Notes to Accounts of Sansera Engineering Ltd.

Mar 31, 2025

2.14 PROVISIONS AND CONTINGENCIES

A provision is recognised when an enterprise has
a present obligation as a result of past events, it is
probable that an outflow of resources will be required
to settle the obligation and the amount can be reliably
estimated. Provisions are determined by discounting
the expected future cash flows to their present value
and are determined based on best estimate required to
settle the obligation at the balance sheet date. These
are reviewed at each balance sheet date and adjusted
to reflect the current best estimates.

Provisions for onerous contracts, i.e., contracts
where the expected unavoidable costs of meeting
the obligations under the contract exceed the
economic benefits expected to be received under it,
are recognised when it is probable that an outflow
of resources embodying economic benefits will be
required to settle a present obligation as a result of
an obligating event, based on a best estimate of such
obligation.

Contingent liabilities are disclosed when there is
a possible obligation arising from past events,

the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more
uncertain future events not wholly within 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 the
obligation or a reliable estimate of the amount cannot
be made. Contingent assets are neither recognised nor
disclosed in the standalone financial statements.

2.15 CASH FLOW STATEMENT

Cash flows are reported using the indirect method,
whereby net profit/(loss) before tax is adjusted for
the effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses
associated with investing or financing cash flows. The
cash flows from operating, investing and financing
activities of the Company are segregated.

2.16 SEGMENT REPORTING

Based on the "management approach" as defined
in Ind AS 108 - Operating Segments, Managing
Directors of the Company has been identified as the
Chief Operating Decision Maker (CODM). The CODM
evaluates the Company''s performance and allocates
resources based on single segment approach and
accordingly, information has been presented.

2.17 RECENT ACCOUNTING PRONOUNCEMENTS

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.

* During the year ended March 31,2025, the Company has issued 77,22,007 equity shares of '' 2 each fully paid up at ''
1,554 per share (including securities premium of '' 1,552 per share) to qualified institutional buyers pursuant to a Qualified
Institutional Placement (QIP), dated October 15, 2024, as per provisions of section 42 of Companies Act, 2013 read with
rule 14 of the Companies (Prospectus and Allotment of Securities) Rules 2014, and Chapter VIII of the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 which have been listed on the
Stock Exchanges on October 16, 2024.

(iii) Rights, preferences and restrictions attached to equity shares.

The Company has a single class of equity shares. Each holder of the equity share, as reflected in the records of the
Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters
submitted to vote in the Shareholders’ meeting. The dividend, if any, proposed by the Board of Directors is subject to
the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive residual assets of
the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number
of equity shares held by the shareholders or in line with the terms of the shareholders agreement as the case may be.

Promoters’ contribution and lock-in: Pursuant to Regulations 14 of the SEBI ICDR Regulations, an aggregate of the
20% of the fully diluted Post-Offer Equity Share capital of the Company held by Promoters shall be locked in for a
period of three years as minimum Promoters’ contribution ("Minimum Promoters’ Contribution") from the date of
Allotment.

(v) As at March 31, 2025, the Company has reserved 629,528 shares (March 31,2024: 1,126,702 shares) for issuance
towards outstanding employee stock option available for exercise. Refer note 42.

(vi) (a) There have been no shares allotted as fully paid up pursuant to contract without payment being received in cash

during five years immediately preceding March 31,2025.

(b) There are no shares bought back during 5 years immediately preceding March 31,2025.

Nature and purpose of other equity:

Capital redemption reserve

The capital redemption reserve is created out of undistributed profits for purchase of its own shares.

Capital reserve

Capital reserve of '' 2.39 mn refers to the subsidy received from the Government of Karnataka, Department of Industries
and Commerce in the year 1999. This subsidy was received as the Company was a small scale industry in that particular
year. It further includes '' 5.61 mn as share of pre-acquisition profit of a subsidiary at the time of acquisition by the
Company accounted as capital reserve.

Securities premium

Securities premium account comprises premium on issue of shares. The reserve is utilised in accordance with specific
provision of the Companies Act, 2013.

General reserve

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

Retained earnings

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

Share options outstanding account

The fair value of the equity-settled share based payment transactions with employees is recognised in the standalone
statement of profit and loss with corresponding credit to share options outstanding account.

Cashflow hedge reserve

Accumulated balance of the effective portion of gains/(losses) arising from hedging instruments used to manage the risk
associated with fluctuations in cash flows related to future/ forecasted transactions.

Note A: Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings
of cash flows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with
various forums/authorities. The Company has reviewed all its pending litigations and proceedings and has adeguately
provided for wherever reguired and disclosed as contingent liabilities where applicable, in these standalone financial
statements. The Company does not expect the outcomes of these proceedings to have a materially adverse effect on its
financial position.

(i) Relating to demand for service tax on labour charges, refund granted on service tax paid under reverse charge
mechanism (RCM).

(ii) Relating to demand raised by GST authorities on mismatch of GSTR 3B and GSTR 2A.

(iii) Relating to disallowance of certain expenses, additional depreciation and non-consideration of MAT (Minimum
Alternate Tax) credit.

** The Company supplied Shifter Forks to American Axle (AAM). American Axle reported failure of the product Shifter Fork
and filed a suit with South Carolina Civil Court. The Company appointed a legal firm to handle the civil suit. Following the
unsuccessful negotiations with AAM’s counsel, the Company had filed a new motion with the Court reguesting to dismiss
the lawsuit in entirety because AAM had failed to comply with the contractual terms. During the financial year March 31,
2025, a summary judgement has been passed by the Court, dismissing the claims made by AAM. Subseguent to March
31, 2025, AAM has filed an appeal against such judgement. The Company is confident of a favourable outcome and
continues to disclose the matter as a contingent liability.

Note B: Represents the amount utilised out of the corporate guarantee/standby letter of credit provided by the Company
for the Credit facilities of EURO 6.50 Million (March 31,2024 - Euro 5 Million) equivalent to maximum amount approx ''
598.59 mn, granted to Sansera Sweden AB by the Citi bank NA.

# The Honourable Supreme Court of India, in the month of February 2019 had passed a judgement relating to definition of
wages under the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the
application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the
provision for earlier periods, the Company has made a provision of '' 0.58 mn for provident fund contribution pursuant to
the judgement in the year 2018-2019 from the date of Order of the Honourable Supreme Court of India. The Company will
evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company does not
expect any material impact of the same.

@@ The Karnataka State Pollution Control Board ("KSPCB") issued a demand order dated February 17, 2020 ("Demand
Order") to the Company, demanding an amount of ''10.00 mn on the grounds that Plant 12 was not compliant with the
provisions of the Water (Prevention & Control of Pollution) Act, 1974, Air (Prevention & Control of Pollution) Act, 1981 and
rules framed under Environment (Protection) Act, 1986 in relation to noise pollution and LPG storage. The Company filed
a reply dated February 27, 2020 refuting all allegations made pursuant to the Demand Order specifying that the Company
is in compliance with all pollution regulations and laws and requesting for an opportunity to be heard in person. KSPCB
reassessed the compensation calculation notice dated July 13, 2023 to pay the revised compensation of ''12.07 mn
instead of ''10.00 mn. The Company has submitted a reply to KSPCB dated August 22, 2023. This matter is currently
pending.

The Uttarakhand Pollution Control Board ("UKPCB") issued a demand order dated March 12, 2020 ("Demand Order") to
the Company, demanding an amount of ''10.00 mn on the grounds that Plant 6 was not compliant with regulations in
relation to discharge of pollutants, issued by the UKPCB and the order of the National Green Tribunal dated November
14, 2019 ("NGT Order"). The Company filed a writ petition dated May 15, 2020 ("Writ Petition") before the High Court of
Uttarakhand to quash the Demand Order. The High Court of Uttarakhand pursuant to order dated May 18, 2020 read with
order dated July 06, 2020 noted that the NGT Order has been stayed by the Supreme Court of India, and stayed recovery
of the compensation demanded pursuant to the Demand Order until the Supreme Court of India completes adjudication
in the matter related to the NGT Order. Hon’ble Supreme Court have vacated the stay in February 2022. Consequently,
subsequent to March 31,2025, Uttarakhand Pollution Control Board issued a revised assessment order determining the
liability to ''2.10 mn. The Company has provided for ''2.10 mn as on March 31,2025.

*Excludes contribution to employee retirement/post retirement and other employee benefits which are based on
actuarial valuation done on an overall Company basis. Also excludes cost pertaining to ESOP’s given to the employees
as a part of the ESOP scheme.

** Represents the amount utilised by Sansera Sweden AB against the corporate guaratee proposed to be provided/
provided by the Company.

*** The Company has undertaken to provide necessary financial support in the form of letter of comfort to its
subsidiary ''Fitwel Tools and Forgings Private Limited’ and its associate ''MMRFIC Technology Private Limited’ to
enable the entities to obtain borrowing facility from respective banks.

Terms and conditions:

All transactions with related parties are unsecured and at arm’s length.

41 EMPLOYEE BENEFIT PLANS
A Defined contribution plan

The Company has defined contribution plan. Contributions are made to the Provident fund for employees at the
specified rate of basic salary as per regulations. The contributions are made to registered provident fund administered
by the government. The obligation of the Company is limited to the amount contributed and it has no further
contractual nor any constructive obligation.

B Defined benefit plans - Gratuity

The Company sponsors funded defined benefit plans for Qualifying employees. The defined benefit plans are
administered by a separate Fund that is legally separated from the entity. The benefit vests upon completion of
five years of continuous service and once vested it is payable to employees on retirement (Age of 58 years) or on
termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The
Company makes annual contribution to the Fund.

The following table sets out the status of the gratuity plan as required under Ind AS 19 "Employee benefits":

g) Asset liability matching strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in
which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance
Company, as part of the policy rules, makes payment of all gratuity liability occurring during the year (subject
to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash
accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company
is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in
a increase in liability without corresponding increase in the asset).

h) The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every
year, the insurance Company carries out a funding valuation based on the latest employee data provided by the
Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

42 EMPLOYEE STOCK OPTIONS

The Company has share option schemes for the permanent employees of the Company and its subsidiaries. In accordance
with the terms of the plan, as approved by shareholders, permanent employees may be granted options to purchase equity
shares.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable
by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry as per ESOP Schemes.

(a) Sansera Employee Stock Option Plan 2015

On March 12, 2015, the Board of Directors of the Company approved "Sansera Employee Stock Option Plan 2015"
("the Plan") for grant of stock options to the employees of the Company and its subsidiaries which was further ratified
by the shareholders on April 13, 2015. Further, the ESOP 2015 has been amended pursuant to resolutions passed by
the Shareholders on August 03, 2018, June 02, 2021 and August 31,2021, respectively. The vested options can be
exercised by the option holder and the shares can be allotted by the Board/Committee as specified in the Plan. The
plans are as follows:

(b) Sansera Employee Stock Option Plan 2018

The Company, pursuant to resolution passed by its shareholders dated August 08, 2018 has adopted "Sansera
Employee Stock Option Plan 2018" ("the Plan"). Further, the ESOP 2018 has been amended pursuant to resolutions
passed by the Board of Directors on April 19,2021, August 22, 2021 and Shareholders on June 02, 2021 and August 31,
2021. The aggregate number of options, which may be issued under ESOP 2018, shall be decided by the Nomination
and Remuneration Committee and shall not exceed such number of options which represents 2.50% shareholding
in the Company on a fully diluted basis as on the date of this plan. The plans are as follows:

Options under this program are granted to certain employees at an exercise price in the range of '' 744.00 - ''
1,380.05 per option. Stock options issued carry different vesting periods. It ranges from 25 to 100 percent vesting of
total options granted by the end of every one year from the grant date. All stock options shall be fully vested by the
end of 4 years from the grant date.

Fair value hierarchy

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). The derivative contracts are valued using market approach, determined
using forward exchange rates as at the balance sheet date.

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

The Company has not disclosed the fair value of financial instruments such as other non-current financial assets, trade
receivables, cash and cash equivalents, bank balances, other current financial assets, loans, borrowings, other non-current
financial liabilities, trade payables and other current financial liabilities because their carrying amounts are a reasonable
approximation of fair value.

Investments in subsidiaries and associate are not appearing as financial asset in the table above, being accounted under
Ind AS 27 (At cost), Separate Financial Statements.

The majority of costs and incomes are denominated in local currencies, which is not impacted by currency exchange
fluctuations. Some of the contracts with key export customers may not allow for price adjustments in the event of
unfavourable currency exchange rate developments. Global footprint exposes the Company to certain currency exchange
risks, arising primarily from foreign currency receivables, import of raw materials and capital goods for operations, export
of goods. The Company hedges significant portion of the net foreign exchange exposure through forward contracts.

44 FINANCIAL RISK MANAGEMENT

The Company is exposed to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

(i) Risk management framework

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

(ii) 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) and from its financing activities, including deposits with banks and others, foreign exchange
transactions and other financial instruments. The carrying amount of financial assets represents the maximum
credit exposure.

Trade receivable

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base, including
the default risk associated with the industry and country in which customers operate. In respect of trade receivables
the Company performs credit assessment for customers on an annual basis and recognises credit risk on the basis
of lifetime expected losses. (Refer note 12).

The top 5 customers generated sale of products of 49.55% during the year (March 31, 2024: 47.29%), wherein 3
customers (March 31, 2024: 3 customers) individually represented more than 10% of the revenue from sale
of products for the year. Further, 3 customers accounted for more than 28.22% (March 31, 2024: 37.67%) of the
receivables as at March 31,2025.

Cash and cash equivalents (including bank balances, fixed deposits and margin money with banks):

Credit risk on cash and cash equivalents is limited as the Company generally transacts with banks and others with
high credit ratings assigned by international and domestic credit rating agencies.

(iii) Liquidity risk

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

The working capital position of the Company is given below :

(a) As at March 31,2025, the Company had a working capital of '' 9,414.27 including cash and cash equivalents and
bank balances of '' 4,137.51 mn and current investments of '' 9.29 mn.

(b) As at March 31,2024, the Company had a working capital of '' 633.35 mn including cash and cash equivalents
and bank balances of '' 583.73 mn and current investments of '' 10.19 mn.

(iv) 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 prices comprises interest rate risk and currency rate risk. Financial instruments
affected by market risk include loans, borrowings and payables. The Company''s activities expose it to a variety of
financial risks, including effects of changes in foreign currency exchange rates and interest rate movement.

(v) 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
change in market interest rates. The Company''s exposure to risk of changes in market interest rates relates primarily
to the Company''s long term debt obligations with floating interest rates.

The Company is exposed to currency risk on certain transactions that are denominated in a currency other than
the entity’s functional currency, hence exposures to exchange rate fluctuations arise. The risk is that the functional
currency value of cash flows will vary as a result of movements in exchange rates. The Company uses forward
exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Foreign currency (FC) 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 evaluates the impact of foreign exchange rate fluctuations by
assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments.
The information on derivative instruments is as follows.

The Company determines the existence of an economic relationship between the hedging instrument and the hedged
item based on the currency, amount and timing of its forecasted cash flows. Hedge effectiveness is determined at
the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that
an economic relationship exists between the hedged item and hedging instrument, including whether the hedging
instrument is expected to offset changes in cash flows of hedged items.

The Company uses critical terms comparison to establish hedge effectiveness between hedging instrument and
hedged item. The Company takes effective portion gain/ loss of MTM revaluation of the hedging instrument to the
cashflow hedge reserve. Any hedge ineffectiveness is calculated and accounted for in standalone statement of profit
and loss at the time of the hedge relationship rebalancing.

The following table summarises activity in the cash flow hedging reserve within equity related to all derivative
instruments classified as cash flow hedges:

The related hedge transactions for balance in cash flow hedging reserves as at March 31,2025 are expected to occur
and be reclassified to the standalone statement of profit and loss over a period of 63 months.

As at March 31,2024 and 2025, there were no material gains or losses on derivative transactions or portions thereof
that have become ineffective as hedges or associated with an underlying exposure that did not occur.

CAPITAL MANAGEMENT

i The Company''s 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.

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 and implements capital structure improvement
plan when necessary.

49 SEGMENT REPORTING

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and
assessment of segment performance focuses on the types of goods or services delivered or provided. The Company is in
the business of manufacture and sale of automobile/aerospace components, which in the context of Ind AS 108 ''Segment
Information’ represents single reportable business segment. The entire operations are governed by the same set of risk
and returns. Accordingly, these operations represent a single segment. The revenues, total expenses and net profit as per
the standalone statement of profit and loss represents the revenue, total expenses and the net profit of the sole reportable
segment.

The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of
1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of
MoneyLaundering Act, 2002 (15 of 2003).

d) The Company has 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

e) The Company has no 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).

f) The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of
1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of
Money-Laundering Act, 2002 (15 of 2003)

g) The Company has not been declared wilful defaulter by any bank or financial institution or other lender.

52 The Company has used an accounting software for maintaining its books of account for the year ended March 31, 2025
which has feature of recording audit trail (edit log) facility and the same was enabled and operated throughout the year for
all relevant transactions recorded in the software except that the audit trail feature was not enabled from April 01,2024 to
May 20, 2024.

53 During the year ended March 31,2025, on account of final dividend for financial year 2023-24, the Company has incurred
a net cash outflow of '' 161.99 mn.

The Board of Directors, in their meeting held on May 27, 2025, recommended a final dividend of '' 3.25 per equity share
for the financial year ended March 31,2025. This payment is subject to the approval of shareholders in the AGM of the
Company and if approved, would result in a net cash outflow of approximately '' 201.25 mn.

54 Subsequent to the year end, during an internal review, the Company identified financial transactions involving a former
employee who was found to have engaged in forgery, cheating, and misappropriation of funds amounting to ''12.21 mn
over the period June 2023 to May 2025. The individual committed these offences by forging the signatures of Company
personnel on fabricated service invoices and unlawfully encashing the fraudulent documents.

In response, the Company has initiated legal proceedings against the former employee and the associated vendor by filing
a complaint with the police authorities in Bangalore. The Company conducted an internal assessment and also engaged
an independent external agency to conduct a detailed investigation. The agency evaluated the scale of the fraudulent
activities, identified the individuals involved, and reviewed related transactions to uncover any additional instances of
potential fraud. The total financial impact of the misconduct was as mentioned above.

55 The Company evaluated all events or transactions that occurred after March 31, 2025 up through May 27, 2025, the
date the standalone financial statements were authorised for issue by the Board of Directors. Based on this evaluation,
the Company is not aware of any events or transactions that would require recognition or disclosure in the standalone
financial statements.

56 The Audit Committiee has recommended and Board of Directors of the Company have approved these standalone financial
statements of the Company in their respective meetings held on May 27, 2025.

for and on behalf of the Board of Directors of

Sansera Engineering Limited

CIN: L34103KA1981PLC004542

S Sekhar Vasan F R Singhvi

Managing Director Joint Managing Director

DIN: 00361245 DIN: 00233146

B R Preetham Vikas Goel

Executive Director and Chief Executive Officer Chief Financial Officer

DIN: 03499506

Rajesh Kumar Modi

Place: Bengaluru Company Secretary

Date: May 27, 2025

---

Mar 31, 2024

2.14 PROVISIONS AND CONTINGENCIES

A provision is recognised when an enterprise has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are determined by discounting the expected future cash flows to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Provisions for onerous contracts, i.e., contracts where the expected unavoidable costs of meeting

the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a best estimate of such obligation.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within 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 the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the standalone financial statements.

2.15 CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby net profit/(loss) before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

2.16 SEGMENT REPORTING

Based on the "management approach" as defined in Ind AS 108 - Operating Segments, Managing Directors of the Company has been identified as the Chief Operating Decision Maker (CODM). The CODM evaluates the Company’s performance and allocates resources based on single segment approach and accordingly, information has been presented.

2.17 RECENT ACCOUNTING PRONOUNCEMENTS

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, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

(iii) Rights, preferences and restrictions attached to equity shares.

The Company has a single class of equity shares. Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the Shareholders’ meeting. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive residual assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders or in line with the terms of the shareholders agreement as the case may be.

Promoters’ contribution and lock-in: Pursuant to Regulations 14 of the SEBI ICDR Regulations, an aggregate of the 20% of the fully diluted Post-Offer Equity Share capital of the Company held by Promoters shall be locked in for a period of three years as minimum Promoters’ contribution ("Minimum Promoters’ Contribution") from the date of Allotment.

Nature and purpose of other equity:

Capital redemption reserve

The capital redemption reserve is created out of undistributed profits for purchase of its own shares.

Capital reserve

Capital reserve of '' 2.39 mn refers to the subsidy received from the Government of Karnataka, Department of Industries and Commerce in the year 1999. This subsidy was received as the Company was a small scale industry in that particular year. It further includes '' 5.61 mn as share of pre-acquisition profit of a subsidiary at the time of acquisition by the Company accounted as capital reserve.

Securities premium

Securities premium account comprises premium on issue of shares. The reserve is utilised in accordance with specific provision of the Companies Act, 2013.

General reserve

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

Retained earnings

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

Share options outstanding account

The fair value of the equity-settled share based payment transactions with employees is recognised in the standalone statement of profit and loss with corresponding credit to share options outstanding account.

Note A: Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash flows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for wherever required and disclosed as contingent liabilities where applicable, in these standalone financial statements. The Company does not expect the outcomes of these proceedings to have a materially adverse effect on its financial position.

(i) Relating to demand for service tax on labour charges, refund granted on service tax paid under reverse charge mechanism (RCM), disallowance of Excise duty rebate etc.,

(ii) Relating to demand raised by GST authorities on mismatch of GSTR 3B and GSTR 2A.

(iii) Relating to disallowance of certain expenses, additional depreciation and non-consideration of MAT (Minimum Alternate Tax) credit.

** The Company supplied Shifter Forks to American Axle (AAM). American Axle reported failure of the product Shifter Fork and filed a suit with South Carolina Civil Court. The Company appointed a legal firm to handle the civil suit. Following the unsuccessful negotiations with AAM’s counsel, the Company has filed a new motion with the Court requesting to dismiss the lawsuit in entirety because AAM had failed to comply with the contractual terms. Company, further requested the Court to hold all proceedings in abeyance until the ruling on the request to dismiss the suit in entirety comes through. Court entered an order staying all proceedings until such time as the Court can rule on motion.The management is confident of a favorable outcome and expects the settlement to be not exceeding the amount provided for (''15 mn).

Note B: The Company has proposed to provide corporate guarantee/standby letter of credit for the Credit facilities of EURO 5 mn (March 31,2023 - Euro 5 mn ) equivalent to maximum amount approx '' 400 mn, granted to Sansera Sweden AB by the Citi bank NA.

# The Honourable Supreme Court of India, in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision of '' 0.58 mn for provident fund contribution pursuant to the judgement in the year 2018-19 from the date of Order of the Honourable Supreme Court of India. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company does not expect any material impact of the same.

## As disclosed in note 4.b, the Company has invested in Clean Max Vega Power LLP (i.e., power producer) and entered into an energy supply agreement for a period of 25 years with lock in period of 5 years. Pursuant to such energy supply agreement, the Company has committed to purchase atleast 51% of the total power produced by the power producer.

@@ The Karnataka State Pollution Control Board ("KSPCB") issued a demand order dated February 17, 2020 ("Demand Order") to the Company, demanding an amount of '' 10.00 mn on the grounds that Plant 12 was not compliant with the provisions of the Water (Prevention & Control of Pollution) Act, 1974, Air (Prevention & Control of Pollution) Act, 1981 and rules framed under Environment (Protection) Act, 1986 in relation to noise pollution and LPG storage. Our Company filed a reply dated February 27, 2020 refuting all allegations made pursuant to the Demand Order specifying that the Company is in compliance with all pollution regulations and laws and requesting for an opportunity to be heard in person. KSPCB reassessed the compensation calculation notice dated July 13, 2023 to pay the revised compensation of '' 12.07 mn instead of '' 10.00 mn. The Company has submitted a reply to KSPCB dated August 22, 2023. This matter is currently pending.

The Uttarakhand Pollution Control Board ("UKPCB") issued a demand order dated March 12, 2020 ("Demand Order") to the Company, demanding an amount of '' 10.00 mn on the grounds that Plant 6 was not compliant with regulations in relation to discharge of pollutants, issued by the UKPCB and the order of the National Green Tribunal dated November 14, 2019 ("NGT Order"). The Company filed a writ petition dated May 15, 2020 ("Writ Petition") before the High Court of Uttarakhand to quash the Demand Order. The High Court of Uttarakhand pursuant to order dated May 18, 2020 read with order dated July 06, 2020 noted that the NGT Order has been stayed by the Supreme Court of India, and stayed recovery of the compensation demanded pursuant to the Demand Order until the Supreme Court of India completes adjudication

g) Asset liability matching strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity liability occurring during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

h) The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

42 EMPLOYEE STOCK OPTIONS

The Company has share option schemes for the permanent employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, permanent employees may be granted options to purchase equity shares.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry as per ESOP Schemes.

(a) Sansera Employee Stock Option Plan 2015

On March 12, 2015, the Board of Directors of the Company approved "Sansera Employee Stock Option Plan 2015" ("the Plan") for grant of stock options to the employees of the Company and its subsidiaries which was further ratified by the shareholders on April 13, 2015. Further, the ESOP 2015 has been amended pursuant to resolutions passed by the Shareholders on August 03, 2018, June 02, 2021 and August 31, 2021, respectively. The vested options can be exercised by the option holder and the shares can be allotted by the Board/Committee as specified in the Plan. The plans are as follows:

Program 1: Key management group

Options under this program are granted to certain employees at an exercise price of '' 0.14 per option. All the stock options under this program are completely vested.

The following reconciles the outstanding share options granted under employee share option plan at beginning and at the end of financial year:

(b) Sansera Employee Stock Option Plan 2018

The Company, pursuant to resolution passed by its shareholders dated August 08, 2018 has adopted "Sansera Employee Stock Option Plan 2018" ("the Plan"). Further, the ESOP 2018 has been amended pursuant to resolutions passed by the Board of Directors on April 19, 2021, August 22, 2021 and Shareholders on June 02, 2021 and August 31, 2021. The aggregate number of options, which may be issued under ESOP 2018, shall be decided by the Nomination and Remuneration Committee and shall not exceed such number of options which represents 2.50% shareholding in the Company on a fully diluted basis as on the date of this plan. The plans are as follows:

Options under this program are granted to certain employees at an exercise price in the range of '' 744.00 - '' 934.70 per option. Stock options issued carry different vesting periods. It ranges from 25 to 100 % vesting of total options granted by the end of every one year from the grant date. All stock options shall be fully vested by the end of 4 years from the grant date.

Fair value hierarchy

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The derivative contracts are valued using market approach, determined using forward exchange rates as at the balance sheet date.

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

The Company has not disclosed the fair value of financial instruments such as other non-current financial assets, trade receivables, cash and cash equivalents, bank balances, other current financial assets, loans, borrowings, other non-current financial liabilities, trade payables and other current financial liabilities because their carrying amounts are a reasonable approximation of fair value.

Investments in subsidiaries and associate are not appearing as financial asset in the table above, being accounted under Ind AS 27 (At cost), Separate Financial Statements.

The majority of costs and incomes are denominated in local currencies, which is not impacted by currency exchange fluctuations. Some of the contracts with key export customers may not allow for price adjustments in the event of unfavourable currency exchange rate developments. Global footprint exposes the Company to certain currency exchange risks, arising primarily from foreign currency receivables, import of raw materials and capital goods for operations, export of goods. The Company hedges significant portion of the net foreign exchange exposure through forward contracts.

44 FINANCIAL RISK MANAGEMENT

The Company is exposed to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

(i) Risk management framework

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

(ii) 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) and from its financing activities, including deposits with banks and others, foreign exchange transactions and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure.

Trade receivable

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In respect of trade receivables the Company performs credit assessment for customers on an annual basis and recognises credit risk on the basis of lifetime expected losses. (Refer note 11).

The top 5 customers generated revenues of 47.29% during the year (March 31,2023 : 56.17%), wherein 3 customers (March 31,2023: 3 customers) individually represented more than 10% of the revenue from sale of products for the year. Further, 3 customers accounted for more than 37.67% (March 31,2023: 36%) of the receivables as at March 31, 2024.

Cash and cash equivalents (including bank balances, fixed deposits and margin money with banks):

Credit risk on cash and cash equivalents is limited as the Company generally transacts with banks and others with high credit ratings assigned by international and domestic credit rating agencies.

(iii) Liquidity risk

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

(vi) Foreign currency risk

The Company is exposed to currency risk on certain transactions that are denominated in a currency other than the entity’s functional currency, hence exposures to exchange rate fluctuations arise. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Foreign currency (FC) 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 evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments. The information on derivative instruments is as follows.

49 SEGMENT REPORTING

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Company is in the business of manufacture and sale of automobile/aerospace components, which in the context of Ind AS 108 ''Segment Information’ represents single reportable business segment. The entire operations are governed by the same set of risk and returns. Accordingly, these operations represent a single segment. The revenues, total expenses and net profit as per the standalone statement of profit and loss represents the revenue, total expenses and the net profit of the sole reportable segment.

e) The Company has no 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).

f) The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003)

g) The Company has not been declared wilful defaulter by any bank or financial institution or other lender.

52 The Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility, however, the same has not operated throughout the year for all relevant transactions recorded in the software. The Company is in process of implementing the changes inline with the regulation.

53 During the year ended March 31,2024, on account of final dividend for financial year 2022-23, the Company has incurred a net cash outflow of '' 133.32 mn.

The Board of Directors, in their meeting held on May 16, 2024, recommended a final dividend of '' 3 per equity share for the financial year ended March 31,2024. This payment is subject to the approval of shareholders in the AGM of the Company and if approved, would result in a net cash outflow of approximately '' 160.85 mn.

54 The Company evaluated all events or transactions that occurred after March 31, 2024 up through May 16, 2024, the date the standalone financial statements were authorised for issue by the Board of Directors. Based on this evaluation, the Company is not aware of any events or transactions that would require recognition or disclosure in the standalone financial statements.

55 The Board of Directors of the Company have approved these standalone financial statements of the Company in their meeting held on May 16, 2024.

for and on behalf of the Board of Directors of Sansera Engineering Limited

CIN: L34103KA1981PLC004542

S Sekhar Vasan F R Singhvi

Managing Director Joint Managing Director

DIN: 00361245 DIN: 00233146

B R Preetham Vikas Goel

Executive Director and Chief Financial Officer

Chief Executive Officer

DIN: 03499506 Rajesh Kumar Modi

Company Secretary

Place: Bengaluru Date: May 16, 2024

---

Mar 31, 2023

# (a) It includes land of 60,786.60 square meter allocated by Karnataka Industrial Area Development (KIADB) at Plot no. 48, 2^nd Phase, Sector - 2, Bidadi Industrial Area for a period of 10 years w.e.f. 08 August 2014 to the Company on a lease cum sale basis.

(b) Karnataka Industrial Area Development Board (KIADB) has allotted land measuring 2,025 square meter at Plot no. 143-B-8 Bommasandra Industrial Area, Hebbagodi Village, Attibele Hobli, Anekal Taluk, Bengaluru 560099, Karnataka on a lease cum sale basis for a period of 11 years w.e.f. 03 December, 1999 and 1,058 square meter at Plot no. 143-B-8-Part Bommasandra Industrial Area, Hebbagodi Village, Attibele Hobli, Anekal Taluk, Bengaluru 560099, Karnataka on a lease cum sale basis for a period of 11 years w.e.f. 29 May 2001 with specified terms and conditions to be complied with by each party. KIADB has alleged / contended that as per the terms and conditions of Clause 2(r)(ii) of the Lease Cum Sale Agreement dated 17 January 2000, the original allottee should hold minimum 51 % shares in the Company till the execution of the sale deed and in view of there being a violation of the said clause by Sansera Engineering Limited (Sansera), they have issued a demand notice No. KIADB / HO / Allot / Secy - 3/ 1 2680 / 6102 / 19-20 dated 29 July 2019 calling upon Sansera to remit an additional sum of? 5,383,798. Challenging the said demand, Sansera has filed Writ Petition seeking quashing of the said demand and also directions to execute the sale deed.

Refer note 19 for details of charge over the Company’s property, plant and equipment for the borrowings taken by the Company.

The Company has a dedicated facility in Bengaluru for machine building and machine design with special purpose machines being manufactured in-house. Special purpose machines are customised machines deployed to automate industrial processes to ensure high productivity. Machinery component required for machine building process are included in capital work-in-progress.

There are no projects which are under suspension. With regard to the ongoing projects there are no projects where completion is overdue or has exceeded the cost as compared to its original plan, considering amendments as may be approved. The Projects in-progress for more than 3 years represent components which would be commonly used across various special purpose machines being manufactured in-house.

(iii) Rights, preferences and restrictions attached to equity shares.

The Company has a single class of equity shares. Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the Shareholders’ meeting. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive residual assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders or in line with the terms of the shareholders agreement as the case may be.

Promoters’ contribution and lock-in: Pursuant to Regulations 14 and 16 of the SEBI ICDR Regulations, an aggregate of the 20% of the fully diluted post-Offer Equity Share capital of the Company held by Promoters shall be locked in for a period of three years as minimum Promoters’ contribution ("Minimum Promoters’ Contribution") from the date of Allotment and the shareholding of the Promoters in excess of 20% of the fully diluted post-Offer Equity Share capital shall be locked in for a period of one year from the date of Allotment.

Share capital locked-in for one year: In terms of the Regulation 17 of the SEBI ICDR Regulations, in addition to the Equity Shares proposed to be locked-in as part of the Minimum Promoters'' Contribution, the entire pre-Offer Equity Share capital of the Company will be locked-in for a period of one year from the date of Allotment except the Equity Shares held by Client Ebene Limited and CVCIGP II Employee Ebene Limited who are SEBI registered FVCIs; and Equity Shares held by the employees of the Company (whether currently an employee or not) which have been or will be allotted to them under ESOP 2015 and ESOP 2018 scheme.

* Pursuant to the provisions of a memorandum of understanding executed between F R Singhvi and the Singhvi Family Shareholders, dated May 15, 2013, F R Singhvi is acting in trust in relation to 1,658,624 Equity Shares held by the Singhvi Family Shareholders.

(vi) As at 31 March 2023, the Company has reserved 1,767,312 shares (31 March 2022: 2,541,037 shares) for issuance towards outstanding employee stock option available for exercise. Refer note 42.

(vii) (a) There have been no shares allotted as fully paid up pursuant to contract without payment being received in cash

during five years immediately preceding 31 March 2023, except with effect from July 27, 2018, on approval of shareholders, one equity share of '' 100 each was sub-divided into 50 equity shares of '' 2 each resulting into 3,237,000 number of shares. Subsequently, the Company had issued 43,699,500 bonus shares in the proportion of 27:2.

(b) There are no shares bought back during 5 years immediately preceding 31 March 2023.

* Pursuant to the provisions of a memorandum of understanding executed between F R Singhvi and the Singhvi Family Shareholders, dated May 15, 2013, F R Singhvi is acting in trust in relation to 1,658,624 Equity Shares held by the Singhvi Family Shareholders.

The promoters of the Company are S Sekhar Vasan, F R Singhvi, Unni Rajagopal K and D Devaraj. Promoters'' contribution and lock-in: Pursuant to Regulations 14 and 16 of the SEBI ICDR Regulations, an aggregate of the 20% of the fully diluted

post-Offer Equity Share capital of the Company held by Promoters shall be locked in for a period of three years as minimum Promoters'' contribution ("Minimum Promoters'' Contribution") from the date of Allotment on September 21, 2021 and the shareholding of the Promoters in excess of 20% of the fully diluted post-Offer Equity Share capital shall be locked in for a period of one year from the date of Allotment on September 21,2021.

Share capital locked-in for one year: In terms of the Regulation 17 of the SEBI ICDR Regulations, in addition to the Equity Shares proposed to be locked-in as part of the Minimum Promoters'' Contribution, the entire pre-Offer Equity Share capital of the Company will be locked-in for a period of one year from the date of Allotment except the Equity Shares held by Client Ebene Limited and CVCIGP II Employee Ebene Limited who are SEBI registered FVCIs; and Equity Shares held by the employees of the Company (whether currently an employee or not) which have been or will be allotted to them under ESOP 2015 and ESOP 2018 schemes.

Nature and purpose of other equity:Capital redemption reserve

The capital redemption reserve is created out of undistributed profits for purchase of its own shares.

Capital reserve

Capital reserve of '' 2.39 million refers to the subsidy received from the Government of Karnataka, Department of Industries and Commerce in the year 1999. This subsidy was received as the Company was a small scale industry in that particular year. It further includes '' 5.61 million as share of pre-acquisition profit of a subsidiary at the time of acquisition by the Company accounted as capital reserve.

Securities premium

Securities premium account comprises premium on issue of shares. The reserve is utilised in accordance with specific provision of the Companies Act, 2013.

General reserve

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

Retained earnings

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

Share options outstanding account

The fair value of the equity-settled share based payment transactions with employees is recognised in the statement of profit and loss with corresponding credit to share options outstanding account.

Cash credit, working capital loan, packing credit loan from banks and others amounting to '' 2,693.06 million as at 31 March 2023 (31 March 2022: '' 2,385.34 million) are secured by hypothecation of current assets, movable fixed assets and certain immovable properties of the Company.

Working capital loan carries interest rate ranging from 5.65% p.a. to 8.6% p.a., Cash credit carries interest rate ranging from 7.1% p.a. to 8.6% p.a. and Packing credit carries interest rate ranging from 4.3% p.a. to 7.30% p.a.

The quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the unaudited books of accounts. The Company is yet to submit the revised return for the quarter ended March 31, 2023 with the banks or financial institutions based on audited books of accounts of the Company for the year ended March 31,2023.

*The Company''s exposure to currency and liquidity risk related to other current financial liabilities are disclosed in note 44.

37 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)		(Amount in '' millions)
Particulars		As at	As at
	31 March 2023		31 March 2022
Contingent liabilities # Claims against the Company not acknowledged as debts:	...............................................	......................................	......................................................................................
Excise duty, entry tax and service tax matters (Refer note A(i))		33.82	49.07
Income tax matters (Refer note A(ii))		44.18	6.36
Customer claims **		67.17	-
Other matters @@		20.00	-
Corporate guarantee for credit facility (Refer note B) Commitments ##		-	227.13
Estimated amount of contracts remaining to be executed on capital account and not provided for		515.24	740.90
Corporate guarantee for credit facility (Refer note B)		309.30	-
Investment in MMRFIC Technology Private Limited (MMRFIC) (Refer note 53)		200.00	-

Note A: Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash flows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for wherever required and disclosed as contingent liabilities where applicable, in these standalone financial statements. The Company does not expect the outcomes of these proceedings to have a materially adverse effect on its financial position.

(i) Relating to demand for service tax on labour charges, refund granted on service tax paid under reverse charge mechanism (RCM), disallowance of Excise duty rebate etc.,

(ii) Relating to disallowance of certain expenses, additional depreciation and non-consideration of MAT (Minimum Alternate Tax) credit.

** The Company supplied Shifter Forks to American Axle (AAM). American Axle reported failure of the product Shifter Fork and filed a suit with South Carolina Civil Court. The Company appointed a legal firm to handle the civil suit. The management is confident of a favorable outcome and expects the settlement to be not exceeding the amount provided for ('' 15 million). The Company is expecting a mediation process to settle the matter during financial year ending 31 March 2024.

Note B: The Company has proposed to provide corporate guarantee/standby letter of credit for the Credit facilities of EURO 3.6 Million (31 March 2022 - EURO 5 Million) equivalent to maximum amount approx '' 321.99 million, granted to Sansera Sweden AB by the Citi bank NA.

# The Honourable Supreme Court of India, in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision of '' 0.58 million for provident fund contribution pursuant to the judgement in the year 2018-2019 from the date of Order of the Honourable Supreme Court of India. The Company will

evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company does not expect any material impact of the same.

## As disclosed in note 4.b, the Company has invested in Clean Max Vega Power LLP (i.e., power producer) and entered into an energy supply agreement for a period of 25 years with lock in period of 5 years. Pursuant to such energy supply agreement, the Company has committed to purchase atleast 51% of the total power produced by the power producer.

''@@ The Karnataka State Pollution Control Board ("KSPCB") issued a demand order dated February 17, 2020 ("Demand Order") to the Company, demanding an amount of ''10.00 million on the grounds that Plant 12 was not compliant with the provisions of the Water (Prevention & Control of Pollution) Act, 1974, Air (Prevention & Control of Pollution) Act, 1981 and rules framed under Environment (Protection) Act, 1986 in relation to noise pollution and LPG storage. Our Company filed a reply dated February 27, 2020 refuting all allegations made pursuant to the Demand Order specifying that the Company is in compliance with all pollution regulations and laws and requesting for an opportunity to be heard in person. This matter is currently pending.

The Uttarakhand Pollution Control Board ("UKPCB") issued a demand order dated March 12, 2020 ("Demand Order") to the Company, demanding an amount of ''10.00 million on the grounds that Plant 6 was not compliant with regulations in relation to discharge of pollutants, issued by the UKPCB and the order of the National Green Tribunal dated November 14, 2019 ("NGT Order"). The Company filed a writ petition dated May 15, 2020 ("Writ Petition") before the High Court of Uttarakhand to quash the Demand Order. The High Court of Uttarakhand pursuant to order dated May 18, 2020 read with order dated July 6, 2020 noted that the NGT Order has been stayed by the Supreme Court of India, and stayed recovery of the compensation demanded pursuant to the Demand Order until the Supreme Court of India completes adjudication in the matter related to the NGT Order. Further, the High Court of Uttarakhand has directed the Company to apprise the UKPCB of all measure undertaken to control pollutions. Hon’ble Supreme Court have vacated the stay in February 2022. Consequently, Uttarakhand Pollution Control Board is expected to issue fresh notice of recovery of Environment Compensation by June 2023.

The Company does not have any other material commitments.

*Excludes contribution to employee retirement/post retirement and other employee benefits which are based on actuarial valuation done on an overall Company basis.

** Represents the amount utilized by Sansera Sweden AB against the corporate guaratee proposed to be provided/ provided by the Company. As at March 31,2023 the proposed Corporate Guarantee is under review by the Citi bank NA.

# The Company''s equity shares were listed on National Stock Exchange (""NSE"") and on BSE Limited (""BSE"") on 24 September 2021, by completing the Initial Public Offering (IPO) of 17,244,328 equity shares of face value of '' 2 each at an issue price of '' 744 per equity share, consisting of an offer for sale of 17,244,328 equity shares by the selling shareholders.

For the purpose of IPO, during the current financial year, the Company has incurred a cost of '' 35.51 million (31 March 2022: '' 257.98 million). As per the arrangement with the related selling shareholders, the aforesaid expenditure is borne by the respective selling shareholders. Outstanding cost recoverable as at 31 March 2023 is Nil (31 March 2022: '' 3.47 million).

Terms and conditions:

All transactions with related parties are unsecured.

41 EMPLOYEE BENEFIT PLANS A Defined contribution plan

The Company has defined contribution plan. Contributions are made to the Provident fund for employees at the specified rate of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

B Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by a separate Fund that is legally separated from the entity. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement (Age of 58 years) or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the Fund.

In respect of the above plans, the most recent actuarial valuation of the present value of the defined benefit obligation were carried out as at 31 March 2023 by an independent member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

g) Asset liability matching strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity liability occurring during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

h) The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

42 EMPLOYEE STOCK OPTIONS

The Company has share option schemes for the permanent employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, permanent employees may be granted options to purchase equity shares.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry as per ESOP Schemes.

(a) Sansera Employee Stock Option Plan 2015

On March 12, 2015, the Board of Directors of the Company approved "Sansera Employee Stock Option Plan 2015" ("the Plan") for grant of stock options to the employees of the Company and its subsidiaries which was further ratified by the shareholders on April 13, 2015 Further, the ESOP 2015 has been amended pursuant to resolutions passed by the Shareholders on August 03, 2018, June 02, 2021 and August 31, 2021, respectively. The vested options can be exercised by the option holder and the shares can be allotted by the Board/Committee as specified in the Plan. The plans are as follows:

Programme 1: Key management group

Options under this programme are granted to certain employees at an exercise price of '' 0.14 per option. The entire stock options are completely vested.

* The options granted during the year have been vested over the period of one year from the date of grant.

During the year ended 31 March 2023, shares were exercised on 23 May 2022, 28 September 2022 and 28 February 2023. The share price on the date of exercise was '' 733.90, '' 711.80 and '' 728.5 respectively.

Measurement of fair values

Black-Scholes Option Pricing Model is used to value the fair value of the stock options. The fair value of the options and the inputs used in the measurement of the grant-date fair values of the equity-settled share based payment plans are as follows:

(b) Sansera Employee Stock Option Plan 2018

The Company, pursuant to resolution passed by its shareholders dated August 08, 2018 has adopted "Sansera Employee Stock Option Plan 2018" ("the Plan"). Further, the ESOP 2018 has been amended pursuant to resolutions passed by the Board of Directors on 19 April 2021 and 22 August 2021 and Shareholders on 02 June 2021 and 31 August 2021. The aggregate number of options, which may be issued under ESOP 2018, shall be decided by the Nomination and Remuneration Committee and shall not exceed such number of options which represents 2.50% shareholding in the Company on a fully diluted basis as on the date of this plan. The plans are as follows:

Options under this programme are granted to certain employees at an exercise price of '' 744 per option. Stock options issued carry different vesting periods. It ranges from 25 to 100 percent vesting of total options granted by the end of every one year from the grant date. All stock options shall be fully vested by the end of 4 years from the grant date.

The following reconciles the outstanding share options granted under employee share option plan at beginning and at the end of financial year:

Fair value hierarchy

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The derivative contracts are valued using market approach, determined using forward exchange rates as at the balance sheet date.

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

The Company has not disclosed the fair value of financial instruments such as other non-current financial assets, trade receivables, cash and cash equivalents, bank balances, other current financial assets, loans, borrowings, other non-current financial liabilities, trade payables and other current financial liabilities because their carrying amounts are a reasonable approximation of fair value.

Investments in subsidiaries are not appearing as financial asset in the table above, being accounted under Ind AS 27, Separate Financial Statements.

The majority of costs and incomes are denominated in local currencies, which is not impacted by currency exchange fluctuations. Some of the contracts with key export customers may not allow for price adjustments in the event of unfavourable currency exchange rate developments. Global footprint exposes the Company to certain currency exchange risks, arising primarily from foreign currency receivables, import of raw materials and capital goods for operations, export of goods and non-Indian rupee denominated borrowings. The Company hedges significant portion of the net foreign exchange exposure through forward contracts and non-Indian rupee denominated loans.

44 FINANCIAL RISK MANAGEMENT

The Company is exposed to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

(i) Risk management framework

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

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) and from its financing activities, including deposits with banks and others, foreign exchange transactions and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure.

Trade receivable

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In respect of trade receivables the Company performs credit assessment for customers on an annual basis and recognises credit risk on the basis of lifetime expected losses. (Refer note 11).

The top 5 customers generated revenues of 56.17% during the year (31 March 2022 : 57.12%), wherein 3 customers ( 31 March 2022: 3 customers) individually represented more than 10% of the revenue from sale of products for the year. Further, 3 customers accounted for more than 36% of the receivables as at 31 March 2023.

Cash and cash equivalents (including bank balances, fixed deposits and margin money with banks):

Credit risk on cash and cash equivalents is limited as the Company generally transacts with banks and others with high credit ratings assigned by international and domestic credit rating agencies.

(iii) Liquidity risk

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

The working capital position of the Company is given below :

As at 31 March 2023, the Company had a working capital of '' 1,398.69 million including cash and cash equivalents and bank balances of '' 469.57 million and current investments of '' 6.73 million. As at 31 March 2022, the Company had a working capital of '' 1,083.76 million including cash and cash equivalents and bank balances of '' 385.79 million and current investments of '' 5.97 million.

(iv) 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 prices comprises interest rate risk and currency rate risk. Financial instruments affected by market risk include loans, borrowings and payables. The Company’s activities expose it to a variety of financial risks, including effects of changes in foreign currency exchange rates and interest rate movement.

(v) 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 change in market interest rates. The Company’s exposure to risk of changes in market interest rates relates primarily to the Company’s long term debt obligations with floating interest rates.

Interest rate sensitivity:

Sensitivity analysis for fixed-rate instruments

There is no impact on the profit or loss on account of fixed rate instruments.

Cash flow sensitivity analysis for variable-rate instruments

The sensitivity analysis below have been determined based on exposure to interest rate. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the year was outstanding for the whole year. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

The Company is exposed to currency risk on certain transactions that are denominated in a currency other than the entity''s functional currency, hence exposures to exchange rate fluctuations arise. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Foreign currency (FC) 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 evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments. The information on derivative instruments is as follows.

45 CAPITAL MANAGEMENT

The Company’s 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.

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 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 standalone financial statements.

49 SEGMENT REPORTING

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Company is in the business of manufacture and sale of automobile/aerospace components, which in the context of Ind AS 108 ‘Segment Information'' represents single reportable business segment. The entire operations are governed by the same set of risk and returns. Accordingly, these operations represent a single segment. The revenues, total expenses and net profit as per the standalone statement of profit and loss represents the revenue, total expenses and the net profit of the sole reportable segment.

(i) Geographical information

Geographic segmentation is based on business sourced from specific geographic regions. Other foreign countries comprises all other places except India, Europe and USA:

51 The Company has considered various internal and external sources consisting of feedback from the customers and the market trends, up to the date of approval of the standalone financial statements in determining the impact, if any, arising from the pandemic on various elements of its standalone financial statements. The Company has used the principles of prudence in applying judgments, estimates and assumptions and based on its current estimates, the Company expects to recover the carrying value of its financial and non-financial assets, including tangible assets and meet its financial obligations in the normal course of business. The eventual outcome of the possible impact of the pandemic may be different from that estimated as on the date of approval of these standalone financial statements. The Company will continue to monitor any material changes to future economic conditions and consequential impact on its standalone financial statements.

52 ADDITIONAL REGULATORY INFORMATION:

a) There are no transactions or balances with Companies which have been removed from the Register of Companies (Struck off Companies), during the year ended/as at 31 March 2023.

b) The Company has not traded/invested in Cryptocurrency/Virtual currency.

c) The Company has 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

d) The Company has 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

e) The Company has no 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).

53 On 29 March 2023, the Company had entered into a definitive agreement for a strategic investment in MMRFIC Technology Private Limited (MMRFIC). As per the terms of the agreement, the Company would make an investment of '' 200 million in 149,250 Compulsorily Convertible Preference Shares (CCPS) of '' 100 each with a premium of '' 1,240 per CCPS; and 17 Equity Shares of Re.1 each with a premium of '' 599 per Equity Share, for an approximate 21% stake in MMRFIC and has right to invest and increase stake up to 51% at a predefined valuation formula. Subsequent to the year end, the Company has made an investment of '' 50 million.

54 During the year ended 31 March 2023, on account of final dividend for financial year 2021-22, the Company has incurred a net cash outflow of '' 105.26 million.

The Board of Directors, in their meeting held on 22 May 2023, recommended a final dividend of '' 2.5 per equity share for the financial year ended 31 March 2023. This payment is subject to the approval of shareholders in the AGM of the Company and if approved, would result in a net cash outflow of approximately '' 132.36 million.

55 The Board of Directors of the Company have approved these standalone financial statements of the Company in their meeting held on 22 May 2023.

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Mar 31, 2022

The Company has a dedicated facility in Bengaluru for machine building and machine design with special purpose machines being manufactured in-house. Special purpose machines are customised machines deployed to automate industrial processes to ensure high productivity. Machinery component required for machine building process are included in capital work-inprogress.

There are no projects which are under suspension. With regard to the ongoing projects there are no projects where completion is overdue or has exceeded the cost as compared to its original plan, considering amendments as may be approved. The Projects in-progress for more than 3 years represent components which would be commonly used across various special purpose machines being manufactured in-house.

The Company has a single class of equity shares. Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the Shareholders’ meeting. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive residual assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders or in line with the terms of the shareholders agreement as the case may be.

The promoters of the Company are S Sekhar Vasan, F R Singhvi, Unni Rajagopal K and D Devaraj. Promoters'' contribution and lock-in: Pursuant to Regulations 14 and 16 of the SEBI ICDR Regulations, an aggregate of the 20% of the fully diluted post-Offer Equity Share capital of the Company held by Promoters shall be locked in for a period of three years as minimum Promoters'' contribution ("Minimum Promoters'' Contribution") from the date of Allotment on 21 September, 2021 and the shareholding of the Promoters in excess of 20% of the fully diluted post Offer Equity Share capital shall be locked in for a period of one year from the date of Allotment on 21 September, 2021. Share capital locked-in for one year: In terms of the Regulation 17 of the SEBI ICDR Regulations, in addition to the Equity Shares proposed to be locked-in as part of the Minimum Promoters'' Contribution, the entire pre-Offer Equity Share capital of the Company will be locked-in for a period of one year from the date of Allotment except the Equity Shares held by Client Ebene Limited and CVCIGP II Employee Ebene Limited who are SEBI registered FVCIs; and Equity Shares held by the employees of the Company (whether currently an employee or not) which have been or will be allotted to them under ESOP 2015 and ESOP 2018 schemes.

Compulsorily Convertible Preference Shares (CCPS) - [Series A and Series B]

Dividend rights

In accordance with the share subscription agreement dividend shall be equal to 0.0001 % per annum of the face value of the CCPS [Series A and Series B]. In any given financial year, the Company may not declare any dividend or other distribution to its holders of equity shares unless it has first declared the preferential dividend for such financial year to the holders of the CCPS [Series A and Series B]. The dividends are non-cumulative.

Conversion of preference shares

CCPS [Series A and Series B] is convertible, on the expiry of 20 (twenty) years from the completion date respectively (7 July, 2033) and into a fixed share entitlement ratio as defined in the share subscription agreement (SSA) or earlier of events as defined in SSA. The equity shares issued to the holders of the CCPS [Series A and Series B] pursuant to conversion shall be free of all encumbrances and shall (i) be fully-paid up, (ii) be transferable to any person in accordance with the terms of the agreement, (iii) carry full voting rights, and (iv) rank pari-passu in every respect with other ordinary fully paid up equity shares. The Company in its meeting of the Board of Directors held on 3 September, 2021, converted 300,000 Series A Compulsorily Convertible Preference Shares and 750,000 Series B Compulsorily Convertible Preference Shares into 4,439,900 and 1,450 equity shares respectively for '' 2 per equity share.

Nature and purpose of other equity:

Capital redemption reserve

The capital redemption reserve is created out of undistributed profits for purchase of its own shares.

Capital reserve

Capital reserve of '' 2.39 mn refers to the subsidy received from the Government of Karnataka, Department of Industries and Commerce in the year 1999. This subsidy was received as the Company was a small scale industry in that particular year. It further includes '' 5.61 mn as share of pre-acquisition profit of a subsidiary at the time of acquisition by the Company accounted as capital reserve.

Securities premium

Securities premium account comprises premium on issue of shares. The reserve is utilised in accordance with specific provision of the Companies Act, 2013.

General reserve

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

Retained earnings

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

Share options outstanding account

The fair value of the equity-settled share based payment transactions with employees is recognised in the statement of profit and loss with corresponding credit to share options outstanding account.

Note A: Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash flows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for wherever required and disclosed as contingent liabilities where applicable, in these standalone financial statements. The Company does not expect the outcomes of these proceedings to have a materially adverse effect on its financial position.

(i) Relating to demand for service tax on labour charges, refund granted on service tax paid under reverse charge mechanism (RCM), disallowance of Excise duty rebate etc.,

(ii) Relating to disallowance of certain expenses, additional depreciation and non-consideration of MAT (Minimum Alternate Tax) credit.

Note B: The Company has provided corporate guarantee/standby letter of credit for the Credit facilities of EURO 5 mn equivalent to maximum amount approx. '' 400 mn granted to Sansera Sweden AB, subsidiary by Citibank.

# The Honourable Supreme Court of India, in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the application of the judgement retrospectively. Based on the legal advice and in the absence of reliable measurement of the provision for earlier periods, the Company has made a provision of '' 0.58 mn for provident fund contribution pursuant to the judgement in the year 2018-2019 from the date of Order of the Honourable Supreme Court of India. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company does not expect any material impact of the same.

## As disclosed in note 4.b, the Company has invested in Clean Max Vega Power LLP (i.e., power producer) and entered into an energy supply agreement for a period of 25 years with lock in period of 5 years. Pursuant to such energy supply agreement, the Company has committed to purchase atleast 51% of the total power produced by the power producer.

The Company does not have any other material commitments.

B Defined benefit plans

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by a separate Fund that is legally separated from the entity. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement (Age of 58 years) or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the Fund.

The following table sets out the status of the gratuity plan as required under Ind AS 19 "Employee benefits":

g) Asset liability matching strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity liability occurring during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

h) The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

~| EMPLOYEE STOCK OPTIONS

The Company has share option schemes for the permanent employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, permanent employees may be granted options to purchase equity shares.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry as per ESOP Schemes.

(a) Sansera Employee Stock Option Plan 2015

On 12 March, 2015, the Board of Directors of the Company approved "Sansera Employee Stock Option Plan 2015" ("the Plan") for grant of stock options to the employees of the Company and its subsidiaries which was further ratified by the shareholders on 13 April, 2015 Further, the ESOP 2015 has been amended pursuant to resolutions passed by the Shareholders on 3 August, 2018, 2 June, 2021 and 31 August, 2021, respectively. The vested options can be exercised by the option holder and the shares can be allotted by the Board/Committee as specified in the Plan. The plans are as follows:

Program 1: Key management group

Options under this program are granted to certain employees at an exercise price of '' 0.14 per option. The entire stock options are completely vested.

(b) Sansera Employee Stock Option Plan 2018

The Company, pursuant to resolution passed by its shareholders dated 8 August, 2018 has adopted "Sansera Employee Stock Option Plan 2018" ("the Plan"). Further, the ESOP 2018 has been amended pursuant to resolutions passed by the Board of Directors on 19 April, 2021 and 22 August, 2021 and Shareholders on 2 June, 2021 and 31 August, 2021. The aggregate number of options, which may be issued under ESOP 2018, shall be decided by the Nomination and Remuneration Committee and shall not exceed such number of options which represents 2.50% shareholding in the Company on a fully diluted basis as on the date of this plan. The plans are as follows:

Options under this program are granted to certain employees at an exercise price of '' 744 per option. Stock options issued carry different vesting periods. It ranges from 25 to 100 % vesting of total options granted by the end of every one year from the grant date. All stock options shall be fully vested by the end of 4 years from the grant date.

Fair value hierarchy

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The derivative contracts are valued using market approach, determined using forward exchange rates as at the balance sheet date.

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

The Company has not disclosed the fair value of financial instruments such as other non-current financial assets, trade receivables, cash and cash equivalents, bank balances, other current financial assets, loans, borrowings, other non-current financial liabilities, trade payables and other current financial liabilities because their carrying amounts are a reasonable approximation of fair value.

Investments in subsidiaries are not appearing as financial asset in the table above, being accounted under Ind AS 27, Separate Financial Statements.

The majority of costs and incomes are denominated in local currencies, which is not impacted by currency exchange fluctuations. Some of the contracts with key export customers may not allow for price adjustments in the event of unfavourable currency exchange rate developments. Global footprint exposes the Company to certain currency exchange risks, arising primarily from foreign currency receivables, import of raw materials and capital goods for operations, export of goods and non-Indian rupee denominated borrowings. The Company hedges significant portion of the net foreign exchange exposure through forward contracts and non-Indian rupee denominated loans.

4^ FJ.NAMQIALAISK.MANAGEMJNT

The Company is exposed to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

(i) Risk management framework

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

(ii) 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) and from its financing activities, including deposits with banks and others, foreign exchange transactions and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure.

Trade receivable

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In respect of trade receivables the Company performs credit assessment for customers on an annual basis and recognises credit risk on the basis of lifetime expected losses. (Refer note 11).

The top 5 customers generated revenues of 57.12% during the year (31 March, 2021 : 62.5%), wherein 3 customers ( 31 March, 2021: 3 customers) individually represented more than 10% of the revenue for the year. Further, 3 customers accounted for more than 31% of the receivables as at 31 March, 2022.

Cash and cash equivalents (including bank balances, fixed deposits and margin money with banks):

Credit risk on cash and cash equivalents is limited as the Company generally transacts with banks and others with high credit ratings assigned by international and domestic credit rating agencies.

(iii) Liquidity risk

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

The working capital position of the Company is given below :

As at 31 March, 2022, the Company had a working capital of '' 1,083.76 mn including cash and cash equivalents and bank balances of '' 385.79 mn and current investments of '' 5.97 mn. As at 31 March, 2021, the Company had a working capital of '' 551.13 mn including cash and cash equivalents and bank balances of '' 398.03 mn and current investments of '' 5.58 mn. The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted:

(iv) 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 prices comprises interest rate risk and currency rate risk. Financial instruments affected by market risk include loans, borrowings and payables. The Company''s activities expose it to a variety of financial risks, including effects of changes in foreign currency exchange rates and interest rate movement.

(v) 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 change in market interest rates. The Company''s exposure to risk of changes in market interest rates relates primarily to the Company''s long term debt obligations with floating interest rates.

(vi) Foreign currency risk

The Company is exposed to currency risk on certain transactions that are denominated in a currency other than the entity''s functional currency, hence exposures to exchange rate fluctuations arise. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

5^ SEGMENT REPORTING

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Company is in the business of manufacture and sale of automobile/aerospace components, which in the context of Ind AS 108 ''Segment Information’ represents single reportable business segment. The entire operations are governed by the same set of risk and returns. Accordingly, these operations represent a single segment. The revenues, total expenses and net profit as per the standalone statement of profit and loss represents the revenue, total expenses and the net profit of the sole reportable segment.

(i) Geographical information

Geographic segmentation is based on business sourced from specific geographic regions. Other foreign countries comprises all other places except India, Europe and USA:

The Company has considered various internal and external sources consisting of feedback from the customers and the market trends, up to the date of approval of the Standalone financial statements in determining the impact, if any, arising from the pandemic on various elements of its Standalone financial statements. The Company has used the principles of prudence in applying judgments, estimates and assumptions and based on its current estimates, the Company expects to recover the carrying value of its financial and non-financial assets, including tangible assets and meet its financial obligations in the normal course of business. The eventual outcome of the possible impact of the pandemic may be different from that estimated as on the date of approval of these Standalone financial statements. The Company will continue to monitor any material changes to future economic conditions and consequential impact on its Standalone financial statements.

The Code on Social Security, 2020 ("the Code) which would impact the contributions by the Company towards Provident Fund and Gratuity has received Presidential assent in September 2020. The Code have been published in the Gazette of India. However, the date from which the Code will come into effect has not been notified. The Company will complete its evaluation and will give appropriate impact in its standalone financial statements in the period in which the Code becomes effective and the related rules are published.

5^ ADDITIONAL REGULATORY INFORMATION:

a) There are no transactions or balances with Companies which have been removed from the Register of Companies (Struck off Companies), during the year ended/as at 31 March, 2022.

b) The Company has not traded/invested in Cryptocurrency/Virtual currency.

c) The Company has 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

d) The Company has 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

e) The Company has no 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).

55

The Board of Directors have recommended final dividend of '' 2 per equity share having face value of '' 2 each for the year ended 31 March, 2022, subject to approval of shareholders.

56

The Board of Directors of the Company have approved these Standalone Financial Statements of the Company in their meeting held on 23 May, 2022.