Notes to Accounts of Sharda Motor Industries Ltd.

Mar 31, 2023

Trade Receivables, Contract Balances

For Trade Receivables, Refer note no. 13.

Further, the Company has no contracts where the period between the transfer of the promised goods or services to the customer and payment terms by the customer exceeds one year. In light of above;

- it does not adjust any of the transaction prices for the time value of money, and

- there is no unbilled revenue as at March 31, 2023.

Further, the company doesn''t have any contract liabilities as at March 31, 2023 and March 31, 2022 Unsatisfied performance obligations:

Information about the Company’s performance obligations are summarised below:

Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.

Sales of services: The performance obligation in respect of maintenance services is satisfied over a period of time and acceptance of the customer. In respect of these services, payment is generally due upon completion of service based on time elapsed and acceptance of the customer.

The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Group will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the Group believes the impact of the change will not be significant.

Note 37 : Gratuity and other post-employment benefit plans

a) Defined contribution plans

The Company makes contribution towards Employees Provident Fund, Employee''s State Insurance scheme and Employee Welfare Fund. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The contributions are made to registered funds 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. The Company during the year recognised the following amount in the Standalone Statement of profit and loss account under Company''s contribution to defined contribution plan:

b) Defined benefit plans

In accordance with Ind AS 19 "Employee benefits", an actuarial valuation on the basis of "Projected Unit Credit Method" was carried out, through which the Company is able to determine the present value of obligations. "Projected Unit Credit Method” recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation.

i) Gratuity scheme

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The employee''s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of services as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation.

ii) Compensated absences

The Company operates compensated absences plan wherein every employee is entitled to the benefit equivalent to 26 days leave salary for every completed year of service subject to maximum 45 accumulations of leaves. The salary for calculation of earned leave is last drawn salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee. Short term compensated absences are recognised in the standalone statement of profit and loss on the basis of actual liability and long term compensated absences are recognised on the basis of actuary valuation which is an unfunded defined benefit plan.

These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest Risk

The plan expose the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Note 40: Contingent Liabilities and Commitments

(a) Contingent Liabilities (to the extent not provided for)

I The Company has reviewed all its pending claims, litigations and other proceedings and has adequately provided for wherever required. However, wherever it is difficult for the Company to estimate the timings of cash outflows, if any, in respect of the below as it is determinable only on receipt of judgement/decisions pending with various forums/authorities, the Company has disclosed the same as Contingent Liabilities (pending resolution of the respective proceedings).

The Company does not expect the outcome of these proceedings to have a material or adverse effect on financial position of the Company. Also, the Company does not expect any reimbursements in respect of the below contingent liabilities.

Particulars	As At March 31, 2023	As At March 31, 2022
i) Disputed State Tax Matters	665.38	665.38
ii) Disputed Service Tax Matters	16.96	16.96
iii) Disputed GST Matters	24.37	24.37
iv) Disputed Income Tax Matters	385.00	397.61
v) Disputed Central Excise Matters	440.00	440.00

Particulars	As At March 31, 2023	As At March 31, 2022
vi) Bill discounting	3,524.85	2,773.57
vii) Dispute with Vendor	132.25	6.96
viii) Disputed EPFA demand	18.31	-
ix) Others II Irrevocable Letter of credit outstanding wiith Banks		6.86
i) With Foreign LC	2,054.71	1,635.89
ii) With Inland LC	8,723.28	2,504.30
Note: Letter of Credit above includes amount relating to outstanding of under LC/Buyer''s Credit/ DRUL bills under collection: Foreign LC - March 31, 2023 : ''154.77 Lakh (March 31, 2022 : Nil) Inland LC - March 31, 2023 : ''654.60 lakh (March 31, 2022 : Nil) (b) Commitments
Particulars	As At March 31, 2023	As At March 31, 2022
Capital Commitment Estimated amount of contracts remaining to be executed on the capital account (net of capital advances of March 31, 2023: '' 537.01 lakh (March 31, 2022 : '' 273.16 lakh)) The Company does not have any other long term Commitments or material non cancellable contractual commitments, which may have a material impact on the standalone financial statement.	589.74	1,874.42

Note 42 : Segment Information

1. In line with the provision of Ind AS 108- Operating Segments and on the basis of review of operations being done by the board of directors of the Company (which has been identified as the Chief Operating Decision Maker (CODM) who evaluates the Company''s performance, allocates resources based on the analysis of the various performance indicator of the Company as a single unit), the operations of the Company falls under manufacturing & trading of auto component parts, which is considered to be the only reportable segment.

2. Major Customer: Revenue from 3 customers (March 31, 2022, 3 customers) of the Company''s manufacturing & trading business are '' 225,337 lakh (March 31, 2022 '' 176,418 lakh) which is more than 10% of the Company''s total revenue. No other single customer contributed 10% or more to the Company''s revenue for both March 31, 2023 and March 31, 2022.

Note 43 : Fair value measurements

I Financial instruments

a) Financial instruments by category

Except Investment in tax free bond and investment in mutual funds which are measured at fair value through profit or loss, all other financial assets and liabilities viz. trade receivables, security deposits, cash and cash equivalents, other bank balances, interest receivable, other receivables, trade payables, employee related liabilities and advances, are measured at amortised cost.

b) Fair value hierarchy

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

The following table shows the carrying amounts and fair values of financial assets and financials liabilities, including their levels of in the fair value hierarchy:

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

d) Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

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

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

There have been no transfers in either direction for the year ended 31 March 2023 and 31 March 2022.

e) Fair value of financial assets and liabilities measured at amortised cost

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

For other financial liabilities/ assets that are measured at fair value, the carrying amounts are equal to the fair values.

*Discount rate used in determining fair value

The interest rate used to discount estimated future cash flows, where applicable, are based on the incremental borrowing rate of borrower which in case of financial liabilities is average market cost of borrowings of the company and in case of financial asset is the average market rate of similar credit rated instrument. The company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available.

Note 44 : Capital Management

Equity share capital and other equity are considered for the purpose of Company''s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders and benefits for other stakeholders. The capital structure of the Company is based on management''s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure. During the year, Company had paid '' 8.15 (March 31, 2021: '' 2.63) per equity share as final dividend for the year ended March 31, 2022. In addition to the above dividend, subsequant to year end the Directors have recommended the payment of a final dividend of '' 17.27 (March 31, 2022: '' 8.15) per equity share. The propose dividend is subject to the approval of share holders in the ensuing annual gerneral meeting.

The Company''s policy is to maintain a strong capital base so as to maintain confidence of investors, bankers, customers and vendors and to sustain future development of the business. The management monitors the return on capital and also monitors capital using a a gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises of total lease laibility less cash and cash equivalents.Equity includes equity share capital and reserves that are managed as capital. The gearing ratio at the end of reporting periods were

Note 45 : Financial Risk Management objectives and policies

The company’s principal financial liabilities other than derivatives comprise trade and other payables, employees related payables, interest accrued, unpaid dividend, security deposit, capital creditors and others. The main purpose of these financial liabilities is to finance the company’s operations and to provide guarantees to support its operations.

The company’s principal financial assets includes Investment in mutual funds, security deposits, trade receivables, cash and cash equivalents, deposits with banks, interest accrued in deposits, receivables from related and other parties and interest accrued thereon.

The company has exposure to the following risks arising from financial instruments:

- Market risk

- Credit risk

- Liquidity risk

The company''s senior level management assess these risks and is supported by Treasury department that advises on the appropriate financial risk governance framework.

A. Credit Risk

Credit risk is the risk that counterparty will default on its contractual obligations resulting in finance loss to the company. Credit risk arise from Cash and cash equivalents, deposit with banks, trade receivables and other financial assets measure at amortised cost. The company continuously monitors defaults of customers and other counterparties and incorporate this information into its credit risk control.

(i) Trade Receivables

The company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The credit risk is managed by the company based on credit approvals, establishing credit limits and continuosly monitoring the credit worthiness of the customers, to whom the company grants credit period in the normal course of business inlcuding taking credit insurance against export receivables. The company uses expected credit loss model to assess the impairement loss in trade receivables and makes an allowance of doubtful trade receivables using this model.

(ii) Other Financial Assets: The company maintains exposure in cash & cash equivalents, term deposits with banks, investments, advances and security deposits etc. Credit risk from balances with banks and investment in mutual funds is managed by the Company’s treasury department in accordance with the company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the company’s finance committee. The company''s maximum exposure to the credit risk as at March 31, 2023 and March 31, 2022 is the carrying value of each class of financial assets.

B. Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

The Company’s objective is to, maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system.

C. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the company''s income. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. The objective of market risk management is to manage and control market risk exposures withing acceptables parameters, while optimising the return. The Board of Directors is responsible for setting up the policies and procedures to manage risks of the company.

i) Foreign Currency risk

The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than entity''s funactional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The following tables demonstrate the sensitivity (strengthening or weakening of Indian Rupee) to a reasonably possible change in exchange rates, with all other variables held constant.

Note 48:

Pursuant to transfer pricing legislations under the Income-tax Act, 1961, the Company is required to use specified methods for computing arm’s length price in relation to specified international transactions with its associated enterprises. Further, the Company is required to maintain prescribed information and documents in relation to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed.The Company is in the process of updating its transfer pricing documentation for the current financial year. Based on the preliminary assessment, the management is of the view that the update would not have a material impact on the tax expense recorded in these standalone financial statements.

Accordingly, these standalone financial statements do not include any adjustments for the transfer pricing implications, if any.

Note 49:

No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

The Company has not received any fund from any party (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entity identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note 50: Disclosure of transactions with struck off companies

The company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the financial years.

Note 51:

A) No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:

(a) Crypto Currency or Virtual Currency

(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder

(c) Registration of charges or satisfaction with Registrar of Companies except charges mentioned in note 21(ii) of the standalone financial statements.

(d) Relating to borrowed funds:

i) Wilful defaulter

ii) Utilisation of borrowed funds & share premium

iii) Borrowings obtained on the basis of security of current assets

iv) Discrepancy in utilisation of borrowings

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Mar 31, 2018

Note 1: Corporate Information

Sharda Motor Industries Limited (“the Company”) is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The Company serves as a ‘Tier I’ vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ‘State of Art’ manufacturing facilities across thirteen locations in seven states of India. The Company’s production range includes Exhaust Systems, Catalytic Convertors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries.

Note 2: Basis of preparation of Financial statements

2.1 Statement of Compliance:

The financial statements have been prepared as a going concern in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 (“the Act”) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

Upto the year ended 31st March, 2017, the Company prepared the financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Act. These are the Company’s first Ind AS financial statements. The date of transition to the Ind AS is April 01, 2016. The financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Company’s Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 41.

The financial statements were authorized for issue by the Company’s Board of Directors on May 26, 2018.

2.2 Basis of preparation and presentation:

The financial statements have been prepared on the historical cost convention on accrual basis except for certain financial assets and liabilities (including derivative instruments) and net defined benefits (assets)/liability which are measured at fair value and fair value of the plan assets less present value of defined benefits obligations respectively at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange of goods or services.

The principal accounting policies are set out below.

2.3 Going concern:

The board of directors have considered the financial position of the Company at March, 31 2018 and the projected cash flows and financial performance of the Company for at least twelve months from the date of approval of these financial statements as well as planned cost and cash improvement actions, and believe that the plan for sustained profitability remains on course. The board of directors have taken actions to ensure that appropriate long-term cash resources are in place at the date of signing the accounts to fund the Company’s operations.

2.4 Use of estimates and judgements:

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements:

- useful life of Property, plant and equipment

- useful life of Intangible assets

- provisions and contingent liabilities

- income taxes

- lease classification and judgement regarding whether an arrangement contain a lease Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31, 2018:

- measurement of defined benefit obligations: key actuarial assumptions

- recognition and measurement of provision for warranties, provision for litigations and contingent liabilities: key assumptions about the likelihood and magnitude of an outflow of resources

- the liability for site restoration is measured on the basis of present estimated cost to decommission the asset, current inflation rate and discount rate.

2.5 Measurement of fair values:

A number of the Company’s accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to measurement of fair values. The directors are responsible for overseeing all significant fair value measurements, including Level 3 fair values. Directors regularly reviews significant unobservable inputs and valuation adjustments.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

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

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

When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the changes have occurred.

2.6 Operating cycle:

All assets and liabilities have been classified as current or non-current according to the Company’s operating cycle and other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

b) Terms/ rights attached to equity shares:

(i) The Company has only one class of equity shares having a par value of Rs.10 per share. Each shareholder is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors of Rs.6.25 per share (March 31, 2017: Rs.6.25 per share) is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(ii) During the year, an interim dividend of Rs.6.25 per share (March 31, 2017: Rs.6.25 per share) has been recognized as distributions to equity shareholders.

*Note: Number of Shares are given in absolute numbers

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

Notes:

1. 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 shareholders.

2. General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

3. For the year ended March 31, 2017, a dividend of Rs.13.50 per share (total dividend of Rs.743.28 lakhs) was paid to holders of fully paid equity shares.

4. For the year ended March 31, 2018, an interim dividend of Rs.6.25 per share (total dividend of Rs.371.64 lakhs) was paid to holders of fully paid equity shares. The directors propose dividend of Rs.6.25 per share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all the holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.371.64 lakhs

A. Summary of borrowing arrangements

a) The External Commercial Borrowing consisted of two loans:

(i) First loan of US $ 20 lakhs was taken in August, 2012 and was repayable in 15 quarterly instalments of US$ 1.33 Lakhs each (Rs.86.45 Lakhs) commencing from 26.01.2014. The loan carried an interest rate of 8.45% p.a.

This loan was secured by way of first exclusive charge over immovable assets at C-506 & 526, Pioneer Industrial Park, Patherdi, Bilaspur Chowk Manesar, Distt: Gurgaon and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan.

(ii) Second loan of US$ 60 lakhs was taken in January, 2014 and was repayable in six half yearly instalments. The loan carried an interest rate of 7.75% p.a.

This loan was secured by way of first exclusive charge over immovable assets at G-20, Sipcot Industrial Park, Irungattu Kottai, Sriperumbudur, Kancheepuram Dist. Tamilnadu and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan. The borrower shall maintain a minimum security cover of 1.25 times during the entire tenure of the facility.

b) Unsecured loans from directors:

Unsecured term loans from directors was repayable upon call by the lender at anytime by giving an advance notice in writing of atleast one year to the borrower. The loan carried a interest rate of 8.65% - 10.60% p.a. Unsecured short term loans from directors was repayable on demand. The loan was taken on an interest rate of 8.65 % - 8.95 % p.a.

c) Cash Credit

i) The Cash Credit facility has been secured by way of charge on inventories and book debts. There is an equitable mortgage of leasehold land and building, situated at Plot No. 4, Sector 31, Greater Noida Industrial Development Area, U.P and plant & machinery and other assets.

ii) The Cash Credit carries a rate of interest in the range of 8.8% -10.60% and is repayable on demand

d) Overdraft

Overdraft is secured against Fixed Deposits with bank carrying interest rate @ 8.15% p.a.

B. There have been no breach of covenants mentioned in the loan agreements during the reporting periods.

Notes:

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

(ii) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position. The Company does not expect any reimbursements in respect of the above contingent liabilities.

According to the requirement of Ind-AS, revenue for the corresponding previous year ended March 31, 2017 was reported inclusive of excise duty. The Government of India has implemented Goods and Service Tax (“GST”) from July 1, 2017 replacing Excise duty, Service Tax and various other Indirect Taxes. Accordingly, per IND AS-18, the revenue for the year ended March 31, 2018 is reported net of GST. Had the previously reported revenue shown net of excise duty, comparative income from operations of the Company would have been as follows:

Note:

(i) Relying on the judgment of Honourable Supreme Court of India in “Kedar Nath Yadav Vs. State of West Bengal & Ors.” the Company had written off an amount of March 31, 2018:Nil (March 31, 2017:’ 738.87) lakhs incurred in respect of setting up of Singur facility and disclosed the same under the head ‘Exceptional item’.

(ii) Diminution in value of asset of Rs.58.73 lakhs (March 31, 2017 Rs.176.40 lakhs) has been recognized on reclassification of assets as held for sale as the fair value (estimated based on the recent market prices) is less than its carrying amount and had been disclosed the same under the head ‘Exceptional item’.

Note 35 : Gratuity and other post-employment benefit plans

a) Defined contribution plans

The Company makes contribution towards Employees Provident Fund, Employee’s State Insurance scheme and Employee Welfare Fund. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The contributions are made to registered funds 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. The Company during the year recognised the following amount in the Statement of profit and loss account under Company’s contribution to defined contribution plan:

b) Defined benefit plans

In accordance with Ind AS 19 “Employee benefits”, an actuarial valuation on the basis of “Projected Unit Credit Method” was carried out, through which the Company is able to determine the present value of obligations. “Projected Unit Credit Method” recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation.

i) Gratuity scheme

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The employee’s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of services as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation.

ii) Compensated absences

The Company operates compensated absences plan wherein every employee is entitled to the benefit equivalent to 26 days leave salary for every completed year of service subject to maximum 30 accumulations of leaves. The salary for calculation of earned leave is last drawn salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee. Short term compensated absences are recognised in the statement of profit and loss on the basis of actual liability and long term compensated absences are recognised on the basis of actuary valuation which is an unfunded defined benefit plan.

These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest Risk

The plan expose the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

c) The following tables summarize the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the defined benefit plan (viz. gratuity and compensated absences).Leave encashment include earned leaves and sick leaves. These have been provided on accrual basis, based on year end actuarial valuation.

3.1 Measurement of fair value

Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of options, cross currency and interest rate swap contract & investments in mutual funds.

Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are investments in unquoted equity instruments and other investment.

There have been no transfers between Level 1 and Level 2 during the period.

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

(i) Investments in mutual funds: Fair value is determined by reference to quotes, i.e. net asset value (NAV) for investments in mutual funds as declared.

(ii) Derivative contracts: The Company has entered into variety of foreign currency Options and interest rate swap contract to manage its exposure to fluctuations in foreign exchange rates and interest risk. These financial exposures are managed in accordance with the Company’s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data.

(iii) Unquoted equity and other investments: Fair value of same has not been derived as in the opinion of directors the carrying amounts of these investments approximate their fair values.

(iv) Fair value of cash and cash equivalents, trade receivables, other current financial assets, trade payables, other current financial liabilities approximate their carrying amount, largely due to the short-term nature of these instruments.

(v) Interest rates on long-term borrowings are equivalent to the market rate of interest. Accordingly, the carrying value of such long-term debt approximates fair value.

(vi) Fair value of all other non-current financial assets have not been disclosed as the change from carrying amount is not significant, as the discount rate has not changed significantly.

Discount rate used in determining fair value

The interest rate used to discount estimated future cash flows, where applicable, are based on the incremental borrowing rate of borrower which in case of financial liabilities is average market cost of borrowings of the Company and in case of financial asset is the average market rate of similar credit rated instrument. The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available.

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

3.2 Capital management

The Company’s policy is to maintain a strong capital base so as to maintain confidence of investors, bankers, customers and vendors and to sustain future development of the business. The management monitors the return on capital and also monitors capital using a ratio of ‘adjusted net debt’ to ‘equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising borrowings less cash and cash equivalents. Equity comprises all components of equity.

3.3 Financial risk management

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

- Market risk

- Credit risk

- Liquidity risk

Risk management framework:

The Company’s principal financial liabilities other than derivatives comprise trade and other payables, borrowings, employees related payables, interest accrued, unpaid dividend, security deposit, capital creditors and others. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations.

The Company’s principal financial assets includes Investment in mutual funds, security deposits, trade receivables, cash and cash equivalents, deposits with banks, interest accrued in deposits, receivables from related and other parties and interest accrued thereon.

The Company’s senior level management assess these risks and is supported by Treasury department that advises on the appropriate financial risk governance framework.

All derivative activities for risk management purposes are carried out in line with the policy duly approved by board of directors. The execution of the policy is done by treasury deaprtment which has appropriate skills, experience and supervision. The policy provides that the Company should hedge through prescribed instruments to cover all possible risks of foreign currency outstanding after considering the natural hedge available and customer arrangements. It also prohibits any hedging for speculative transactions.

A. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates - will affect the Company’s financial position or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return. The Company uses derivatives to manage market risks. All such transactions are carried out within the guidelines set by the Company.

Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and functional currency of the Company, i.e. INR (‘). The currencies in which these transactions are primarily denominated are US dollar. The Company uses options, cross currency and interest rate swap contracts to hedge its currency risk on borrowings as per the approved policy of the Company. The Company’s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rate when necessary to address short term imbalances. However, the Company has not designated these derivatives as hedge relationship.

Sensitivity analysis:

A reasonably possible strengthening (weakening) of USD against INR (‘) at the end of the year, would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amount shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

B. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivable from customers, foreign exchange transactions, deposits with banks and other financial instruments. The carrying amount of financial assets represent the maximum credit risk exposure.

i) Trade receivables

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.

The Company primarily has the exposure from following type of customer:

- Original equipment manufacturers (OEMs)

Company has established a policy under which each new OEMs are analysed individually for creditworthiness before goods are sold to them. The Company’s review includes due diligence by analysing financial statements, industry information, promoter’s background and in some cases bank references. In case of sales, the Company has limited its credit exposure to OEMs and dealers by providing a maximum payment period up to 60 days.

The Company’s expected probability of default is nil and all major payments are received on due dates without any significant delays.

The ageing analysis of trade receivables as of the reporting date is as follows:

The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade receivables, loans and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, their geographical location, industry and existence of previous financial difficulties.

The impairment provisions for financial assets disclosed are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

However, Company need not required to provide for any risk allowance on account of trade receivable being bad and not recoverable as the amount of outstanding pertaining to trade receivables which exceeds the credit period allowed by the Company is less than 2% of the total outstanding from them.

C. 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 asset. 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 Company’s primary sources of liquidity include cash deposits,short term investments in mutual funds, borrowings, undrawn committed credit facilities and cash flow from operating activities. The Company seeks to increase income from its existing operations by maintaining quality standards for its goods and services while reducing the related costs and by controlling operating expenses.

Consequently, the Company believes its revenue, along with proceeds from financing activities will continue to provide the necessary funds to cover its short term liquidity needs. In addition, the Company projects cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. However, material changes in the factors described above may adversely affect the Company’s net cash flows.

As on March 31, 2018, Company doesn’t have any outstanding borrowings Exposure to liquidity risk:

The following are the remaining undiscounted contractual maturities of financial liabilities including interest at the reporting date:

Note 4: First time adoption of Ind AS

As stated in note 2, the financial statements for the year ended March 31, 2018 would be the first annual financial statements prepared in accordance with Ind AS. For year up to and including the year ended March 31, 2017, the Company has prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013 and other relevant provisions of the Act (‘previous GAAP’).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 01, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017.

Exemptions applied

The Company has prepared the opening balance sheet as per Ind AS as of April 01, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS and applying Ind AS in measurement of recognised assets and liabilities. However this principle is subject to certain exception and certain optional exemption availed by the Company. The Company has applied the following exemptions apart from mandatory exceptions in Ind AS 101:

a) Mandatory exceptions

i) Estimates

As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS or as at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the I GAAP unless there is a objective evidence that those estimates were in error. However the estimates should be adjusted to reflect any differences in accounting policies. As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under I GAAP, those estimates should be made to reflect conditions that existed at the date of transition or at the end of comparative period, as the case may be.

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the I GAAP are as follows:

- Fair valuation of financial instruments carried at FVTPL.

- Determination of the discounted value for financial instruments carried at amortized cost

ii) Classification and measurement of financial assets:

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

b) Optional exemptions

i. Property, Plant and Equipment and Intangible Assets

As permitted by Ind AS 101 - First-time Adoption of Indian Accounting Standards, the Company has elected to continue with carrying values under IGAAP for all items of Property, Plant and Equipment and intangible assets. The carrying values of property, plant and equipment and capital work in progress as aforesaid are after making adjustments relating to de-commissioning liabilities, if any.

ii. Determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has elected to avail of the above exemption.

iii. Investments in Joint Controlled Entities and Associates in separate financial statements

In accordance with Ind-AS transitional provisions, the Company opted to consider previous GAAP carrying value of investments as deemed cost on transition date for investments in Joint Ventures and Associates in separate financial statement.

c) Other Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following table represents the reconciliations from previous GAAP to Ind AS

Notes to First Time Adoption:

1) Fair Value through profit & loss

Under previous GAAP, investments in long term equity instruments are shown at cost and tested for provision other than temporary diminution. As per Ind AS 109, such investments are measured at fair value through profit & loss (FVTPL) and resultant gain/ (loss) is recognised in statement of profit & loss.

2) Mark to Market on derivative instruments

Under the previous GAAP, the premium or discount arising at the inception of forward contracts are amortised as an expense in statement of profit & loss. As per Ind AS 109, such derivative contracts are marked to market at reporting date and resultant gain/ (loss) is recognised in statement of profit & loss.

3) Effective interest rate adjustment on borrowings

As per Ind AS 109 requires transaction costs incurred towards origination of borrowings to be dedcuted from the carrying amount of borrowings on initial recognition. These costs are recognised in the statement of profit & loss over the tenure of the borrowings as part of finance cost by applying the effective interest method. Under previous GAAP, these transactions were charged to statement of profit & loss on straight line basis over the period of loan.

4) Proposed Dividend

Under Previous GAAP, proposed dividends and related the dividend distribution tax are recognised as a provision in the year to which they relate, irrespective of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognised as a liability in the year in which it is approved by the shareholders in the Annual General Meeting of the Company.

5) Retirement Benefits

Actuarial gain/(loss) - Under Previous GAAP, the actuarial gain/(loss) of defined benefit plans has been recognised in Statement of Profit and Loss as an exceptional item. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognised in Other Comprehensive Income net of tax.

6) Discounting of security deposits for leases

Under Previous GAAP, the security deposits for leases are accounted at an undiscounted value. Under Ind AS, the security deposits for leases have been recognised at discounted value and the difference between undiscounted and discounted value has been recognised as ‘Deferred lease rent’ which has been amortised over respective lease term as rent expense under ‘other expenses’. The discounted value of the security deposits is increased over the period of lease term by recognising the notional interest income under ‘other income’.

7) Lease Equalisation Reserve

Under Previous GAAP, lease payments are required to be recognised on a straight-line basis over the term of the lease. Under Ind AS, lease payments which are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases, are required to be recognised as an expense in line with its contractual term. Accordingly, the provision for scheduled increases on operating lease recognised under Previous GAAP has been written back under Ind AS.

8) Reclassification adjustment (Mat credit entitlement and excise duty)

MAT credit entitlement: Under previous GAAP, MAT credit entitlement was being shown separately under the head “Loans and Advances” whereas under Ind AS, the same is required to be shown under the head “Deferred tax asset”.

Excise duty: Under previous GAAP, revenue form operations was shown net of excise duty, whereas as per Ind AS excise duty paid should be presented as a separate line item under the head ‘Expenses’ on the face of the Statement of Profit and Loss.

9) Prior period expenses

Under previous GAAP, prior period items was required to be disclosed separately in the financial statements. However, as per Ind AS, Company is required to adjust material prior period errors retrospectively by restating the comparative amounts for the earliest prior period presented. Further, where the amount of prior period pertains to the period before the earliest prior period presented, opening balances of the earliest period presented are to be restated.

10) Deferment of Revenue

Under Ind AS, Income from services including the associated selling cost is deferred over the respective years to which they pertain. Such income is recognised on straight line basis over the warranty period and the associated service claim cost is recognised as an when incurred and no provision is recognised for warranty cost whereas under previous GAAP, provision for warranty were made and revenue against the same had been recognised in full in the year of sale.

11) Other Ind AS Adjustments

Other adjustments include adjustments on various matters which have not been disclosed separately considering the materiality of the amounts involved.

12) Deferred Tax Adjustments

Retained earnings and statement of profit & loss has been adjusted consequent to the Ind AS transition adjustments with corresponding imoact to deferred tax, wherever applicable.

Note 6: In view of the management, the current assets (financial & other) have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet.

Note 7: Events occurring after balance sheet date

There are no major events which has occurred after the balance sheet date.

Note 8: Figures have been rounded off to the nearest lakhs upto two decimal place except otherwise stated.

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Mar 31, 2017

1. Terms/rights attached to Equity shares

(i) The company has only one class of Equity shares having a par value of '' 10 per share. Each shareholder is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors of '' 6.25 per share (March 31, 2016: '' 6.25 per share) is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Defined Benefit plans

Gratuity Scheme: The employee''s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: Short term compensated absences are recognized in the statement of profit and loss of Rs. 32.62 Lakhs (March 31, 2016: Rs. 33.71 Lakhs)on the basis of actual liability and long term compensated absences are recognized on the basis of actuary valuation which is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31, 2017).

In accordance with the Accounting Standard (revised 2005), an actuarial valuation was carried out in respect of the aforesaid defined benefit plans based on following assumptions:

Note 3: Segment Reporting

4. Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) as notified under Companies (Accounts) Rules, 2014, the Company’s primary business segment involves manufacturing and trading of auto component parts mainly with similar risks and returns. As the Company’s business activities fall within a single primary business segment, i.e. sale of auto component parts, the disclosure requirements of AS-17 in this regard are not applicable.

5. The Company sells its products mostly within India and does not have any operations in economic environments with different risks and returns. Hence it is considered to be operating in single geographical segment.

6. Figures in brackets () relate to previous year

7. Share of Contingent liabilities incurred in relation to interests in joint ventures as at March 31, 2017 : Rs. NIL ( March 31, 2016 Rs. NIL )

8. Share of Capital Commitments incurred in relation to interests in joint ventures as at March 31, 2017 : Rs. NIL ( March 31, 2016 Rs. NIL )

Note 9: CSR Expenditure

10. Gross amount required to be spent by the Company during the year (i.e. 2% of Average Net profits u/s 198 of Companies Act, 2013 of last three years): Rs. 64.54 Lakhs.

Note 11

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

Note 12

The balances of debtors, creditors and loans and advances are awaiting confirmation.

Note 13

‘Relying on the judgment of Honorable Supreme Court of India in “Kedar Nath Yadav Vs. State of West Bengal & Ors.” the company has written off an amount of Rs. 7.38 Cr. incurred in respect of setting up of Singur facility and disclosed under the head ‘Exceptional item''. Exceptional items for the current quarter ended March 31, 2017 includes 1.76 Cr. as diminution in value of assets held for sale at Korin Unit for sale. Exceptional items for the year ended contains sum of both the above amounts.''

Note 14

Figures are rounded off to nearest rupee in Lakhs . Previous year figures has been re-grouped or re-classified where ever considered necessary.

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Mar 31, 2016

NOTE 1.: LEASES

i) The Company has taken Factory Plot on non cancellable lease from M/s Om Exports Pvt Ltd. Lease Agreement was renewed on 20.01.2016 and is valid till 19.01.2021. Lease Rental ( including transfer to lease equalization reserve) amounting to '' 39.38 Lacs has been debited to Statement of Profit and Loss. Future minimum lease rentals as on 31.03.2016 are as under:

ii) The Company has taken Factory Plot on non cancellable lease from M/s Sharda Enterprises. Lease Agreement was renewed on 01.07.2015 and is valid till 30.06.2020. Lease Rental amounting to '' 48.08 Lacs has been debited to Statement of Profit and Loss. Future minimum lease rentals as on 31.03.2016 are as under:

(ii) Defined Benefit plans

Gratuity Scheme: The employee''s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31, 2016).

In accordance with the Accounting Standard (revised 2005), an actuarial valuation was carried out in respect of the aforesaid defined benefit plans based on following assumptions:

Note:

The estimate of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors on long term basis including supply and demand in the employment market.

The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.

*Notes

1) Remuneration paid to Shri N.D. Relan and Shri Ajay Relan includes the arrear of Rs, 58.92 Lacs and Rs, 47.49 Lacs of FY 2014-15 respectively post Central Government approval for the FY 2014-15.

2) During the year, the company has purchased/sold certain investments aggregating to Rs, 96,948.53 Lacs through associate company Relan Industrial Finance Ltd by using its net banking facility at BSE portal. At the year end, there was no transaction outstanding with the said associate company and it does not have any financial impact on financial statements of the company.

* The above disclosure for the year ended March 31, 2016 is based on unaudited financial statements of the above mentioned Joint Venture entities as the audit of the said Joint Venture entities is yet to be concluded. The management is not expecting significant changes in the disclosure relating to asset, liability, income and expenses for the year ended as March 31,2016.

Notes :

i) Figures in brackets () relate to previous year

ii) Share of Contingent liabilities incurred in relation to interests in joint ventures as at March 31, 2016: Rs, NIL (March 31, 2015 Rs, NIL)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at March 31, 2016 : Rs, NIL ( March 31, 2015 Rs, NIL )

NOTE 2: CSR Expenditure

(a) Gross amount required to be spent by the Company during the year (i.e. 2% of Average Net profits u/s 198 of Companies Act, 2013 of last three years): Rs, 62.22 Lacs.

NOTE 3

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 4

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 5

Figures are rounded off to nearest rupee in Lacs . Previous year figures has been re-grouped or re-classified where ever considered necessary.

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Mar 31, 2015

1 CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a 'Tier I' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a 'State of Art' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP), and mandatory Accounting Standards as prescribed under section 133 of the Companies Act 2013 read with rule 7 of companies ( Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs. The company has complied in all material respects with the Accounting Standards notified under the Companies Act 2013.The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3 Terms/rights attached to Equity shares

The company has only one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is entitled to one vote per share.The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.

During the year ended 31st March, 2015, the amount of per share dividend recognized as distributions to Equity Shareholders was Rs. 10/- (31st March, 2014: Rs. 10/-)

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

4 a) Term Loan (External Commercial Borrowing) - I Loan

First Exclusive charge over immovable assets at C-506 & 526, Pioneer Industrial Park, Patherdi, Bilaspur Chowk Manesar, Distt : Gurgaon and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan.

b) Term Loan (External Commercial Borrowing) - II Loan

First Exclusive charge over immovable assets at G-20, Sipcot Industrial Park, Irungattu Kottai, Sriperumbudur, Kancheepuram Dist. Tamilnadu and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan. The Borrower shall maintain a minimum security cover of 1.25 times during the entire tenor of the facility.

c) Rupee Term Loan (Previous year)

Mortgage in favour of bank in respect of Plot No. C - 8 , TML Vendor Park, Sanand Road, Kotepura, Sanand, Ahemdabad. The loan was taken in financial year 2010-11 and repayable in 16 Instalments of Rs. 81.06 Lacs beginning from 10.08.2010.

a) Cash Credit/Buyer's Credit

(i) Secured by charge on inventories and books debts

(ii) Equitable mortgage of leasehold land and building, situated at Plot No.4, Sector 31, Greater Noida Industrial Development Area, U.P., and plant & Machinery and other assets

(iii) Rate of Interest

Cash Credit : 11.0% - 12.5%

Buyer's Credit : 3.0% - 3.5%

b) Bills Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. And bill discounting under the bill discounting/ Express vendor disccounting schemes and receivables of Tata Motors Ltd. both present and future hemes and receivables of Tata Motors Ltd. Both present and future

c) Directors Loan

Payable on demand. The loan is taken on an interest rate of 10% - 12%.

(ii) Defined Benefit plans

Gratuity Scheme: The employee's gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on 31st March, 2015).

5 SEGMENT WISE REPORTING (a) Composition of Business Segments:

The Company's business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

(Rupees in Lacs)

6 CONTINGENT LIABILITIES AND COMMITMENTS

For the For the year ended year ended March 31, 2015 March 31, 2014

1. Contingent liabilities

(a) Claims against the company not acknowledged as debts

i) Disputed State Tax Matters 0.90 2.27

ii) Disputed Excise Matters 2.24 2.24

iii) Disputed Service Tax Matters 11.07 11.07

iv) Disputed Central Sales Tax Matters 10.74 -

v) Disputed Income Tax Matters 102.33 -

vi) Disputed Central Excise Matters 440.00 -

vii) Dispute with vendor 4.42 -

(b) Other money for which the company is contingently liable* 1,351.33 1,784.98

2. Commitments

a) Estimated amount of contracts remaining to be executed on capital account and 990.62 1,669.88 not provided for in the Accounts, net of advance

Total 2,913.65 3,470.44

i) Entry Tax of Rs. 0.90 Lacs (31st March, 2014: Rs. 2.27 lacs) for Financial Year 2001-02 against which the company has filed an appeal before Appelate Authority UP Trade Tax.

ii) Matter related to Cenvat Credit of Rs. 2.24 Lacs (31st March, 2014: 2.24 Lacs) under Cenvat Credit Rules is pending before the Appelate Authority of LTU Delhi.

iii) Service Tax of Rs. 11.07 Lacs (31st March, 2014: Rs. 11.07 Lacs) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appelate Tribunal, Delhi

iv) Central Sales Tax of Rs.10.74 Lacs (31st March, 2014:Nil) for Financial Year 2008-09 which is pending before U.P. Sales Tax.

v) Income Tax of Rs. 24.04,Rs.39.26 &Rs.39.03Lacs (31st March, 2014: Nil) for Assessment Year 2004-05, 2009-10& 2011-12 respectively against which appeal has been filed before ITAT, New Delhi.

vi) Excise Tax of Rs.440 Lacs(31st March, 2014 :Nil) under Cenvat Credit Rules is pending before the Hon'ble Supreme Court of India.

vii) Claim of Rs.4.42 lacs (31st March, 2014:Nil) for Financial Year 2014-15 which is pending before District Court,Saket.

*Foreign Letters of Credit of Rs. 1,351.33 Lacs (31st March, 2014: Rs. 1,784.98 Lacs)

i) Figures in brackets () relate to previous year

ii) Share of Contingent liabilities incurred in relation to interests in joint ventures as at 31st March, 2015 : Rs. NIL (31st March, 2014 Rs. NIL)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at 31st March, 2015 : Rs. NIL (31st March, 2014 Rs. NIL)

7 As per the requirements of sub section (5) of section 135 of the Companies Act, 2013 the Company was required to spend at least two per cent of its average net profits for the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (CSR) Policy. Accordingly, the Company had to spend a minimum of Rs. 59.44 Lacs during the current financial year towards CSR activities. During the current year, the Company has adopted a strategy whereby certain long term programmes will be undertaken by the Company for the social and economic welfare. As the process of evaluating and identifying specific programme is in progress, no amount was incurred on CSR during the year ended 31 March 2015.

8 The Compnay has w.e.f. 01.04.2014, computed depreciation in accordance with the useful life of the fixed assets as per Schedule II of the Companies Act 2013. Consequantly Depreciation charged for the year is higher by Rs. 351.43 Lacs and carrying value of assets amounting to Rs. 137.96 Lacs ( Net of Deferred Tax Rs. 66.26 Lacs ) after retaining the residual value, whose remaining useful life is NIL has been adjusted from the opening balance of retained earnings.

9 In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

10 The balances of debtors, creditors and loans and advances are awaiting confirmation.

11 Figures are rounded off to nearest rupee in Lacs . Previous year figures has been re-grouped or re-classified where ever considered necessary.ary.

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Mar 31, 2014

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of Sharda Motor Industries Limited ("the Company") have been prepared with generally accepted accounting principles in India ("GAAP"), and mandatory accounting standards issued by the Companies ( Accounting Standards) Rules, 2006, (as amended) and the provisions of the Companies Act, 1956 ("the Act") as adopted by the Company. The Company has complied inall material respects with Accounting Standards notifed under the Companies Act, 1956 read with General Circular 8/2014 dated 4 April 2014, issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

NOTE 3: SEGMENT WISE REPORTING

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under: i) Automotive components ii) White Goods

(b) Segment revenues, Results and Other Information

NOTE 4 : RELATED PARTY DISCLOSURES

List of related parties where control exists and related parties with whom transactions have taken place and relationships:

Name of the Related Party Relationship

Sharda Sejong Auto components (India) Limited Subsidiary Company #

a) Relan Industrial Finance Ltd.

Associate Companies

b) Bharat Seats Ltd.

a) Mr.N.D Relan (Co. Chairman)

b) Mr.Ajay Relan (Managing Director) Key Managerial Personnel

c) Mr.Udayan Banerjee (Executive Director)

a) Mr.Rohit Relan

b) Mrs.Sharda Relan

c) Mrs.Mala Relan

d) Mrs.Ritu Relan

e) Ms Aashita Relan Relatives of Key Managerial Personnel

f) Mr.Aashim Relan

g) Mr.Rishabh Relan h) Mr.Pranav Relan i) Mr.Ayush Relan

a) Sharda Enterprises

b) N.D.Relan (HUF)

c) Ajay Relan (HUF)

Enterprises over which Key Managerial Personnel are able to

d) Rohit Relan (HUF)

Exercise significant infuence (Associate Concern)

e) Sharda Auto Solutions Pvt. Ltd.

f) A.N.I Hospitality LLP

g) Progressive Engineering & Automation Pvt. Ltd.

# In persuance of the order dated 25th July, 2012 of the Honorable High Court of Delhi, subsidiary company, has been amalgamated with the holding company ( ''Sharda Motor Industries Limited'' )

NOTE 5 : CONTINGENT LIABILITIES AND COMMITMENTS For the year For the year ended ended March 31, 2014 March 31, 2013

1. Contingent liabilities

(a) Claims against the company not acknowledged as debts

- Disputed State Tax Matters* 2.27 2.27

- Disputed Excise Matters ** 2.24 442.24

- Disputed Service Tax Matters *** 11.07 11.07

--

(b) Other money for which the company is contingently liable 1,784.98 789.83

2. Commitments

(a) Estimated amount of contracts remaining to be executed on capital account 1,669.88 1,708.13 and not provided for in the Accounts, Net of Advances

Tot al 3,470.44 2,953.55

* Entry Tax of Rs. 2.27 Lacs (March 31, 2013: Rs. 2.27 lacs) for Financial Year 2000-01, 2001-02 and 2002-03 against which the company has fled an appeal before Appellate Authority UP Trade Tax.

Another matter related to Cenvat Credit of Rs. 2.24 Lacs (March 31, 2013: 442.24 Lacs) under Cenvat Credit Rules is pending before the Appellate Authority of LTU Delhi.

^ Service Tax of Rs. 11.07 Lacs (March 31, 2013: Rs. 11.07 Lacs) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appellate Tribunal, Delhi

^^ Foreign Letters of Credit of Rs. 1784.98 Lacs (March 31, 2013: Rs. 789.83 Lacs)

NOTE 6

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 7

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 8

In pursuance of the order dated 25th July, 2012 of the Honorable High Court of Delhi, a scheme of amalgamation of the company with M/s Sharda Sejong Auto Components (India) Ltd., a wholly owned subsidiary of the company, has been approved. Hence, fgures pertaining to current year are merged fgures & are not comparable with that of the previous year.

NOTE 9

Figures are rounded off to nearest rupee in Lacs.

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Mar 31, 2013

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles ("GAAP"), mandatory accounting standards as per the Company (Accounting Standards) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and other relevant provisions of the Companies Act, 1956 and guidelines issued by the Security Exchange Board of India as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

NOTE 3.1: LEASES

Assets taken on operating lease:

The company has taken certain assets on non-cancelable operating lease and lease rent amounting to Rs. 132.00 Lacs(March 31, 2012: Rs. 132.00 Lacs) has been debited to the Statement of Profit & Loss. The future minimum lease payments as on 31st March, 2013

NOTE 4

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 5

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 6

In pursuance of the order dated 25th July, 2012 of the Honurable High Court of Delhi, a scheme of amalgamation of the company with Sharda Sejong Auto Components (India) Ltd., a wholly owned subsidiary of the company, has been approved. Hence, figures pertaining to current year are merged figures and are not comparable with that of the previous year.

NOTE 7

Figures are rounded off to nearest rupee in lakhs.

---

Mar 31, 2012

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles ("GAAP"), mandatory accounting standards as per the Company (Accounting Standards) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and other relevant provisions of the Companies Act, 1956 and guidelines issued by the Security Exchange Board of India as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

a) Terms/rights attached to Equity shares

The company has only one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is entitled to one vote per share.The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.

During the year ended 31st March, 2012, the amount of per share dividend recognized as distributions to Equity Shareholders was Rs. 10/- (March 31, 2011: Rs. 10.00/-).

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

Note: Particulars of Security/Guarantees/Terms of Repayment/Default

a) Term Loan (External Commercial Borrowing)

Mortgage in favour of the Security Trustee in a form satisfactory to the Security Trustee of the Borrower''s immovable properties pertaining to the Project Situated at:

i) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

ii) An exclusive charge by way of hypothecation in favour of the Security Trustee of the Borrower''s movables pertaining to the Projects Situated at:

- Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

- Plot No. 52/1,52/2,53/2A,54A,54B,54C & 54D, Behind Ceat Company, Satpur, Nashik-422007

- Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad

- 58 KM, Delhi - Jaipur Highway, P.O. Binola, Haryana. being financed out of the proceeds of the Facility (save and except book debts), including movable machinery, machinery spares, tools and accessories, both Present & future

The ECB loan consists of 2 loans:

i) First loan was taken in July 2008 and repayable in 10 instalments of Rs.7,857,000/- each commencing from 14.07.2009. The loan carries an interest rate of 10.25% p.a.

ii) Second loan was taken in September, 2008 and repayable in 10 instalments of Rs.16,038,000/- each commencing from 30.09.2009. The loan carries an interest rate of 7.5% p.a.

b) Rupee Term Loan

Mortgage in favour of bank in respect of Plot No. C - 8 , TML VENDER PARK, Sanand Road, Kotepura, Sanand, Ahemdabad The loan was taken in financial year 2010-11 and repayable in 16 Instalments of Rs.8,106,250/- beginning from 10.08.2010.

* Amount of Rs.212,988,868 (March 31, 2011: 212,988,868) payable to Subsidiary company, Sharda Sejong Auto Components India Ltd. on account of transfer of business unit at G-20, Sipcot, Chennai. This amount has been shown in the current portion (March 31, 2011: Long Term).

a) Cash Credit/Buyer''s Credit

(i) Secured by charge on inventories and books debts

(ii) Equitable mortgage of leasehold land and building, situated at Plot No.4, Sector 31, Greater Noida Industrial Development Area, U.P., and plant & Machinery and other assets

(iii) Rate of Interest

Cash Credit : 11.5% - 13.5%

Buyer''s Credit: 3.5% - 4.5%

b) Bills Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. And bill discounting under the bill discounting/ Express vendor disccounting schemes and receivables of Tata Motors Ltd. both present and future

c) Directors Loan

Payable on demand. The loan is taken on an interest rate of 10% - 12%.

a) The above does not includes any amount due to be transferred to investor education & protection fund

b) Pursuant to amendments to Schedule VI to Companies Act, 1956 vide notification number GSR 719 (E) dated November 16, 2007, there are no amount due as of March 31, 2012 due to micro, small & medium enterprises as defined in Industries (Development and Regulation) Act, 1951, hence it has not been disclosed in the books of the company (March 31, 2011: Nil). Further no interest during the year have been paid or payable under the terms of MSMED Act'' 2006

** in the earlier years the company had invested in the shares with the intention of holding it for more than 1 year from the date on which Investment was made. Thus, it was classified as Long term Investment as per AS 13 "Accounting for Investments". However, since the subsidiary company is getting merged with Sharda Motors Industries Limited in next financial year, the said investment no more remains Long term Investment. Hence, it is shown under Current Investments.

(ii) Defined Benefit plans

Gratuity Scheme:The employee''s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31, 2012).

NOTE 3: SEGMENT WISE REPORTING

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

* Entry Tax of Rs. 227,265/- (March 31, 2011: Rs. 227,265/-)for Financial Year 2000-01, 2001-02 and 2002-03 against which the company has filed an appeal before Appelate Authority UP Trade Tax.

** Excise duty of Rs. 44,000,000/- (March 31, 2011: Rs. 44,000,000/-) under the Central Excise Rules, which is pending before the Custom, Central Excise & Service Tax Appelate Tribunal, Delhi. However, the company has filed the Writ petition against this issue before Bombay High Court which has been decided in favour of the company.

Another matter related to Cenvat Credit of Rs. 224,378/- (March 31, 2011: NIL) under Cenvat Credit Rules is pending before the Appelate Authority of LTU Delhi.

*** Service Tax of Rs. 1,106,897/- (March 31, 2011: Rs. 1,106,897/-) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appelate Tribunal, Delhi

**** Income Tax demand of Rs. 5,432,553/- (March 31, 2011: NIL) for Asst. year 2009-10 and Rs. 3,772,302/- (March 31, 2011: Nil) for Asst. year 2004-05 under the Income Tax Act, is pending before the Commissioner of Income Tax LTU (Appeals), Delhi.

***** Foreign Letters of Credit of Rs. 120,440,953/- (March 31, 2011: Rs. 135,124,476/-)

NOTE 4

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 5

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 6

Till the year ended 31 March, 2011, the company was using pre-revised schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31 March, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year''s classification.

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Mar 31, 2011

1. Background

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across eight locations in India. Their production range includes Exhaust Systems, Catalytic Convertors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries.

2 (a) Contingent Liabilities

(i) Foreign Letters of Credit Rs. 135,124,476/- (Previous year Rs. 86,334,633/-).

(ii) Entry tax of Rs 227,265/- (Previous year Rs. 227,265/-) for the financial year 2000-01, 2001 -02 & 2002-03 against which the company has filed an appeal before Appellate Authority UP Trade Tax.

(iii) Excise duty of Rs. 97,461/- (Previous year Rs. 97,461/-) under Central Excise Rules, which is pending before the Adjucating Authority. The company has executed a bank guarantee of Rs 175,000 against such liability.

(iv) Excise duty of Rs. 44,000,000/- (Previous year Rs. 44,000,000/-) under the Central Excise Rules, which is pending before the Custom, Central Excise & Service Tax Appellate Tribunal, Delhi, however, the Company has filed the special leave petition against this issue before Bombay high court which has been decided in favour of the Company.

(v) Excise duty of Rs. 4,072,313/- (Previous year Rs. 4,072,313/-) under Central Excise Rules, which is pending before ''The Additional Commissioner, Central Excise Large Tax Payer Unit.

(vi) Service Tax of Rs. 1,106,897/- (Previous Year Rs. Nil) under Service Tax Rules which is pending before the Additional Commissioner of Service Tax, Delhi.

(b) Estimated value of contracts remaining to be executed on capital account not provided for in the Accounts, net of advance is Rs. 86,828,717/- (Previous Year Rs. 177,458,667/-).

3. The balances of debtors, creditors and loans and advances are awaiting confirmation.

4. In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all the known liabilities are adequate and not in excess of the amount reasonably necessary.

5. Pre-Operative Expenses and Capital Work in Progress (including capital advances)

(a) Pre Operative expenses (directly allocable) amounting to Rs. 36,713,204/- (previous year Rs. 36,507,924) as under:

(b) Capital Work in Progress includes an amount of Rs. 129,712,547/- (Previous Year Rs. 128,904,958/-) paid as Capital Advances.

6 (a) Amounts due from/ to Subsidiary Company:

The maximum aggregate amount due to Sharda Sejong Auto Components (India) Limited, a subsidiary company, during the year as well as closing balance as on 31st March, 2011 was Rs. 212,988,,868/-. In the previous year the amount due from Sharda Sejong Auto Components (India) Limited as well as closing balance was Rs.569,193,665/-.

(b) Debtors include amounts due from Companies under the same management:

(i) The maximum aggregate amount due from Bharat Seats Limited, during the year was Rs 140,518,449/- (Previous year Rs.101,641,949/-) and closing balance as on 31st March, 2011 was Rs. 39,732,600/- (Previous year Rs. 86,541,030).

(ii) The maximum aggregate amount due from Progressive Engineering & Automation Pvt Ltd, during the year was Rs 21,174,352/- (Previous year Rs. 1,635,125) and closing balance as on 31st March, 2011 was Rs. 14,379,769/- (Previous year Rs. 1,635,125/-).

7 Employee Benefits Defined Contribution Plan

The Company makes contribution towards Employees Provident Fund and Employee''s State Insurance scheme. Under the rules of these schemes, the company is required to contribute a specified percentage of payroll costs. The Company during the year recognized the following amounts in the Profit and Loss Account under company''s contribution to Defined contribution plan.

Note:

The above amount includes Rs 128,204and Rs 6,779 as Employer''s Contribution to Provident Fund and Employer''s Contribution to ESI respectively transferred to Capital Work in Progress.

Defined Benefit Plans:

Gratuity Scheme: This is a funded defined benefit plan for qualifying employees. The employees gratuity fund scheme managed by Life Insurance Corporation of India. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31,2011).

In accordance with the Accounting Standard (revised 2005), an actuarial valuation was carried out in respect of the aforesaid defined benefit plans based on following assumptions:

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

8. Pursuant to amendments to Schedule VI to Companies Act, 1956 vide Notification No. GSR 719 (E) dated 16th November, 2007. The company has not received any intimation from suppliers regarding the status under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, disclosure, if any was concerning the amount unpaid as at the year end together with interest paid/payable as required under the said act has not been given.

Note: -

1. Managerial Remuneration to Directors does not include incremental liability for gratuity and leave encashment unless paid/ payable as per company rules.

2. The Managerial Remuneration paid to the Directors is well within the limits specified in Companies Act, 1956.

9. Additional Information:

a) Capacity, Production, Turnover & Stocks:

(i) Licensed & Installed Capacity :

As certified by the Management and as per the norms laid down by the Central Government, no licence is required for the class of goods manufactured by the Company; hence information pertaining to the licensed capacity is not given. The Company is of the view that the installed capacity of its machinery in terms of measurable units cannot be determined as it varies, based on the design / process of its heterogeneous range of products.

10. Segment wise Reporting

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

11. Leases

Assets taken on operating Lease

a) The company has taken certain assets on non-cancelable operating lease and lease rent amounting to Rs. Nil (Previous Year Rs. 12,287,903/-) has been debited to the Profit & Loss account. The future minimum lease payments as on 31st March, 2011 are as under:

General Description of Lease Terms:

- Lease Rentals are charged on the basis of agreed terms.

- Assets are taken on lease over a period of 1 to 9 years.

b) Assets given on Operating Lease

The Company has given the premises on cancellable operating lease on or after 2001, and lease rental amounting to Rs. Nil (Previous Year: Rs. 1,500,000/-) has been credited to the Profit and Loss Account. The details for the assets given of operating lease are as under:

12. Financial and Derivative Instruments

Derivative contracts entered into by the company and outstanding as on 31st March, 2011.

- Foreign currency exposure hedged by derivative instruments amounts to Rs. 55,225,000/- (P.Y.Rs. 112,187,500 /- ).

- Foreign currency exposure that are not hedged by derivative instruments as on 31st March, 2011 amounts to Rs.373,015,636/- (P.Y.Rs. 74,041,900)

13. Previous year''s figures have been reclassified/regrouped, wherever considered necessary.

14. The current year results include the figure pertaining to Sipcot Unit situated at G-20, Sipcot Industrial Park, Kancheepuram, Chennai due to cancellation of transfer of business vide cancellation deed dated November 20, 2009. All assets and liabilities pertaining to Sipcot Unit hitherto hived off to wholly owned subsidiary M/s Sharda Sejong Auto Components India Ltd. have returned back to the company at their respective book values as on commencement of business on 1st April, 2010. Hence current year''s figures are not comparable with previous year''s figures

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Mar 31, 2010

Note : The above Loans are secured against :

1) Cash Credit

(a) Secured by charge on Inventories and Book Debts at Company''s Godowns, yards and Premises situated at Noida, Greater Noida, Haridwar, Gurgaon, Nasik and Chennai (Mahindra World City).

(b) Equitable mortgage of Leasehold Land and Building and Plant & Machinery and other assets situated at Plot No.4, Sector 31, Kasna Industrial Area, Greater Noida, U.P

2) Bill Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. and bill discounting under the bill discounting / Express vendor discounting scheme and recievables of Tata Motors Ltd. both present and future.

3) Term Loan (External Commercial Borrowing)

Company is in the process of creating Mortgage/Hypothecation on the respective assets as stipulated in the Facility Agreement signed between ICICI Bank and the company.The brief description on such securities are given vide Note No.22 of Schedule 12 (B).

4) Short Term Loan

First charge on current assets (both present and future) and first charge on all movable fixed assets (except those which are exclusively charged to existing lenders)

5) Vehicle Loan

Secured against hypothecation of respective assets.

1. Background

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across eight locations in India. Their production range includes Exhaust Systems, Catalytic Convertors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries.

2. (a) Contingent Liabilities

(i) Foreign Letters of Credit Rs. 86,334,633/- (Previous year Rs. 13,292,850/-).

(ii) Entry tax of Rs 227,265/- (Previous year Rs. 227,265/-) for the financial year 2000-01, 2001-02 & 2002-03 against which the company has filed an appeal before Appellate Authority UP Trade Tax.

(iii) Excise duty of Rs. 97,461/- (Previous year Rs. 97,461/-) under Central Excise Rules, which is pending before the Adjucating Authority. The company has executed a bank guarantee of Rs 175,000 against such liability.

(iv) Excise duty of Rs. 44,000,000/- (Previous year Rs. Nil) under Central Excise Rules, which is pending before ''The Commissioner, Central Excise Large Tax Payer Unit''.

(v) Excise duty of Rs. 4,072,313/- (Previous year Rs. Nil) under Central Excise Rules, which is pending before ''The Additional Commissioner, Central Excise Large Tax Payer Unit.''.

(b) Estimated value of contracts remaining to be executed on capital account not provided for in the accounts, net of advance is Rs 177,458,667/- (Previous Year Rs. 24,730,279/-).

3. The balances of debtors, creditors and loans and advances are awaiting confirmation.

4. In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all the known liabilities are adequate and not in excess of the amount reasonably necessary.

5. Employee Benefits

Defined Contribution Plan

The Company makes contribution towards Employees Provident Fund and Employee''s State Insurance scheme. Under the rules of these schemes, the company is required to contribute a specified percentage of payroll costs. The Company during the year recognised the following amounts in the Profit and Loss Account under company''s contribution to Defined contribution plan.

Note:

The above amount includes Rs 106,899 and Rs 5,195 as Employer''s Contribution to Provident Fund and Employer''s Contribution to ESI respectively transferred to Capital Work in Progress.

Defined Benefit Plans:

Gratuity Scheme: This is a funded defined benefit plan for qualifying employees. The employees gratuity fund scheme managed by Life Insurance Corporation of India. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity

Leave Encashment/Compensated Absences : This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31,2010).

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

6. Pursuant to amendments to Schedule VI to Companies Act, 1956 vide Notification No. GSR 719 (E) dated 16th November, 2007. The company has not received any intimation from suppliers regarding the status under the Micro, small and Medium Enterprises Development Act, 2006. Hence, disclosure, if any was concerning the amount unpaid as at the year end together with interest paid/payable as required under the said act has not been given.

Note: -

1. Managerial Remuneration to Directors does not include incremental liability for gratuity and leave encashment unless paid/payable as per company rules.

2. The Managerial Remuneration paid to the Directors is well within the limits specified in Companies Act, 1956.

7. Additional Information:

a) Capacity, Production, Turnover & Stocks:

(i) Licensed & Installed Capacity :

As certified by the Management and as per the norms laid down by the Central Government, no licence is required for the class of goods manufactured by the Company; hence information pertaining to the licensed capacity is not given. The Company is of the view that the installed capacity of its machinery in terms of measurable units cannot be determined as it varies, based on the design / process of its heterogeneous range of products.

8. Segment wise Reporting

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

(b) Assets given on Operating Lease

The Company has given the premises on cancellable operating lease on or after 2001, and lease rental amounting to Rs. 1,500,000/- (Previous Year: Rs. 1,500,000/-) has been credited to the Profit and Loss Account. The details for the assets given of operating lease are as under:

9. Financial and Derivative Instruments

Derivative contracts entered into by the company and outstanding as on 31st March'' 2010.

- Foreign currency exposure hedged by derivative instruments amounts to Rs.112,187,500 (P.Y.Rs. 173,737,500 /- ).

- Foreign currency exposure that are not hedged by derivative instruments as on 31st March'' 2010 amounts to Rs.74,041,900(P.Y.Rs. 315,009,376)

10. Previous year''s figures have been reclassified/regrouped, wherever necessary, to make them comparable.

11. Security creation arrangement with regard to External Commercial Borrowings.

i) Mortgage in favour of the Security Trustee in a form satisfactory to the Security Trustee of the Borrower''s immovable properties pertaining to the Project Situated at :

a) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

b) Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad* being financed out of the proceeds of the Facility, both present and future*

* Charge yet to be created, Since Lease deed pertaining to the land of this property is under execution.

ii) An exclusive charge by way of hypothecation in favour of the Security Trustee of the Borrower''s movables pertaining to the Projects Situated at:

a) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

b) Plot No. 52/1,52/2,53/2A,54A,54B,54C & 54D, Behind Ceat Company, Satpur, Nashik-422007

c) Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad

d) 58 KM, Delhi - Jaipur Highway, P.O. Binola, Haryana. being financed out of the proceeds of the Facility (save and except book debts), including movable machinery, machinery spares, tools and accessories, both present and future.