on 31.03.2021 as export sale could not be materialized due to COVID-19 during FY 2020-21.

*** The COVID-19 outbreak has significantly impacted overall infrastructure development resultant revenue from operation of the company got impacted and due to reduction in revenue from operations, trade receivable turnover ratio was lower during FY 2020-21.

**** The COVID-19 outbreak has significantly impacted overall business of the company resultant decrease in total income of the company during FY 2020-21 and therefore, lower net capital turnover ratio.

J) Land for office building at Gomati Nagar Extension, Lucknow allotted by Lucknow Development Authority (LDA) having a total cost of H 4.22 crore is yet to be registered in the name of the Company due to dispute of stamp duty . However, physical possession of the land has been with the Company w.e.f. 27^th June, 2019. An amount of H1.17 crore on account of disputed stamp duty is included in contingent liability (Refer note no.47(b)(i)(III)(C).)

l) Balances shown under trade receivable, advances and trade payables including Indian Railway are subject to confirmation / reconciliation/ adjustment, if any. The Company has been sending letters for confirmation to parties. However, the Company does not expect any material dispute w.r.t. the recoverability/payment of the same.

In the opinion of the management, the value of current assets, loans and advances on realization in the ordinary course of business, will not be less than the value at which these are stated in the balance sheet.

m) Information as regard to loans, investments made as required under section 186(4) of the Companies Act, 2013 have been given vide note no. 7,8, 16 & 17.

n) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

o) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

q) Recent pronouncements

Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1^st, 2022, as below:

Ind AS 103 - Reference to Conceptual Framework

The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.

Ind AS 16 - Proceeds before intended use

The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the Company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.

Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract

The amendments specify that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.

Ind AS 109 - Annual Improvements to Ind AS (2021)

The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6) (b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF RITES LIMITED FOR THE YEAR ENDED 31 MARCH 2022.

The preparation of financial statements of RITES Limited for the year ended 31 March 2022 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the Company. The Statutory Auditor appointed by the Comptroller and Auditor General of India under Section 139 (5) of the Act is responsible for expressing opinion on the financial statements under Section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under Section 143 (10) of the Act. This is stated to have been done by them vide their Audit Report dated 24 May 2022.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements of RITES Limited for the year ended 31 March 2022 under Section 143(6) (a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the Statutory Auditor and is limited primarily to inquiries of the Statutory Auditor and company personnel and a selective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to Statutory Auditor''s report under Section 143(6) (b) of the Act.

Mar 31, 2018

company overview

RITES Ltd. is a multidisciplinary engineering and consultancy organization providing diversified and comprehensive array of services from concept to commissioning in all facets of transport infrastructure and related technologies. The major business engagements as consultants, engineers and project managers are in railways, highways, airports, ports, ropeways, urban transport and inland waterways in India and abroad. The company also provides services of third party inspection, quality assurance, construction supervision & project management, operations & maintenance, leasing, export of rolling stock and modernization of railways workshop projects on turnkey basis.

The Company is a âMiniratnaâ, Schedule-âAâ, Category-I CPSE and ISO 9001 certified public limited company incorporated and domiciled in India. The address of its registered office is SCOPE Minar, Laxmi Nagar, Delhi-110092 (India) and address of its corporate office is RITES Bhawan, No. 1, Sector -29, Gurgaon, Haryana-122001 (India). President of India through Ministry of Railways and its nominees are presently holding 100% equity share of the company (Refer Note No. 2.50).

The reporting and functional currency of the company is Indian Rupees (INR). Figures in financial statements are presented in Rs. crore, by rounding off upto two decimals except for per share data and as otherwise stated. Certain figures that are required to be disclosed but do not appear due to rounding off are detailed in note 2.52. Previous periods figures have been regrouped/recasted/rearranged, wherever necessary.

The standalone financial statements are approved for issue by the companyâs Board of Directors in their meeting held on 30th July, 2018.

1.1 property, plant and equipment

FOLLOWING ARE THE CHANGES IN THE CARRYING VALUE OF PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED 31.03.2018

1.2.1 RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES

THE COMPANY HAS ONE CLASS OF EQUITY SHARES HAVING A PAR VALUE OF Rs.10 Each. Each sHAREHoLDER is ELIGIBLE FOR ONE VOTE PER SHARE HELD IN CASE POLL IS DEMANDED BY THE MEMBERS IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT, 2013. IN THE EVENT OF LIQUIDATION, THE EQUITY SHAREHOLDERS ARE ELIGIBLE TO RECEIVE THE REMAINING ASSETS OF THE COMPANY AFTER DISTRIBUTION OF ALL PREFERENTIAL AMOUNTS, IN PROPORTION TO THEIR SHAREHOLDING.

The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions have been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases (decreases) by 1%, the defined obligations would decrease by Rs.4.35 crore (increase by Rs.4.64 crore) as on 31^st March, 2018 and if the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by Rs.4.68 crore (decrease by Rs.4.42 crore) as on 31^st March, 2018.

However, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

The Company is expected to contribute Rs.13.82 crore to defined benefit plan obligations towards gratuity during the year 2018-19. Remeasurement (gain)/loss of defined employee benefit plans in Other Comprehensive Income (OCI) for the year ended 31.03.2018 and 31.03.2017 are Rs.4.11 crore and â (1.36) crore respectively.

1.3.1. Gratuity (Funded)-Contract Employees.

1.3.2. Changes in Present Value of the Benefit Obligation are as follows:

1.3.3 The significant actuarial assumptions for the determination of the defined obligations are discount rate and expected salary increase. The sensitivity for actuarial assumptions have been computed by varying respective actuarial assumption used for valuation of the defined benefit obligation by 1%, while holding all other assumptions constant.

If the discount rate increases (decreases) by 1%, the defined obligations would decrease by Rs.0.28 crore (increase by Rs.0.31 crore) as on 31^st March, 2018 and if the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by Rs.0.32 crore (decrease by Rs.0.30 crore) as on 31^st March, 2018.

however, the actual change in assumptions would not necessarily behave in isolation to each other. The defined benefit obligations would change accordingly.

1.3.4. Provident Fund (Funded)

All eligible employees of the company are entitled to receive benefits under the Provident Fund, a defined benefit plan, set up through a Trust named as RITES Contributory Provident Fund Trust. Both employee and employer contribute monthly at a determined rate as specified under the law to the Trust. The obligation of the company is limited to such contribution and to make good the shortfall, if any, between the returns from the investments of the trust and the notified interest rate. Short fall, if any, is recognised as an expense during the year. As per actuarial valuation, present value of the expected future earnings on the fund is higher than the expected amount to be contributed to the individual members based on the expected guaranteed rate of interest, resulting in no liability on the company.

The company contributed Rs.23.78 crore and Rs.19.44 crore to the provident fund during the year ended 31^st March, 2018 and 31^st March, 2017 respectively.

1.3.5 Other Benefits

1.3.6 Other Benefits (Funded):- Leave Encashment and Medical Leave- Regular Employees

1.3.7 Changes in Present Value of the Benefit Obligation are as follows:

1.3.8 Other Benefits (unfunded):- Leave Encashment (Contract employee), LTC (Deputation employee) and Long service Award (regular employee).

1.3.9 Present value of the defined benefits plan obligations

1.3.10 Defined Contribution Plans

1.3.11 Post Retirement Benefits (Pension & Medical)

All eligible employees are entitled to benefit under defined contribution plans towards pension under EPFO scheme, post retirement pension fund and medical schemes as defined contribution plans. The company has no obligations other than the contribution payable to such funds/schemes. The company recognizes such contributions as expenses when an employee renders the related service.

During the year, company contributed/ provided Rs.17.26 crore (previous year Rs.12.33 crore) towards post retirement pension fund, Rs.4.13 crore (previous year Rs.4.01 crore) towards pension under EPFO and Rs.11.87 crore (previous year Rs.11.94 crore) towards medical schemes.

1.4 Disclosures on Operating segments (Indian Accounting standard-108) are as follows:

Operating segments are defined as components of an enterprise for which discrete financial information is available which is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. The companyâs chief operating decision maker is the Chief Executive Officer and Chairman & Managing Director.

1.4.1 Company has identified four operational reportable segments based on operations being carried out which are as under:-

- Consultancy Services

- Turnkey Construction Projects

- Export of rolling stock, equipments and spares

- Leasing of railway rolling stock & equipments

1.4.2 Geographical wise revenue segment is disclosed as under:-

(a) Revenue within India from consultancy includes quality assurance & project management services, turnkey construction projects and domestic lease rental services to clients located inside India.

(b) Revenue from outside India includes services rendered, export sales of rolling stock & spare parts and lease rental services to the clients located outside india.

1.4.3 The accounting principles used in the preparation of the financial statements are consistently applied to record revenue & expenditure in individual segment, as set out in the note of significant accounting policies.

1.4.4 Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of attributed direct cost. All other expenses which are not attributable or allocable to the segments have been disclosed as un-allocable expenses.

1.4.5 Assets and liabilities used in the Companyâs business are not identified to any of the reportable segments as these are used interchangeably between segments. Depreciation, amortisation & impairment on Property, Plant & Equipment and Intangible Assets cannot be allocated to a specific segment. Company believes that it is currently not practicable to provide segmental disclosure relating to total assets, total liabilities and depreciation, amortisation & impairment since a meaningful segregation of the available data could be onerous.

* Interest income includes interest on bank deposits, bonds, staff advances, loans, income tax refunds etc. ** Other income includes provision no longer required, profit on sale of assets, export incentives, rental income from investment properties, dividend on trade current & non-current investments, exchange gain etc.

Note:- No Impairment and its reversal has been recognized in Other Comprehensive Income (OCI) during the year ended 31.03.2018 and 31.03.2017.

*RITES Mohawarean Arabia Company Ltd. (RMAC), a subsidiary company with 76% stake, is under liquidation. Investment in equity of Rs.0.47 crore made by the company has already been received from RMAC.

**RITES Infrastructure Services Limited (RISL) is under liquidation. Prior to initiating process of liquidation, all assets & liabilities have been taken over by RiTEs on 30.09.2016.

1.5.1.1 Key Management Personnel

Chairman & Managing Director (Chief Executive Officer)

Mr. Rajeev Mehrotra

Whole Time Directors

Mr. Arbind Kumar, Director Projects

Mr. Ajay Kumar Gaur, Director Finance (Chief Finance Officer)

Mr. Mukesh Rathore, director Technical

Government Nominee Directors

Mr. A.P. Dwivedi, Director

Mr. Ravindra Nath Misra, director (Upto 31st August, 2017)

Mr. Bhupendra Kumar Agarwal, director (From 26th september, 2017)

Non-Executive (Independent) Directors

Dr. Vidya Rajiv Yeravdekar Mr. Anil Kumar Goel Mr. Satish Sareen

Dr. Pramod Kumar Anand (From 19th Sept., 2017)

Ms. Geethakumary (From 15th March, 2018)

Dr. Rajendra N.Goyal (From 15th March, 2018)

company secretary

Mr. PT. Mittal, Company Secretary & GM (Legal) (upto 31st March, 2018)

Mr. Ashish Srivastava, Company Secretary (From 1st April, 2018)

1.6.1 Transactions and Balance with Related parties

Outstanding balances from the related parties are unsecured and considered good which are due towards ordinary course of business and are being realised within reasonable time.

1.6.2.1 subsidiary companies

Transactions with Subsidiary Companies:

* With a moratorium period of 30 months upto July, 2019 for principal and interest

Note: Company has invested in M/s BNV Gujarat Rail Private Limited during the year 2016-17. Venture Company is incorporated in the year 2016-17 but no operation started till 31st March, 2018.

1.6.2.2 Transactions with other related parties (Post-Retirement Benefits Trusts/Plans):

Transactions regarding Post-Retirement Benefit Plans, as mentioned vide note no. 2.39.1.2, are indicated vide note 2.37.

1.6.3 Government related entities

Government of India (GOI) is holding 100% equity shares of the company, which are held by President of India through Ministry of Railways and its nominees. GOI controls the company through Ministry of Railways (refer note no:- 2.50)

The Company has made various transactions with the Ministry of Railways and with entities being controlled or jointly controlled or having significant influence of the Ministry of Railways. The transactions with them are as under:

Significant Transactions with Government related entities:

1.7 Disclosures on Leases (Indian Accounting standard-17) are as follows:

Operating Lease (cancelable)

1.7.1.1 The company has leasing arrangement of locomotives in domestic and overseas markets, Company is also providing services of its experts for maintenance of these locomotives for which lease rent is received from the clients as per terms of the contracts.

1.7.1.2 Detail of the leased assets: New & In-Service Locomotives (refer note no. 2.1)

1.7.2.1 Description of lease arrangement of Scope Office Complex

The company has leased 545 sq. m. area of furnished accommodation to Railway Board, Indian Railways on lease rent basis receivable every month. The lease arrangement is upto 30^th September, 2018.

1.7.2.2 Details of the leased assets: Office Premises*

* Leased assets include building, air conditioners, AC plant, furniture and fixture.

1.7.3 The company has not sub-leased any of the assets taken on lease.

1.7.4 Operating Leases for Companyâs offices, staff residential premises and vehicles are renewable / cancelable as laid down in the respective agreements. The total of minimum lease payments recognized in the Statement of Profit & Loss for the year is Rs.30.62 crore (previous year Rs.31.84 crore).

1.7.5 There are no provisions relating to contingent rent.

1.7.2 Disclosures in respect of Joint Ventures:

1.7.2.1 investment is measured at cost.

1.7.2.2 Summarised financial information of the Joint Ventures are as under:

1.8 The company has carried out the assessment on impairment of assets in terms of IND AS 36 âImpairment of Assetsâ accordingly impairment losses or reversal, if any, has been recognized during the year in the Statement of Profit & Loss.

1.9 Disclosures on Provisions, Contingent Liabilities and Contingent Assets (Indian Accounting Standard-37) are as follows:

1.10.1 Provisions include mainly towards warranty which has been made for fulfillment of warranty obligation after export sale of rolling stocks/ locomotives & spares. Estimation of such provision is based on past experience, nature of rolling stock exported to various clients and year specified in the agreements with them. Actual expenditure may vary during the warranty period as per the requirements.

Effect of change in the discount rate:

As per the agreements with the customers, warranty years are varying from two to five years, i.e. extending beyond one year, require discounting to work out net present value of such provisions made towards warranty.

Discount rate is based on the average of interest rates in Fixed Deposits with banks during the reporting year. Average interest rate for the year 2017-18 is of 6.74% vice 7.5% for the year 2016-17. The effect of interest rate change on the above provisions is Rs.0.24 crore.

1.10.2 Contingent liabilities and commitments to the extent not provided for include:

1.10.2.1 Contingent Liabilities

(a) Claims against the company not acknowledged as debts as certified by the Management are Rs.672.49 crore (previous year Rs.491.60 crore).

These include:-

(i) Claims (excluding interest) amounting to Rs.639.48 crore (previous year Rs.458.76 crore) against the company by the sub-contractors / other agencies including award against the company pending in courts. The management does not foresee any liability on the company as the same are contested by the company for and or on behalf of the clients.

(ii) Other claims (excluding interest) amounting to Rs.33.01 crore (previous year Rs.32.84 crore) are contested by the company and the company has made counter claims of Rs.63.00 crore (previous year Rs.63.00 crore) on the executing agency (refer note no.2.55.1). The company is subject to legal/arbitration proceedings and claims, which have arisen in the ordinary course of business. Management doesnât reasonably expect that when these cases ultimately conclude and determined, will have material and adverse effect on the companyâs results of operations or financial conditions.

(iii) Claims against the company not acknowledged as debts as certified by the Management includes 8 nos. of case amounting to Rs.39.07 crore which has been settled after the decision of the respective appellate authority and 13 nos. of cases for an amount of Rs.277.95 crore added during the year.

(b) Other money for which the company is contingently liable:

(i) Excise bonds amounting to Rs. NIL crore (previous year Rs.4.89 crore) are outstanding against export obligations with Central Excise Department. Out of this, bonds value of Rs. NIL crore (previous year Rs.3.59 crore) are due for release by the department.

(ii) Demands on account of taxes viz. VAT, Service Tax & Income Tax amounting to Rs.2.64 crore (previous year Rs.1.34 crore) are contested by the company.

1.10.2.2 Commitments

Estimated amount of contracts remaining to be executed on capital account as certified by the management and not provided for amounts to Rs.160.44 crore (previous year Rs.3.35 crore) including Rs.144.80 crore against booking of office space from NBCC at Nauroji Nagar, New Delhi.

1.11.1 Fair Value

Market value of investment property as on 31.03.2018 is Rs.2.62 crore based on valuations performed by an external independent valuer and management considered no significant change in the value.

Methods & assumptions for valuation:

The valuation is carried out by Independent agency on the basis of present construction/replacement cost of similar structures/constituents without considering the value of furniture, fixture & fitting, office equipments etc.

There is no Capital Commitment in respect of investment property.

1.12 Financial Instruments

1.12.1 Financial instruments by category

The carrying value and fair value of financial instruments categories-wise as on 31^st March, 2018 are as under: * Equity shares of Rs.0.04 crore of Global Procurement Consultants Limited (GPCL) which are not tradable and amount of investment in the entity is immaterial, hence investment is recognised at cost and same is considered as its fair value.

**The carrying amounts of trade receivables, trade payables, cash and cash equivalents, short term loans, other current financial assets and liabilities are considered to be same as their amortised cost due to their short-term nature. As per practice, Security Deposits and Retention money represent source of protection with respect to contract performance rather than a source of financing, hence shown at transaction value.

1.12.2 Fair value hierarchy & valuation techniques

To provide an indication about the reliability of method used in determining fair value, the company has classified its financial instruments into three levels prescribed under the Indian Accounting Standard (Ind AS-113) on fair value measure.

Level 1 : Quoted prices in active markets for identical assets or liabilities.

Level 2 : Fair value of financial instruments that are not traded in an active markets is determined using valuation techniques and observable Inputs for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 : Inputs for the assets or liabilities that are not based on observable market data (observable inputs).

Fair value hierarchies of assets and liabilities as on 31st March, 2018 are as follows:

* Equity shares of Rs.0.04 crore of Global Procurement Consultants Limited (GPCL) which are not tradable and amount of investment in the entity is immaterial, hence investment is recognised at cost and same is considered as its fair value.

**Liquid plan of mutual funds are valued at NAV.

1.12.3 Financial Risk Management

The Companyâs activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The companyâs focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Companyâs exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from few customers.

Market Risk

The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk for its sales and services in the Middle East and South Asian countries. The exchange rates between the rupee and foreign currencies have changed substantially in recent years which may also fluctuate substantially in the future. However, company has currency risk management policy and exchange fluctuations are regularly monitored by the risk management committee to mitigate this risk. Policy covers various aspects of currency risk management, benchmarking, hedging and risk appetite, permissible instruments, hedging policy, structure of the risk management committee and treasury group, reporting procedures etc.

For the year ended 31st March, 2018 and 31st March, 2017, every percentage increase/decrease in the exchange rate between the INR & US Dollar has affected the Companyâs incremental margins by approximately (1.01%) (previous year 0.82%) each.

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting year and the current reporting year.

credit Risk

Further, most of the clients of the company are Government or Government Undertakings; hence credit risk is bare minimum. Company has impaired, as a prudent measure, the trade receivables towards expected credit loss as per company accounting policy to the extent of Rs.82.83 crore (previous year Rs.63.53 crore).

No significant credit risk on cash and bank balances including clientsâ funds amounting to Rs.3629.86 crore (previous year Rs.2977.20 crore) is expected as company parks surplus funds with Schedule Banks having good credit adequacy ratio and least NPA as determined by RBI and guidelines of the company. Company has parked its owned funds in fixed deposits of â1396.74 crore (previous year Rs.913.31 crore) with schedule banks with negligible credit risks.

Non-Strategic Investments primarily include investments in liquid mutual fund units of Rs. NIL crore (previous year Rs.143.04 crore) and tax free bonds of â120 crore (previous year Rs.170 crore) issued by Public Sector Undertaking where risk is minimal.

Company has given loans to employees and one of the joint ventures. House building, Multi-purpose loans etc. to the employee are secured by way of insurance and mortgage of the house properties or hypothecation of vehicles in line with the policies of the company. The loan provided to the joint venture is long term. The risk of default in respect of these loans is considered negligible.

Liquidity Risk

Companyâs principal sources of liquidity are âcash and bank balancesâ and the cash flow that is generated from operations. The company has no outstanding bank borrowings. The company has a working capital of Rs.1652.60 crore (previous year Rs.1397.49 crore) including cash and bank balance (owned funds) of Rs.1419.82 crore (previous year Rs.961.38 crore) and current investment Rs. NIL crore (previous year Rs.193.04 crore). Company believes that the working capital is sufficient to meet its requirements, accordingly no liquidity risk is perceived by the company.

1.13 Disclosures on Accounting Policies, Change in Accounting Estimates and Errors (Indian Accounting Standard-8) are as follows:

1.13.1 Prior Period Transactions are as follows:

1.13.2 Correction of Prior Period transactions with impact on profit.

1.13.2.1 Impact on Balance Sheet Items is as follows:

Prior period items have been re-stated for the year ended on 31.03.2017 however there is no impact of provision for taxation on account of prior period re-statement.

Aforesaid prior period figures are crystallized during the year 2017-18 though these are prior period transactions and tax benefit on such transactions is available in the year ended 2017-18. However, these figures are re-stated as per IND AS 8 to the respective years on which no tax benefit is available on these respective years due to the reasons given above. The tax impact on such transaction is of Rs.0.58 crore which is not considered in EPS calculation for year ended on 31.03.2018, for the same reason as stated above.

1.13.3 Impact of Change in Accounting Policy:

Impact of change in accounting policy, in respect of gratuity for contract employees and leave encashment including medical leave for regular employees, are as under:

During the year, gratuity for contract employees has been funded by making contribution of Rs.2.01 crore to Gratuity Trust Fund which is being administrated by Life Insurance Corporation of India (LIC) and leave encashment including medical leave for regular employees has also been funded by making contribution of Rs.110 crore through insurance policies from insurance companies approved by Insurance Regulatory Development Authority (IRDA).

1.14 Disclosures on Income Taxes (Indian Accounting Standard-12) are as follows:

1.14.1 Income tax expense in the Statement of Profit & Loss comprises:

Entire deferred income tax for the year ended 31st March, 2018 and 31st March, 2017 relates to origination and reversals of temporary differences.

Deferred tax assets and liabilities have been offset wherever the company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.

during the year ended March 31, 2018, 16 Locomotives having Gross Block Rs.28.04 crore (WDV as on 31.03.2017 Rs.8.32 crore) has been converted into Stock-in-Trade at Rs.6.19 crore and subsequently sold to Govt. of Mozambique.

Based on the level of historical taxable income and projections for future taxable income over the years in which the deferred income tax assets are deductible, management believes that the company will realize the benefits of those deductible differences. The amount of deferred income tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

The gross movement in the deferred income tax account for the year ended 31st March, 2018 and 31st March, 2017 are as follows:

The composition of deferred assets relating to temporary differences during the year ended 31st March, 2018 is primarily on account of Property, Plant and Equipment, Trade Receivable and Compensation to Employees.

1.15 Disclosures on Presentation of Financial Statements (Indian Accounting Standard-1) are as follows:

1.15.1 Capital Management

The Companyâs objective for capital management is to maximize shareholders value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are primarily being met through operating cash flows generated.

1.15.2 Subsequent Event-Dividend

Dividend paid during the financial year ended 31.03.2018 is Rs.148 crore which includes final dividend of Rs.78 crore (Rs.3.90 per equity share to 20 crore equity shares) for the financial year 2016-17 and interim dividend of Rs.70 crore (Rs.3.50 per equity share to 20 crore equity shares) for the financial year 2017-18.

As per DPE guidelines issued for CPSEs for payment of dividend, company has proposed a sum of Rs.40 crore (Rs.2.00 per share to 20 crore equity shares) as final dividend for FY 2017-18 subject to approval of shareholders in Annual General Meeting. If approved, the dividend would result in a cash outflow of Rs.48.22 crore inclusive of dividend distribution tax of Rs.8.22 crore.

Other Disclosures:

1.16 Consequent upon Govt. of India decision to disinvest 2.52 crore shares of the company, shares of the company were listed on NsE and BsE on 2^nd July, 2018 and the proceeds have been realized by Govt. of India.

1.16 Information on CSR expenditure:

(a) Gross amount required to be spent including advances given during the year 2017-18 Rs.9.90 crore (previous year 2016-17 Rs.9.20 crore).

(b) Expenditure incurred including advance on CsR during the year on:

1.17 The financial statements are presented in Rs. crore. Those items which are required to be disclosed but canât be presented in the financial statement due to rounding off to the nearest Rs. crore are given as follows:-balance sheet items

1.18 Value of imports on CIF basis, Earnings and Expenditure in Foreign Currency

1.18.1 Value of imports calculated on C.I.F. basis:

1.18.2 Dividend from foreign subsidiary company Rs.0.03 crore (previous year Rs. NIL).

1.19 Details of dues to micro, small and medium enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006* are given on the basis of information available with the management.

*The Company has initiated the process of identification of suppliers registered under The Micro, Small and Medium Enterprises Development Act, 2006, by obtaining confirmations from all suppliers. Information has been collated only to the extent of information received.

1.20 In a pre-closed contract in the year 2005-06, company raised claims of Rs.233.93 crore (previous year Rs.233.93 crore) against a client and the client raised counter claims of Rs.469.10 crore (previous year Rs.469.10 crore).

The arbitrator on 19^th January, 2011 rejected the aforesaid counter claims of the client and awarded Rs.88.31 crore in favour of the company against claims of Rs.233.93 crore. Company filed an appeal before the appellate authority on 21st March, 2011 against the said award. Further on 16th September, 2011, the appellate authority awarded Rs.231.68 crore with interest in favour of the company. Client filed a petition in the Civil Court of Ranchi on 31st July, 2011 & thereafter amendment filed by the client for setting aside the aforesaid award of the appellate authority. Argument is concluded and order is passed in favour of RITES on 22.11.2017, wherein the petition filed by Client is dismissed and preliminary objections filled by company is allowed by the Civil Court. RITES has asked our Advocate to furnish further course of action to recover the said awarded amount. In response, the advocate has drafted the writ petition which is likely to be filed before Jharkhand High Court shortly. The awarded amount has not been recognized.

1.21.1 The executing agency also raised claims (excluding interest) of Rs.184.41 crore (previous year Rs.184.41 crore) against the company before the arbitration tribunal at Ranchi and company also raised counter claims of Rs.644.53 crore (previous year Rs.644.53 crore) against the executing agency for the contract which became void due to commitment of fraud by the agency, thus terminated. Both the parties had concluded their arguments before the Tribunal and award was published on 18^th October, 2016 in favour of the company. As per the award, Company was to get Rs.63 crore from executing agency effective from the date of publication of award i.e. 18^th October, 2016. Executing agency had the right to file the objection before the Jharkhand High Court, Ranchi within four months of receipt of copy of award. As per information of the Tribunal, agency received the copy of award on 1st March, 2017. The executing agency filed the arbitration appeal before Jharkhand High Court on 25th May, 2017. The matter was fixed for argument on 2^nd february, 2018 which could not take place and the next date of hearing is yet to be fixed. In view of the above, company has not recognized the award amount in the books of account.

further, Company has to pay Rs.25.92 crore to executing agency after receiving the said amount from the client. The said amount of Rs.25.92 crore is included in the contingent liabilities.

1.21.2 Cumulative interest up to 31.03.2018 due from the executing agency of Rs.25.98 crore (previous year Rs.23.97 crore) on mobilization advance of Rs.16.80 crore has not been recognized as income due to uncertainty as regard to realizability. This includes Interest of Rs.2.01 crore for the year (previous year Rs.2.02 crore).

1.22 A joint venture company named CCFB was incorporated in Mozambique in 2004 for rehabilitation, operation and management of Beira Rail Corridor, Mozambique by entering into a 25 years concessioning agreement with the Government of Mozambique. Company invested a sum of Rs.6.01 crore in equity in the said joint venture company for a 26% share. Other shareholders are IRCON & CFM, Mozambique with 25% & 49% share respectively. The company extended a shareholder loan of Rs.87.89 crore (equivalent to US$ 19.79 million) inclusive of interest accrued which was converted to principal as per agreement, out of which company received repayment of part loan amounting to Rs.4.44 crore (equivalent to US$ one million) during the year 2012-13.

1.23.1 On 8^th December, 2011, Government of Mozambique (GoM) unilaterally terminated the concessioning agreement and took over the project which in the opinion of the company was unlawful and against the provisions of the agreement. Consequently, CCFB initiated arbitration proceeding against the said decision of GoM.

1.23.2 Dispute has been amicably settled with Government of Mozambique (GoM) on 21st October, 2015 through settlement agreement. As per schedule of payment of the settlement agreement, upfront payment of USD 17.07 million was received during financial year 2015-16 and LC was also established by GoM during financial year 2016-17. Further, 1st and 2nd installment of USD 5.655 million each as per schedule of payment has also been received in financial year 2016-17 and 2017-18 respectively and balance two installments of USD 5.655 million each are due in the FY 2018-19 and FY 2019-20 as per schedule of payment.

1.23.3 In view of receipt of payments and establishment of LC duly confirmed by Scheduled Bank in India, company transferred its shareholding in CCFB to CFM, a nominated agency of GoM on 22^nd september, 2016 and consequently profit of Rs.71.47 crore on such transfer of equity shares has been recognized in Statement of Profit and Loss for financial year 2016-17.

1.24 Under the settlement agreement with Government of Tanzania, last three installments out of six installments of principal amounting to Rs.59.04 crore (equivalent US$ 9.19 million) {Previous year is Rs.58.72 crore (equivalent US$ 9.19 million)} are still outstanding despite of continuous follow-up and legal notice issued to Government of Tanzania and therefore the company has made a provision for the same during the financial year 2017-18. Company is also contemplating invocating arbitration clause as per provisions of settlement deed. Interest on principal and on delayed payments of Rs.20.88 crore (equivalent US$ 3.25 million) {Previous year is Rs.17.66 crore (equivalent US$ 2.76 million)} have not been recognised.

1.25 Foreign Service Contribution is recognized on accrual basis in the Statement of Profit and Loss Account as per the deputation terms with parent organizations in respect of officers taken on deputation from other organizations.

1.26 Lease deeds are pending for execution in respect of the office building at Central Metro Railway Building, 56, C.R. Avenune, Kolkata of Rs.3.46 crore (previous year Rs.3.46 crore), the physical testing laboratory at 52 A&B, C.R. Avenue, Kolkata of Rs.1.24 crore (previous year Rs.1.24 crore), office building at DLF Cybercity, Bhubaneshwar of Rs.5.64 crore (previous year Rs.5.64).

1.26.1 Northern Railway has leased a plot in Wazirpur Northern Railway colony, Delhi for construction of residential flats to RITES LTD for a period of thirty years. The lease period has been expired in the month of March-2015. The extension of lease has been sought from Northern Railway and the same is under consideration.

1.27 RITES purchased a freehold land for construction of office building at Gomati Nagar Extension, Lucknow from Lucknow Development Authority (LDA) and was registered in the financial year 2010-11 at a total cost of Rs.4.22 crore including registration charges. The physical possession of the land has not been given to RITES due to some disputes regarding acquisition of land by LDA. LDA has for the first time disclosed about the dispute and legal issue in respect of the plot vide their letter dated 29.05.2017. Honâble Court has cancelled the acquisition of land by LDA. LDA assured to allot alternate land to RITES. Pending allotment of alternative land to RITES, the amount shown as freehold land under Property, Plant & Equipment has been transferred to capital advance.

1.28 A demand has been received during the year from West Bengal Housing Infrastructure Development Corporation Ltd (WBHIDC) for delay in submission of building plan in respect of land purchased from WBHIDC for office complex. Accordingly a sum of â1.09 crore has been provided in the books of accounts. Company is taking up the issue with authority for waiver of the demand.

1.29 It was decided by the company to wind up one of its wholly owned subsidiaries, RITES Infrastructure Services Ltd (RISL) and accordingly, all assets and liabilities were transferred to the parent company during the financial year 2016-17. Despite of best efforts, bidders could not be located to take up these Multi Functional Complexes (MFCs) on lease, so it was decided by the company to hand over these MFCs to Ministry of Railways free of cost to avoid expenses towards maintenance and security of these MFCs. These MFCs have already been handed over to Ministry of Railways expect one which is also likely to be handed over to them shortly. Accordingly, carrying cost of Rs.5.84 crore of these MFCs has been charged off/write off during the current financial year 2017-18.

1.30 In one of the overseas project fee of Rs.11.22 crore upto 31st March 2018(previous year Rs.15.78 crore) has not been recognized as works have not been carried out by the contractors to the satisfaction of the client and the realisability of the fee based on the works done seems to be uncertain.

1.31 Sundry creditors, customers advances, amounts recoverable, security deposits receivable/payable are subject to confirmation.

1.32 Information as regard to loans, investments made as required under section 186(4) of the Companies Act, 2013 have been given vide note no. 2.6 & 2.7.

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Notes to Accounts of Rites Ltd.

1.13. PROVISION FOR WARRANTY FOR SALE ANDSERVICES RENDERED

1.14. LEASES:-COMPANY AS A LESSEE

1.15. LEASES:-COMPANY AS A LESSOR

1.16. FINANCIAL INSTRUMENTS

1.16.1 Initial Recognition

1.16.2 Subsequent Measurement

1.16.3 De-recognition of Financial Instruments

1.17. GOVERNMENT GRANT

iii) Provident Fund (Funded)

b) Defined Contribution Plans

ii) Performance Related Pay:

c) Foreign Service Contribution

| 41 | INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FORGOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

| 42 | INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OFCHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

| 46 | INDIAN ACCOUNTING STANDARD (IND AS) 36, DISCLOSURES ON IMPAIRMENT OF ASSETSARE AS FOLLOWS:

Effect of change in the discount rates

b) Contingent liabilities and Commitments to the extent not provided for include:

ii) Commitments

c) Contingent Assets

Methods & assumptions for valuation:

b) Fair value hierarchy & valuation techniques

c) Financial Risk Management

i) Market Risk

| 50 | INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTSARE AS FOLLOWS:

a) Company has identified four operational reportable segments based on operations being carried out whichare as under:-

b) Geographical wise revenue segment is disclosed as under:-

a) Significant management judgments on Revenue Recognition:

b) Company has contracts with customers for different services which are given below:-

d) Disaggregation Revenue information:

| 52 | INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE ASFOLLOWS:

a) Company as Lessee:-

| 56 | CAPITAL MANAGEMENT:

| 57 | OTHER DISCLOSURES:

q) Recent pronouncements

1.15.3 De-recognition of Financial Instruments

41. INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

42. INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

e) Key Management Personnel

f) Transactions and Balances with Related Parties

46. INDIAN ACCOUNTING STANDARD (IND AS) 36, DISCLOSURES ON IMPAIRMENT OF ASSETS ARE AS FOLLOWS:

47. INDIAN ACCOUNTING STANDARD (IND AS) 37, DISCLOSURES ON PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS ARE AS FOLLOWS:

b) Contingent liabilities and Commitments to the extent not provided for include:

c) Contingent Assets

b) Fair value hierarchy & valuation techniques

c) Financial Risk Management

50. INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTS ARE AS FOLLOWS:

a) Company has identified four operational reportable segments based on operations being carried out which are as under:-

b) Geographical wise revenue segment is disclosed as under:-

51. INDIAN ACCOUNTING STANDARD (IND AS) 115, DISCLOSURES ON REVENUE FROM CONTRACTS WITH CUSTOMERS ARE AS FOLLOWS:

52. INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE AS FOLLOWS:

a) Company as Lessee:-

57. OTHER DISCLOSURES:

c) Information on CSR expenditure:

q) Recent pronouncements

Provident Fund (Funded)

b) Defined Contribution Plans

i) Post Retirement Benefits (Pension & Medical):

ii) Performance Related Pay:

c) Foreign Service Contribution

b) Contingent liabilities and Commitments to the extent not provided for include:

i) Contingent Liabilities

ii) Commitments

c) Contingent Assets

Fair Value

Methods & assumptions for valuation:

Fair value hierarchy & valuation techniques

Financial Risk Management

Market Risk

i Credit Risk

iii) Liquidity Risk

a) Significant management judgments on Revenue Recognition:

b) Company has contracts with customers for different services which are given below:-

a) Company as Lessee:-

b) Company as a lessor:-

i) Operating Lease: As Lessor

a) Impact of COVID-19:

q) Recent pronouncements

Ind AS 103 - Reference to Conceptual Framework

Ind AS 16 - Proceeds before intended use

1.13. PROVISION FOR WARRANTY FOR SALE AND
SERVICES RENDERED

| 41 | INDIAN ACCOUNTING STANDARD (IND AS-20), DISCLOSURES ON ACCOUNTING FOR
GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE ARE AS FOLLOWS:

| 42 | INDIAN ACCOUNTING STANDARD (IND AS) 21, DISCLOSURES ON THE EFFECTS OF
CHANGES IN FOREIGN EXCHANGE RATES ARE AS FOLLOWS:

| 46 | INDIAN ACCOUNTING STANDARD (IND AS) 36, DISCLOSURES ON IMPAIRMENT OF ASSETS
ARE AS FOLLOWS:

| 50 | INDIAN ACCOUNTING STANDARD (IND AS) 108, DISCLOSURES ON OPERATING SEGMENTS
ARE AS FOLLOWS:

a) Company has identified four operational reportable segments based on operations being carried out which
are as under:-

| 52 | INDIAN ACCOUNTING STANDARD (IND AS-116): DISCLOSURES ON LEASES ARE AS
FOLLOWS: