Notes to Accounts of Sona BLW Precision Forgings Ltd.

Mar 31, 2025

p) Provisions

A provision is recognised if, as a result of a past event,
the Company has a present legal or constructive
obligation, it is probable that an outflow of resources
will be required to settle the obligation and the amount
can be reliably estimated. Provisions are measured at
the present value of best estimate of the expenditure
required to settle the present obligation at the balance
sheet date.

The discount rate used to determine the present value is
a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to
the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
Expected future operating losses are not provided for.

Contingencies

Contingent liability is disclosed for:

â¢ Possible obligations which will be confirmed only
by future events not wholly within the control of
the Company; or

â¢ Present obligations arising from past events where
it is not probable that an outflow of resources will
be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot
be made. Contingent assets are not recognised.
However, when inflow of economic benefits is
probable, related asset is disclosed.

q) Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing
costs. Eligible transaction/ ancillary costs incurred in
connection with the arrangement of borrowings are
adjusted with the proceeds of the borrowings.

r) Rounding of amounts

All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
millions as per the requirement of Schedule III, unless
otherwise stated.

s) Current versus non-current classification

The Company presents assets and liabilities in
the Balance Sheet based on the current/non-
current classification.

An asset is treated as current when:

â¢ It is expected to be realised or intended to be sold
or consumed in normal operating cycle;

â¢ It is held primarily for the purpose of trading;

â¢ It is expected to be realised within twelve months
after the reporting period; or

â¢ It is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

Current assets include the current portion of nonÂ¬
current financial assets. The Company classifies all
other assets as non-current.

A liability is treated current when:

â¢ It is expected to be settled in normal operating cycle;

â¢ It is held primarily for the purpose of trading;

â¢ It is due to be settled within twelve months after
the reporting period; or

â¢ There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.

Current liabilities include current portion of non-current
financial liabilities. The Company classifies all other
liabilities as non-current.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve
months as its operating cycle for the purpose of current/
non-current classification of assets and liabilities.

2.3 Significant accounting judgements, estimates and
assumptions

The preparation of financial statements in conformity
with Ind AS requires management to make judgements,
estimates and assumptions that affect the application
of accounting policies and the reported amount of
assets, liabilities, income, expenses and disclosures
of contingent assets and liabilities at the date of these
financial statements andthe reported amount of revenues
and expenses for the years presented. Actual results
may differ from the estimates. Estimates and underlying
assumptions are reviewed at each balance sheet date.
Revisions to accounting estimates are recognised
in the period in which the estimates are revised and
future periods affected. In particular, information about
significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have
the most significant effect on the amounts recognised
in the financial statements includes:

a) Provisions

At each balance sheet date basis the management
judgment, changes in facts and legal aspects, the
Company assesses the requirement of provisions

against the outstanding contingent liabilities. However,
the actual future outcome may be different from
this judgement.

b) Contingencies

Contingent liabilities may arise from the ordinary course
of business in relation to claims against the Company,
including legal, contractual and other claims. By their
nature, contingencies will be resolved only when one or
more uncertain future events occur or fail to occur. The
assessment of the existence, and potential quantum,
of contingencies inherently involves the exercise
of significant judgments and the use of estimates
regarding the outcome of future events.

c) Recognition of deferred tax assets

The extent to which deferred tax assets can be
recognised is based on an assessment of the probability
that future taxable income will be available against
which the deductible temporary differences can be
utilised. In addition, significant judgement is required in
assessing the impact of any legal or economic limits or
uncertainties in various tax jurisdictions.

d) Useful lives of tangible/intangible assets

The Company reviews its estimate of the useful lives
of tangible/intangible assets at each reporting date,
based on the expected utility of the assets.

e) Defined benefit obligation

The cost of the defined benefit plan and other postÂ¬
employment benefits and the present value of such
obligation are determined using actuarial valuations. An
actuarial valuation involves making various assumptions
that may differ from actual developments in the future.
These include the determination of the discount rate,
future salary increases, mortality rates and future
pension increases. In view of the complexities involved
in the valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each
reporting date.

f) Impairment of non-financial assets and goodwill

In assessing impairment, Company estimates the
recoverable amount of each asset or cash-generating
units based on expected future cash flows and uses an
interest rate to discount them. Estimation uncertainty
relates to assumptions about future operating results
and the determination of a suitable discount rate.

g) Fair value measurement of financial instruments

including the DCF model. The inputs to these models
are taken from observable markets where possible,
but where this is not feasible, a degree of judgment
is required in establishing fair values. Judgements
include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of
financial instruments.

h) Measurement of share-based payments;

The fair value of employee stock options is measured
using the Black-Scholes model. Measurement inputs
include share price on grant date, exercise price of
the instrument, expected volatility (based on weighted
average historical volatility), expected life of the
instrument (based on expected exercise behaviour),
expected dividends, and the risk free interest rate
(based on government bonds)

i) Capitalisation of internally developed intangible
assets

The Company applies judgement in determining at
what point the recognition criteria under Ind AS 38
is satisfied with respect to technology development
expenditure being incurred.

2.4 Application of new and revised Indian Accounting
Standard (Ind AS)

For the year ended 31^st March 2025, MCA has not
notified any new standards applicable to the Company.

Recent Indian Accounting Standards (Ind AS)

The Ministry of Corporate Affairs vide notification
dated 31^st March 2023 notified the Companies (Indian
Accounting Standards) Amendment Rules, 2023, which
amended certain accounting standards (see below),
and are effective 1^st April 2024:

1. Amendments to Ind AS 116 - Lease liability in a
sale and leaseback

2. Introduction of Ind AS 117

3. The amendments to Ind AS 21 The Effects of
Changes in Foreign Exchange Rates specify
how an entity should assess whether a currency
is exchangeable and how it should determine
a spot exchange rate when exchangeability is
lacking. The amendments also require disclosure
of information that enables users of its financial
statements to understand how the currency not
being exchangeable into the other currency
affects, or is expected to affect, the entityâs financial
performance, financial position and cash flows.

The Company has reviewed the new pronouncements
and based on its evaluation has determined that these
amendments do not have a significant impact on the
Companyâs Standalone Financial Statements.

Notes:

a) Indian Rupee loans repayable on demand from banks

Above working capital loan is secured by first pari passu charge on entire current assets of the Company and
second pari passu charge on the entire moveable fixed assets, present and future, of the company and immovable
fixed assets situated at Gurgaon only.

Repayment and rate of interest:

i) Cash credit as on 31^st March 2024 was amounting to INR 9.23 million was repayable on demand carries interest @
floating rate linked with T-bill current year effective rate was 9.15 % p.a.

ii) EPC as on 31^st March 2024 was amounting to 1,728.72 million was repayable on demand carries interest @ floating
rate linked with T-bill current year effective rate was the range of 5.18% - 5.54% p.a.

b) Indian Rupee loans repayable on demand from NBFC

The Company enters into factoring arrangements with recourse for its trade receivables with Tata Capital Financial
Services Limited. As at 31 March 2024 the Company had factoring facilities in place for trade receivables amounting
to INR 105.89 million were realised by using these facilities against which the monies were yet to be collected by
the financial institution from the Companyâs customer. The Company does not derecognise the receivables from
its books since, it does not transfer substantially all the risks and rewards of ownership of the financial asset
(i.e. receivables) and a corresponding liability towards the banks is recognised in respect of aforementioned
amounts so realised by the Company from the banks but yet to be collected by the financial institution from the
Companyâs customers.

All the loans were repaid during the year.

Valuation technique to determine fair value

Cash and cash equivalents, other bank balances, trade receivables, current investment, other current financial assets, trade
payables, current borrowings and other current financial liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments. The fair value of the financial assets and liabilities is the amount at which the
instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. For
valuation techniqe to determine fair value of derivative financial assets refer note 48.

(b) Fair value hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its
financial assets/liabilities into the three levels prescribed under the accounting standard. An explanation of each level
follows underneath.

(a) Credit Risk Management

(i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis
of assumptions, inputs and factors specific to the class of financial assets.

a) Low credit risk

b) Moderate credit risk

c) High credit risk

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a
litigation decided against the Company. The Company continues to engage with parties whose balances are written off
and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

There are no transfers amongst levels during the year

Level 1: It includes financial instruments measured using quoted prices in active markets for identical assets or liabilities.

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs other than Level 1
inputs; and

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in
level 3.

33 FINANCIAL RISK MANAGEMENT

The Companyâs principal financial liabilities comprise loans and borrowings, trade payables and other financial liabilities.
The main purpose of these financial liabilities is to provide finance to the Company to support its operations. The
Companyâs principal financial assets include loans, trade and other receivables; cash and bank balances etc. that derive
directly from its operations.

The Companyâs activities expose it to the financial risk of market risk, credit risk and liquidity risk . The Company enters
into a certain derivative financial instrument to manage its exposure to foreign currency. There have been no major
changes to the Companyâs exposure to market risk or the manner in which it manages and measures the risk in recent
past. The Companyâs senior management oversees the management of these risks. The Companyâs senior management
ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that
financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.

(A) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument fails to discharge an obligation to the
Company. The Companyâs maximum exposure to credit risk is limited to the carrying amount of following types of
financial assets.

- Cash and cash equivalents

- Trade receivables

- Loans carried at amortised cost, and

- Other financial assets

- Derivative financial assets

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and
diversifying bank deposits and accounts in different banks across the country. In respect of derivative assets, the credit
risk is considered negligible as counterparties are banks.

Trade receivables

To mitigate the credit risk related to trade receivables, the Company closely monitors the credit-worthiness of the trade
receivables through internal systems that are configured to define credit limits of customers, thereby, limiting the credit
risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable
that become past due and default is considered to have occurred when amounts receivable become past due.

(b) Expected credit losses for financial assets (other than trade receivables)

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing
individual financial instruments for expectation of any credit losses.

For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the
underlying asset.

For other financial assets - Credit risk is evaluated based on Company knowledge of the Credit worthiness of those
parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and
purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial
assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for
lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss
based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach. In accordance
with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses
a provision matrix to compute the expected credit loss allowance of trade receivables. The provision matrix takes
into account available external and internal credit risk factors such as default risk of industry, historical experience for
customers etc. However, the allowance for lifetime expected credit loss on customer balances for the year ended 31^stMarch 2025, and for the year ended 31^st March 2024 is insignificant. Considering the nature of trade receivables, and
entityâs history of credit with those receivables, entity has rebutted the presumption of having significant increases in
credit risk since initial recognition for financial assets which are more than 30 days past due.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as
equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings,
deposits and foreign currency receivables and payables. The sensitivity of the relevant profit and loss item is the effect
of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company is exposed to risk of changes in borrowing rates. The Board continuously
monitors the prevailing interest rates in the market.

(B) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at
reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and
liquidity requirements. The Company closely monitors its liquidity position and maintains adequate source of financing
through the use of short term bank deposits, demand loans and cash credit facility. Processes and policies related to
such risks are overseen by senior management.

(i) Maturities of financial liabilities

The table below provides details regarding the non-derivative financial liabilities have contractual undiscounted
maturities as summarised below:

(ii) Foreign currency risk

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions,
primarily with respect to the trade receivables and payables. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional
currency (INR ) also refer note 48.

34 CAPITAL MANAGEMENT

For the purposes of the Companyâs capital management, capital includes equity attributable to the equity holders of the
Company and all other equity reserves. The primary objective of the Companyâs capital management is to ensure that
it maintains an efficient capital structure and maximise shareholder value. The Company manages its capital structure
and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To
maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new
shares. The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using net debt to equity ratio, which is net debt (as reduced by cash and cash equivalent)
divided by total equity.

XI The average duration of the defined benefit plan obligation at the end of the reporting period is 5-6.20 years (31^st March
2024: 5-6.23 years)

XII The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation,
seniority, promotion and other relevant factors including supply and demand in the employment market. The above
information is as certified by the Actuary. The sensitivity analysis above have been determined based on a method that
extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at
the end of the reporting period. The expected contribution to the plan is expected to be similar to that of current year.

XIII Plan is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit
at the time of retirement or termination of the employment on completion of five years or death while in employement.
The level of benefit provided depends on the memberâs length of service and salary at the time of retirement/
termination age.

The Board of the Company in its meeting held on 10^th February 2025 has approved execution of an agreement for purchase
of plot of land measuring 33,423 (thirty three thousand four hundred twenty three) square yards equivalent to 27,945.89
(twenty seven thousand nine hundred forty five point eight eight five) square meters forming part of the industrial plot
bearing no. 115 and half of plot no. 114 located in Sector 24, Faridabad, Haryana from Escort Kubota, adjacent to the land of
Railway Equipment Division (âREDâ) business of Escorts Kubota, for total consideration of INR 1100 million, which may help
in its future expansion plans.

43 LEASES

i) The Company has entered into lease arrangements for land, building and plant and machinery that are renewable on a
periodic basis with approval of both lessor and lessee.

ii) The Company does not have any lease commitments towards variable rent as per the contract.

iii) Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset
to another party, the right-of-use asset can only be used by the Company. The Company is prohibited from selling or
pledging the underlying leased assets as security. For leases over land and building the Company must keep those
properties in a good state of repair and return the properties in their original condition, except for normal wear and tear,
at the end of the lease. Further, the Company shall insure items owned by it and incur maintenance fees on such items
in accordance with the lease contracts.

The Company has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12
months or less) and for leases of low value assets.

The Company determines the leases term as either the non-cancellable period of the lease and any additional periods
when there is an enforceable option to extend the lease and it is reasonably certain that the Company will extend the
term, or a lease period in which it is reasonably certain that the Company will not exercise a right to terminate. The lease
term is reassessed if there is a significant change in circumstances.

44 REVENUE FROM CONTRACTS WITH CUSTOMERS

(a) Disaggregation of revenue

The Company has performed a disaggregated analysis of revenues considering the nature, amount, timing and
uncertainty of revenues. This includes disclosure of revenues by geography and timing of recognition.

a) Share-based payments

Employee Stock Option Scheme Sona BLW Precision Forging Limited- 2020 (âSona BLW ESOP Plan-2020â) was approved
by the shareholders of the Sona BLW Precision Forgings Limited on 30^th September 2020. The maximum number of
Options granted under the Sona BLW ESOP Plan-2020 shall be 3,342,672 Options which shall upon exercise convert
into maximum 3,342,672 Shares. The Sona BLW ESOP Plan entitles employees of the Company to excercise shares
in the Company at the stipulated exercise price, subject to compliance with vesting conditions. A description of the
share-based payment arrangement of the Company is given below:

Stock options will be settled by issue of equity shares of the Company. As per the plan, holders of vested options are
entitled to purchase one equity share for every option at an exercise price of INR 38.34 per option which against the fair
market value of INR 79.17 per share determined on the date of grant, i.e. 1^st October 2020.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options
granted. The fair values of options granted were determined using Black-Scholes option pricing model that takes into
account factors specific to the share incentive plans along with other external inputs. Expected volatility has been
determined by reference to the average volatility for comparable companies for corresponding option term. Total
Company share-based payment to employees amounting INR Nil for the year ended 31^st March 2025 ( INR 8.70 million
for the year ended 31^st March 2024) is recognised in the statement of profit and loss of the Companny pertaining
to options issued to employees of the Company . The following principal assumptions were used in the valuation:
Expected volatility was determined by comparison with peer companies, as the Companyâs shares were not publicly
traded at that time. The expected option life and average expected period to exercise, is assumed to be equal to the
contractual maturity of the option. Dividend yield is taken as 1.6% based on the the expected dividend payout by the
management. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option.
At each balance sheet date, the Company reviewed its estimates of the number of options that are expected to vest.
The Company recognises the impact of the revision to original estimates, if any, in the profit or loss in statement of
comprehensive income, with a corresponding adjustment to âretained earningsâ in equity. The fair value of option using
Black Scholes model and the inputs used for the valuation for options that have been granted during the reporting
period are summarised as follows:

(b) Share-based payments

Employee Stock Option Scheme Sona BLW Precision Forging Limited- 2023 (âSona BLW ESOP Plan-2023â) was approved
by the shareholders of the Sona BLW Precision Forgings Limited on 19^th July 2023. The maximum number of Options
to be granted under the Sona BLW ESOP Plan-2023 shall be 7,610,402 Options which shall upon exercise shall convert
into maximum 7,610,402 Shares. The Sona BLW ESOP Plan - 2023 entitles employees of the Company to excercise
shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. A description of
the Share-based payment arrangement of the Company is given below:

Stock options will be settled by issue of equity shares of the Company. As per the plan, holders of vested options are
entitled to purchase one equity share for every option at an exercise price of INR 508.95/ INR 641.60 per option against
the fair market value of INR 508.95/INR 641.60 per share determined on the date of grant, i.e. 25^th October 2023 and
15^th March 2024 respectively.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options
granted. The fair values of options granted were determined using Black-Scholes option pricing model that takes into
account factors specific to the share incentive plans along with other external inputs. Expected volatility has been
determined by reference to the average volatility for comparable companies for corresponding option term. Total
Company share-based payment to employees amounting INR 269.27 million (excluding INR 18.42 million capitalised)
for the year ended 31^st March 2025 (31^st March 2024 INR 138.31 million (excluding INR 11.57 million capitalised))
is recognised in the statement of profit and loss of the Companny pertaining to options issued to employees of the
Company . The following principal assumptions were used in the valuation: Expected volatility was determined basis
50% weight to Sona BLW Precision Forgings Limited and a balance of 50% weight equally to the other comparable
companies. The expected option life and average expected period to exercise, is assumed to be equal to the contractual
maturity of the option. Dividend yield is taken as 0.55% and 0.48% based on the the expected dividend payout by the
management. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option.
At each balance sheet date, the Company reviewed its estimates of the number of options that are expected to vest.
The Company recognises the impact of the revision to original estimates, if any, in the profit or loss in statement of
comprehensive income, with a corresponding adjustment to âretained earningsâ in equity. The fair value of option using
Black Scholes model and the inputs used for the valuation for options that have been granted during the reporting
period are summarised as follows:

46 (a) Intangible assets impairment testing
Goodwill

As per note no. 4 , Company has recognised an amount of INR 1,582.24 million as Goodwill including assembled
workforce and future customers. Annual test for impairment of goodwill was carried out as at 31^st March 2025 and
31^st March 2024, details of which are outlined below. The outcome of the test indicated that the value in use of business
was higher than its carrying value in those CGUâs (Cash generating unit). Accordingly, no impairment charge has been
recognised in the standalone statement of profit and loss.

The recoverable amount of each CGU was determined based on value-in-use calculations using a discount rate ranging
between 13.00%-14.50% reflecting current market assessments of the time value of money and risks specific to the
business, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal
growth rate of approximately 3.5% - 4.5% as determined by the management.

Brand

On 1^st August 2018, the Company acquired SONA Intellectual property rights (ââSona IPââ) and all rights thereto from
SONA Management Services Limited (ââSMSLââ) having indefinite useful lives, pursuant to which the company had
recognised brand amounting to INR 687.40 million. This was due to the expectation of permanent use of acquired
brand. The Company tests on an annual basis whether the brand is impaired based on the value-in-use concept of
the entity basis certain inputs outlined below. In March 2025 and March 2024, there was no impairment identified for
the brand.

The recoverable amount of the entity was determined on the basis of value in use based on the present value of the
expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-
year period in total. The management believes that any reasonable possible changes in the key assumptions would not
cause the Brandâs carrying amount to exceed its recoverable amount.

The recoverable amount of the brand was determined based on value-in-use calculations for the company using a
discount rate ranging between 13%-14% reflecting current market assessments of the time value of money and risks
specific to the business as at the respective dates, covering a detailed five-year forecast , followed by an extrapolation
of expected cash flows using a terminal growth rate ranging between 4%-5% as determined by the management.

Intangible assets under development

In accordance with IND AS 36 - âImpairment of Assetsâ, the Company has carried out commercial feasibility assessment
of intangibles under development (âIAUDâ) amounting to INR 627.11 million (March 31^st 2024: INR 453.29 million) and has
not identified any impairment which is required to be recorded in the financial statements. (refer note 5)

Growth rates

The growth rates used are in line with the growth rate of the industry and the countries in which the entities operates
and are consistent with the internal/external sources of information.

Discount rates

The discount rates take into the consideration market risk and specific risk factors of the entity. The cash flow projections
are based on the forecasts made by the management.

Terminal growth rate

The terminal growth rate is the constant rate at which an entity is expected to grow at the end of the last forecasted cash
flow period in a discounted cash flow model and goes into perpetuity.

Sensitivity

The management believes that any reasonable possible changes in the key assumptions would not cause the cash
generating unitâs carrying amount to exceed its recoverable amount.

(b) Investment in Novelic d.o.o. Beograd Zvezdara

During the previous year, the Company had acquired 54% stake (representing 54% voting interest) of Novelic d.o.o., worldâs
leading self-sustaining provider of mmWave radar sensors, perception solutions, and full stack embedded systems on
6^th September 2023 for its unique & patented mmWave radar technology which is the best solution for in-cabin sensing.

As on 31^st March 2025 amount of INR 728.44 million (31^st March 2024: INR 1397.56 million) payable under a deferred
payment mechanism to founders of Novelic d.o.o. and Novelic d.o.o., as per the Share purchase agreement and
shareholder agreement.

As mentioned in the note no. 5, the Company has invested an amount of INR 3,506.37 million (March 31^st 2024:
INR 3,506.37 million) ( for acquisition of 54% voting rights of Novelic d.o.o. Beograd Zvezdara. Test for impairment of
this investment was carried out as at 31^st March 2025, details of which are outlined below. The outcome of the test
indicated that the value in use of investment was higher than its carrying value as at 31^st March 2025 and 31^st March
2024. Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of this investment was determined based on value-in-use calculations using a discount rate
ranging between 22.00%-25.00% reflecting current market assessments of the time value of money and risks specific
to the business, covering a detailed ten-year forecast , followed by an extrapolation of expected cash flows using a
terminal growth rate of approximately 3.00% - 4.00% as determined by the management.

47 During the year, the Company raised funds through Qualified Institutional Placement (QIP) of 34,782,608 Equity
Shares of the face value of INR 10 each at a premium of INR 680.00 per share aggregating to INR 24,000.00 million
(INR 23,695.00 million net of issue expenses) for certain specific purposes as stated in the Placement Document. Out
of the above QIP proceeds, INR 14,502.94 million has been utilised for the repayment of borrowings, purchase of fixed
assets and general corporate purposes and the balance INR 9,192.06 million has been temporarily invested in approved
financial instruments, pending utilisation as on 31^st March 2025. The equity shares issued as a result of QIP have been
considered in calculating earnings per share (EPS) for the relevant periods.

49 OTHER STATUTORY INFORMATION

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

(ii) The Company do not have any transactions with struck off companies during the current and previous year.

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

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

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

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

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

The Companyâs hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is
determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessment to ensure
that an economic relationship exists between the hedged item and hedging instrument.

For forward contracts, hedge effectiveness is measured using hypothetical derivative method. Ineffectiveness is measured
by comparing the change in the fair value of the actual derivative i.e. forward contracts designated as the hedging instrument
and the change in the fair value of a hypothetical derivative representing the hedged item i.e. highly probable forecast sales.
Hypothetical derivative matches the critical terms i.e. maturity date, currency and amount of highly probable forecast sales.

In hedges of foreign currency forcast sales, ineffectiveness mainly arises because of Change in timing of hedged item
from that of the hedging instrument and cost of hedging. The ineffectiveness arised in the hedges have been disclosed in
above table.

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

50 EXCEPTIONAL ITEM

(a) The Company has signed a Business Transfer Agreement (BTA) dated 23^rd October 2024 with Escorts Kubota Limited
(EKL) to acquire its Railway Equipment Division (RED) which is a leading supplier of critical components like brakes and
suspension systems to Indian Railways, as a going concern on slump sale basis, for a consideration of INR 16,000.00
million, subject to the terms of the said agreement. On 10^th February 2025 the agreement was amended, amongst
others, to revise the timeline for transfer of certain business related registrations and conditions related therewith in
order to bring forward the expected date of completion of sale/transfer of RED Business from end of September 2025
to 1^st May 2025 or such other date as mutually agreed by the Parties. Parties have subsequently mutually agreed to
extend the closing date to 1^st June 2025 or such other date as mutually agreed by the Parties. Since all the conditions
necessary for closing the transaction have not been met, no effect has been given in the financial statements with
respect to this business acquisition.

The exceptional item is related to costs incurred in relation to various acquisition opportunities.

(b) During previous financial year, the Company had completed the acquisition of 54% voting rights in Novelic d.o.o. on 6^thSeptember 2023, through acquisition of 51% voting rights from the existing shareholders and 3% voting rights as a result
of capital infusion in Novelic d.o.o., as per the Share purchase agreement and shareholder agreement. The exceptional
item is related to diligence work and other expenses incurred on for the said acquisition.

Notes:-

i) HDFC,SBI, CITI and Yes Banks are represented as Working capital lenders.

* Above information is given as per the norms of working capital lenders.

53 Previous yearâs figures has been regrouped and/ or reclassed wherever necessary to confirm to the current yearâs
groupings and classifications. The impact of such reclassification/regrouping is not material to the financial statements.

54 Authorisation of Standalone financial statements

The Standalone financial Statements for the year ended 31^st March 2025 were approved by the Board of Directors on
30^th April 2025.

This is the summary of material accounting policy information and other explanatory information form an integral part of these Standalone
financial statements.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of

Chartered Accountants Sona Blw Precision Forgings Limited

Firm Registration No.: 001076N/N500013

Arun Tandon Sunjay Kapur Vivek Vikram Singh

Partner Non-Executive Chairman Managing Director and

Membership No.: 517273 DIN: 00145529 Group Chief Executive Officer

DIN: 07698495

Rohit Nanda Ajay Pratap Singh

Group Chief Financial Officer Company Secretary

Membership No.: FCS 5253

Place: New Delhi Place: Gurugram

Date: 30^th April 2025 Date: 30^th April 2025

Mar 31, 2024

a) Provisions

At each balance sheet date basis the management judgement, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

b) Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractual and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgements and the use of estimates regarding the outcome of future events.

c) Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

d) Useful lives of tangible/intangible assets

The Company reviews its estimate of the useful lives of tangible/intangible assets at each reporting date, based on the expected utility of the assets.

e) Defined benefit obligation

The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. In view of the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

f) impairment of non-financial assets and goodwill

In assessing impairment, Company estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

g) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

h) Measurement of share based payments;

The fair value of employee stock options is measured using the Black-Scholes model. Measurement inputs include share price on grant date, exercise price of the instrument, expected volatility (based on weighted average historical volatility), expected life of the instrument (based on expected exercise behaviour), expected dividends, and the risk free interest rate (based on government bonds)

i) Capitalisation of internally developed intangible assets

The Company applies judgement in determining at what point the recognition criteria under Ind AS 38 is satisfied with respect to technology development expenditure being incurred.

2.4 Application of new and revised Indian Accounting Standard (ind AS)

The Ministry of Corporate Affairs vide notification dated 31^st March 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023, which amended certain accounting standards (see below), and are effective 1 April 2023:

â¢ Disclosure of accounting policies - amendments to Ind AS 1

â¢ Definition of accounting estimates - amendments to Ind AS 8

These amendments did not have any material impact on the Company. For the year ended March 31, 2024, MCA has not notified any new standards applicable to the Company.

(i) Building (gross block) amounting INR 1,102.27 million (31^st March 2023: INR 1,012.16 million), net block INR 824.55 million (31^st March 2023:INR 857.59 million) is constructed on leasehold land.

(ii) Refer note 40 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) Refer note 15 for information on property, plant and equipment pledged as security by the company.

(iv) Property, plant and equipment, Capital work-in-progress include gross assets amounting to INR 425.44 million (31^st March 2023 : INR 359.35 million) relating to development.

(v) Property, plant and equipment (net carrying amount) of INR 134.94 million (31^st March 2023 : INR 131.00 million) and capital work in progress of INR 26.29 million (31^st March 2023 : INR 28.00 million) is lying with job workers. Also includes amount of INR 22.05 million pertaining to projects in progress which have crossed the budgeted period.

33 FINANCIAL RISK MANAGEMENT

The Company''s principal financial liabilities comprise loans and borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to provide finance to the Company to support its operations. The Company''s principal financial assets include loans, trade and other receivables; cash and bank balances etc. that derive directly from its operations.

The Company''s activities expose it to the financial risk of market risk, credit risk and liquidity risk . The Company enters into a certain derivative financial instrument to manage its exposure to foreign currency. There have been no major changes to the Company''s exposure to market risk or the manner in which it manages and measures the risk in recent past. The Company''s senior management oversees the management of these risks. The Company''s senior management ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.

(A) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument fails to discharge an obligation to the Company. The Company''s maximum exposure to credit risk is limited to the carrying amount of following types of financial assets.

- Cash and cash equivalents

- Trade receivables

- Loans carried at amortised cost, and

- Other financial assets

- Derivative financial assets

(a) Credit Risk Management

(i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

a) Low credit risk

b) Moderate credit risk

c) High credit risk

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

(b) Expected credit losses for financial assets (other than trade receivables)

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

For other financial assets - Credit risk is evaluated based on Company knowledge of the Credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance of trade receivables. The provision matrix takes into account available external and internal credit risk factors such as default risk of industry, historical experience for customers etc. However, the allowance for lifetime expected credit loss on customer balances for the year ended 31^st March 2024, and for the year ended 31^st March 2023 is insignificant.Considering the nature of trade receivables, and entity''s history of credit with those receivables, entity has rebutted the presumption of having significant increases in credit risk since initial recognition for financial assets which are more than 30 days past due.

46 (A) INTANGIBLE ASSETS IMPAIRMENT TESTING

Goodwill

As per note no. 4 , Company has recognised an amount of INR 1,582.24 million as Goodwill including assembled workforce and future customers. Annual test for impairment of goodwill was carried out as at 31^st March 2024 and 31^st March 2023, details of which are outlined below. The outcome of the test indicated that the value in use of business was higher than its carrying value in those CGU''s (Cash generating unit). Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of each CGU was determined based on value-in-use calculations using a discount rate ranging between 13.00%-14.50% reflecting current market assessments of the time value of money and risks specific to the business, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate of approximately 3.5% - 4.5% as determined by the management.

Brand

On 1 August 2018, the Company acquired SONA Intellectual property rights (""Sona IP"") and all rights thereto from SONA Management Services Limited (""SMSL"") having indefinite useful lives, pursuant to which the company had recognised brand amounting to INR 687.40 million. This was due to the expectation of permanent use of acquired brand. The Company

tests on an annual basis whether the brand is impaired based on the value-in-use concept of the entity basis certain inputs outlined below. In March 2024 and March 2023, there was no impairment identified for the brand.

The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the Brand''s carrying amount to exceed its recoverable amount.

The recoverable amount of the brand was determined based on value-in-use calculations for the company using a discount rate ranging between 13%-14% reflecting current market assessments of the time value of money and risks specific to the business as at the respective dates, covering a detailed five-year forecast, followed by an extrapolation of expected cash flows using a terminal growth rate ranging between 4.%-5% as determined by the management.

Intangible assets under development

As per note no. 5 , the Company had recognised an amount of INR 453.29 million (31^st March 2023 : INR 217.79 million) as Intangible assets under development. Annual test for impairment of Intangible assets under development was carried out as at 31^st March 2024 and 31^st March 2023, details of which are outlined below. The outcome of the test indicated that the value in use of business was higher than its

carrying value in those CGU''s (Cash generating unit). Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of each CGU was determined based on value-in-use calculations using a discount rate ranging between 13.00%-14.50% reflecting current market assessments of the time value of money and risks specific to the business, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate of approximately 3.5%- 4.5% as determined by the management.

Growth rates

The growth rates used are in line with the growth rate of the industry and the countries in which the entities operates and are consistent with the internal/external sources of information.

Discount rates

The discount rates take into the consideration market risk and specific risk factors of the entity. The cash flow projections are based on the forecasts made by the management.

Terminal growth rate

The terminal growth rate is the constant rate at which an entity is expected to grow at the end of the last forecasted cash flow period in a discounted cash flow model and goes into perpetuity.

Sensitivity

The management believes that any reasonable possible changes in the key assumptions would not cause the cash generating unit''s carrying amount to exceed its recoverable amount.

(B) Investment in Novelic d.o.o, Beograd Zvezdara

The Company has acquired 54% stake (representing 54% voting interest) of Novelic d.o.o., world''s leading self-sustaining provider of mmWave radar sensors, perception solutions, and full stack embedded systems on 6^th September 2023 for its unique & patented mmWave radar technology which is the best solution for in-cabin sensing.

As on 31^st March 2024 amount of INR 1397.56 million payable under a deferred payment mechanism in 2 tranches to founders of Novelic d.o.o. and Novelic d.o.o., as per the Share purchase agreement and shareholder agreement.

As mentioned in the note no. 5, the Company has invested an amount of INR 3,506.37 million for acquisition of 54% voting rights of Novelic d.o.o. Beograd Zvezdara. Test for impairment of this investment was carried out as at 31^st March 2024, details of which are outlined below. The outcome of the test indicated that the value in use of investment was higher than its carrying value as at 31^st March 2024. Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of this investment was determined based on value-in-use calculations using a discount rate ranging between 22.00%-25.00% reflecting current market assessments of the time value of money and risks specific to the business, covering a detailed ten-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate of approximately 3.00% - 4.00% as determined by the management.

47 With effect from 1 April 2022, the Company has designated certain forward contracts in the cash flow hedge relationship as eligible hedging instruments for the hedge of foreign currency exposure of highly probable forecasted sales in accordance with Ind AS 109, Financial Instruments. Pursuant to this, the effective portion of change in fair value of the hedging instruments has been recognised in âcash flow hedge reserve'' under other comprehensive income. Amount recognised in cash flow hedge reserve is reclassified to profit or loss as and when the hedged item affects the profit / loss or the hedges are no longer effective.

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

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

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

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

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

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

50 EXCEPTIONAL ITEM

The Company has completed the acquisition of 54% voting rights in Novelic d.o.o. on 6^th September 2023, through acquisition of 51% voting rights from the existing shareholders and 3% voting rights as a result of capital infusion in Novelic d.o.o., as per the Share purchase agreement and shareholder agreement. The exceptional item is related to diligence work for the said acquisition.

54 AUTHORISATION OF STANDALONE FINANCIAL STATEMENTS

The Standalone financial Statements for the year ended 31^st March 2024 were approved by the Board of Directors on 30^th April 2024.

The accompanying summary of accounting policies and significant explanatory notes form an integral part of these Standalone financial statements.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of

Chartered Accountants SONA BLW PRECISION FORGINGS LIMITED

Firm Registration No. : 001076N/N500013

Arun Tandon Sunjay Kapur Vivek Vikram Singh

Partner Non-Executive Chairman Managing Director and

Membership No.: 517273 DIN: 00145529 Group Chief Executive Officer

DIN: 07698495

Rohit Nanda Ajay Pratap Singh

Group Chief Financial Officer Company Secretary

M.No. - FCS-5253

Place: New Delhi Place: Gurugram

Date: 30^th April 2024 Date: 30^th April 2024

Mar 31, 2023

(i) Building (gross block) amounting '' 1,012.16 million (31 March 2022: '' 208.91 million), net block '' 857.59 million (31 March 2022: '' 150.33 million) is constructed on leasehold land.

(ii) Refer note 40 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) The Company has a leasehold land at Pune which has been taken on a lease for a period of 95 years in the year 2018-19. Initial lease payment of '' 227.68 million has been made. No annual rent is required to be paid for the aforementioned leasehold land.

(iv) The Company has a leasehold land at Pune which has been taken on a lease for a period of 71 years and 8 months in the year 2004-05. Initial lease payment of '' 17.15 millions has been made. No annual rent is required to be paid for the aforementioned leasehold land.

(v) Refer note 15 for information on property, plant and equipment pledged as security by the company.

(vi) Property, plant and equipment, Capital work-in-progress include gross assets amounting to '' 550.14 million ( March 31 2022 : '' 349.46 million) relating to development.

(vii) Property, plant and equipment of '' 131.00 million (31 March 2022 : '' 111.00 million) and capital work in progress of '' 28.00

million (31 March 2022 : '' 19.00 million) is lying with job workers.

ii) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(iv) The Board of Directors of the Company had approved the following: issuance of 11 (Eleven) bonus shares of face value '' 10 (Rupees Ten) each for every 1 (One) existing fully paid up equity share of face value '' 10 (Rupees Ten) each (including the equity shares issued upon conversion of the Compulsorily Convertible Preference Shares (CCPS) and accordingly 525,232,180 bonus shares were issued, which were allotted on 10 February 2020. Other than this, the Company has not issued any shares pursuant to contracts without payment being received in cash, or allotted as fully paid up by way of bonus shares during the period ended 31 March 2023 and five years immediately preceding the year ended 31 March 2023.

In earlier years, the Company transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. This reserve is available for distribution to shareholders in accordance with provisions of Companies Act, 2013.

Companies Act, 2013 requires that where a Company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to the buyback of shares in earlier years.

a) Indian Rupee loans repayable on demand from banks

Above working capital loan is secured by first pari passu charge on entire current assets of the Company and second pari passu charge on the entire moveable fixed assets, present and future, of the company and immovable fixed assets situated at Gurgaon only.

Repayment and rate of interest:

i) Cash credit amounting to '' 7.67 million (31 March 2022 : '' 0.11 million) is repayable on demand carries interest @ floating rate linked with T-bill current year effective rate is 8.66% p.a (31 March 2022 : 7.10% p.a.)

ii) WCDL amounting to '' 11.54 million (31 March 2022 : 57.04 million) is repayable on demand carries interest @ floating rate linked with T-bill current year effective rate is 7.45% p.a (March 31, 2022: 7.20% p.a.)

iii) EPC amounting to '' 1,423.25 million (31 March 2022 : Nil) is repayable on demand carries interest @ floating rate linked with T-bill current year effective rate in the range of 5.02% - 6.17% p.a. (March 31, 2022: Nil)

b) Indian Rupee loans repayable on demand from NBFC

The Company enters into factoring arrangements with recourse for its trade receivables with Tata Capital Financial Services Limited. As at 31 March 2023 the Company had factoring facilities in place for trade receivables and amount of '' 144.72 million (31 March 2022: '' 196.11 million) were realised by using these facilities against which the monies were yet to be collected by the financial institution from the Company''s customer. The Company does not derecognise the receivables from its books since, it does not transfer substantially all the risks and rewards of ownership of the financial asset (i.e. receivables) and a corresponding liability towards the banks is recognised in respect of aforementioned amounts so realised by the Company from the banks but yet to be collected by the financial institution from the Company''s customers.

Valuation technique to determine fair value

Cash and cash equivalents, other bank balances, trade receivables, other current financial assets, trade payables, current borrowings and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

(b) Fair value hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial assets/liabilities into the three levels prescribed under the accounting standard. An explanation of each level follows underneath.

33 FINANCIAL RISK MANAGEMENT

(A) Credit risk

- Cash and cash equivalents

- Trade receivables

- Loans carried at amortised cost, and

- Other financial assets

- Derivative financial assets

(a) Credit Risk Management

(i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

a) Low credit risk

b) Moderate credit risk

c) High credit risk

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country. In respect of derivative assets, the credit risk is considered negligible as counterparties are banks.

Trade receivables

To mitigate the credit risk related to trade receivables, the Company closely monitors the credit-worthiness of the trade receivables through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due.

(b) Expected credit losses for financial assets (other than trade receivables)

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

For other financial assets - Credit risk is evaluated based on Company knowledge of the Credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance of trade receivables. The provision matrix takes into account available external and internal credit risk factors such as default risk of industry, historical experience for customers etc. However, the allowance for lifetime expected credit loss on customer balances for the year ended 31 March 2023, and for the year ended 31 March 2022 is insignificant.

(B) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company''s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and maintains adequate source of financing through the use of short term bank deposits, demand loans and cash credit facility. Processes and policies related to such risks are overseen by senior management.

(C) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits and foreign currency receivables and payables. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to risk of changes in borrowing rates. The Board continuously monitors the prevailing interest rates in the market.

(ii) Foreign currency risk

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the trade receivables and payables. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (?) also refer note 48.

34 CAPITAL MANAGEMENT

For the purposes of the Company''s capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company''s capital management is to ensure that it maintains an efficient capital structure and maximise shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements.

The Board of Directors of the Company in its meeting held on May 03, 2023 has approved and declared final dividend of '' 1.53/- i.e (15.3%) per equity share of the Company having face value of '' 10/- each for the financial year 2022-2023, subject to approval from shareholders.

35 SEGMENT INFORMATION

The Company''s operating business is organised and managed according to a single primary reportable business segment namely âAutomotive Componentsâ. The Company has opted to provide segment information in its consolidated Ind AS financial statements in accordance with para 4 of Ind AS 108 - Operating Segments.

36 RELATED PARTY DISCLOSURES

In accordance with the requirement of Indian Accounting Standard (Ind AS) 24 "Related Party Disclosures", name of the related parties, related party relationships, transactions and outstanding balances including commitments where control exist and with whom transactions have taken place during the reported period are as follows:

(a) Names of related parties and nature of relationship

(i) Entity exercising control of Company

Singapore VII Topco III Pte Ltd. (till 21^st June 2021)

(ii) The entity having substantial interest in the Company

Aureus Investment Private Limited ( formerly known as Sona Autocomp Holding Private Limited)

Singapore VII Topco III Pte Ltd. (with effect from 21^st June 2021 till 13th March 2023)

(iii) Ultimate holding Company

BCP Topco I Pte Ltd.( till 21^st June 2021)

Terms and conditions

All the transactions were made on normal commercial terms and conditions and at market rates. All outstanding balances are unsecured.

Corporate guarantee given on behalf of Sona Comstar Edrive Private Limited is '' 83.23 million (March 31 2022 : '' 83.23 million).

B Defined benefit plans:

(i) Gratuity

The Company operates post retirement defined benefit plan for retirement gratuity, which is funded. The Company through the gratuity trust has taken Company gratuity policy of Life Insurance Corporation of India Gratuity Scheme.

XI The average duration of the defined benefit plan obligation at the end of the reporting period is 4-6.27 years (31 March 2022: 6.30 - 9 years)

XII The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The expected contribution to the plan is expected to be similar to that of current year.

XIII Plan is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employement. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age

39 CONTINGENT LIABILITIES
	As at 31^st March 2023	As at 31^st March 2022
a) Claims against the Company not acknowledged as debts
i) Service tax
Cases pending before Appellate authorities in respect of which the Company has filed appeals/show cause notices. (FY 2005-06 to 2007-08)	0.47	0.47
ii) Income Tax *
Income Tax Appellate Tribunal restored the matter with the Jurisdictional Ld. Assessing officier (AY-2011-12)**	2.14	4.21
Income Tax Appellate Tribunal restored the matter with the Jurisdictional Ld. Assessing officier (AY-2012-13)	3.18	3.18
Cases pending before ITAT in respect of which the Company has filed appeal (AY-2013-14)	2.12	2.12
Cases pending before ITAT in respect of which the Company has filed appeal (AY-2016-17)	2.50	2.00
Cases pending before CIT in respect of which the Company has filed appeal (AY-2017-18)¹	84.05	77.25
Cases pending before CIT in respect of which the Company has filed appeal (AY-2018-19)	6.96	6.01
(iii) Central Excise Act, 1944
Case pending before Directorate General of Goods And Service Tax Intelligence in respect of which the Compay has filed appeals. (FY 2014-15 to FY 2017-18)	14.85	14.85
(iv) Goods and Services tax Act
Writ petition filed before high court (GST case)	281.97	-

*Amount paid under protest of '' 24.48 million (31 March 2022: '' 24.48 million)

** Total disputed amount of the case is '' 4.21 million(including interest liability) out of which '' 2.27 million (including interest liability) has been provided as a provision and balance amount of '' 2.14 million (including interest liability) is being disclosed as a contingent liability.

d) The company has given letter of undertaking to its subsidiary company namely "Comstar Automotive Hongkong Limitedâ to provide finanial support if any required by the subsidiary company, for the year from 1^st April 2023 to 31^st March 2024 to allow it to continue as a going concern.

43 LEASES

i) The Company has entered into lease arrangements for land, building and plant and machinery that are renewable on a periodic basis with approval of both lessor and lessee.

ii The Company does not have any lease commitments towards variable rent as per the contract.

iii) Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over land and building the Company must keep those properties in a good state of repair and return the properties in their original condition, except for normal wear and tear, at the end of the lease. Further, the Company shall insure items owned by it and incur maintenance fees on such items in accordance with the lease contracts.

The Company determines the leases term as either the non-cancellable period of the lease and any additional periods when there is an enforceable option to extend the lease and it is reasonably certain that the Company will extend the term, or a lease period in which it is reasonably certain that the Company will not exercise a right to terminate. The lease term is reassessed if there is a significant change in circumstances.

45 SHARE BASED PAYMENTS

Employee Stock Option Scheme Sona BLW Precision Forging Limited- 2020 (''Sona BLW ESOP Plan-2020'') was approved by the shareholders of the Sona BLW Precision Forging Limited on 30 September 2020. The maximum number of Options to be granted under the Sona BLW ESOP Plan-2020 shall be 3,342,672 Options which shall upon exercise shall convert into maximum 3,342,672 Shares. The Sona BLW ESOP Plan entitles employees of the Company to purchase shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. A description of the share based payment arrangement of the Company is given below:

Stock options will be settled by issue of equity shares of the Company. As per the plan, holders of vested options are entitled to purchase one equity share for every option at an exercise price of '' 38.34 per option which against the fair market value of '' 79.17 per share determined on the date of grant, i.e. 1 October 2020.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The fair values of options granted were determined using Black-Scholes option pricing model that takes into account factors specific to the share incentive plans along with other external inputs. Expected volatility has been determined by reference to the average volatility for comparable companies for corresponding option term. Total Company share based payment to employees amounting '' 30.18 million for the year ended 31 March 2023 ( '' 66.60 million for the year ended 31 March 2022) is recognised in the statement of profit and loss of the Companny pertaining to options issued to employees of the Company . The following principal assumptions were used in the valuation: Expected volatility was determined by comparison with peer companies, as the Company''s shares were not publicly traded at that time. The expected option life and average expected period to exercise, is assumed to be equal to the contractual maturity of the option. Dividend yield is taken as 1.6% based on the the expected dividend payout by the management. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option. At each balance sheet date, the Company reviewed its estimates of the number of options that are expected to vest. The Company recognises the impact of the revision to original estimates, if any, in the profit or loss in statement of comprehensive income, with a corresponding adjustment to âretained earnings'' in equity. The fair value of option using Black Scholes model and the inputs used for the valuation for options that have been granted during the reporting period are summarised as follows:

During the year ended 31 March 2021, the Board of Directors of the Company has approved the issuance of 11 (Eleven) bonus shares of face value '' 10 (Rupees Ten) each for every 1 (One) existing fully paid up equity share of face value '' 10 (Rupees Ten) each. Accordingly number of options has been increased to twelve times of original options and fair value and exercise price of options has been reduced to one twelth from previous values.

46 INTANGIBLE ASSETS IMPAIRMENT TESTING

Goodwill

As mentioned in the below note no. 49 company has recognised an amount of '' 1,582.24 million as Goodwill including assembled workforce and future customers. Annual test for impairment of goodwill was carried out as at 31 March 2023 and 31 March 2022, details of which are outlined below. The outcome of the test indicated that the value in use of business was higher than its carrying value in those CGU''s (Cash generating unit). Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of each CGU was determined based on value-in-use calculations using a discount rate ranging between 11.50%-14.50% reflecting current market assessments of the time value of money and risks specific to the business, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate of approximately 3.5% - 4.5% as determined by the management.

Brand

On 1 August 2018, the Company acquired SONA Intellectual property rights (""Sona IP"") and all intellectual property rights thereto from SONA Management Services Limited (""SMSL"") having indefinite useful lives.pursuant to which the company had recognised brand amounting to '' 687.40 million. This was due to the expectation of permanent use of acquired brand. The Company tests on an annual basis whether the brand is impaired based on the value-in-use concept of the entity basis certain inputs outlined below. In March 2023 and March 2022, there was no impairment identified for the brand. The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the Brand''s carrying amount to exceed its recoverable amount.

The recoverable amount of the brand was determined based on value-in-use calculations for the company using a discount rate ranging between 11.50%-14.00% reflecting current market assessments of the time value of money and risks specific to the business as at the respective dates, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate ranging between 4%-5% as determined by the management.

Technology development expenditure

As per note 4, the Company had capitalised technology development expenditure of INR 402.13 million towards the development of hybrid starter motor (BSG technology) as at 1^st Feb 2020. The development expenditure incurred towards Hybrid starter motor was put to impairment test as at 31^st March 2023 and 31^stMarch 2022. The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the hybrid starter motor (BSG technology) carrying amount to exceed its recoverable amount. Carrying value as on 31^st March 2023 is '' 228.30 million (March 31^st 2022 : '' 308.73 million).

The recoverable amount of was determined based on value-in-use calculations using a discount rate of11.50%-13.50% reflecting current market assessments of the time value of money and risks specific to the technology, covering a detailed five-year forecast.

As per note 4, the Company had capitalised technology development expenditure of INR 590.77 million towards the development of Electric starter motor (BLDC technology) as at 1^st Feb 2020. The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the Electric starter motor (BLDC technology) carrying amount to exceed its recoverable amount. Carrying value as on 31^st March 2023 is '' 335.40 million (March 31^st 2022 : '' 453.54 million).

Customer Relationships

As mentioned in the below note no. 49 company has recognised an amount of '' 2,929.00 million as Customer relationship. Annual test for impairment of customer relationship was carried out as at 31 March 2023 and 31 March 2022, details of which are outlined below. The outcome of the test indicated that the value in use of business was higher than its carrying value in those

CGU''s (Cash generating unit). Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss. The Carrying value as on 31^st March 2023 is '' 2,198.76 million (March 31^st 2022 : '' 2,393.86 million).

Growth rates

The growth rates used are in line with the growth rate of the industry and the countries in which the entities operates and are consistent with the internal/external sources of information.

Discount rates

The discount rates take into the consideration market risk and specific risk factors of the entity. The cash flow projections are based on the forecasts made by the management.

Terminal growth rate

The terminal growth rate is the constant rate at which an entity is expected to grow at the end of the last forecasted cash flow period in a discounted cash flow model and goes into perpetuity.

Sensitivity

The management believes that any reasonable possible changes in the key assumptions would not cause the cash generating unit''s carrying amount to exceed its recoverable amount.

The Company''s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instrument.

For forward contracts, hedge effectiveness is measured using hypothetical derivative method. Ineffectiveness is measured by comparing the change in the fair value of the actual derivative i.e. forward contracts designated as the hedging instrument and the change in the fair value of a hypothetical derivative representing the hedged item i.e. highly probable forecast sales. Hypothetical derivative matches the critical terms i.e. maturity date, currency and amount of highly probable forecast sales.

In hedges of foreign currency forcast sales, ineffectiveness mainly arises because of Change in timing of hedged item from that of the hedging instrument and cost of hedging. The ineffectiveness arised in the hedges have been disclosed in above table.

49 MERGER WITH COMSTAR AUTOMOTIVE TECHNOLOGIES PRIVATE LIMITED

During the year ended 31 March 2022, the Hon''ble National Company Law Tribunal, Chandigarh Bench, vide order dated 7th January, 2022 (âOrderâ), has approved the Scheme of Amalgamation of Comstar Automotive Technologies Private Limited (âWholly Owned Subsidiaryâ) with Sona BLW Precision Forgings Limited (âCompanyâ) with effect from 5th July , 2019 (âAppointed Dateâ) and the Order was filed by the Company with the Registrar of Companies, NCT of Delhi and Haryana on 28th January, 2022. Accordingly, the Company has accounted for the merger as mentioned in the Scheme retrospectively and restated numbers for period presented as prescribed in Appendix C of IND AS 103 -Business Combinations. Goodwill (including assembled workforce) and customer relationships, earlier recorded in the consolidated financial statements amounting to '' 1,582.24 million and '' 2,929 million are now recorded in standalone financial statements. Change in the tax base of customer relationship after the merger has resulted in creation of merger reserve amounting to '' 737.23 million.

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

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

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

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

51 EXCEPTIONAL ITEM

In previous year the exceptional item w.r.t Initial Public Offer related income represents the pro-rata Initial Public Offer expenses recovered from the selling shareholder recorded as an exceptional income in the Statement of Profit and Loss.

In current year Company has signed a Binding Term Sheet with the shareholders of NOVELIC d.o.o. Beograd - Zvezdara (a company registered with Business Registers Agency having office in Belgrade, Serbia) (âNOVELICâ) where in it has agreed to acquire at least 54% shares capital and voting rights in , subject to execution of definitive agreements and completion of certain identified conditions precedent. The exceptional item is related to diligence work for the said acquisition.

52 The Company completed its maiden Initial Public Offer of 190,721,649 Equity Shares of the face value of '' 10/- each at an issue price of '' 291/- per Equity Share, comprising offer for sale of 180,412,371 shares by selling shareholders and fresh issue of 10,309,278 shares. The Equity Shares of the Company were listed on 24 June 2021 on Bombay Stock Exchange and National Stock Exchange of India Limited. Singapore VII Topco III Pte. Ltd., one of earstwhile promoters of the Company sold their 13.60% and 20.50% stake on 18^th August 2022 and 13^th March, 2023 respectively. As a result of this transaction Singapore VII Topco III Pte. Ltd. no longer holds any stake in the company.

56 Previous year''s figures has been regrouped and/ or reclassed wherever necessary to confirm to the current year''s groupings and classifications. The impact of such reclassification/regrouping is not material to the financial statements.

57 Authorisation of Standalone financial statements

The Standalone financial Statements for the year ended 31 March 2023 were approved by the Board of Directors on 03rd May 2023.

The accompanying summary of accounting policies and significant explanatory notes form an integral part of these Standalone financial statements.

Total disputed amount of the case is '' 85.88 million(including interest liability) out of which '' 8.63 million (including interest liability) has been provided as a provision and balance amount of '' 77.25 million (including interest liability) is being disclosed as a contingent liability.

As hearing date has not yet been set and therefore it is not practicable to state the timing of the payment, if any.

b) There are labour cases pending before High Court and Labour Commissioner/Officer. The Company has been legally advised that the cases filed by the employees are not sustainable in law and accordingly no provision has been made therefore. Moreover no monetary claim was filed or is pending.

Mar 31, 2022

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Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ''10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The Board of Directors of the Company have approved the following: issuance of 11 (Eleven) bonus shares of face value '' 10 (Rupees Ten) each for every 1 (One) existing fully paid up equity share of face value '' 10 (Rupees Ten) each (including the equity shares issued upon conversion of the Compulsorily Convertible Preference Shares (CCPS) and accordingly 525,232,180 bonus shares were issued, which were allotted on 10^th February 2020. Other than this, the Company has not issued any shares pursuant to contracts without payment being received in cash, or allotted as fully paid up by way of bonus shares during the period ended 31^st March 2022 and five years immediately preceding the year ended 31^st March 2021.

Rights, preferences and restrictions attached to preference shares

Each compulsorily convertible preference shares (CCPS) has a par value of ''10 and would be converted into equity shares of the holding company on the date falling five years from the date of issue of such CCPS or the last date of conversion under applicable laws, whichever is earlier. The preference shareholders shall receive a dividend of 0.01% per annum and carry a preferential right vis-a-vis equity shares of the holding company with respect to payment of dividend or repayment of capital. Each CCPS shall have the same voting as that given to the equity shareholders in the shareholdersâ meeting, to the extent of their respective ownership of equity shares (assuming the CCPS have been converted into equity shares in accordance with their terms).The preference shares shall have preferential rights vis-a-vis the equity shares, with respect to interest and other distribution rights and rights on liquidation, dissolution and winding up of the affairs of the holding company.

) In the board meeting on 27^th January 2021 the board Board of Directors of the Company has approved the conversion of the compulsorily convertible preference shares (CCPS) into the equity shares of the Company in accordance with the Share Subscription and Share Purchase Agreement dated 16^th October 2018 executed between inter alia, the Company and the Investor. Number of equity shares issued against conversion of CCPS : 594,436.

) The Board of Directors of the Company has approved the following: issuance of 11 (Eleven) bonus shares of face value '' 10 (Rupees Ten) each for every 1 (One) existing fully paid up equity share of face value '' 10 (Rupees Ten) each (including the equity shares issued upon conversion of the Compulsorily Convertible Preference Shares (CCPS) and accordingly 525,232,180 bonus shares were issued, which were allotted on 10^th February 2020. Other than this, the Company has not issued any shares pursuant to contracts without payment being received in cash, or allotted as fully paid up by way of bonus shares during the period ended 31^st March 2022 and five years immediately preceding the year ended 31^st March 2021.

* The Company enters into factoring arrangements with recourse for its trade receivables with Tata Capital Financial Services Limited. As at 31 March 2022 the Company had factoring facilities in place for trade receivables and amount of '' 196.11 million (31 March 2021: ''102.93 million) were realised by using these facilities against which the monies were yet to be collected by the financial institution from the Companyâs customer. The Company does not derecognise the receivables from its books since, it does not transfer substantially all the risks and rewards of ownership of the financial asset (i.e. receivables) and a corresponding liability towards the banks is recognised in respect of aforementioned amounts so realised by the Company from the banks but yet to be collected by the financial institution from the Companyâs customers.

There are no transfers amongst levels during the year.

Level 1: It includes financial instruments measured using quoted prices in active markets for identical assets or liabilities.

Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs other than Level 1 inputs; and Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

33 FINANCIAL RISK MANAGEMENT

The Companyâs principal financial liabilities comprise loans and borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to provide finance to the Company to support its operations. The Companyâs principal financial assets include loans, trade and other receivables; cash and bank balances etc. that derive directly from its operations.

The Companyâs activities expose it to the financial risk of market risk, credit risk and liquidity risk. The Company enters into a certain derivative financial instrument to manage its exposure to foreign currency. There have been no major changes to the Companyâs exposure to market risk or the manner in which it manages and measures the risk in recent past. The Companyâs senior management oversees the management of these risks. The Companyâs senior management ensures that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.

(A) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument fails to discharge an obligation to the Company. The Companyâs maximum exposure to credit risk is limited to the carrying amount of following types of financial assets.

- Cash and cash equivalents

- Trade receivables

- Loans carried at amortised cost, and

- Other financial assets

- Derivative financial assetsâ

(a) Credit Risk Management

(i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

a) Low credit risk

b) Moderate credit risk

c) High credit risk

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country. In respect of derivative assets, the credit risk is considered negligible as counterparties are banks.

Trade receivables

To mitigate the credit risk related to trade receivables, the Company closely monitors the credit-worthiness of the trade receivables through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due.

Other financial assets measured at amortised cost

Other financial assets measured at amortised cost includes security deposits, other receivables etc. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.

(b) Expected credit losses for financial assets (other than trade receivables)

(i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

For cash & cash equivalents and other Bank balances - Since the Company deals with only High-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as low.

For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

For other financial assets - Credit risk is evaluated based on Company knowledge of the Credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognises lifetime expected credit losses on trade receivables using a simplified approach. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance of trade receivables. The provision matrix takes into account available external and internal credit risk factors such as default risk of industry, historical experience for customers etc. However, the allowance for lifetime expected credit loss on customer balances for the period ended 31^st March 2022, and for the years ended 31^st March 2021 is insignificant.

(B) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Companyâs objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and maintains adequate source of financing through the use of short-term bank deposits, demand loans and cash credit facility. Processes and policies related to such risks are overseen by senior management.

(C) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits and foreign currency receivables and payables. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to risk of changes in borrowing rates. The Board continuously monitors the prevailing interest rates in the market.

(ii) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the trade receivables and payables. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency ('').

34 CAPITAL MANAGEMENT

For the purposes of the Companyâs capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Companyâs capital management is to ensure that it maintains an efficient capital structure and maximise shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Companymay adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements.

The Board of Directors of the Company in its meeting held on 5^th May 2022 has approved and declared final dividend of '' 0.77/- i.e (7.7%) per equity share of the Company having face value of '' 10/- each for the financial year 2021-22.

35 SEGMENT INFORMATION

The Companyâs operating business is organised and managed according to a single primary reportable business segment namely âAutomotive Componentsâ. The Company has opted to provide segment information in its consolidated Ind AS financial statements in accordance with para 4 of Ind AS 108 - Operating Segments.

36 RELATED PARTY DISCLOSURES

I n accordance with the requirement of Indian Accounting Standard (Ind AS) 24 âRelated Party Disclosuresâ, name of the related parties, related party relationships, transactions and outstanding balances including commitments where control exist and with whom transactions have taken place during the reported period are as follows:

(a) Names of related parties and nature of relationship

(i) Entity exercising control of Company

Singapore VII Topco III Pte Ltd. (with effect from 5^th July 2019 till 21^st June 2021)

(ii) The entity having substantial interest in the Company

Sona Autocomp Holding Private Limited

Singapore VII Topco III Pte Ltd. (with effect from 21^st June 2021)

(iii) Ultimate holding Company

BCP Topco I Pte Ltd.( till 21^st June 2021)

XI The average duration of the defined benefit plan obligation at the end of the reporting period is 6.30 - 9 years (31^st March 2021: 6.28 - 9 years)

XII The estimates of rate of escalation in salary considered in actuarial valuation are after taking into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

XIII Plan is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employement. The level of benefit provided depends on the memberâs length of service and salary at the time of retirement/termination age

43 LEASES

i ) The Company has entered into lease arrangements for land, building and plant and machinery that are renewable on a periodic basis with approval of both lessor and lessee.

ii) The Company does not have any lease commitments towards variable rent as per the contract.

iii) Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over land and building the Company must keep those properties in a good state of repair and return the properties in their original condition, except for normal wear and tear, at the end of the lease. Further, the Company shall insure items owned by it and incur maintenance fees on such items in accordance with the lease contracts.

45 SHARE BASED PAYMENTS

Employee Stock Option Scheme Sona BLW Precision Forging Limited- 2020 (âSona BLW ESOP Plan-2020â) was approved by the shareholders of the Sona BLW Precision Forging Limited on 30^th September 2020. The maximum number of Options to be granted under the Sona BLW ESOP Plan-2020 shall be 3,342,672 Options which shall upon exercise shall convert into maximum 3,342,672 Shares. The Sona BLW ESOP Plan entitles employees of the Company to purchase shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. A description of the share based payment arrangement of the Company is given below:

Particulars	Sona BLW Precision Forging Limited Employee Stock Option Plan
Exercise Price	'' 38.34
Grant date	1^st October 2020
Vesting schedule	1,087,740 options 12 months after the grant date (âFirst vestingâ)
1,087,740 options 24 months after the grant date (âSecond vestingâ)
1,087,740 options 36 months after the grant date (âThird vestingâ)
Exercise period	Stock options can be exercised within a period of 3 years from vesting date.
Number of share options granted	32,63,220
The total pool of Options that can be granted under the ESOP Plan is 3,342,672 (Thirty three lakhs forty two thousand six hundred seventy two) Options out of which 3,263,220 (Thirty two lakhs sixty three thousand two hundred twenty) options were granted to the employees.
Method of settlement	Equity

Stock options will be settled by issue of equity shares of the Company. As per the plan, holders of vested options are entitled to purchase one equity share for every option at an exercise price of '' 38.34 per option which against the fair market value of '' 79.17 per share determined on the date of grant, i.e. 1^st October 2020.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The fair values of options granted were determined using Black-Scholes option pricing model that takes into account factors specific to the share incentive plans along with other external inputs. Expected volatility has been determined by reference to the average volatility for comparable companies for corresponding option term. Total Company share based payment to employees amounting '' 66.61 million for the year ended 31^st March 2022 ( '' 45.37 million for the year ended 31^st March 2021) is recognised in the statement of profit and loss of the Company pertaining to options issued to employees of the Company . The following principal assumptions were used in the valuation: Expected volatility was determined by comparison with peer companies, as the Companyâs shares were not public traded at that time. The expected option life and average expected period to exercise, is assumed to be equal to the contractual maturity of the option. Dividend yield is taken as 1.6% based on the expected dividend payout by the management. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option. At each balance sheet date, the Company reviewed its estimates of the number of options that are expected to vest. The Company recognises the impact of the revision to original estimates, if any, in the profit or loss in standalone statement of comprehensive income, with a corresponding adjustment to âretained earningsâ in equity. The fair value of option using Black Scholes model and the inputs used for the valuation for options that have been granted during the reporting period are summarised as follows:

During the year ended 31^st March 2021, the Board of Directors of the Company has approved the issuance of 11 (Eleven) bonus shares of face value '' 10 (Rupees Ten) each for every 1 (One) existing fully paid up equity share of face value '' 10 (Rupees Ten) each. Accordingly number of options has been increased to twelve times of original options and fair value and exercise price of options has been reduced to one twelth from previous values.

46 GOODWILL AND BRAND IMPAIRMENT TESTING Goodwill

As mentioned in the below note no. 49 company has recognised an amount of '' 1,582.24 million as Goodwill including assembled workforce and future customers. Annual test for impairment of goodwill was carried out as at 31^st March 2022 and 31^st March 2021, details of which are outlined below. The outcome of the test indicated that the value in use of business was higher than its carrying value in those CGUâs (Cash generating unit). Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss.

The recoverable amount of each CGU was determined based on value-in-use calculations using a discount rate ranging between 12%-14% reflecting current market assessments of the time value of money and risks specific to the business, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate of approximately 3%- 4% as determined by the management.

Brand

On 1^st August 2018, the Company acquired SONA Intellectual property rights (âSona IPâ) and all intellectual property rights thereto from SONA Management Services Limited (âSMSLâ) having indefinite useful lives. This was due to the expectation of permanent use of acquired brand. The Company tests on an annual basis whether the brand is impaired based on the value-in-use concept of the entity basis certain inputs outlined below. In March 2022 and March 2021, there was no impairment identified for the brand. The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the Brandâs carrying amount to exceed its recoverable amount.

The recoverable amount of the brand was determined based on value-in-use calculations for the company using a discount rate ranging between 11%-15% reflecting current market assessments of the time value of money and risks specific to the business as at the respective dates, covering a detailed five-year forecast , followed by an extrapolation of expected cash flows using a terminal growth rate ranging between 3%-4% as determined by the management.

Intangible Asset

As per Note 4 to the standalone financial statements, the company had capitalised technology development expenditure of '' 402.13 million towards the development of hybrid starter motor (BSG technology) as at 1^st Feb 2020. The development expenditure incurred towards Hybrid starter motor was put to impairment test as at 31^st March 2022. The outcome of the test indicated that the value in use of the asset was higher than its carrying value of '' 308.74 million as at 31^st March 2022. Accordingly, no impairment charge has been recognised in the standalone statement of profit and loss. The recoverable amount of was determined based on value-in-use calculations using a discount rate of 11.5% reflecting current market assessments of the time value of money and risks specific to the technology, covering a detailed five-year forecast.

Growth rates

The growth rates used are in line with the growth rate of the industry and the countries in which the entities operates and are consistent with the internal/external sources of information.

Discount rates

The discount rates take into the consideration market risk and specific risk factors of the entity. The cash flow projections are based on the forecasts made by the management.

Terminal growth rate

The terminal growth rate is the constant rate at which an entity is expected to grow at the end of the last forecasted cash flow period in a discounted cash flow model and goes into perpetuity.

Sensitivity

The management believes that any reasonable possible changes in the key assumptions would not cause the cash generating unitâs carrying amount to exceed its recoverable amount.

(Figures in million unless siatea otherwise;

47 The Company has considered the possible effects that may arise out of the still unfolding COVID-19 pandemic on the carrying amounts of property, plant & equipment, intangible assets, investments, inventories, trade receivables, etc. For this purpose, the Company has considered internal and external sources of information up to the date of approval of the Standalone Financial Results. Based on the current estimates, the Company does not expect any significant impact on such carrying values. The Company will continue to closely monitor any material changes to future economic conditions .

48 RELINQUISHMENT OF RIGHT

In the board meeting on 12 Feb 2021 the board has approved waiver of the right to sell 19% shares in Sona Holding BV (put option) to Sona Autocomp at a pre-agreed consideration of ''19 million and a waiver of the right to buy 81% shares in Sona Holding BV (call option) from Sona Autocomp at a pre-agreed formula based price defined in European Seperation Agreement. The decision was made taking cognisance of the situation that Sona Holding B.V, The Netherlands now has no business operations left in any of its subsidiaries. Put option waiver was approved as a transaction not at armâs length whereas waiver of call option was approved as a transation at armâs length. Accordingly, the carrying value for 19% investment in Sona B.V. of ''19 million as on 31^st March 2020, has been taken as '' Nil as at 31^st March 2021 and the resultant fair value loss has been booked under other comprehensive income.

49 MERGER WITH COMSTAR AUTOMOTIVE TECHNOLOGIES PRIVATE LIMITED

The Honâble National Company Law Tribunal, Chandigarh Bench, vide order dated 7^th January, 2022 (âOrderâ), has approved the Scheme of Amalgamation of Comstar Automotive Technologies Private Limited (âWholly Owned Subsidiaryâ) with Sona BLW Precision Forgings Limited (âCompanyâ) with effect from 5^th July, 2019 (âAppointed Dateâ) and the Order was filed by the Company with the Registrar of Companies, NCT of Delhi and Haryana on 28^th January, 2022. Accordingly, the Company has accounted for the merger as mentioned in the Scheme retrospectively and restated numbers for period presented as prescribed in Appendix C of IND AS 103 - Business Combinations. Goodwill (including assembled workforce) and customer relationships, earlier recorded in the consolidated financial statements amounting to '' 1,582.24 million and '' 2,929 million are now recorded in standalone financial statements. Change in the tax base of customer relationship after the merger has resulted in creation of merger reserve amounting to '' 737.23 million

50 OTHER STATUTORY INFORMATION

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

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

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

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

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

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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

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

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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

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

51 EXCEPTIONAL ITEM

As per the terms of contract with the Selling shareholders, all Initial Public Offering (âIPOâ) related expenses were to be borne by the Company and the Selling shareholders in proportion to the number of Equity Shares issued and/or transferred by each one of them in the IPO respectively. However, in the event that the Issue was withdrawn by the Company or not completed for any reason whatsoever, all the Issue related expenses would have to be solely borne by the Company.

During the year ended 31^st March 2021, the Company had incurred expenses amounting to '' 143.23 million related to the proposed IPO of the company. Considering the fact that the recovery of expenses incurred was not virtually certain as on 31^st March 2021, the management decided to charged off '' 139.06 million to the Statement of Profit and Loss as an Exceptional Expense and the remaining amount of '' 4.17 million was recorded under the head âOther Current Assetsâ.

In year ended 31^st March 2022, since the IPO has now been completed, the pro-rata IPO expenses recovered from the selling shareholder have been recorded as an exceptional income in the Statement of Profit and Loss. Pro-rata IPO expenses related to fresh issue of shares have been charged off to the equity in compliance with the applicable accounting standards.

52 The Parent Company completed its maiden Initial Public Offer of 190,721,649 Equity Shares of the face value of '' 10/- each at an issue price of '' 291/- per Equity Share, comprising offer for sale of 180,412,371 shares by selling shareholders and fresh issue of 10,309,278 shares. The Equity Shares of the Company were listed on 24^th June 2021 on Bombay Stock Exchange and National Stock Exchange of India Limited.

Notes:

i) HDFC Bank and SBI are represented as Working capital lenders

# The difference in the trade receivables between the books of account and the amount reported to banks is on account of adjustment of bill discounting for a specific debtor. Rest of the differences are not significant.

* Above information is given as per the norms of working capital lenders ** Q4 FY22 Quarter figure are post merger (refer note 49)

56 Previous year''s figures has been regrouped and/ or reclassed wherever necessary to confirm to the current year''s groupings and classifications.

57 AUTHORISATION OF STANDALONE FINANCIAL STATEMENTS

The Standalone financial Statements for the year ended 31^st March 2022 were approved by the Board of Directors on 5^th May 2022.

The accompanying summary of accounting policies and significant explanatory notes form an integral part of these Standalone financial statements.

Mar 31, 2021

. FINANCIAL RISK MANAGEMENT

(A) Credit risk

- Cash and cash equivalents

- Trade receivables

- Loans carried at amortized cost, and

- Other financial assets

- Derivative financial assets

(a) Credit Risk Management

(i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

a) Low credit risk

b) Moderate credit risk

c) High credit risk

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognized in statement of profit and loss.

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country. In respect of derivative assets, the credit risk is considered negligible as counterparties are banks.

Trade receivables

To mitigate the credit risk related to trade receivables, the Company closely monitors the credit-worthiness of the trade receivables through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due.

Other financial assets measured at amortized cost

Other financial assets measured at amortized cost includes security deposits, other receivables etc. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.

(b) Expected credit losses for financial assets (other than trade receivables)

i) Financial assets (other than trade receivables)

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.

For other financial assets - Credit risk is evaluated based on Company knowledge of the Credit worthiness of those parties and loss allowance is measured. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognized on such assets.

ii) Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach. In accordance with Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance of trade receivables. The provision matrix takes into account available external and internal credit risk factors such as default risk of industry, historical experience for customers etc. However, the allowance for lifetime expected credit loss on customer balances for the period ended 31^st March 2021, and for the years ended 31^st March 2020 is insignificant.

(B) Liquidity risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risks include loans and borrowings, deposits and foreign currency receivables and payables. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to risk of changes in borrowing rates. The Board continuously monitors the prevailing interest rates in the market.

(ii) Foreign currency risk

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the trade receivables and payables. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency ('').

For the purposes of the Company''s capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company''s capital management is to ensure that it maintains an efficient capital structure and maximize shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements.

35. SEGMENT INFORMATION

The Company has opted to provide segment information in its consolidated Ind AS financial statements in accordance with para 4 of Ind AS 108 - Operating Segments.

36. RELATED PARTY DISCLOSURES

In accordance with the requirement of Indian Accounting Standard (Ind AS) 24 âRelated Party Disclosuresâ, name of the related parties, related party relationships, transactions and outstanding balances including commitments where control exist and with whom transactions have taken place during the reported period are as follows:

(a) Names of related parties and nature of relationship (i) Entity exercising control of Company

Singapore VII Topco III Pte Ltd. (with effect from 5^th July 2019)

Sona Autocomp Holding Private Ltd. with ultimate control exercised by RK Family Trust (from 9^th February 2018 till 4^th July 2019)

43. LEASES

i) The Company has entered into lease arrangements for land, building and plant and machinery that are renewable on a periodic basis with approval of both lessor and lessee.

ii) The Company does not have any lease commitments towards variable rent as per the contract.

iii) Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over land and building the Company must keep those properties in a good state of repair and return the properties in their original condition, except for normal wear and tear, at the end of the lease. Further, the Company shall insure items owned by it and incur maintenance fees on such items in accordance with the lease contracts.

There are insignificant discounts offered by the Company to its customers for the period ended 31^st March 2021''1.26 million (31^st March 2020: '' 3.19 million)

45. SHARE BASED PAYMENTS

Sona BLW Precision Forgings Limited Employee Stock Option Plan (''Sona BLW ESOP Plan'') was approved by the Board of Directors and the shareholders of the Sona BLW Precision Forgings Limited (the Company) on 30^th September 2020. The plan entitles employees of the Company and Comstar Automotive Technologies Private Limited (CATPL) (together referred as ''Group'') to purchase shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. A description of the share based payment arrangement of the Group is given below:

The total amount to be expensed over the vesting period is determined by reference to the fair value of th options granted. The fair values of options granted were determined using Black-Scholes option pricir model that takes into account factors specific to the share incentive plans along with other external input Expected volatility has been determined by reference to the average volatility for comparable companii for corresponding option term. Out of total ''Group share based payment to employees'' amounting '' 45.3 million for the year ended 31^st March 2021, '' 30.61 million was recognized in the statements of profit an loss of the Company pertaining to options issued to employees of the Company and remaining amount '' 14.76 million increased the investment in equity shares of CATPL. The following principal assumptior were used in the valuation: Expected volatility was determined by comparison with peer companies, as th Company''s shares are not presently publicly traded. The expected option life and average expected peric to exercise, is assumed to be equal to the contractual maturity of the option. Dividend yield is taken as 1.6 based on the the expected dividend payout by the management. The risk-free rate is the rate associated wi a risk-free security with the same maturity as the option. At each balance sheet date, the Group reviews its estimates of the number of options that are expected to vest. The Group recognizes the impact of th revision to original estimates, if any, in the profit or loss in consolidated statement of comprehensive incom with a corresponding adjustment to ''retained earnings'' in equity. The fair value of option using Black Scholf model and the inputs used for the valuation for options that have been granted during the reporting perio are summarized as follows:

46. BRAND IMPAIRMENT TESTING

On 1^st August 2018, the Company acquired SONA Intellectual property rights (âSona IPâ) and all intellectual property rights thereto from SONA Management Services Limited (âSMSLâ) having indefinite useful lives. This was due to the expectation of permanent use of acquired brand. The Company tests on an annual basis whether the brand is impaired based on the value-in-use concept of the entity basis certain inputs outlined below. In March 2021 and March 2020, there was no impairment identified for the brand. The recoverable amount of the entity was determined on the basis of value in use based on the present value of the expected future cash flows. This calculation uses cash flow projections based on the financial planning covering a five-year period in total. The management believes that any reasonable possible changes in the key assumptions would not cause the Brand''s carrying amount to exceed its recoverable amount.

The recoverable amount of the brand was determined based on value-in-use calculations for the company using a discount rate ranging between 14.00%-17.00% reflecting current market assessments of the time value of money and risks specific to the business as at the respective dates, covering a detailed five-year forecast with a growth rate ranging between 16.00%-30.00%, followed by an extrapolation of expected cash flows using a terminal growth rate ranging between 1.50%-3.00% as determined by the management.

Growth rates

The growth rates used are in line with the growth rate of the industry and the countries in which the entities operates and are consistent with the internal/external sources of information.

Discount rates

The discount rates take into the consideration market risk and specific risk factors of the entity. The cash flow projections are based on the forecasts made by the management.

Terminal growth rate

The terminal growth rate is the constant rate at which an entity is expected to grow at the end of the last forecasted cash flow period in a discounted cash flow model and goes into perpetuity.

Sensitivity

The management believes that any reasonable possible changes in the key assumptions would not cause the cash generating unit''s carrying amount to exceed its recoverable amount.

47. In March 2020, the World Health Organization declared the COVID-19 to be a pandemic. Consequent to this, Government of India declared a nationwide lockdown on 25^th March 2020, which has impacted the business activities of the Company. The Company has assessed the impact that may result from this pandemic on its liquidity position, carrying amount of receivables, inventories, tangible and intangible assets, investment and other assets / liabilities. In developing the assumptions relating to the possible future uncertainties in the global economic condition because of this pandemic, the Company has considered internal and external information available till the date of approval of these Standalone financial statements and has assessed its situation. Given the uncertainties of the pandemic, the final impact on the Company''s assets in future may differ from that estimated as at the date of approval of these financial results, and the Company will continue to closely monitor any material changes to future economic conditions.

48. RELINQUISHMENT OF RIGHT

In the board meeting on 12^th Feb 2021 the Board has approved waiver of the right to sell 19% shares in Sona Holding B.V. (put option) to Sona Autocomp Holding Pvt. Ltd. at a pre-agreed consideration of '' 19 million and a waiver of the right to buy 81% shares in Sona Holding B.V. (call option) from Sona Autocomp Holding Pvt. Ltd. at a pre-agreed formula based price defined in European Separation Agreement. The decision was made taking cognizance of the situation that Sona Holding B.V. The Netherlands now has no business operations left in any of its subsidiaries. Put option waiver was approved as a transaction not at arm''s length whereas waiver of call option was approved as a transation at arm''s length. Accordingly, the carrying value for 19% investment in Sona Holding B.V. of '' 19 million as on 31^st March 2020, has been taken as '' Nil as at 31^st March 2021 and the resultant fair value loss has been booked under other comprehensive income.

49. SALE OF INVESTMENT IN SONA HOLDING B.V., THE NETHERLANDS

Pursuant to the terms of the Share Purchase and Shareholder''s Agreement dated 16^th October 2018 and the approval of the Board of Directors and the shareholders in their meetings held on 3^rd July 2019, the Company had disposed off on 4^th July 2019 (a) 40,727 Equity Shares, representing 81% (eighty one percent) of the Equity Shares on a Fully Diluted Basis, and (b) 1,673,918 Redeemable Preference Shares , representing 81% of investment held in Sona Holding B.V. as on 31^st March 2019 to Sona Autocomp Holding Private Limited (âSAHPLâ). The sale of investment by the Company to SAHPL was carried out at a total consideration of '' 1,399.48 million as per the valuation report obtained from an independent expert. As per the aforementioned agreement, the Company has a put option to sell all the securities held in Sona Holding B.V., The Netherlands, by the Company along with its subsidiaries to SAHPL for the put consideration of '' 19 million.

50. FOREIGN DIRECT INVESTMENT MADE BY SINGAPORE VII TOPCO III PTE LTD

Pursuant to the terms of the Shares Subscription and Share Purchase Agreement dated 16^th October 2018 and the approval of the Board of Directors and the shareholders in their meetings held on 5^th July 2019, the Company had made an allotment of equity shares of '' 8,477.30 million and compulsorily convertible preference shares of '' 228.76 million.

During the year ended 31^st March 2020, pursuant to the terms of the Shares Subscription and Share Purchase Agreement dated 16^th October 2018 entered into by the Company with Singapore VII Topco III Pte Ltd and the approval of the Board of Directors and the shareholders in their meetings held on 5^th July 2019, the Company has issued 22,028,503 equity shares having a face value of '' 10 per share and 594,436 compulsorily convertible preference shares having a face value of '' 10 per share at '' 374.83 per share. Pursuant to this, Company has recorded '' 220.29 million as equity share capital, '' 5.94 million as compulsorily convertible preference shares capital and '' 8,479.83 million under Securities Premium Account.

51. ACQUISITION OF COMSTAR ENTITIES

Pursuant to terms of the Comstar Share Purchase Agreement and the approval of the Board of Directors and the shareholders in their meetings held on 5^th July 2019, the Company had acquired 100% equity shares of Comstar Automotive Technologies Pvt. Ltd. (Comstar India) and Comstar Automotive Hong Kong Limited

52. WRITE OFF OF THE INVESTMENT IN SUBSIDIARY

The Company had made a provision of impairment in value of investment in Sona Holding B.V.,Netherlands amounting to Euro 6.90 million (equivalent to approx. '' 407.65 million) in its audited financial statements for the year ended 31^st March 2016 as âExceptional itemâ on account of bankruptcy application filed by Sona BLW Precision Forge Inc., USA, a step down subsidiary. After the consent of Board of Directors to write off the investment in Sona Holding B.V. Netherlands, Company had filed an application to Reserve Bank of India through State Bank of India (i.e. authorized dealer) to obtain the approval on write off of the partial equity investment in Sona Holding B.V. Netherlands amounting to Euros 6.90 million. On 28^th June 2019, Company has received NOC for writing off equity investment of Euro 6.90 million vide RBI Letter (reference no. FE.CO. OID./7659/19.19.832/2018-19) and thereafter Company has written off investment of '' 407.65 million in books of accounts.

53. PROPOSED MERGER WITH COMSTAR AUTOMOTIVE TECHNOLOGIES PRIVATE LIMITED

The Company had filed a Scheme of Amalgamation under sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 before the NCLT Chandigarh (the âSchemeâ) on 10^th January 2020. Pursuant to the Scheme, Comstar Automotive Technologies Private Limited is proposed to merge with the Company from 5^th July 2019, being the appointed date. The Scheme was approved by Board on 20^th December 2019. The rationale for the proposed merger is for consolidation and simplification of existing structure and more focused operational efforts, realizing synergies in terms of compliance, governance, administration and costs, among other things. The first motion order was passed on 22^nd December 2020 dispensing with the requirement to convene the meeting of the equity shareholders, preference shareholder, secured creditors and unsecured creditors of both Companies. The Second motion petition has been filed on 27^th December 2020. The Scheme is pending approval by the NCLT and is subject to receipt of requisite approvals and third party consents.

54. EXCEPTIONAL ITEM

The Company filed its Draft Red Herring Prospectus with Securities & Exchange Board of India (SEBI) on 23^rd February 2021 for a proposed Initial Public Offering (IPO) of its equity shares.

The Issue related expenses include, among others, fees payable to the Book Running Lead Managers (BRLMs) and legal and professional fees, Accountants'' fees relating to prospectus (Auditors'' fee), Listing fees, advertising, marketing expenses and all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges.

All Issue related expenses shall be shared by our Company and the Selling Shareholders in proportion to the number of Equity Shares being issued or offered, as the case may be, by each of them in the Fresh Issue and the Offer for Sale. Any payments by our Company in relation to the Issue on behalf of the Selling Shareholders shall be reimbursed by the Selling Shareholders to our Company in proportion to the Equity Shares being offered for sale by the Selling Shareholders in the Issue. However, in the event that the Issue is withdrawn by our Company or not completed for any reason whatsoever, all the Issue related expenses will be solely borne by our Company.

Basis relevant guidance available under Indian accounting standard, the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received, if the entity settles the obligation. Considering the reimbursement of expense incurred is not virtually certain, management has decided to charge off '' 139.06 million to statement of profit and loss account as an exceptional item.

55. CODE ON SOCIAL SECURITY, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on 13^th November 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company and its Indian subsidiaries will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective.

56. PROPOSED TRANSFER OF CORPORATE SOCIAL RESPONSIBILITY (CSR ) ACCOUNT

Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (âthe Rulesâ), the Company has transferred '' 5 million being the unspent amount relating to ongoing project for CSR for FY 2020-21 in a ''Unspent Corporate Social Responsibility Account (UCSRA)'' as on 16^th April 2021.

57. AUTHORIZATION OF STANDALONE FINANCIAL STATEMENT

The Standalone financial Statement for the year ended 31^st March 2021 (including comparative) were approved by the Board of Directors on 27^th April 2021.

Summary of significant accounting policies and other explanatory information.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of

Chartered Accountants Sona BLW Precision Forgings Limited

Firm Registration No. : 001076N/N500013

Arun Tandon Sunjay Kapur Vivek Vikram Singh

Partner Chairman and Non-Executive Director Managing Director and

DIN: 00145529 Group Chief Executive Officer

Membership No: 517273 DIN: 07698495

Rohit Nanda Ajay Pratap Singh

Group Chief Financial Officer Company Secretary

Membership No. F5253

Place: New Delhi Place: Gurugram

Date: 27^th April 2021 Date: 27^th April 2021

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