Notes to Accounts of Sandhar Technologies Ltd.

Mar 31, 2025

p. Provisions (Other than employee
benefits)

General provisions

Provisions are recognized when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that an
outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation. When the Company
expects some or all of a provision to be
reimbursed the expense relating to a provision is
presented in the Standalone Statement of Profit
and Loss net of any reimbursement. Provisions
are determined by discounting the expected
future cash flows (representing the best estimate
of the expenditure required to settle the present
obligation at the balance sheet date) at a pre-tax
rate that reflects current market assessments
of the time value of money and the risks specific
to the liability. The unwinding of the discount is
recognized as finance cost. Expected future
operating losses are not provided for.

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

Warranty provisions

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

Contingent liability

A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond
the control of the company or a present
obligation that arises from past events where it is
either not probable that an outflow of resources
will be required to settle or a reliable estimate
of the amount cannot be made. A contingent
liability also arises in extremely rare cases where
there is a liability that cannot be recognized
because it cannot be measured reliably.

q. Employee benefits

(i) Short-term employee benefits

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

(ii) Defined contribution plans

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

(iii) Defined benefit plans

The Company operates a defined benefit
gratuity plan, which requires contributions
to be made to Kotak Mahindra Old Mutual
Life Insurance Limited, ICICI Prudential Life
Insurance and LIC of India. There are no other
obligations other than the contribution
payable to the respective entities.

The Company has an obligation towards
gratuity, a defined benefit retirement
plan covering eligible employees. The
plan provides for a lump sum payment to

vested employees at retirement, death
while in employment or on termination
of employment of an amount based on
the respective employee’s salary and the
tenure of employment. Vesting occurs upon
completion of five years of service.

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

The calculation of defined benefit obligation
is performed annually by a qualified actuary
using the projected unit credit method,
which recognizes each year of service as
giving rise to additional unit of employee
benefit entitlement and measure each unit
separately to build up the final obligation. The
obligation is measured at the present value
of estimated future cash flows. The discount
rates used for determining the present value
of obligation under defined benefit plans, is
based on the market yields on Government
securities as at the Balance Sheet date,
having maturity periods approximating to
the terms of related obligations.

Re-measurements, comprising of actuarial
gains and losses, the effect of the asset
ceiling, excluding amounts included in net
interest on the net defined benefit liability
and the return on plan assets (excluding
amounts included in net interest on the net
defined benefit liability), are recognized
immediately in the balance sheet with a
corresponding debit or credit to retained
earnings through OCI in the period in which
they occur. Re-measurements are not
reclassified to profit or loss in subsequent
periods.

Past service costs are recognized in profit or
loss on the earlier of:

• The date of the plan amendment or
curtailment, and

• The date that the Company recognizes
related restructuring costs

Net interest is calculated by applying the
discount rate to the net defined benefit
liability or asset. The Company recognizes
the following changes in the net defined
benefit obligation as an expense in the
Standalone Statement of Profit and Loss:

• Service costs comprising current
service costs, past-service costs, gains
and losses on curtailments and non¬
routine settlements; and

• Net interest expense or income

(iv) Other long term employee benefits

Compensated absences

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

As per the compensated absence
encashment policy, the Company does
not have an unconditional right to defer
the compensated absence of employees,
accordingly the entire compensated
absence obligation as determined by an
independent actuary has been classified as
current liability as at the year end..

Financial instruments

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

(i) Recognition and initial measurement

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

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

(ii) Classification and subsequent
measurement

Financial assets

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

- Amortized cost;

- Fair Value through Other Compre¬
hensive Income (''FVOCI’) - debt
instrument;

- FVOCI - equity investment; or

- FVTPL

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

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

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

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

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

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

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

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

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

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

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

Equity investments

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

If the Company decides to classify an
equity instrument as at FVOCI, then all fair
value changes on the instrument, excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI
to the Standalone Statement of Profit and

Loss, even on sale of investment. However,
the Company may transfer the cumulative
gain or loss within equity.

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

Investments in joint ventures

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

Investments in subsidiaries

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

Financial assets: Business model
assessment

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

• the stated policies and objectives
for the portfolio and the operation of
those policies in practice. These include
whether management’s strategy
focuses on earning contractual interest
income, maintaining a particular interest
rate profile, matching the duration of
the financial assets to the duration of
any related liabilities or expected cash
outflows or realising cash flows through
the sale of the assets;

• how the performance of the portfolio
is evaluated and reported to the
Company’s management;

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

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

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

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

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

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

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

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

- prepayment and extension features;
and

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

A prepayment feature is consistent with
the solely payments of principal and
interest criterion if the prepayment amount
substantially represents unpaid amounts
of principal and interest on the principal
amount outstanding, which may include
reasonable additional compensation
for early termination of the contract.
Additionally, for a financial asset acquired
at a significant discount or premium to its
contractual amount, as feature that permits
or requires prepayment at an amount that
substantially represents the contractual
par amount plus accrued (but unpaid)

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

contractual interest (which may also include
reasonable additional compensation for
early termination) is treated as consistent
with this criterion if the fair value of the
prepayment feature is insignificant at initial
recognition.

(iii) Derecognition
Financial assets

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

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

Financial liabilities

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

(iv) Offsetting

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

(v) Derivative financial instruments

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

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

Impairment of financial assets

The Company recognizes loss allowances
for expected credit losses on:

- Financial assets measured at amortized
cost; and

- Financial assets measured at FVOCI -
debt instruments.

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

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

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

Measurement of expected credit losses

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

Presentation of allowance for expected
credit losses in the balance sheet

Loss allowance for financial assets measured
at amortized cost are deducted from the
gross carrying amount of the assets. For
debt securities at FVOCI, the loss allowance
is charged to the Standalone Statement of
Profit and Loss and is recognized in OCI.

Write-off

The gross carrying amount of a financial
asset is written off (either partially or in full) to
the extent that there is no realistic prospect
of recovery. This is generally the case when
the Company determines that the debtor
does not have assets or sources of income
that could generate sufficient cash flows to
repay the amounts subject to the write- off.
However, financial assets that are written
off could still be subject to enforcement
activities in order to comply with Company’s
procedures for the recovery of amount due.

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

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

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

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

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

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

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

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

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

• All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options)
over the expected life of the financial
instrument. However, in rare cases
when the expected life of the financial
instrument cannot be estimated
reliably, then the entity is required to
use the remaining contractual term of
the financial instrument

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

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

• Financial assets measured as at
amortized cost and contractual revenue
receivables: ECL is presented as an
allowance, i.e., as an integral part of the

measurement of those assets in the
balance sheet. The allowance reduces
the net carrying amount. Until the asset
meets write-off criteria, the Company
does not reduce impairment allowance
from the gross carrying amount.

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

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

The Company does not have any purchased
or originated credit-impaired (POCI)
financial assets, i.e., financial assets which
are credit impaired on purchase/ origination.

s. Expenditure

Expenses are accounted for on the accrual basis.

t. Exceptional items

Exceptional items refer to items of income or
expense within the Standalone Statement of
Profit and Loss from ordinary activities which
are non-recurring and are of such size, nature
or incidence that their separate disclosure
is considered necessary to explain the
performance of the Company.

u. Research and development

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

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

v. Recognition of dividend income,
interest income or expense

Dividend income is recognised in profit or loss on
the date on which the Company’s right to receive
payment is established.

Interest income or expense is recognised using
the effective interest method.

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

- the gross carrying amount of the financial
asset; or

- the amortised cost of the financial liability.

In calculating interest income and expense, the
effective interest rate is applied to the gross
carrying amount of the asset (when the asset is
not credit-impaired) or to the amortised cost
of the liability. However, for financial assets that

have become credit-impaired subsequent to
initial recognition, interest income is calculated
by applying the effective interest rate to the
amortised cost of the financial asset. If the asset
is no longer credit-impaired, then the calculation
of interest income reverts to the gross basis.

w. Standard issued but not yet effective

Ministry of Corporate Affairs ("MCA”) 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, applicable to
the Company 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 its
financial statements.

1. During the year ended 31 March 2025, the Company entered into share purchase agreement on 27 March 2025 for
the sale of its entire 50% stake (dis-investment) in the Joint Venture namely, Jinyoung Sandhar Mechatronics Private
Limited. The Company completed the sale transaction and received an amount of Rs 668.44 lacs on 15 April 2025 and
accordingly, the carrying value of Company’s investment of Rs 670.57 lacs (Rs 1,336.88 lacs less impairment allowance
of Rs 666.31 lacs) has been recognised under Assets held for sale.

2. During the year ended 31 March 2025, the Board of Directors has decided to sell the assets of Peenya plant which was
available for sale in their present conditions. The asset held for sale was measured at lower of cost and fair value less
cost to sell i.e., Rs. 2,699.31 lacs.

3. During the year ended 31 March 2024, the Board of Directors has decided to sell the assets of Mysore plant which was
available for sale in their present conditions. The asset held for sale was measured at lower of cost and fair value less
cost to sell i.e., Rs. 83.09 lacs. The asset was sold during the year, resulting in a gain on disposal of Rs. 541.29 lacs ,
which has been recognized under "Other income” in the statement of profit or loss.

* Impairment testing of goodwill

For the purposes of impairment testing, goodwill is allocated to the Cash Generating Unit (CGU) which represents the lowest
level at which the goodwill is monitored for internal management reporting purposes.

The recoverable amount of the cash generating unit was based on its value in use. The value in use of this unit was determined
to be higher than the carrying amount and an analysis of the calculation’s sensitivity towards change in key assumptions
did not identify any probable scenarios where the CGU recoverable amount would fall below their carrying amount.

Value in use was determined by discounting the future cash flows generated from the continuing use of the CGU. The
calculation was based on the following key assumptions:

i. The anticipated annual revenue growth and margin included in the cash flow projections are based on past experience,
actual operating results and the 5-year business plan in all periods presented.

ii. The terminal growth rate ranges from 2% to 3% representing management view on the future long-term growth rate.

iii. Discount rate ranging from 8% to 10% for all periods presented was applied in determining the recoverable amount of
the CGU. The discount rate was estimated based on past experience and companies average weighted average cost
of capital.

The values assigned to the key assumptions represent the management’s assessment of future trends in the industry
and based on both internal and external sources.

*Notes:

1. During the year ended 31 March 2025, the Company entered into share purchase agreement on 27 March 2025 for
the sale of its entire 50% stake (dis-investment) in the Joint Venture namely, Jinyoung Sandhar Mechatronics Private
Limited. The Company completed the sale transaction and received an amount of Rs 668.44 lacs on 15 April 2025 and
accordingly, the carrying value of Company’s investment of Rs 670.57 lacs (Rs 1,336.88 lacs less impairment allowance
of Rs 666.31 lacs) has been recognised under Assets held for sale.

2. During the year ended March 31, 2025, the Company conducted an impairment review of its investment in equity
shares of Sandhar Whetron Electronics Private Limited. Based on the updated assessment, the recoverable amount of
the investment, determined using the value-in-use method, exceeded its carrying amount. As a result, the Company
has reversed the impairment loss of Rs. 304.33 lakhs that was previously recognized during the earlier years.

3. During the year ended 31 March 2024, the Company performed an impairment assessment of its investment in
equity shares and preference shares of Jinyoung Sandhar Mechatronics Private Limited to compute the fair value of
its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying
amount of the investment, an impairment charge of Rs. 555.95 Lacs was recognized in the Standalone Statement of
Profit and Loss as an exceptional item. As at 31 March 2024, the total impairment allowance pertaining to Jinyoung
Sandhar Mechatronics Private Limited is Rs 666.31 Lacs.

4. During the year ended 31 March 2024, the Company has acquired 12,05,000 equity shares (equivalent to 20.08%
of total paid up share capital) of Sandhar Ascast Private Limited (formerly known as Sandhar Tooling Private Limited)
(subsidiary company) at Rs 41 per equity share.

Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having par value of Rs.10 per share (31 March 2024: Rs.10 per share). Each holder
of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.

The Board of Directors at its Meeting held on 23 May 2024, had recommended a final dividend @ 32.5% i.e. Rs. 3.25 per
equity share, which has been approved by shareholders in Annual General Meeting held on 24 September 2024. The same
has been paid.

The Board of Directors at its Meeting held on 22 May 2025, has recommended a final dividend @ 35% i.e. Rs. 3.50 per equity
share. The dates of the book closure for the entitlement of such final dividend and Annual General Meeting shall be decided
and informed in due course of time.

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

30. Gratuity and other post-employment benefit plans

A. Defined contribution plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident
Fund, National pension scheme and Employee state insurance scheme (''ESI’) which are collectively defined as defined
contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are
charged to the Standalone Statement of Profit and Loss as they accrued.

B. Defined benefit plan

The Company has a defined benefit gratuity plan for its employees, governed by the Payment of Gratuity Act, 1972. Every
employee who has rendered at least five years of continuous service gets a gratuity on departure at the rate of fifteen
days of last drawn salary for each completed year of service or part thereof in excess of 6 months. The scheme is funded
with insurance companies in the form of qualifying insurance policies. Gratuity benefits are valued in accordance with the
Payment of Gratuity Act, 1972.

The most recent actuarial valuation of present value of the defined benefit obligation for gratuity were carried out as at 31
March 2025. The present value of the defined benefit obligations and the related current service cost and past service cost,
were measured using the Projected Unit Credit Method.

* It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending
resolution of the respective proceedings as it is determinable only on receipt of judgements / decisions pending with
various forums/ authorities.

Based on the status of cases and as advised by Company’s tax/legal advisors, wherever applicable, the management
believes that the Company has strong chance of success and hence no provision against matters disclosed in "Claims
against the Company not acknowledged as debts” are considered necessary.

Note A:

Guarantee given by the Company:

To facilitate grant of financing facilities to the Company’s joint ventures and subsidiaries, the Company has given corporate
guarantees to banks. As at year end, the outstanding corporate guarantee/stand by-letter of credits/ bank guarantees so
given amounts to Rs. 40,335.17 (31 March 2024: Rs. 27,199.69).

The Company has issued guarantees of Rs 762.92 (31 March 2024: Rs 157.84) to its vendors.

The following methods and assumptions were used to estimate the fair values:

Long-term fixed-rate and variable-rate receivables/borrowings are evaluated by the Company based on parameters such
as interest rates, specific country risk factors and individual creditworthiness of the customer, allowances are taken into
account for the expected credit losses of these receivables.

The fair value of unquoted instruments, is calculated by arriving at intrinsic value of the investee. The fair value of loans
from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is
estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining
maturities.

Discount rates used in determining fair value:

The interest rates used to discount estimated future cash flows, where applicable, are based on the discount rate that
reflects the issuer’s borrowing rate as at the end of the reporting period.

The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most
relevant data available. In addition, the Company internally reviews valuation, including independent price validation for
certain instruments.

36. Fair value hierarchy

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

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its
financial instruments into three levels prescribed under the accounting standard.

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

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

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

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

The Company has an established control framework with respect to the measurements of fair values. This includes a valuation
team and has overall responsibility for overseeing all significant fair value measurements and reports directly to the Chief
Financial Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third
party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses
the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind
AS, including the level in the fair value hierarchy in which the valuations should be classified.

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

37. Financial risk management objectives and policies

The Company is primarily engaged in the manufacturing and assembling of automotive components such as lock-set,
mirrors and various sheet metal components including cabins for two wheelers, four wheelers and off road vehicle industry.
The Company’s principal financial liabilities, comprises loans and borrowings, trade and other payables and finance lease
obligation. The main purpose of these financial liabilities is to support the Company’s operations. The Company’s principal
financial assets include investments in equity, employee advances, trade and other receivables, security deposits, cash and
short-term deposits that derive directly from its operations.

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

- Market risk (see (b));

- Credit risk (see (c)); and

- Liquidity risk (see (d)).

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

a) Risk management framework

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

The Company’s senior management oversee the management of these risks and advises on financial risks and the
appropriate financial risk governance framework for the Company. The board of directors of the Company provides
assurance to the shareholders that the Company’s financial risk activities are governed by appropriate policies and
procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies
and risk objectives.

The Company’s risk management policies are established to identify and analyse the risks faced by the company, to set
appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed
regularly to reflect changes in market conditions and Company’s activities. The Company, through its training and
management standards and procedures, aims to maintain a disciplined and constructive control environment in which all
employees understand their roles and obligations.

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

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of
hedge accounting in the financial statements.

b) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises following types of risk: interest rate risk, currency risk, price risk, and commodity
risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits and advances.

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

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

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

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

c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the
Company’s long-term debt obligations with fixed interest rates.

Exposure to interest rate risk

The interest rate profile of the Company’s interest bearing financial instruments as reported to management is as follows:

Equity price risk

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

Credit risk

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

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date
of statements of financial position whether a financial asset or a Company of financial assets is impaired. The Company
recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing
transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months
expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset
has increased significantly since initial recognition.

Trade receivables of Rs. 46,798.83 lacs as at 31 March 2025 (31 March 2024: Rs 40,243.22 lacs) forms a significant part of
the financial assets carried at amortised cost, which is valued considering provision for allowance using expected credit
loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk.
This assessment is not based on any mathematical model but an assessment considering the nature of segment, impact
immediately seen in the demand outlook of these segments and the financial strength of the customers in respect of
whom amounts are receivable.

The Company’s exposure to customers is diversified and some customer contributes more than 10% of outstanding
accounts receivable as of 31 March 2025 and 31 March 2024 however there was no default on account of those customers
in the past. The Company has payment terms in range of 30 days to 120 days with its customers.

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

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis
lifetime expected losses and where receivables are due for more than six months.

Exposure to credit risk

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

(a) Financial assets for which loss allowance is measured using 12 months Expected Credit Losses (ECL)

Financial instruments and cash deposits

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

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

The Company’s policies is to provide financial guarantees only for subsidiaries and joint ventures. At 31 March 2025
and 2024, the Company has issued guarantee to certain bank in respect of credit facilities granted to subsidiaries
and joint ventures.

d) Liquidity risk

Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The
Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities,
by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets
and liabilities.

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

38. Capital management

The primary objective of the Company’s capital management is to safeguard the Company’s ability to continue as a going
concern, maintain a strong credit rating and a healthy capital ratio to support the business and to enhance shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and
business strategies to maintain or adjust the capital structure, issue new shares or raise and repay debts. The Company’s
capital management objectives, policies or processes were unchanged during the year.

39. Segment Reporting

The Company is engaged in the business of manufacturing and assembling of automotive components. The Chief Operating
Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various
performance indicators by industry classes. All operating segments’ operating results are reviewed regularly by CODM to
make decisions about resources to be allocated to the segments and a

---

Mar 31, 2024

p. Provisions (Other than employee benefits)

General provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed the expense relating to a provision is presented in the Standalone Statement of Profit and Loss net of any reimbursement. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.

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

Warranty provisions

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

Contingent liability

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

q. Employee benefits

i. Short-term employee benefits

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

ii. Defined contribution plans

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

iii. Defined benefit plans

The Company operates a defined benefit gratuity plan, which requires contributions to be made to Kotak Mahindra Old Mutual Life Insurance Limited, ICICI Prudential Life Insurance and LIC of India. There are no other obligations other than the contribution payable to the respective entities.

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to

vested employees at retirement, death while in employment or on termination of employment of an amount based on the respective employee’s salary and the tenure of employment. Vesting occurs upon completion of five years of service.

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

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method, which recognizes each year of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognized in profit or loss on the earlier of:

• The date of the plan amendment or curtailment, and

• The date that the Company recognizes related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Standalone Statement of Profit and Loss:

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and

• Net interest expense or income

iv. Other long term employee benefits

Compensated absences

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

As per the compensated absence encashment policy, the Company does not have an unconditional right to defer the compensated absence of employees, accordingly the entire compensated absence obligation as determined by an independent actuary has been classified as current liability as at the year end.

r. Financial instruments

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

i. Recognition and initial measurement

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

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

ii. Classification and subsequent measurement

Financial assets

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

- Amortized cost;

- Fair Value through Other Comprehensive Income (''FVOCI’) - debt instrument;

- FVOCI - equity investment; or -FVTPL

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

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

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

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

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

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

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

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

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

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

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

Equity investments

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

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

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

Investments in joint ventures

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

Investments in subsidiaries

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

Financial assets: Business model assessment

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

• the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

• how the performance of the portfolio is evaluated and reported to the Company’s management;

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

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

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

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

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

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

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

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

- prepayment and extension features; and

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

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual amount, as feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid)

contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets: Subsequent measurement and gains and losses

Financial liabilities: Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest

expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

iii. Derecognition

Financial assets

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

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

Financial liabilities

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

(iv) Offsetting

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

(v) Derivative financial instruments

The Company uses derivative instruments such as foreign exchange forward contracts and currency swaps to hedge its foreign

currency and interest rate risk exposure. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

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

Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on:

- Financial assets measured at amortized cost; and

- Financial assets measured at FVOCI -debt instruments.

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

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

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

Measurement of expected credit losses

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

Presentation of allowance for expected credit losses in the balance sheet

Loss allowance for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to the Standalone Statement of Profit and Loss and is recognized in OCI.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with Company’s procedures for the recovery of amount due.

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

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

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

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

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

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

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

longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

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

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

• All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

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

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

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

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

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

The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.

s. Expenditure

Expenses are accounted for on the accrual basis.

t. Exceptional items

Exceptional items refer to items of income or expense within the Standalone Statement of Profit and Loss from ordinary activities which are non-recurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.

u. Research and development

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

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

v. Recognition of dividend income, interest income or expense

Dividend income is recognised in profit or loss on the date on which the Company’s right to receive payment is established.

Interest income or expense is recognised using the effective interest method.

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

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

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

w. Standard issued but not yet effective

Ministry of Corporate Affairs ("MCA”) 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 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

x. Material accounting policy information

The Company adopted Disclosure of Accounting Policies (Amendment to Ind AS 1) from 1 April 2023. Although the amendments did not result in any changes in the accounting policy themselves, they impacted the accounting policy information disclosed in the standalone financial statements.

The amendments require the disclosure of ''material’ rather than ''significant’ accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the standalone financial statements.

* Impairment testing of goodwill

For the purposes of impairment testing, goodwill is allocated to the Cash Generating Unit (CGU) which represents the lowest level at which the goodwill is monitored for internal management reporting purposes.

The recoverable amount of the cash generating unit was based on its value in use. The value in use of this unit was determined to be higher than the carrying amount and an analysis of the calculation’s sensitivity towards change in key assumptions did not identify any probable scenarios where the CGU recoverable amount would fall below their carrying amount.

Value in use was determined by discounting the future cash flows generated from the continuing use of the CGU. The calculation was based on the following key assumptions:

i. The anticipated annual revenue growth and margin included in the cash flow projections are based on past experience,

actual operating results and the 5-year business plan in all periods presented.

ii. The terminal growth rate ranges from 2% to 3% representing management view on the future long-term growth rate.

iii. Discount rate ranging from 8% to 10% for all periods presented was applied in determining the recoverable amount of the CGU. The discount rate was estimated based on past experience and companies average weighted average cost of capital.

The values assigned to the key assumptions represent the management’s assessment of future trends in the industry and based on both internal and external sources.

*Notes:

1. During the year ended 31 March 2024, the Company has acquired 12,05,000 equity shares (equivalent to 20.08% of total paid up share capital) of Sandhar Tooling Private Limited (subsidiary company) at Rs 41 per equity share.

2. During the year ended 31 March 2024, the Company performed an impairment assessment of its investment in equity shares and preference shares of Jinyoung Sandhar Mechatronics Private Limited to compute the fair value of its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying amount of the investment, an impairment charge of Rs. 555.95 Lacs was recognized in the Standalone Statement of Profit and Loss as an exceptional item. As at 31 March 2024, the total impairment allowance pertaining to Jinyoung Sandhar Mechatronics Private Limited is Rs 666.31 Lacs.

3. During the year ended 31 March 2023, the Company performed an impairment assessment of its investment in equity shares of Sandhar Whetron Electronics Private Limited to compute the fair value of its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying amount of the investment, an impairment charge of Rs. 304.33 Lacs was recognized in the Standalone Statement of Profit and Loss as an exceptional item. As at 31 March 2024, the total impairment allowance pertaining to Sandhar Whetron Electronics Private Limited is Rs 304.33 Lacs.

4. During the year ended 31 March 2021, Sandhar Han Shin Automotive Private Limited, a joint venture of the Company had applied for strike off under Section 248 of the Companies Act, 2013. Hence, the Company noted an impairment of investment amounting to Rs. 1.00 Lacs. The Company was struck-off during the year.

5. During the year ended 31 March 2022, Sandhar Strategic Systems Private Limited, a wholly owned subsidiary of the Company and Sandhar Daeshin Auto Systems Private Limited, a joint venture of the Company, applied for strike off under Section 248 of the Companies Act, 2013. Hence, the Company noted an impairment of investments amounting to Rs. 2.07 Lacs. Both the companies were struck-off on 18 October 2022.

Note A:

i) Show cause notice received in respect of credit taken on freight outward for the period FY 2005-06, FY 2016-17 and FY 2017-18. The reply has been submitted and personal hearing is awaited with Assistant Commissioner, Central Excise. The amount involved is Rs. 11.73 (31 March 2023: Rs. 11.73).

ii) Show cause notice received in respect of credit taken on manpower supply for the period FY 2005-06 to 2014-15 (up to Feb-15). Appeal filed with Commissioner Appeal, personal hearing attended and final order received in Company’s favor. The amount involved is Nil (31 March 2023: Rs. 261.07).

iii) Show cause notice received in respect of credit taken on the Services on Commercial and Industrial construction work for the period FY 2009-10. The matter is pending with Additional Commissioner, Central Excise and CESTAT, Chandigarh. The amount involved is Rs. 2.11 (31 March 2023: Rs.2.11).

iv) Show cause notices received in respect of credit taken on outdoor catering & courier services for the period FY 201011. The matter is pending with the Superintendent and Deputy Commissioner, Central excise. The amount involved is Rs. 0.50 (31 March 2023: Rs. 0.50).

v) Show cause notices received in respect of credit taken on various services such clearing and forwarding agency

services, Construction and industrial Construction, repair & maintenance, travel agent, pandal, authorized service station & outward freight, for the period FY 2004-05 to 2016-17 (up to Mar-2017). The personal hearing attended & final order awaited from Assistant Commissioner, LTU New Delhi. The amount involved is Rs. 35.14 (31 March 2023: Rs. 35.14).

vi) Show cause notice received from Custom Authority. The reply was filed on 29 July 2021 and waiting for personal hearing. The amount involved is Rs 6.94 (31 March 2023: Rs 6.94)

Note B:

i) Show cause notices received in respect of irregular and excess availment of input tax credit of Goods and Services Tax, for the period FY 2017-18 and FY 2018-19. The appeal filed with Addl. Commissioner, GST and personal hearing awaited. The amount involved is Rs. 61.19 (31 March 2023: Rs. Nil).

ii) Show cause notice received in respect of multiple e-way bill against single invoice under Goods and Services tax Act, 2017.The reply has been submitted with Deputy Commissioner of State Tax and personal hearing and order awaited. The amount involved is Rs. 5.11 (31 March 2023: Rs. Nil).

Note C:

i) In respect of assessment year 2013-14, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal was filed with ITAT and in the current year final order received in Company’s favor. The amount involved is Nil (31 March 2023: Rs. 64.54)

ii) In respect of assessment year 2014-15, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal was filed with ITAT and in the current year final order received in Company’s favor. The amount involved is Nil (31 March 2023: Rs. 3.12)

iii) In respect of assessment year 2015-16 demand was issued against certain expenses disallowed under section 35(2AB), 14A etc. The appeal has been filed with ITAT. The amount involved is Rs. 11.80 (31 March 2023: Rs.11.80).

iv) In respect of assessment year 2016-17 demand was issued against certain expenses disallowed under section 35(2AB), 14A etc. The appeal has been filed with ITAT. The amount involved is Rs. 2.50 (31 March 2023: Rs. 2.50).

v) In respect of assessment year 2014-15 demand was issued for penalty proceeding. The appeal was filed with CIT-(Appeal)-22 and in the current year final order received in Company’s favor. The amount involved is Nil (31 March 2023: Rs. 3.12).

vi) In respect of assessment year 2017-18 demand was issued for depreciation on Intangible asset, disallowance u/s 14A, disallowance on membership fee, sponsorship fee and bad debt. The appeal has been filed with CIT (Appeal-22). The amount involved is Rs. 12.92 (31 March 2023: Rs. 19.40).

vii) In respect of assessment year 2016-17 demand was issued for disallowance of MAT credit consequence effect related to A.Y 2013-14. The appeal has been filed with ITAT for the A.Y 2013-14 and in the current year order received in Company’s favor. The amount involved is Nil (31 March 2023: Rs. 63.14).

viii) In the respect of assessment year 2013-14 demand was issued for concealment of income u/s 271(1)(c). The appeal has been filed with CIT (Appeal) and order received in Company’s favor. The amount involved is NIL (31 March 2023: Rs.64.54).

ix) In the respect of assessment year 2015-16 demand was issued for concealment of income u/s 271(1)(c). The appeal has been filed with CIT (Appeal). The amount involved is Rs.16.89 (31 March 2023: Rs.16.89).

x) In the respect of assessment year 2016-17 demand was issued for concealment of income u/s 271(1)(c). The appeal has been filed with CIT (Appeal). The amount involved is Rs.7.42 (31 March 2023: Rs.7.42).

xi) In the respect of assessment year 2018-19 demand was issued for concealment of income u/s 170A(9). The appeal has been filed with CIT (Appeal). The amount involved is Rs.1.15 (31 March 2023: Rs.1.15).

xii) In the respect of assessment year 2020-21 demand was issued for concealment of income u/s 170A(9). The appeal has been filed with CIT (Appeal). The amount involved is Rs.2.16 (31 March 2023: Rs. 2.16).

Based on the status of cases and as advised by Company’s tax/legal advisors, wherever applicable, the management believes that the Company has strong chance of success and hence no provision against matters disclosed in "Claims against the Company not acknowledged as debts” are considered necessary.

Note D:

Guarantee given by the Company:

To facilitate grant of financing facilities to the Company’s joint ventures and subsidiaries, the Company has given corporate

guarantees to banks. As at year end, the outstanding corporate guarantee/stand by-letter of credits/ bank guarantees so

given amounts to Rs. 27,357.53 (31 March 2023: Rs. 23,797.73).

The management assessed that the fair values of short term financial assets and liabilities significantly approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, management has not disclosed fair values for financial instruments such as trade receivables, trade payables, cash and cash equivalents, other current assets, interest accrued on fixed deposits, other current liabilities etc.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

Long-term fixed-rate and variable-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors and individual creditworthiness of the customer, allowances are taken into account for the expected credit losses of these receivables.

The fair value of unquoted instruments, is calculated by arriving at intrinsic value of the investee. The fair value of loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

Discount rates used in determining fair value:

The interest rates used to discount estimated future cash flows, where applicable, are based on the discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period.

The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. In addition, the Company internally reviews valuation, including independent price validation for certain instruments.

36. Fair value hierarchy

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

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard.

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

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

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

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

The Company has an established control framework with respect to the measurements of fair values. This includes a valuation team and has overall responsibility for overseeing all significant fair value measurements and reports directly to the Chief Financial Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

37. Financial risk management objectives and policies

The Company is primarily engaged in the manufacturing and assembling of automotive components such as lock-set, mirrors and various sheet metal components including cabins for two wheelers, four wheelers and off road vehicle industry. The Company’s principal financial liabilities, comprises loans and borrowings, trade and other payables and finance lease obligation. The main purpose of these financial liabilities is to support the Company’s operations. The Company’s principal financial assets include investments in equity, employee advances, trade and other receivables, security deposits, cash and short-term deposits that derive directly from its operations.

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

- Market risk (see (b));

- Credit risk (see (c)); and

- Liquidity risk (see (d)).

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

a) Risk management framework

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

The Company’s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The board of directors of the Company provides assurance to the shareholders that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.

The Company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

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

b) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risk: interest rate risk, currency risk, price risk, and commodity risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits and advances.

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

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other postretirement obligations; provisions.

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

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

c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with fixed interest rates.

Equity price risk

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

Credit risk

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

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a Company of financial assets is impaired. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

Trade receivables of Rs. 40,243.22 lacs as at 31 March 2024 forms a significant part of the financial assets carried at amortised cost, which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk. This assessment is not based on any mathematical model but an assessment considering the nature of segment, impact immediately seen in the demand outlook of these segments and the financial strength of the customers in respect of whom amounts are receivable.

The Company’s exposure to customers is diversified and some customer contributes more than 10% of outstanding accounts receivable as of 31 March 2024 and 31 March 2023 however there was no default on account of those customers in the past. The Company has payment terms in range of 30 days to 120 days with its customers.

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

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses and where receivables are due for more than six months.

Exposure to credit risk

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

Financial instruments and cash deposits

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

The Company places its cash and cash equivalents and term deposits with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts ongoing evaluation of the credit worthiness of the banks with which it does business. Given the high credit ratings of these banks, the Company does not expect these banks to fail in meeting their obligations. The maximum exposure to credit risk for the components of the balance sheet at 31 March 2024 and 31 March 2023 is represented by the carrying amount of each financial asset.

d) Liquidity risk

Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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

38. Capital management

The primary objective of the Company’s capital management is to safeguard the Company’s ability to continue as a going concern, maintain a strong credit rating and a healthy capital ratio to support the business and to enhance shareholder value. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and business strategies to maintain or adjust the capital structure, issue new shares or raise and repay debts. The Company’s capital management objectives, policies or processes were unchanged during the year.

39. Segment Reporting

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

The operating segment of the Company is identified to be "Automotive components” as the CODM reviews business performance at an overall Company level as one segment.

Accordingly, as the company operates in a single business and geographical segment, the reporting requirements for primary and secondary disclosures under Indian Accounting Standard - 108 "Operating Segments” have not been provided in the standalone financial statements.

41. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required b

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Mar 31, 2023

‘During the current year, the Board of Directors has decided to sell Company’s land situated at Jaipur, Rajasthan which is available for sale in its present condition. The Company expects to sell the land within twelve months from its classification. The asset held for sale has bee measured at lower of cost and fair value less cost to sell i.e., Rs. 768.90 lacs.

* Impairment testing of goodwill

For the purposes of impairment testing, goodwill is allocated to the Cash Generating Unit (CGU) which represents the lowest level at which the goodwill is monitored for internal management reporting purposes.

The recoverable amount of the cash generating unit was based on its value in use. The value in use of this unit was determined to be higher than the carrying amount and an analysis of the calculation’s sensitivity towards change in key assumptions did not identify any probable scenarios where the CGU recoverable amount would fall below their carrying amount.

Value in use was determined by discounting the future cash flows generated from the continuing use of the CGU. The calculation was based on the following key assumptions:

i. The anticipated annual revenue growth and margin included in the cash flow projections are based on past experience, actual operating results and the 5-year business plan in all periods presented.

ii. The terminal growth rate ranges from 2% to 3% representing management view on the future long-term growth rate.

iii. Discount rate ranging from 7% to 13% for all periods presented was applied in determining the recoverable amount of the CGU. The discount rate was estimated based on past experience and companies average weighted average cost of capital.

The values assigned to the key assumptions represent the management’s assessment of future trends in the industry and based on both internal and external sources.

‘Breakup of impairment in the value of investments

1. During the year ended 31 March 2023, the Company performed an impairment assessment of its investment in equity shares of Sandhar Whetron Electronics Private Limited to compute the fair value of its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying amount of the investment, an impairment charge of Rs. 304.33 Lacs was recognized in the Standalone Statement of Profit and Loss as an exceptional item.

2. During the year ended 31 March 2022, the Company performed an impairment assessment of its investment in equity shares and preference shares of Jinyoung Sandhar Mechatronics Private Limited to compute the fair value of its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying amount of the investment, an impairment charge of Rs. 110.36 Lacs was recognized in the Standalone Statement of Profit and Loss as an exceptional item.

3. During the year ended 31 March 2020, the Company noted an impairment trigger on account of proposed discontinuation of business in its joint venture company (‘Sandhar Ecco Green Energy Private Limited’). Company performed an impairment assessment of its investment in equity shares of Sandhar Ecco Green Energy Private Limited to compute the fair value of its investment. Based on management’s assessment, as the fair value of the investment was lower than the carrying amount of the investment, an impairment charge of Rs. 143.17 Lacs was recognized in the standalone financial statements. During the current year the Company was voluntary liquidated vide order dated 10 February 2023 by NCLT, New Delhi Bench.

4. During the year ended 31 March 2021, Sandhar Han Shin Automotive Private Limited, a joint venture of the Company had applied for strike off under Section 248 of the Companies Act, 2013. Hence, the Company noted an impairment of investment amounting to Rs. 1.00 Lacs.

5. During the year ended 31 March 2022, Sandhar Strategic Systems Private Limited, a wholly owned subsidiary of the Company and Sandhar Daeshin Auto Systems Private Limited, a joint venture of the Company, applied for strike off under Section 248 of the Companies Act, 2013. Hence, the Company noted an impairment of investments amounting to Rs. 2.07 Lacs. Both the companies were struck-off on 18 October 2022.

#The Company owned 52.18% shareholding in joint venture Sandhar Automotive Systems Private Limited (formerly known as Sandhar Daewha Automotive Systems Private Limited) and had purchased the remaining 47.82% stake from joint venture partner for Rs. 48.84 lakhs on 28 December 2021 through share purchase deed. Accordingly, Sandhar Automotive Systems Private Limited (formerly known as Sandhar Daewha Automotive Systems Private Limited) become wholly owned subsidiary w.e.f. 28 December 2021. In the previous year, the Company had recognised a tax of Rs 180.22 Lacs on net gain on acquisition of shares as per Income Tax Act, 1961.

@The Company had obtained control in Sandhar Auto Castings Private Limited (formerly known as Sandhar Daeshin Technologies Private Limited) on 1 October 2021 and hence it became wholly owned subsidiary w.e.f. 1 October 2021.

Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having par value of Rs.10 per share (31 March 2022: Rs.10 per share). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.

The Company has paid final dividend of Rs. 2.25 per equity share of face value Rs. 10 each, which was declared on 18 May 2022.

The Board of Directors at its Meeting held on 25 May 2023, has recommended a final dividend @ 25% i.e. Rs. 2.5 per equity share. The dates of the book closure for the entitlement of such final dividend and Annual General Meeting shall be decided and informed in due course of time.

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

Nature and purpose of other equity

1. Capital Reserve:

This represents Capital reserve created during the year ended 31 March 2013, consequent to the approval by the Hon’ble High Court of Delhi of the scheme of amalgamation of MAG Engineering Private Limited with the Company and will be utilised as per the requirements of the Companies Act, 2013.

2. Securities premium:

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.

3. Remeasurements of defined benefit obligation:

Remeasurements of defined benefit obligation comprises actuarial losses.

4. Retained earnings

This represents the cumulative profits/(losses) of the Company.

Above term loans are secured by:

1. First pari passu charge on the entire present and future movable property, plant and equipment of the borrower excluding those assets which are specifically funded by other lenders/Financial Institutions

2. First pari passu charge on immovable properties, of the borrower as detailed below:

i. 4, HSIDC Industrial Area, Delhi Gurgaon Road, Gurgaon

ii. 3, HSIDC Industrial Area, Delhi Gurgaon Road, Gurgaon

iii. Plant at Village Dhumaspur, P.O Badshahpur, Gurgaon

iv. Plot no. 24, Sector 3, IMT Manesar, Haryana

v. Plot no. 44, Sector 3, IMT Manesar, Haryana

vi. Plot no. 8, Bommasandra- Jigani Link Road Industrial Area, Hubli

vii. Plot # 12c, Sy No. 47 & 50, KIADB, Bangalore

viii. Plot # 13a, Sy No. 47 & 50, KIADB, Bangalore

ix. Sandhar Himachal, Bharatgarh Road, Tehsil Nalagarh, District Solan, Himachal Pradesh

x. Plot No. 7A, KIADB Industrial Area, Attibele Hobli, Anekal Taluk, Bangalore

3. Second Pari passu charge on entire present and future current assets of the borrower other than vehicles which are financed exclusively by other lenders.

Disclosures as per revised schedule III to the Companies Act, 2013:

1. The Company has utilised the borrowings for the purpose it was taken.

2. The quarterly returns/ statements of current assets filed with the banks/ financial institutions are in agreement with the books of accounts.

Terms and conditions of the above financial liabilities:

For explanations on the Company’s credit risk management processes, refer to Note 37.

For dues payables to related parties refer to Note -32.

‘Acceptances are arrangements where operational suppliers of goods and services are initially paid by banks/ financial institutions while the Company continues to recognise the liability till settlement with the banks/financial institutions,which are normally effected within a period of 90 days.

30 Gratuity and other post-employment benefit plans

A. Defined contribution plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident Fund, National pension scheme and Employee state insurance scheme (‘ESI’) which are collectively defined as defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Standalone Statement of Profit and Loss as they accrued.

B. Defined benefit plan

The Company has a defined benefit gratuity plan for its employees, governed by the Payment of Gratuity Act, 1972. Every employee who has rendered at least five years of continuous service gets a gratuity on departure at the rate of fifteen days of last drawn salary for each completed year of service or part thereof in excess of 6 months. The scheme is funded with insurance companies in the form of qualifying insurance policies. Gratuity benefits are valued in accordance with the Payment of Gratuity Act, 1972.

The most recent actuarial valuation of present value of the defined benefit obligation for gratuity were carried out as at 31 March 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

The principal assumptions used in determining gratuity and compensated absences are as follows: a. Economic assumptions

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

b. Demographic assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Sensitivities due to mortality and withdrawals are not material and hence impact of change not calculated.

Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement.

Gratuity expense expected to be incurred in the next year is Rs. 290.55 Lacs (previous year Rs. 247.32 Lacs).

Other long-term employee benefits:

During the year ended 31 March 2023, the Company has incurred an expense on compensated absences amounting to Rs. 344.05 (previous year Rs. 162.20). The Company determines the expense for compensated absences basis the actuarial valuation of present value of the obligation, using the Projected Unit Credit Method.

31 Contingent liabilities and commitments (to the extent not provided for) A. Capital commitments
Particulars	31 March 2023	31 March 2022
Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for	1,490.93	1,266.76
B. Contingent liabilities
Particulars	31 March 2023	31 March 2022
a. Claims against the Company not acknowledged as debts*
- Service tax matters (refer note A below)	310.55	310.55
- Income tax matters (refer note B below)	259.79	259.08
- Demand notice against Land (Chakan & Pathredi) (refer note C below)	837.52	837.52
- Other matters	60.72	53.44
b. Guarantees given by the Company (refer note D below)	23,797.73	16,728.15

* It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of

the respective proceedings as it is determinable only on receipt of judgements / decisions pending with various forums/ authorities.

Note A:

i) Show cause notice received in respect of credit taken on freight outward for the period 2005-2006, 2016-17 and 2017-18. The reply has been submitted and personal hearing is awaited with Assistant Commissioner, Central Excise. The amount involved is Rs. 11.73 (31 March 2022: Rs. 11.73).

ii) Show cause notice received in respect of credit taken on manpower supply for the period 2005-2006 to 2014-15 (up to Feb-15). The matter is pending for personal hearing with the Additional Commissioner, Commissioner, and Joint Commissioner, Central Excise. The amount involved is Rs. 261.07 (31 March 2022: Rs. 261.07).

iii) Show cause notice received in respect of credit taken on the Services on Commercial and Industrial construction work for the period 2009-2010. The matter is pending with Additional Commissioner, Central Excise and CESTAT, Chandigarh. The amount involved is Rs. 2.11 (31 March 2022: Rs.2.11).

iv) Show cause notices received in respect of credit taken on outdoor catering & courier services for the period 2010-2011. The matter is pending with the Superintendent and Deputy Commissioner, Central excise. The amount involved is Rs. 0.50 (31 March 2022: Rs. 0.50).

v) Show cause notices received in respect of credit taken on various services such clearing and forwarding agency services, Construction and industrial Construction, repair & maintenance, travel agent, pandal, authorized service station & outward freight, for the period 2004-05 to 2016-17 (up to Mar-2017). The personal hearing attended & final order awaited from Assistant Commissioner, LTU New Delhi. The amount involved is Rs. 35.14 (31 March 2022: Rs. 35.14).

Note B:

i) In respect of assessment year 2013-14, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal has been filed with ITAT. The amount involved is Rs. 64.54 (31 March 2022: Rs. 64.54)

ii) In respect of assessment year 2014-15, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal has been filed with ITAT. The amount involved is Rs. 3.12 (31 March 2022: Rs. 3.12)

iii) In respect of assessment year 2015-16 demand was issued against certain expenses disallowed under section 35(2AB), 14A etc. The appeal has been filed with ITAT. The amount involved is Rs. 11.80 (31 March 2022: Rs.11.80).

iv) In respect of assessment year 2016-17 demand was issued against certain expenses disallowed under section 35(2AB), 14A etc. The appeal has been filed with ITAT. The amount involved is Rs. 2.50 (31 March 2022: Rs. 2.50).

v) In respect of assessment year 2014-15 demand was issued for penalty proceeding. The appeal has been filed with CIT-(Ap-peal)-22. The amount involved is Rs. 3.12 (31 March 2022: Rs. 3.12).

vi) In respect of assessment year 2017-18 demand was issued for depreciation on Intangible asset, disallowance u/s 14A, disallowance on membership fee, sponsorship fee and bad debt. The appeal has been filed with CIT (Appeal-22). The amount involved is Rs. 19.40 (31 March 2022: Rs. 19.40).

vii) In respect of assessment year 2016-17 demand was issued for disallowance of MAT credit. The appeal has been filed with ITAT. The amount involved is Rs. 63.14 (31 March 2022: Rs. 63.14).

viii) In the respect of assessment year 2013-14 demand was issued for concealment of income u/s 171(1)(c). The appeal has been filed with CIT (Appeal). The amount involved is Rs.64.54 (31 March 2022: Rs.64.54).

ix) In the respect of assessment year 2015-16 demand was issued for concealment of income u/s 171(1)(c). The appeal has been filed with CIT (Appeal). The amount involved is Rs.16.89 (31 March 2022: Rs.16.89).

x) In the respect of assessment year 2016-17 demand was issued for concealment of income u/s 171(1)(c). The appeal has been filed with CIT (Appeal). The amount involved is Rs.7.42 (31 March 2022: Rs.7.42).

xi) In the respect of assessment year 2016-17 demand was issued for concealment of income u/s 170A. The appeal has been filed with CIT (Appeal). The amount involved is Rs.1.15 (31 March 2022: Rs.1.15).

xii) In the respect of assessment year 2020-21 demand was issued for concealment of income u/s 170A. The appeal has been filed with CIT (Appeal). The amount involved is Rs.2.16 (31 March 2022: Rs. NIL).

Note C:

i) In respect of Pathredi Land, Rajasthan State Industrial Development and Investment Corporation has issued a letter dated October 23, 2015 whereby demand of Rs. 761.04 has been raised for allowing a time extension for making additional investment in the project on land allotted to the Company (31 March 2022: Rs. 761.04). The Company has filed a request letter to waive off the same.

ii) In respect of Chakan Land, Maharashtra Industrial Development Corporation has issued a letter dated March 3, 2015, asking Company to pay an additional amount aggregating to Rs. 76.48 for a further time extension (31 March 2022: Rs. 76.48). The Company is in process to file the waiver letter to Maharashtra Industrial Development Corporation.

Based on the status of cases and as advised by Company’s tax/legal advisors, wherever applicable, the management believes that the Company has strong chance of success and hence no provision against matters disclosed in “Claims against the Company not acknowledged as debts" are considered necessary.

Note D:

In relation to 32(2) above guarantee given by the Company:

To facilitate grant of financing facilities to the Company’s Joint Ventures Subsidiaries and others, Company has given Corporate Guarantees to banks. As at the year-end, the outstanding Corporate Guarantee/Stand by-Letter of Credits/ bank guarantees so given amounts to Rs. 23,797.73 (31 March 2022: Rs. 16,728.15).

C. Terms and conditions of transactions with related parties

All transactions with these related parties are priced on arm’s length basis and resulting outstanding balances at the year-end are unsecured and interest free and are to be settled in cash. The Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken in each financial year through examining the financial position of the related party and the market in which the related party operates.

34 Leases

i) The Company has lease contracts for land & building used in its operations. Generally, the Company is restricted from assigning and subleasing the leased assets. The Company also has certain leases of guest house and other equipment with lease terms of 12 months or less. The Company applies the ‘short-term lease’ recognition exemptions for these leases.

The management assessed that the fair values of short term financial assets and liabilities significantly approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, management has not disclosed fair values for financial instruments such as trade receivables, trade payables, cash and cash equivalents, other current assets, interest accrued on fixed deposits, other current liabilities etc.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

Long-term fixed-rate and variable-rate Receivables/Borrowings are evaluated by the company based on parameters such as interest Rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.

The fair value of unquoted instruments, is calculated by arriving at intrinsic value of the investee. The fair value of loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

The Company has entered into derivative financial instruments with financial institutions/ banks through Cross currency interest rate swap and principals swap.

Such derivatives are valued using valuation techniques, which employs the use of market observable inputs. Valuation technique applied by the company is Mark to Market as provided by the bank as on the date of valuation.

Discount rates used in determining fair value:

The interest rates used to discount estimated future cash flows, where applicable, are based on the discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period.

The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. In addition, the Company internally reviews valuation, including independent price validation for certain instruments.

36 Fair value hierarchy

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

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into three levels prescribed under the accounting standard.

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

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

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

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

The company has an established control framework with respect to the measurements of fair values. This includes a valuation team and has overall responsibility for overseeing all significant fair value measurements and reports directly to the Chief Financial Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

37 Financial risk management objectives and policies

The Company is primarily engaged in the manufacturing and assembling of automotive components such as lock-set, mirrors and various sheet metal components including cabins for two wheelers, four wheelers and off road vehicle industry. The Company’s principal financial liabilities, comprises loans and borrowings, trade and other payables and finance lease obligation. The main purpose of these financial liabilities is to support the Company’s operations. The Company’s principal financial assets include investments in equity, employee advances, trade and other receivables, security deposits, cash and short-term deposits that derive directly from its operations.

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

- Market risk (see (b));

- Credit risk (see (c)); and

- Liquidity risk (see (d)).

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

a) Risk Management Framework

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

The Company’s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The board provides assurance to the shareholders that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken.

The Company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and company’s activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

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

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

b) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risk: interest rate risk, currency risk, price risk, and commodity risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits, advances and derivative financial instruments.

The sensitivity analyses in the following sections relate to the position as at 31 March 2023 and 31 March 2022. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of floating to fixed interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2023.

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

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

-The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2023 and 31 March 2022.

c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with fixed interest rates.

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

The Company does not account for fixed rate financial assets or financial liabilities at fair value through profit or loss, and the company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Interest Rate sensitivity

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Currency risk

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

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

Sensitivity Analysis

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

Equity price risk

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

Credit risk

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

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a company of financial assets is impaired. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

Trade receivables of Rs. 29,300.54 lacs as at 31 March 2023 forms a significant part of the financial assets carried at amortised cost, which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk. This assessment is not based on any mathematical model but an assessment considering the nature of segment, impact immediately seen in the demand outlook of these segments and the financial strength of the customers in respect of whom amounts are receivable.

Company’s exposure to customers is diversified and some customer contributes more than 10% of outstanding accounts receivable as of 31 March 2023 and 31 March 2022 however there was no default on account of those customers in the past.

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

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses and where receivables are due for more than six months.

Exposure to credit risk

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

(c) Financial instruments and cash deposits

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

The Company places its cash and cash equivalents and term deposits with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts ongoing evaluation of the credit worthiness of the banks with which it does business. Given the high credit ratings of these banks, the Company does not expect these banks to fail in meeting their obligations. The maximum exposure to credit risk for the components of the balance sheet at 31 March 2023 and 31 March 2022 is represented by the carrying amount of each financial asset.

(d) Liquidity risk

Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

38 Capital management

The Company’s capital management objectives are:

The Board policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital employed, as well as the level of dividends to equity shareholders.

The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary.

The Company uses debt equity ratio as a capital management index and calculates the ratio as Net debt divided by total equity. Net debt and total equity are based on the amounts stated in the financial statements.

39 Segment Reporting

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

The operating segment of the Company is identified to be “Automotive components" as the CODM reviews business performance at an overall Company level as one segment.

Accordingly, as the company operates in a single business and geographical segment, the reporting requirements for primary and secondary disclosures under Indian Accounting Standard - 108 “Operating Segments" have not been provided in the standalone financial statements.

41 Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as require by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires exitence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of the international transactions entered into with the associated enterprises from 1 April 2022 and expects such records to be in existence before the due date of filing of income tax return. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the Standalone Financial Statements, particularly on the amount of tax expense and that of provision for taxation.

42 Additional Information:

i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii) The Company do not have any transactions with companies struck off.

iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

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

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

ii provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

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

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

ii provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

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

ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

xi) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

---

Mar 31, 2018

1. Gratuity and other post-employment benefit plans

A. Defined contribution plan

The Company makes contributions, determined as a specified percentage of employee salaries, towards Provident Fund, National pension scheme and Employee state insurance scheme (''ESI'') which are collectively defined as defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrued.

B. Defined benefit plan

The Company has a defined benefit gratuity plan for its employees, governed by the Payment of Gratuity Act, 1972. Every employee who has rendered at least five years of continuous service gets a gratuity on departure at the rate of fifteen days of last drawn salary for each completed year of service or part thereof in excess of 6 months. The scheme is funded with insurance companies in the form of qualifying insurance policies. Gratuity benefits are valued in accordance with the Payment of Gratuity Act, 1972. During the year, the maximum amount payable to an employee as per the Payment of Gratuity Act, 1972 has been increased from H10 Lacs to H20 Lacs.

The most recent actuarial valuation of present value of the defined benefit obligation for gratuity were carried out as at 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

2. Gratuity and other post-employment benefit plans (contd..)

Sensitivities due to mortality and withdrawals are not material and hence impact of change not calculated.

Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement.

Gratuity expense expected to be incurred in the next year is H279.14 Lacs (previous year H238.13 Lacs).

Expected maturity analysis:

Other long-term employee benefits:

During the year ended 31 March 2018, the Company has incurred an expense on compensated absences amounting to H197.03 lacs (previous year H272.60 lacs). The Company determines the expense for compensated absences basis the actuarial valuation of present value of the obligation, using the Projected Unit Credit Method.

The Company has availed Capital investment subsidy of H30 Lacs in earlier years. As per the terms and conditions, the Company has to continue production for specified number of years failing which amount of availed subsidy along with interest, penalty etc. will have to be refunded. The amount of commitment is not quantifiable.

The Company has purchased a land at Pune wherein the Company shall commence the construction on the land and commence production within three years from the date of sub lease deed.

* It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements / decisions pending with various forums/ authorities

Note A:

i) Show cause notice received in respect of credit taken on freight outward for the period 2005-2006 and 2016-2017. The reply has been submitted and personal hearing is awaited with Assistant Commissioner, Central Excise. The amount involved is RS,9.93 (31 March, 2017: RS,59.70; 1 April, 2016: H47.13).

ii) Show cause notice received in respect of credit taken on manpower supply for the period 2005-2006 to 2014-15 (up to Feb-15). The matter is pending for personal hearing with the Additional Commissioner, Commissioner, and Joint Commissioner, Central Excise. The amount involved is RS,261.07 (31 March, 2017: RS,261.07; 1 April, 2016: H261.07).

iii) Show cause notice received in respect of credit taken on the Services on Commercial and Industrial construction work for the period 2006-2007 and 2008-09 to 2010-11. The matter is pending with Additional Commissioner, Central Excise and CESTAT, Chandigarh. The amount involved is H10.35 (31 March 2017: RS,10.43, 1 April 2016: RS,10.43).

iv) Show cause notices received in respect of credit taken on outdoor catering & courier services for the period 2005-2006 to 2011

12. The matter is pending with the Superintendent and Deputy Commissioner, Central excise. The amount involved is RS,1.05 (31 March 2017: RS,1.23, 1 April 2016: RS,1.23).

v) Show cause notices received in respect of credit taken on various services such clearing and forwarding agency services, Construction and industrial Construction, repair & maintenance, travel agent, pandal, authorized service station & outward freight, for the period 2004-05 to 2016-17 (up to Mar-2017). The personal hearing attended & final order awaited from Assistant Commissioner, LTU New Delhi. The amount involved is RS,35.14 (31 March 2017: RS,40.21, 1 April 2016: H38.82).

Note B:

i) In respect of Assessment Year 2010-11, demand was raised on account of TDS benefit not given by the Assessing Authority. The rectification letter for the same been filed and the matter is pending with Assistant Commissioner of Income Tax for rectification. The amount involved is RS,7.60 (31 March 2017: RS,7.60, 1 April 2016: H7.60).

ii) In respect of Assessment Year 2010-11, Commissioner of Income Tax (Appeal), LTU ordered for the calculation of the liability for disallowances under section 14-A and referred the case to Assessing officer which is pending with the said authority. The amount involved is RS,5.10 (31 March 2017: RS,5.10, 1 April 2016: RS,5.10).

iii) In respect of Assessment Year 2011-12 & 2012-13 demand was raised due to disallowance of certain expenses and also certain penalty proceedings on the above issue. The matter is pending with Commissioner of Income Tax (Appeal), LTU and appeal is partly allowed by authority. Further appeal has been filed with ITAT. The amount involved is RS,24.61 (31 March 2017: RS,24.61, 1 April 2016: RS,164.00).

iv) In respect of Assessment Year 2011-12, demand was raised due to short payment of TDS under section 201 (1A). The matter is pending with Commissioner of Income Tax (Appeal), LTU. The amount involved is RS,12.69 (31 March 2017: RS,12.69, 1 April 2016: RS,12.69).

v) In respect of assessment year 2013-14, intimation under section 143(1) has been received in which deduction under Chapter-VIA & advance tax benefit was not given by authorities. Letter for rectification of mistake has been filed with the authorities, and the same has been rectified. The amount involved is RS, NIL (31 March 2017: RS, NIL, 1 April 2016: RS,502.43)

vi) In respect of assessment year 2013-14, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal has been filed with CIT (A)-LTU-Saket. The amount involved is H64.54 ( 31 March 2017: H NIL, 1 April 2016: H NIL)

3. Contingent liabilities and commitments (to the extent not provided for) (contd..)

vii) In respect of assessment year 2014-15, demand was issued against expenses disallowed under section 35(2AB) for which deduction under Chapter-VIA was claimed. The appeal has been filed with ITAT. The amount involved is H3.12 (31 March 2017: H NIL, 1 April 2016: H NIL)

Note C:

i) In respect of Financial Year 2000-2001, demand was raised on account of non-payment of Local Area Development Tax (LADT) by the Company. The matter is pending with Joint Excise & Taxation Commissioner (Appeals). The amount involved is H1.27 (31 March 2017: H1.27, 1 April 2016: H1.27).

ii) In respect of Financial Year 2012-13, demand was raised on account of non-issuance of proper statutory form. The appeal has been filed with The Joint Commissioner of Commercial Taxes (Appeal), Bangalore. The assessment has been completed and final order received. The amount involved is RS, Nil (31 March 2017: RS, NIL, 1 April 2016: H2.62)

iii) In respect of Financial Year 2009-10, demand was raised due to calculation mistake while calculating difference amount between Form 100 and Form 240 as per KVAT. The letter has been filed on 18th February 2016 with The Joint Commissioner of Commercial Taxes, Bangalore. The amount involved is RS, Nil (31 March 2017: RS, Nil, 1 April 2016: H2.05).

iv) In respect of Financial Year 2009-10, demand was raised on account of incorrect amount taken of Direct Export in the order. The application has been filed on 03rd February 2016 with The Joint Commissioner of Commercial Taxes, Bangalore. The amount involved is RS, Nil (31 March 2017: RS, Nil, 1 April 2016: RS,2.70)

Note D:

i) In respect of Pathredi Land, Rajasthan State Industrial Development and Investment Corporation has issued a letter dated October 23, 2015 whereby demand of H761.04 has been raised for allowing a time extension for making additional investment in the project on land allotted to the Company (31 March 2017: H761.04, 1 April 2016: H761.04). The Company has filed a request letter to waive off the same.

ii) In respect of Chakan Land, Maharashtra Industrial Development Corporation has issued a letter dated March 3, 2015, asking Company to pay an additional amount aggregating to H76.48 for a further time extension (31 March 2017: H76.48, 1 April 2016: H76.48). The Company is in process to file the waiver letter to Maharashtra Industrial Development Corporation.

Based on the status of cases and as advised by Company''s tax/legal advisors, wherever applicable, the management believes that the Company has strong chance of success and hence no provision against matters disclosed in "Claims against the Company not acknowledged as debts" are considered necessary.

Note E:

In relation to 32(2) above guarantee given by the Company:

To facilitate grant of financing facilities to the Company''s Joint Ventures and Subsidiaries, Company has given Corporate Guarantees to banks. As at the year-end, the outstanding Corporate Guarantee/Stand by-Letter of Credits so given amounts to H9,316.54 (31 March 2017: H7,879.01, 1 April 2016: H7,302.66).

4. Related party transactions

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

A. Name of Related Party and Relationship

Enterprises under common control Sanjeevani Impex Private Limited

Sandhar Intelli-Glass Solutions Limited (formerly known as SLD Auto Ancillary Limited)

Sandhar Info systems Limited Sandhar Estate Private Limited YSG Estates Private Limited Sandhar Enterprises KDB Investment Private Limited Jubin Finance & Investment Limited Raasaa Retail Private Limited Haridwar Estates Private Limited Subsidiary companies Sandhar Tooling Private Limited

PT Sandhar Indonesia (closed w.e.f. 29th August 2016)

Sandhar Technologies Barcelona S.L.

Sandhar Breniar Project, S.L.

Sandhar Technologies De Mexico S de RL de CV

Sandhar Technologies Poland sp. z o.o

Sandhar EURO Holdings B.V. (Closed on 2nd January 2017)

Sandhar Strategic System Private Limited (w.e.f. 9th September 2016) Joint Ventures Indo Toolings Private Limited

Sandhar Han Sung Technologies Private Limited

Sandhar Ecco Green Energy Private Limited

Jinyoung Sandhar Mechatronics Private Limited

Sandhar Amkin Industries Private Limited ( w.e.f. 6th September 2017)

Sandhar Daewha Automotive Systems Private Limited ( w.e.f. 20th

June 2017)

Individual owning an interest in the voting power Mr. Jayant Davar of reporting enterprise that gives them significant influence over the Company

Key Managerial Personnel Mr. Jayant Davar (Co-Chairman-cum-Managing Director)

Mr. Arvind Joshi (Whole time Director, C.F.O. & Company Secretary) Relatives of Key Managerial Personnel and relatives Mr. D. N. Davar (Chairman) of Individual owning an interest in the voting power Mrs. Monica Davar of reporting enterprise that gives them significant Master Neeljay Davar influence over the Company Mrs. Santosh Davar

Mrs. Poonam Juneja Mrs. Urmila Joshi

Enterprises over which relatives of Key Managerial Swaran Enterprises (Mrs. Santosh Davar is a Partner)

Personnel are able to exercise significant influence Shorah Realty LLP

C. Terms and conditions of transactions with related parties

All transactions with these related parties are priced on arm''s length basis and resulting outstanding balances at the year-end are unsecured and interest free and are to be settled in cash. The Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The management assessed that the fair values of short term financial assets and liabilities significantly approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, management has not disclosed fair values for financial instruments such as trade receivables, trade payables, cash and cash equivalents, other current assets, interest accrued on fixed deposits, other current liabilities etc.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

Long-term fixed-rate and variable-rate Receivables/Borrowings are evaluated by the company based on parameters such as interest Rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.

The fair value of unquoted instruments, is calculated by arriving at intrinsic value of the investee. The fair value of loans from banks and other financial liabilities, obligations under finance leases, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

The Company has entered into derivative financial instruments with financial institutions/ banks through Cross currency interest rate swap and principals swap.

Such derivatives are valued using valuation techniques, which employs the use of market observable inputs. Valuation technique applied by the company is Mark to Market as provided by the bank as on the date of valuation.

Discount rates used in determining fair value:

The interest rates used to discount estimated future cash flows, where applicable, are based on the discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period.

The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. In addition, the Company internally reviews valuation, including independent price validation for certain instruments.

5. Fair value hierarchy

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

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into three levels presecribed under the accounting standard.

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

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

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

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

The company has an established control framework with respect to the measurements of fair values. This includes a valuation team and has overall responsibility for overseeing all significant fair value measurements and reports directly to the Chief Finance Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Company''s audit committee.

The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities.

6. Financial risk management objectives and policies

The Company is primarily engaged in the manufacturing and assembling of automotive components such as lock-set, mirrors and various sheet metal components including cabins for two wheelers, four wheelers and off road vehicle industry. The Company''s principal financial liabilities, comprises loans and borrowings, trade and other payables and finance lease obligation. The main purpose of these financial liabilities is to support the Company''s operations. The Company''s principal financial assets include investments in equity, employee advances, trade and other receivables, security deposits, cash and short-term deposits that derive directly from its operations. The Company also enters into derivative transactions viz. CCIRS and Principal Swaps.

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

- Market risk (see (b));

- Credit risk (see (c)); and

- Liquidity risk (see (d)).

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

a) Risk Management Framework

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

The Company''s senior management oversee the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company. The board provides assurance to the shareholders that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken.

The Company''s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and company''s activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

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

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements

7. Financial risk management objectives and policies (contd..)

b) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises following types of risk: interest rate risk, currency risk, price risk, and commodity risk. Financial instruments affected by market risk include loans and borrowings, investment, deposits, advances and derivative financial instruments.

The sensitivity analyses in the following sections relate to the position as at 31 March 2018 and 31 March 2017.The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of floating to fixed interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at 31 March 2018.

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

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

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.

c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with fixed interest rates.

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

The Company does not account for fixed rate financial assets or financial liabilities at fair value through profit or loss, and the company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Interest Rate sensitivity

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant

Currency risk

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

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

Sensitivity Analysis

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

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

Credit risk

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

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of statements of financial position whether a financial asset or a company of financial assets is impaired. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

Company''s exposure to customers is diversified and some customer contributes more than 10% of outstanding accounts receivable as of 31st March, 2018, 31st March, 2017 and 1st April, 2016, however there was no default on account of those customers in the past.

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

The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses and where receivables are due for more than six months.

Exposure to credit risk

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

Financial instruments and cash deposits

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

The Company places its cash and cash equivalents and term deposits with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts on-going evaluation of the credit worthiness of the banks with which it does business. Given the high credit ratings of these banks, the Company does not expect these banks to fail in meeting their obligations. The maximum exposure to credit risk for the components of the balance sheet at 31 March 2018, 31 March 2017 and 01 April 2016 is represented by the carrying amount of each financial asset.

d) Liquidity risk

Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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

8. Capital management

The Company’s capital management objectives are:

The Board policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital employed, as well as the level of dividends to equity shareholders.

The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary.

The Company uses debt ratio as a capital management index and calculates the ratio as Net debt divided by total equity. Net debt and total equity are based on the amounts stated in the financial statements.

9. Segment Reporting

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

The operating segment of the Company is identified to be "Automotive components" as the CODM reviews business performance at an overall Company level as one segment. Further export turnover of the Company is less than 10% of the total turnover; therefore, disclosure relating to geographical segment is also not applicable.

Accordingly, as the company operates in a single business and geographical segment, the reporting requirements for primary and secondary disclosures under Indian Accounting Standard - 108 Operating Segment have not been provided in the financial statements.

10. Explanation of the transition to Ind AS

I. As stated in Note 2, these are the Company''s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies.

The accounting policies set out in Note 2 have been applied in preparing these financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s financial performance and cash flows.

11. Explanation of the transition to Ind AS (contd..)

Optional Exemptions applied

Ind-AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Business Combination:

Company has opted for exemption under Ind AS 101 with respect to Business Combinations whereby Company has elect not to apply Ind AS 103 retrospectively to past business combinations i.e. to (business combinations that occurred before the date of transition to Ind ASs).

b) Deemed cost exemption on Property, Plant and Equipment

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

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

c) Investment in subsidiaries:

As per the requirements of Ind AS 27, Company has opted to record its equity investment in subsidiary at cost. Ind AS 101 provides that while measuring investment at cost, an entity shall measure that investment at one of the following amounts in its separate opening Ind AS Balance Sheet:

(i) cost determined in accordance with Ind AS 27; or

(ii) deemed cost. The deemed cost of such an investment shall be its

(a) fair value at the entity''s date of transition to Ind ASs in its separate financial statements; or

(b) previous GAAP carrying amount at that date.

Accordingly, Company has opted to record its investment in subsidiary at previous GAAP carrying amount at transition date.

d) Leases:

Ind AS 101 permits that if there is any land lease newly classified as finance lease then the first time adopter may recognise assets and liability at fair value on that date; and any difference between those fair values is recognized in retained earnings.

Company has therefore classified land leases with multi decade lease periods as finance lease as on transition date.

Mandatory Exemptions availed

a) Estimates

The estimates at 1 April 2016 and at 31 March 2017 are consistent with those made for the same dates in accordance with previous GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

- Impairment of financial assets based on expected credit loss model.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2016, the date of transition to Ind AS and as of 31 March 2017.

b) Impairment of Financial asset:

As on 1 April 2016, the date of transition to Ind AS, Company is unable to determine whether there have been significant increases in credit risk since initial recognition without undue cost or effort. Company therefore recognize a loss allowance based on lifetime ECL at each reporting date until the financial instrument is derecognized.

c) Classification and measurement of financial assets

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

(i) Under Indian GAAP, the security deposits have been recorded at transaction value however under Ind AS security deposit paid, being a financial asset, has been recorded initially at fair value & subsequently at amortised cost.

i. Share Issue Expenses:

Share issue expenses pertaining to financial year 2015-16, expensed off under previous GAAP in 2016-17, has been adjusted against retained earnings as at 1 April 2016.

j. Deferred Taxes:

IGAAP requires deferred taxes recognition using income statement approach, which focuses on differences between accounting profits and taxable profits for the year. Under Ind AS 12, the Company is required to account for the deferred taxes using balance sheet approach which focuses on difference between carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 has resulted in recognition of deferred tax on new temporary differences which were not required under IGAAP. Further the Company has recognised deferred taxes on temporary differences arising from transitional adjustments in retained earnings (refer note 15). The minimum alternate Tax (MAT) has been adjusted with deferred tax liabilities while in Indian GAAP the same has been classified in loans and advances amounting to H49.71 lacs.

k. Provisions

Under Indian GAAP, proposed dividend including dividend tax are recognised in the period to which it relate, irrespective of when they are declared. In Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by the shareholders in the general meeting). In case of the company, the declaration of dividend occurs after period end. Therefore the liability recorded for dividend as at 1 April 2016 has been derecognized against retained earnings as on 1 April 2016

l. Defined benefit liabilities (net):

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

m. Other comprehensive income

Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Items that have been reclassified from Statement of Profit and Loss to Other Comprehensive Income includes remeasurement of defined benefit plans. Hence, Indian GAAP profit or loss to profit is reconciled to total comprehensive income as per Ind AS.

o. Excise duty

Under Indian GAAP, revenue from sale of goods was presented as net of excise duty. However, under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus sale of goods under Ind AS has increased by H13,475.16 lacs with a corresponding increase in Excise Duty expense.

12. Research & Development (R & D) Expenses

The Company has incurred following expenditure on its Research and Development center at Gurgaon approved and recognised by the Ministry of Science & Technology, Government of India.

*This includes amount of H26.82 which is not allowed as deduction under section 35(2AB) of Income Tax Act 1961 as R&D Expenditure