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Notes to Accounts of Titagarh Rail Systems Ltd.

Mar 31, 2023

b) Refer Note 38 for disclosure of contractual commitments for acquisition of Property, Plant and Equipment.

c) Refer Note 15 for information on Property, Plant and Equipment pledged as security by the Company.

d) Assets pledged as security for term loans availed by an erstwhile Subsidiary Company, now an associate w.e.f September 9, 2022.

The Company has provided pari pasu security of its land at Bharatpur (Gross book value of Rs. 16,964.87 Lacs) against a term loan of Euro. 50 million and overdraft facility of Euro 30 million sanctioned by Bank of Baroda to Titagarh Firema S.p.A, an associate of the Company (w.e.f September 9, 2022). Refer Note 41.

# Represents 368 Railway Wagons sub leased to Indian Railways. As per Arbitration Award dated July 3, 2019, use of said wagons have been restricted by Indian Railway and Indian Railway has been instructed to give the possession back to the Company, being the sole and beneficial owner of said wagons. The realisable value of 368 wagons as per management estimate is estimated to be more than the book value of Rs. 385.12 Lacs.

Information regarding Investment Properties

The Company''s Investment Properties consists of two parcels of land situated at Bharatpur and Malanpur respectively. As at March 31, 2023, fair valuation of the two properties is estimated to be Rs. 1,139.54 Lacs (March 31, 2022: Rs. 1,053.34 Lacs). These valuations are based on valuations performed by an independent valuer who holds recognised and relevant professional qualifications. The fair value was derived using the market comparable approach based on recent market prices and the fair value measurement categorised within Level-3.

The Company has no restrictions on the realisability of its Investment Properties and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements. There is no income earned or expenditure incurred by the Company in relation to the Investment Properties.

The Board of directors of the Company in its meeting held on March 18, 2023 decided to incorporate a new company in India in a joint venture with Titagarh Firema SpA, (TFA), Italy to acquire the Company''s Design Centre in Hyderabad to support the Passengers Rail System. The new company with the proposed name: Titagarh Firema Engineering Services Pvt. Ltd. will carry on the business of research, engineering and design related services. Titagarh Board has approved a maximum investment of Rs. 5 crores in the Joint Venture Company with 51% of the equity to be held by TFA and 49% by Titagarh, India. Accordingly, the assets and liabilities relating to the design centre in Hyderabad has been disclosed as assets held for sale. The Company expects its completion by June 30, 2023.

(d) During the year ended March 31, 2023, the Company considered indicators of impairment such as decline in operational performance, changes in outlook of future profitability among other potential indicators for investments held in Titagarh Firema SpA (TFA). The recoverable value of investments held in TFA, a wholly owned subsidiary of the Company till September 8, 2022 and thereafter an associate of the Company is the value in use (VIU) of the underlying business. The VIU computation uses cash flow forecasts based on most recently approved financial budgets and strategic forecasts which cover a period of five years and future projections taking the analysis out into perpetuity based on a steady state, sustainable cash flow. Key assumptions for the value in use computations are those regarding the discount rates, exchange rates, order book etc. The projections are based on both past performance and the expectations of future performance and assumptions therein. The Company estimates discount rates using post-tax rates that reflect the current market rates. The weighted average post-tax discount rates used for discounting the cash flows projections as a subsidiary and as an associate is 11.14% and 13.83% respectively (March 31, 2022: 15.00%). Beyond the specifically forecasted period, a growth rate of 1% (March 31, 2022: 1%) is used to extrapolate the cash flow projections. The outcome of the impairment assessment as on September 8, 2022 resulted in recognition of an impairment loss of Rs. 4,972.82 lacs whereas as at year ended March 31, 2023, there was no such loss.

The Company has also conducted sensitivity analysis on the impairment tests at year end including sensitivity in respect of discount rates. The management believes that no reasonably possible change in any of the key assumptions used in the assessment would cause the carrying value of investments to exceed its recoverable value.

(a) Loans to Related Parties are non-derivative financial assets receivable on demand which generate a fixed interest income for the Company. The said interest are payable on monthly basis and was fully realised in July 2022. Also Refer Note 43.

(b) The aforesaid loan was converted into investments in equity shares of TFA , as approved by the Board of Directors of TBIPL and TFA in their meetings held on May 23, 2022 and May 27, 2022 respectively in keeping with the requirement of equity infusion in TFA pursuant to investment agreement dated July 20, 2022 signed between the Company, TBIPL (now amalgamated with the Company as disclosed in Note 49) and the Government of Italy through its investment agency, (Invitalia) along with a international private equity investor.

b) Terms and Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 2/- (March 31, 2022: Rs. 2/-) 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 of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

## In previous year, Titagarh Capital Management Services Private Limited (PAN: AACCT5853F) (''TCMSPL'') has acquired 134,722 and 111,777 equity shares of Titagarh Rail Systems Limited (Formerly Titagarh Wagons Limited) (''the Company'') on March 30, 2022 and March 31, 2022 respectively through market purchase from public category shareholder(s). However, the said shares were not credited into TCMSPL''s demat account till March 31,2022, and also did not appear in the BENPOS of the Company as at March 31, 2022 from the Depositories and furnished by the Company''s Registrar. Therefore, the aforesaid 246,499 shares (representing 0.21% of the Company''s paid-up share capital) could not be taken as held by TCMSPL in the shareholding pattern as on March 31,2022 filed with BSE Limited and NSE Limited. However, the said 246,499 shares are considered and included above.

14.1 General Reserve:- Under the erstwhile Indian Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn though the Company may transfer such percentage of its profits for the financial year as it may consider appropriate. Declaration of dividend out of such reserve shall not be made except in accordance with rules prescribed in this behalf under the Act.

14.2 Cash Flow Hedge Reserve:- The cumulative effective portion of gains or losses arising from changes in fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit or loss or are included as an adjustment to the cost of the related non-financial hedged item.

The Company has designated certain foreign currency forward contracts as cash flow hedges in respect of foreign exchange risks.

14.3 During the year, ineffective portion of cash flow hedges recognised in the statement of profit and loss amounted to Rs. Nil (March 31, 2022: Rs. Nil).

The amount recognised in cash flow hedge reserve (net of tax) is expected to impact the statement of profit and loss as below:

- within the next one year: gain Rs. (28.35) Lacs (March 31, 2022: Rs. 990.20 Lacs)

- later than one year: gain Rs. Nil Lacs (March 31,2022: Rs. Nil Lacs)

Notes:

a) Term Loan of Rs. 4,962.50 Lacs (March 31, 2022: Rs. NIL) carrying interest @ 9.05 % p.a. (March 31, 2022: NIL % p.a.) linked to 1 year MCLR has been availed during the year and is repayable in 16 equal quarterly installments from April 2024 to January 2028. Above term loan was secured by way of first charge over land at Gwalior district, Madhya Pradesh owned by the Company. Charge is yet to be created over such land.

b) Term Loan of Rs. 3,286.13 lacs (March 31, 2022: Rs. 5,991.15 Lacs) carries interest @ 7% to 10.23% p.a (March 31, 2022: 7% to 8.75% p.a.) linked to 1 year MCLR and is repayable in 7 quarterly installments starting from June 2022 to December 2023. Above term loan is secured by a first pari-passu charge by way of mortgage upon all fixed assets including land and building, plant and machinery and other movable/immovable assets at Company''s Bharatpur Plant. The loan is further secured by the second charge on the Company''s current assets relating to Bharatpur Plant.

(c) Cash Credits and Working Capital Demand Loans of Rs. 14,639.27 lacs (March 31,2022: Rs. 5,884.89 lacs) are secured by first charge on the Company''s current assets, movable fixed asset both present and future and further creating charge on immovable properties of the company by deposit of title deeds except immovable properties at Bharatpur, Rajasthan, Gwalior and Bhind district, Madhya Pradesh. The above facilities has also been secured by way of pledge of investment in equity shares of Titagarh Enterprises Limited and Titagarh Industries Limited. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium member banks.

(d) Cash Credits is repayable on demand and carry an interest rate ranging between 8.70% to 13.60% p.a. (March 31,2022: 8.95% to 12.35%) linked with MCLR.

(e) Working Capital Demand Loans carry interest ranging from 5% to 13% p.a. (March 31, 2022: 5.25% to 8.95% p.a. ) and are repayable on demand.

(f) Buyers Credit carry an interest rate of 5.20% p.a. (March 31,2022: NIL % p.a. ) and is linked to Secured Overnight Financing Rate (SOFR). The same is repayable by May 2, 2023.

(g) As at March 31, 2023, the register of charges of the Company as available in records of the Ministry of Corporate Affairs (MCA) includes charges that were created/modified for entities which got amalgamated into the Company pursuant to National Company Law Tribunal Orders in earlier years. There are certain charges which are historic in nature and it involves practical challenges in obtaining no-objection certificates (NOCs) from the charge holders of such charges, despite repayment of the underlying loans. Further, certain charges wherein the outstanding loans have been repaid and the Company has also filed the related Form 17 for satisfaction of Charge in respect thereof in earlier years, but the same has not been updated in the MCA records. The Company is following up these matters and is in the continuous process of filing the charge satisfaction e-form with MCA, within the timelines, as and when it receives NOCs from the respective charge holders. Further in case of new term loan obtained during the year, the Company is yet to file charges with MCA.

(h) Term Loans obtained in earlier years have been applied for the purpose for which it has been obtained. Term loan from a bank of Rs. 4,962.50 lacs which was disbursed on March 31, 2023 is lying in cash credit account pending utilisation at year end.

(i) Loan from related party carry an interest rate of 9.5% p.a. (March 31,2022: 9.5% p.a) and is repayable after five years from the date of grant of loan with the condition that the Company has the right to pre-pay the full amount at any time, after the lock-in of 3 months from the date of grant of loan. The said loan has been prepaid during the year.

(j) TBIPL (now merged with the Company) had issued OFCD''s to its promoters in the year 2019-2020 which were unsecured, unlisted and non-transferable. The tenure of OFCD was 7 years from the date of allotment. The OFCDs were convertible into Equity Shares at the option of the holder at the end of one year or three years or five years or seven years respectively from the date of allotment. The OFCD interest was payable on annual basis on every March 31. Pursuant to the conversion, OFCD shall rank pari passu with existing Equity Shares. If OFCD holder does not choose the option of conversion, then the OFCD will be compulsorily redeemed by the company on the expiry of seven years from the date of allotment. During the previous year these OFCD''s were redeemed by the Company.

Information about individual provisions and significant estimates

(i) Warranties

Provision is made for estimated warranty Claims in respect of products sold which are under warranty at the end of the reporting period. Management estimates the provision based on contractual terms, historical warranty claims information and any recent trends that may suggest future claims could differ from historical amounts.

(ii) Litigation, claims and contingencies

The amounts represent best possible estimates of pending litigations / claims filed by vendors, customers, labours etc and probable claims arising out of certain tax matters. The timing and probability of outflow and expected reimbursements, if any, with regard to these matters depends on the ultimate outcome of the legal process or settlement / conclusion of the matter with the relevant authorities / customers / vendors etc.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit obligation recognised in the Balance Sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(ii) Post-employment Defined Contribution Plans:

Provident Fund and Employee State Insurance Scheme (ESI)

Certain categories of employees of the Company receive benefits from a provident fund and ESI, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employee''s qualifying salary. The Company have no further obligations under the plan beyond its monthly contributions.

(iii) Leave Benefits

The Company provides for accumulation of leave by its employees. The employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash in lieu thereof as per the Company''s policy. The Company records a provision for leave benefits in the period in which the employee renders the services that increases this entitlement. This is an unfunded plan.

The total provision recorded by the Company towards these benefits as at year end was Rs. 136.09 Lacs (March 31, 2022: Rs. 125.35 lacs). The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these benefits. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

(iv) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

(a) Discount Rate Risk

The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.

(b) Salary Growth Risks

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company are exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.

35 Employee Stock Option Plan (ESOP)

The Company provides share-based payment schemes to its employees. On September 11, 2014, the shareholders, by way of a special resolution passed at the Annual General Meeting, approved the issue of shares to eligible employees under Employee Stock Option Scheme (Scheme 2014). The Scheme has been approved by the authorized Compensation Committee pursuant to a resolution passed at its meeting held on March 4, 2015. According to the Scheme 2014, the employee selected by the ESOS Compensation Committee from time to time will be entitled to the stock options. The total number of options granted should not exceed 2,500,000 options and will be granted in one or more tranches over a period of 5 years. Each option, when exercised, will be converted into 1 equity share of Rs 2 each fully paid up.

The weighted average fair value of the option as on the grant date is Rs. NIL (March 31, 2022: Rs. NIL) and weighted average contractual life of the option as at March 31, 2023 is NIL years (March 31, 2022: NIL years).

The weighted average remaining contractual life of options outstanding at end of period is NIL years (March 31, 2022: NIL years).The weighted average fair value of stock options granted was Rs. NIL lacs (March 31, 2022 Rs. NIL lacs).

Disclosures are restricted to Tranche 1 - Second Allotment and Tranche 2 - First Allotment as the other tranches have lapsed and expired in the earlier periods.

The expected life of the stock Option is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

During the year ended the Company recorded an employee compensation expense of Rs. NIL Lacs (March 31, 2022 : Rs 16.68 Lacs) in the Statement of Profit and loss.

The Board of Directors of the Company at its meeting held on March 21,2023 approved the Employee Stock Option Scheme titled Titagarh Wagons Limited Emplyees Stock Options Scheme 2023 for the employees of the Company and its subsidiary and associates. Subsequently, on April 26, 2023, the shareholders, by way of postal ballot approved the said Scheme.

39	Contingent Liabilities		(Rs. in Lacs)
		As at March 31, 2023	As at March 31, 2022
(i)	Claims against the Company not acknowledged as debt
Disputed claims contested by the Company and pending at various courts/arbitration¹		3,200.30	3,277.12
Matters under appeal with:
Sales tax authorities		2,520.09	2,522.97
Income tax authorities		4,950.99	5,368.90
Customs and Excise Authorities		13,849.99	13,868.42
Goods and service tax Authorities		168.88	168.88
Custom Duty on import of equipments and spare parts under EPCG scheme		1,190.54	1,190.54
		25,880.79	26,396.83

(b) SBI Caps has raised a claim of Rs. 1,128.95 lacs on erstwhile Cimmco Limited (since merged with the Company) on account of disallowance of depreciation by the income tax authorities on the wagons leased by SBI Caps to erstwhile Cimmco Limited (since merged with the Company) which in turn has been sub leased to Indian Railways. The same pertains to the assessment year 1998-99 to 2004-05 (period prior to change of management in terms of the BIFR order) and the matter is pending with ITAT Mumbai. As per the separate lease agreements entered between SBI CAPS, erstwhile Cimmco Limited (since merged with the Company) and Indian Railways, any claims, charges, duties taxes and penalties as may be levied by the Government or any other authority pertaining to leased wagons shall be borne by the Indian Railways. Considering the above terms contained in the above agreements and also favorable ITAT judgments regarding the admissibility of the depreciation on the leased assets, the Company believes that there would not be any liability that would crystallise on account of the above.

* The Board of Directors of the Company has approved the liquidation of TSPL, a wholly owned subsidiary Company, considering that no operations are currently being carried on in the subsidiary. The process for winding up of the subsidiary in compliance with the local rules and regulations at Singapore has already been initiated. Accordingly, the financial statements of TSPL has been prepared on liquidation basis (fair value) for the year ended March 31, 2023.

** The Company holds 100% equity in TWA together with a wholly owned subsidiary company, TSPL. However, since TWA is under liquidation, the Company is no longer in control of TWA.

On June 4, 2019 the Commercial Court of Paris has approved the start of Rehabilitation Procedure and from said date, Parent company was no longer in control of TWA, under French Law. The Commercial Court of Paris vide its judgement dated August 13, 2019 has approved a plan for transfer of business and assets of TWA to another bidder and ordered for liquidation of TWA. Currently TWA is under liquidation.

42 SEGMENT INFORMATION

During the year, the Company has reassessed its operating segments based on the recent changes in the overall business landscape and accordingly the Company''s products have been identified by the chief operating decision maker, being the Board of Directors, as "Freight Rail Systems" and "Passenger Rail Systems

a) Freight Rail Systems - Consists of manufacturing of Wagons, Loco Shells, bogies, couplers, its components, designing and construction of Warships, Passenger Vessels, Tug and specialised equipment''s for Defence, Bridge Girders etc.

b) Passenger Rail Systems - Consists of designing and manufacturing of Metro, Passenger Coaches, EMUs, Train Sets, Mono Rail, Propulsion equipment, Traction Motors and its components.

Segment performance is evaluated based on profit or loss and is measured consistently with Profit or Loss in the Standalone Financial Statements . Also, the Company''s borrowings (include finance costs) , income taxes, investments and derivative instruments are managed at head office and are not allocated to operating segments.

Segment Revenue is measured in the same way as in the Statement of Profit and Loss.

Segment Assets and Liabilities are measured in the same way as in the standalone financial statements.

These asset and liabilities are allocated based on the operations of the segment and physical location of assets.

The remuneration to key managerial personnel does not include provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the Company as a whole.

44 Fair Values

(i) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are

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

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

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

The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fair value measurements during the year ended March 31, 2023 and March 31, 2022.

(iv) Fair value of financial assets and liabilities

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2022.

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

(a) The fair value of foreign exchange forward contracts is determined using forward exchange rates at the Balance Sheet date.

(b) The management assessed that the fair values of remaining financial assets and liabilities at amortised cost approximate to their carrying amounts largely due to the short-term maturities of these instruments.

(d) Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimate technique. Therefore, for substantially all financial instruments, the fair value estimates are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

45 Financial Risk Management Objectives and Policies

The Company''s financial liabilities comprise short-term borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include trade and other receivables, cash and cash equivalents, investments, loans and deposits and other financial assets.

The Company''s Board of Directors ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company and also reviews these risks and related risk management policy, which are summarised below.

(i) Market Risks

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: foreign currency risk and other price risk, such as equity price risk and interest rate risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, borrowings, loan to foreign subsidiaries, other receivables etc.

(ii) Foreign currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities, borrowings and loans to subsidiaries. Such foreign currency exposures are primarily hedged by the Company through use of foreign exchange forward contracts. The Company has a treasury team which continuously monitors the foreign exchange fluctuations on a continuous basis and advises the management of any material adverse effect on the Company, and any additional remedial measures to be taken.

Foreign Currency Sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD, Euro, JPY and NPR exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company''s exposure to foreign currency changes for all other currencies is not material.

(iii) Equity price risks

The Company only invests in the equity shares of the subsidiaries, associates, joint ventures and some of the group companies as part of the Company''s overall business strategy and policy. The Company manages the equity price risk through placing limits on individual and total equity investment in each of the subsidiaries, associates, joint ventures and group companies based on the respective business plan of each of the companies. Reports on the investment portfolio along with the financial performance of the subsidiaries, associates, joint ventures and group companies are submitted to the Company''s management on a regular basis. The Company''s Board of Directors reviews and approves all investment decisions.

The Company''s investment in quoted equity instruments (other than subsidiaries) is not material. For sensitivity analysis of Company''s investments in equity instruments, Refer Note 44(ii)

(iv) Interest rate risks

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to risk of changes in market interest rates relates primarily to the Company''s debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings. The Company continuously monitor the situation and takes remedial actions if required. The Company''s investments in term deposits with bank are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.

Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and loans / deposits) and from its investing activities (primarily deposits with banks). The Company''s maximum exposure to credit risk for the components of the Balance Sheet as at March 31, 2023 and March 31, 2022 is their carrying amounts except for the financial guarantees.

(a) Trade and Other Receivables

Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation.The Company uses specific identification method in determining the allowance for credit losses of trade receivable considering prior experience, past due status of doubtful receivables which includes factors such as ability to pay, bankruptcy, payment history, forward looking information etc. Receivables are deemed to be past due or impaired with reference to the Company''s normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer''s credit quality and prevailing market conditions. Further the Company has also applied the simplified approach for expected credit loss based on trade receivable and contract assets which resulted in the default risk being upto 6.81% in respect of various categories of customers, which is not significant and the movement of allowance is given in (c) below.

(b) Other Financial Assets and Deposits

Credit Risk from Balances with Banks, deposits, etc is managed by the Company''s finance department. Investments of Surplus funds are made only with approved counterparties in accordance with the Company''s policy.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The Company has obtained fund and non-fund based working capital lines from various banks. The Company invests its surplus funds in bank fixed deposits, which carry no market risk. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of cash credits, bank loans among others.

45.1 The Company does not have any material foreseeable losses on long term contracts. Further the net losses on derivative contracts during the year have been recognised in the financial statements in keeping with Company''s accounting policy.

46 Capital Management (a) Risk Management

The Company''s objective when managing capital (defined as net debt and equity) is to safeguard the Company''s ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.

The Company monitors capital on the basis of the net debt to equity ratio. Net debt are borrowings as reduced by cash and cash equivalents. The Company is not subject to any externally imposed capital requirements.

Proposed Divivdend

The Board of Directors of the Company recommended a dividend of Rs. 0.50/- per Ordinary (Equity) Share of Rs. 2/- each (25%) to the shareholders of the Company for the financial year 2022-23. The dividend recommended by the Board of Directors of the Company is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company. The dividend, if approved by the shareholders at the AGM, will be paid, subject to deduction of tax at source.

The aggregate amount of the transaction price allocated to the remaining performance obligation, which are partially or fully unsatisfied as at year end is Rs. 929,678.13 lacs (March 31, 2022 : Rs. 283,645.00 lacs) and the entity will recognize this revenue as the contract is completed and / or executed, which is expected to occur over the next 12-30 months.

Trade receivables in respect of contract with customers has been included in Note 5

49 Scheme of Amalgamation

The Board of Directors of the Company at its meeting held on January 10, 2022 approved the Scheme for amalgamation ("the Scheme") of Titagarh Bridges and International Private Limited (TBIPL) - a wholly owned subsidiary with the Company, pursuant to Sections 230 to 232 of the Companies Act, 2013 with April 01,2021 as the Appointed Date. The Hon''ble National Company Law Tribunal (NCLT), Kolkata has vide its order dated October 26, 2022 approved the Scheme. In terms of the Scheme, no consideration has been paid and the equity shares and optionally fully convertible debentures held by the Company in TBIPL stands cancelled.

The Company has accounted for the above merger in accordance with Appendix C - (Business combinations of entities under common control) of Indian Accounting Standard (Ind AS) 103, Business Combinations, other accounting principles prescribed under the Companies (Indian Accounting Standards) Rules, 2015 as notified under section 133 of Companies Act, 2013 and relevant clarifications issued by the Institute of Chartered Accountants of India with effect from April 1, 2021 and as also approved in the scheme by NCLT.

(a) The total equity of TBIPL includes Rs. 1,936.19 lacs as equity component of compound instrument, representing 4% optionally fully convertible debentures issued by TBIPL to the Company during the year ended March 31, 2021, which gets eliminated with corresponding deemed equity investment of Rs.1,936.19 lacs in books of Company, on giving effect of aforesaid amalgamation.

50 The Company has evaluated the impact of the Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1 (33)2019/ Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and in the assessment of the management, the exposure is not material.

51 (i) Details of benami property held

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder

(ii) Wilful defaulter

The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(iii) Relationship with struck off companies

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

(iv) Compliance with number of layers of companies

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

(v) Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year, other than as disclosed in Note 49.

(vi) Utilisation of borrowed funds and share premium

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

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.

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

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) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(viii) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(ix) Valuation of PPE, intangible asset and investment property

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

(x) The Company has one Core investment company (Titagarh Capital Management Services Private Limited) as a part of the group.

53 Research and Development expenditure of revenue nature recognised in Profit and Loss during the year amounts to Rs. 301.84 lacs (March 31,2022 : Rs. 322.96 lacs).

54 The board at its meeting held on March 17, 2023 approved change of name of the company to Titagarh Rail Systems Limited to better reflect the current business activities and after shareholders approval obtained on April 27, 2023 the necessary forms have been filed with MCA. The approval for the same has been received and the name change is effective from May 19, 2023.

55 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post employment received Indian Parliament approval and Presidential assent in September 2020. The Code has been published in the Gazette of India and subsequently on November 13, 2020 draft rules were published and invited for stakeholders'' suggestions. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Includes Rs 1,360.45 Lacs (March 31, 2022: Rs. 1,360.45 Lacs) which in terms of BIFR order, even if decided against the Company, would stand at Rs 136.04 Lacs (March 31, 2022 : Rs 136.04 Lacs) only.

In respect of above cases based on favorable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

In respect of above contingent liabilities, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.

(ii) Further:

(a) Erstwhile Cimmco Limited (Since merged with the Company) had prior to year 2000, obtained certain advance licenses for making duty free import of inputs subject to fulfillment of export obligation (EO) within the specified time limit/extended time limit (as extended pursuant to sanctioned scheme of BIFR) from the date of issuance of such licenses. However, in absence of complete list of licenses along with the imports made against each license, the amount of contingent liability towards custom duty saved on unfulfilled export obligations and penal interest if any, is presently unascertainable.

Mar 31, 2018

1 Corporate Information

Titagarh Wagons Limited (the Company) is a public limited company incorporated and domiciled in India. The registered office of the Company is located at 756, Anandapur, EM-Bypass, Kolkata - 700107 and has its manufacturing facilities located in West Bengal. The equity shares of the Company are listed on the BSE Limited and the National Stock Exchange of India Limited.

The Company is mainly engaged in the manufacturing and selling of Freight Wagons, Passenger Coaches, Steel Castings, Specialised Equipments & Bridges, Ships, Heavy Earthmoving and Mining Equipments, etc. The Company caters to both domestic and export market.

The standalone financial statements were approved and authorised for issue in accordance with the resolution of the Companyâs Board of Directors on May 29, 2018.

Notes:

(a) Valued at exchange rate prevailing on the date of transaction.

(b) The 1% Compulsorily Convertible Cumulative Preference Shares are convertible into equity shares on or before August 27, 2022 at par.

(c) The 8% Non-cumulative Non-convertible Redeemable Preference Shares (NCNCRPS) are redeemable within five years from the date of allotment i.e. byJune 27, 2019 at par.

(d) The Company has investment in the equity and preference shares aggregating to Rs. 4,042.57 lacs (March 31, 2017: Rs. 4,042.57 lacs in its wholly owned subsidiary company âTitagarh Capital Private Limitedâ (TCPL). As at March 31, 2018, being the last audited balance sheet date, the accumulated losses in the books of TCPL is Rs. 1,449.49 lacs (March 31, 2017: Rs. 1,451.26 lacs). However, certain Property, Plant and Equipment of TCPL, having net block of Rs 1,035.48 lacs (March 31, 2017: Rs. 1,035.48 lacs) representing 887 wagons, are in possession of Indian Railways since 1998 which have significant residual value. TCPL also has raised claims on Indian Railways on account of secondary lease rentals / user charges and interest thereon along with returning possession of wagons, which is under arbitration proceedings. Considering the above, the management believes there is no impairment on this investment.

(e) Refer Note 42 for determination of fair values.

(f) The Honâble National Company Law Tribunal, Kolkata Bench by an order dated October 16, 2017 has sanctioned the Scheme of Amalgamation (the âSchemeâ) of Titagarh Agrico Private Limited (TAPL), with Cimmco Limited with Appointed Date being April 1, 2016. The certified true copy of the said Order has been received and filed with the Ministry of Corporate Affairs on November 14, 2017, thus making the Scheme effective. Pursuant to the Scheme, the investments in equity shares of TAPL stands cancelled and Cimmco Limited has allotted 72,00,000 equity shares of Rs. 10/- each to the Company.

(g) Refer Note 43 for credit risk and market risk on investments.

a) Trade Receivables - Considered Good includes dues from related parties Rs. 2,374.66 Lacs (March 31, 2017: Rs. 1,664.03 Lacs). Refer Note 41 for details.

b) Refer Notes 17 and 39 for information on trade receivables pledged as security by the Company and Note 43 for information about credit risk and market risk on trade receivables.

Notes:

(a) Cash Credits, Working Capital Demand Loans, Buyerâs Credit (in foreign currency) and Packing Credit Loans (in foreign currency) are secured by first charge on the Companyâs current assets, present and future and by way of collateral charge on Property, Plant and Equipment of the Company, both present and future. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium member banks.

(b) Cash Credits carry interest at Banksâs MCLR plus spread ranging from 1% to 2% p.a (effectively 8.80% to 11.50% p.a.) and are repayable on demand.

(c) Working Capital Demand Loans carry interest at Bankâs MCLR plus spread rangingfrom 0.45% to 1.00% p.a and are repayable within six months.

(d) Buyerâs Credit (in foreign currency) carry interest rate ranging from 2.42% to 3.21% p.a for USD and from 0.53% to 0.90% p.a. for Euro (March 31, 2017: Rs.Nil) and are repayable within maximum of six months from the date of drawdown.

(e) Packing Credit Loans (in foreign currency) as on March 31, 2017 carried interest rate ranging from 2.20% to 2.62% p.a and was repayable within six months from the date of drawdown.

(f) Refer Note 43 for information about market risk and liquidity risk on borrowings.

Sale of Products includes excise duty collected from customers amounting to Rs. 411.66 Lacs (March 31, 2017: Rs. 2,111.85 Lacs). Post applicability of Goods and Service Tax (GST) w.e.f July 1, 2017, revenue from operations is disclosed net of GST. However, revenue for the period up to June 30, 2017 is inclusive of excise duty. Accordingly, revenue from operations and total expenses for the year ended March 31, 2018 are not comparable with the previous year.

2 Employee Benefits

(i) Post-employment Defined Benefit Plans:

Gratuity

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with a bank through its special deposit scheme with State Bank of Bikaner and Jaipur). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The Company has increased the maximum limit to Rs.20 Lacs for certain category of employees during the year.

The following tables sets forth the particulars in respecct of the gratuity plan of the Company.

Assumptions regardingfuture mortality experience are based on mortality tables of Indian Assured Lives Mortality (2006-2008) published by the Institute of Actuaries of India.

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

The Company expects to contribute Rs.67.49 Lacs (March 31, 2017 Rs.105.98 Lacs) to the funded gratuity plans during the next financial year.

A quantitative sensitivity analysis of impact on defined benefit obligations for significant assumption on the gratuity plan is as shown below:

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(ii) Post-employment Defined Contribution Plans:

(A) Superannuation Fund

Certain categories of employees of the Company participate in superannuation, a defined contribution plan. The Company has no further obligations under the plan beyond its annual contributions.

(B) Provident Fund

Certain categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer make monthly contributions to a government administered fund at specified percentage of the covered employeeâs qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions.

(iii) Leave Benefits

The Company provides for accumulation of leave by its employees. The employees can carry forward a portion of the unutilised leave balances and utilise it in future periods or receive cash in lieu thereof as per the Companyâs policy. The Company records a provision for leave benefits in the period in which the employee renders the services that increases this entitlement. This is an unfunded plan.

The total provision recorded by the Company towards these benefits as at year end was Rs. 102.58 lacs (March 31, 2017: Rs. 72.87 lacs). The amount of the provision is presented as current, since the Company does not have an unconditional right to defer settlement for any of these benefits. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

(iv) Risk Exposure

Through its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

(i) Discount Rate Risk

(ii) Salary Growth Risk

(iii) Demographic Risk

In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.

3 Employee Stock Option Plan (ESOP)

The Company provides share-based payment schemes to its employees. On September 11, 2014, the shareholders, by way of a special resolution passed at the Annual General Meeting, approved the issue of shares to eligible employees under Employee Stock Option Scheme (Scheme 2014). The Scheme has been approved by the authorized Compensation Committee pursuant to a resolution passed at its meeting held on March 4, 2015. According to the Scheme 2014, the employee selected by the ESOS Compensation Committee from time to time will be entitled to the stock options. The total number of options granted should not exceed 25,00,000 options and will be granted in one or more tranches over a period of 5 years. Each option, when exercised, will be converted into 1 equity share of Rs 2 each fully paid up.

Theweighted averagefairvalueoftheoption ason thegrantdate is Rs. 102.21 (March31,2017: Rs. 100.85)and weighted average contractual life of the option as at March 31, 2018 is 3.78 years (March 31, 2017: 3.15 years).

The weighted average fair value of stock options granted was Rs 141.21 lacs (March 31, 2017: Rs 137.90 lacs). The Black-Scholes valuation model has been used for computing the weighted average fairvalue considering the below mentioned inputs. For the year ended March 31, 2017, Monte Carlo valuation model was used for computing the weighted average fair value.

The weighted average fairvalue of the option as on the grant date is Rs. 88.35 (March 31, 2017: Nil) and weighted average contractual life of the option as at March 31, 2018 is 3.15 years (March 31, 2017: Nil).

Theweighted averagefairvalueofstockoptionsgranted was Rs33.10 lacs (March 31, 2017: Nil). The Black-Scholes valuation model has been used for computing the weighted average fair value considering the below mentioned inputs.

The weighted average fair value of the option as on the grant date is Rs. 89.35 (March 31, 2017: Nil) and weighted average contractual life of the option as at March 31, 2018 is 3.46 years (March 31, 2017: Nil).

The weighted average fair value of stock options granted was Rs 91.96 lacs (March 31, 2017: Nil). The Black-Scholes valuation model has been used for computing the weighted average fair value considering the below mentioned inputs.

The weighted averagefairvalue ofthe options as on the grant date is Rs. 112.07 (March 31, 2017: Nil) and weighted average contractual life of the option as at March 31, 2018 is 3.46 years (March 31, 2017: Nil). The weighted average fair value of stock options granted was Rs 7.50 lacs (March 31, 2017: Nil). The Black-Scholes valuation model has been used for computing the weighted average fair value considering the below mentioned inputs.

The expected life ofthe stock Option is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

During the year ended the Company recorded an employee compensation expense of Rs 288.56 lacs (March 31, 2017: Rs. 83.57 lacs) in the Statement of Profit and loss.

4 Leases

Certain office premises and land are obtained by the Company on operating lease. The lease term is for 1-10 years and renewable for further period on mutual consent. These are cancellable by giving a notice period ranging from one month to three months. Lease agreements have price escalation clause and rent is not based on any contingencies. There is no restriction under the lease agreement. There are no subleases.

c) Titagarh Wagons Limited, the holding company of Cimmco Limited (Cimmco) owns majority of equity and preference shares, directly or indirectly, in Cimmco Limited. Cimmco has been incurring losses over the last few years due to low volume. The Company has given commitment to provide financial support, to the best of its ability, to Cimmco Ltd so as to ensure its business continuity.

d) The Company, has given a put option for a loan obtained by Cimmco limited from ICICI Bank for Rs.4,000.00 lacs (March 31, 2017: Rs. 4,000.00 lacs). In terms of the said put option, upon occurrence of any event of default as per the terms of the facility agreement, ICICI bank shall have the right to call upon TWL to pay the entire outstanding within such time as may be prescribed, the outstanding amount as at March 31, 2018 being Rs. 2,000.00 lacs (March 31, 2017: Rs.3,142.85 Lacs).

In respect of above cases, based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no further provision for any liability is required in the standalone financial statements.

The above particulars, as applicable, have been given in respect of MSEs to the extent they could be identified on the basis of the information available with the Company.

5 List of Subsidiaries and Joint Venture of the Company

The Company has following Subsidiaries and Joint Venture for which the Company prepares Consolidated Financial Statements as per Ind AS 110 âConsolidated Financial Statementsâ. Investment in these subsidiaries and Joint Ventures has been recognised at cost.

6 Assets Pledged as Security for Working Capital Loans Availed by the Subsidiaries Companies

The foreign subsidiaries of the Company has been sanctioned with a working capital facility for Rs 17,736.88 lacs (Euro 22.00 million) [March 31, 2017: 15,234.47 Lacs (Euro 22.00 Million)] which is secured by the following assets of the Company:

First charge on the current assets, both present and future and by way of collateral charge on entire fixed assets (excluding vehicles) of the Company, both present and future. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium bankers.

The total working capital facility that has been drawn out of the above sanctioned facility as on March 31, 2018 is Rs 13,705.77 lacs (Euro 17.00 million) [March 31, 2017: 8,315.44 Lacs (Euro 12.00 Million)]

7 Segment Information

The Companyâs Board of Directors examines the Companyâs performance on the basis of its business and has identified following reportable segments:

a) Wagons & Coaches - Consists of manufacturing of wagons, coaches, bogies, couplers and crossings as per customer specification.

b) Specialised Equipments & Bridges - Consists of bailey/other modular bridges, nuclear biological shelters and other defence related products

c) Shipbuilding - Consists of manufacturing of barges, research vessels and other fabrication of blocks

d) Others - Consists of miscellaneous business like heavy earth moving machineries, etc which comprises of less than 10% revenueon individual basis.

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements. Also, the Companyâs borrowings (includes finance costs), income taxes, investments and derivative instruments are managed at head office and are not allocated to operating segments.

Segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment assets and liabilities are measured in the same way as in the standalone financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of assets.

8 Fair Values

(i) Fair value hierarchy

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

Level 1: Level 1 hierarchy includesfinancial instruments measured usingquoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fairvalue an instrument are observable, the instrument is included in level 2.

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

The Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 fairvalue measurements during the year ended March 31, 2018 and March 31, 2017.

(ii) Fair value measurements using significant unobservable inputs (Level 3)

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy -(FVTPL assets in unquoted equity shares/units valued using Discounted Cash Flow method) together with a quantitative sensitivity analysis as at March 31, 2018 and March 31, 2017 are as shown below:

(iv) Fair value of financial assets and liabilities

The fairvalues offinancial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2017.

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

(a) The fair value of foreign exchange forward contarcts is determined using forward exchange rates at the Balance Sheet date.

(b) The management assessed that the fair values of remaining financial assets and liabilities at amortised cost approximate to their carrying amounts largly due to the short-term maturities of these instruments.

(d) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimate technique. Therefore, for substantially all financial instruments, the fair value estimates are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

9 Financial Risk Management Objectives and Policies

The Companyâs financial liabilities comprise short-term borrowings, trade payables and otherfinancial liabilities. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs financial assets include trade and other receivables, cash and cash equivalents, investments, loans and deposits and other financial assets.

The Company has a Risk Management Committee that ensures that risks are identified, measured and managed in accordance with Risk Management Policy of the Company. The Board of Directors also review these risks and related risk management policy which are summarised below:

I) Market Risks

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: foreign currency risk and other price risk, such as commodity price risk and equity price risk and interest rate risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, borrowings, loan to foreign subsidiaries, other receivables etc.

(i) Foreign currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities, borrowings and loans to subsidiaries. Such foreign currency exposures are hedged by the Company through use of foreign exchange forward contracts. The Company has a treasury team which monitors the foreign exchange fluctuations on a continuous basis and advises the management of any material adverse effect on the Company.

Foreign Currency Sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and Euro exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The Companyâs exposure to foreign currency changes for all other currencies is not material.

(ii) Equity price risks

Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in equity prices (otherthan those arisingfrom interest rate orforeign exchange rate risk), whetherthose changes are caused by factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in the market.The Company only invests in the equity shares of the subsidiaries and some of the group companies as part of the Companyâs overall business strategy and policy. The Company manages the equity price risk through placing limits on individual and total equity investment in each of the subsidiaries and group companies based on the respective business plan of each of the companies. Reports on the investment portfolio along with the financial performance of the subsidiaries and group companies are submitted to the Companyâs management on a regular basis. The Companyâs Board of Directors reviews and approves all investment decisions.The Companyâs investment in quoted equity instruments (other than subsidiaries) is not material. For sensitivity analysis of Companyâs investments in equity instruments, Refer Note 42(iii).

(iii) Interest rate risks

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 Companyâs exposure to risk of changes in market interest rates relates primarily to the Companyâs debt interest obligation. Further the Company engages in financing activities at market linked rates, any changes in the interest rate environment may impact future rates of borrowings.The Companyâs investments in bonds and term deposits with bank are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.

Interest rate risk exposure

The exposure of the Companyâs borrowings to interest rate changes at the end of the reporting period are as follows:

II) Credit Risks

Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and loans / deposits) and from its investing activities (primarily deposits with banks and investments in tax free bonds). The Companyâs maximum exposure to credit risk for the components of the Balance Sheet as at March 31, 2018 and March 31, 2017 is their carrying amounts except for the financial guarantees. The Companyâs maximum exposure to financial guarantees is given in Note 35(b).

(a) Trade and Other Receivables

Customer credit risk is managed by the Company through established policy and procedures and control relating to customer credit risk management. Trade receivable are non-interest bearing. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation.The Company uses specific identification method in determining the allowance for credit losses of trade receivable considering historical credit loss experience and is adjusted for forward looking information.Receivables are deemed to be past due or impaired with reference to the Companyâs normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customerâs credit quality and prevailing market conditions.

(b) Other Financial Assets and Deposits

Credit Riskfrom Balances with Banks, deposits, etc is managed by the Companyâs finance department. Investments of Surplus funds are made only with approved counterparties in accordance with the Companyâs policy.

The impairment provision as disclosed above are based on assumptions about risk of defaulst and expected credit losses rates. The Company uses judgement in making these assumptions based on the Companyâs past history, existuing market conditions as well as forward looking estimates at the end of each reporting period.

III) Liquidity Risks

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Companyâs treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs net liquidity position through rolling forecasts on the basis of expected cash flows.The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of cash credits, bank loans among others.

@ Includes contractual interest payment based on interest rate prevailing at the end of the reporting period.

10 Capital Management

(a) Risk Management

The Companyâs objective when managing capital (defined as net debt and equity) is to safeguard the Companyâs ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and strategic objectives of the Company.

11 Research and Development expenditure of revenue nature recognised in Profit and Loss during the year amounts to Rs. 37.87 Lacs (March 31, 2017 : 54.10 Lacs)

Mar 31, 2017

*** All the units are pledged against the working capital loan taken by Titagarh Singapore Pte Limited

Notes:

(a) Valued at exchange rate prevailing on the date of transaction.

(b) The Compulsorily Comvertible Cumulative Preference Shares are convertible into equity shares on or before August 27, 2022 at par.

(c) The 8% Non Convertible Non Cumulative Redeemable Preference Shares (NCNCRPS) are redeemable within five years from the date of allotment i.e. by June 27, 2019 at par.

(d) The Company has investment in the equity and preference capital aggregating to Rs. 4,042.57 lacs in its wholly owned subsidiary company "Titagarh Capital Private Limited" (TCPL). As at March 31, 2017, being the last audited balance sheet date, the accumulated losses in the books of TCPL is Rs. 1,451.26 lacs. However, certain fixed assets of TCPL, having net block of Rs 1,035.48 lacs representing 887 wagons, are in possession of Indian Railways as lease since 1998 which have significant residual value. Considering the above, the management believes there is no impairment on this investment.

(e) Investments at fair value through statement of profit and loss reflects investment in unquoted equity securities. Refer Note 43 for determination of their fair values.

(f) On March 31, 2016, Rs. 125 lacs was accounted on account of fair valuation of the corporate guarantee given by the Company for the working capital loan obtained by the subsidiary. Subsequently, the Company has started charging commission for the said financial guarantee, including for earlier years, and hence the amount recognized as investment on March 31, 2016 has been adjusted during the year ended March 31, 2017.

a) For terms and conditions relating to related party receivables refer Note 42.

b) Refer Note 16 and 40 for information on trade receivables pledged as security by the Company.

c) Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

Notes:

(a) Loans and receivables are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.

(b) Refer Note 16 and 40 for information on loan and deposits pledged as security by the Company.

(c) Loans to related parties are receivable on demand except loan amounting to Rs.1,731.53 lacs given to Titagarh Wagons AFR, which is receivable in 4 structured annual installments by March 31, 2018.

(a) Derivative instruments at fair value through profit and loss (Foreign exchange forward contracts)

While the Company entered into foreign exchange forward contracts with the intention of reducing the foreign exchange risk of expected sales and purchases, these contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

(b) Refer Note 16 and 40 for information on other financial assets pledged as security by the Company.

Note: During the year ended 31st March 2016, the Company has split its equity shares having face value of Rs 10 each into five equity shares having face value of Rs 2 each pursuant to approval of shareholders obtained through postal ballot on April 13, 2015. The record date for the sub-division was April 24, 2015.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2/- (31st March 2016: Rs. 2/- , 1st April 2015: Rs. 10/-) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

For the year ended March 31, 2017, the Company has proposed a dividend of Rs. 0.80 per share (March 31, 2016: Re. 0.80 per share and March 31, 2015: Rs. 4/- per share).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents legal ownership of shares.

d) Pursuant to the approval of shareholders on April 13, 2015, the Company had issued and alloted 15,089,025 Equity Shares of Rs.2/- each at an issue price of Rs.99.41 per share (including premium of Rs.97.41 per share) aggregating to Rs. 15,000.00 lacs under Qualified Institutional Placement (QIP) in accordance with Chapter VIII-A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009, which was completed on July 15, 2015.

e) Shares reserved for issue under Employee Stock Options

During the year, 27,500 equity shares of Rs 2 each were issued and alloted to the eligible employees of the Company under the Employee Stock Option Scheme (ESOP) and listing formalities were duly completed.

For details of shares reserved for issue under ESOP of the Company, please refer note 32.

f) Pursuant to merger of certain subsidiaries (refer note 46), the authorized share capital of the company was enhanced by Rs 8,010 lacs divided into 4,005 lacs shares of Rs 2/- each w.e.f April 1, 2015.

Note - The management has estimated the provisions for pending litigations, claims and demands relating to indirect taxes based on its assessment of probability for these demands crystalising against the Company in due course.

Notes:

a) Cash Credits and Packing credit loan (in foreign currency) are secured by first charge on the Company''s current assets, present and future and by way of collateral charge on fixed assets of the Company, both present and future. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium member banks.

b) Cash credits carry interest at banks''s MCLR plus spread ranging from 1% to 2% p.a and are repayable on demand.

c) Packing credit loan (in foreign currency) carry interest rate ranging from 2.20% to 2.62% p.a and are repayable within six months from the date of drawdown.

d) Relates to merged subsidiaries

The management of Corporated Shipyard Private Limited (wholly owned step down subsidiary merged with effect from 1st April 2015) had provided/written off Rs 1,954.16 lacs in the previous year relating to trade receivables, inventory and other advances / Claims receivable as significant time has elapsed without any recovery / realization in the balances. The said amount has been disclosed as exceptional items.

1 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

2 Significant accounting judgments, estimates and assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions, as described below, that affect the reported amounts and the disclosures.

There is no significant area involving high degree of judgment or complexity.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Employee benefit plans

The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer to Note 31.

(b) Fair value measurement of investments

The fair value of unquoted investments are determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 43.

The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the total cost to be incurred in order to determine the percentage of completion as on the reporting date. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

(d) Warranty

The Company estimates the provision for warranty based on past trend of sales. As at 31 March 2017, the estimated liability towards warranty amounted to approximately Rs. 184.06 lacs (March 31, 2016: Rs 207.85 lacs, April 1, 2015: Rs 104.72 lacs).

(e) ESOP

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 32.

3 Retirement and other Employee Benefit Plans

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with a bank through its special deposit scheme with State Bank of Bikaner and Jaipur ). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972.

The following tables summaries the components of employee benefit expenses recognized in the statement of profit and loss and balance sheet for the Gratuity plans..

The Company expects to contribute Rs. 105.98 lacs (Rs 264.05 lacs) to the gratuity fund during 2017-18.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan.

4 Employee Stock Option Plans (ESOP)

The company provides share-based payment schemes to its employees. The Company has formulated an employee stock option scheme namely ESOP Scheme 2014 during the year ended 31 March 2015.

On 11 September 2014, the shareholders, by way of a special resolution passed at the Annual General Meeting, approved the issue of shares to eligible employees under Employee Stock Option Scheme (Scheme 2014). The scheme has been approved by the authorized Compensation Committee pursuant to a resolution passed at its meeting held on March 4, 2015. According to the Scheme 2014, the employee selected by the ESOS compensation committee from time to time will be entitled to the stock options. The total number of options granted should not exceed 25,00,000 options and will be granted in one or more tranches over a period of 5 years. Each option, when exercised, will be converted into 1 equity share of Rs 2 each fully paid up. During the year, the company has issued the first tranche of stock options amounting to 500,000 options. Other relevant terms of the grant are as below:

The weighted average remaining contractual life for the stock options outstanding as at 31 March 2017 is 1.90 years (31st March 2016: 2.90 years).

The weighted average fair value of stock options granted was Rs 137.90 lacs (31 March 2016: Rs 54.33 lacs). The Monte Carlo valuation model has been used for computing the weighted average fair value considering the following inputs:

During the year ended the Company recorded an employee compensation expense of Rs 83.57 lacs (Rs. 54.33 lacs) in the Statement of Profit and loss.

5 Leases

6 Interest in Joint Ventures

The Company has formed a Joint Venture Company ''Matiere Titagarh Bridges Pvt Ltd'' with Matiere SAS, France on January 2nd, 2017 to carry the business of manufacturing, marketing and selling Matiere panel bridges, unibridges, and other auxiliary products.

b) Titagarh Wagons Limited (TWL), the holding company of Cimmco Limited (Cimmco) owns majority of equity and preference shares, directly or indirectly, in Cimmco Limited. Cimmco has been incurring losses over the last few years due to low volume. The company has given commitment to provide financial support, to the best of its ability, to Cimmco Ltd so as to ensure its business continuity.

c) Titagarh Wagons Limited (TWL), the holding company of Titagarh Agrico Private Limited (TAPL), holding 100% equity shares has issued a comfort letter to RBL Bank Limited for the working capital facility sanctioned by it that it will not reduce its financial interest in TAPL.

In respect of above cases, based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

B The Company, has given a put option for a loan obtained by Cimmco limited from ICICI Bank for Rs.4,000 lacs. In terms of the said put option, upon occurrence of any event of default as per the terms of the facility agreement, ICICI bank shall have the right to call upon TWL to pay the entire outstanding within such time as may be prescribed, the outstanding amount as at 31st March 2017 being Rs. 3,142.85 lacs.

38 List of subsidiaries and joint venture of the Company

The Company has following subsidiaries and joint venture for which the Company prepares Consolidated Financial Statements as per Ind AS 110 "Consolidated Financial Statements". Investment in these subsidiaries and Joint ventures has been recognized at.

* Represents cash withdrawals from bank accounts across various locations for petty cash purposes.

7 Assets Pledged as Security for working capital loan availed by the subsidiary companies

The foreign subsidiaries of the Company has been sanctioned with a working capital facility for Rs 15,234.47 lacs (Euro 22 million) during the year which is secured by the following assets of the Company:

The Company is in the process of creation of the above security subject to necessary approval of the consortium bankers. The total working capital facility that has been drawn out of the above sanctioned facility as on March 31, 2017 is Rs 8,315.44 lacs (Euro 12 million).

2 Segment Information

The Company is organized into business units based on its products and services and has three reportable segments, as follows

a) Wagons & Coaches - Consists of manufacturing of wagons, coaches, bogies, couplers and crossings as per customer specification.

b) Specialized Equipments & Bridges - Consists of bailey / other modular bridges, nuclear biological shelters and other defence related products

c) Others - Consists of miscellaneous business like heavy earth moving machineries, ship building, etc which comprises of less than 10% revenue on individual basis.

No operating segments have been aggregated to form the above operating segments.

Total revenue includes sale to Indian Railways of Rs 17,882.21 lacs (Rs 15,792.36 lacs) and to Ministry of Defence of Rs 4,523.38 lacs (Rs 601.26 lacs).

Information about operating segments For the year ended 31st March 2017

Notes

a) Terms and conditions of transactions with related parties

The sales / services to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free (except loan given to subsidiaries) and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2016: INR Nil, 1 April 2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Advance against salary to KMP are interest free and are repayable within 1 year.

b) The remuneration to key managerial personnel does not include provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the Company as a whole.

(iv) The fair value of financial assets (except investment classified as FVTPL) and liabilities approximates their carrying value as at balance sheet date.

3 Financial Risk Management Objectives and policies

The Company''s financial liabilities comprise short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s financial assets include trade and other receivables, cash and cash equivalents, investment in subsidiaries, loan to subsidiaries and deposits. The Company also holds other investments.

I) Market risks

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 two types of risk: currency risk and other price risk, such as commodity price risk and equity price risk. Financial instruments affected by market risk include FVTPL investments, trade payables, trade receivables, borrowings, loan to foreign subsidiaries, other receivables etc

(i) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. Such foreign currency exposures are hedged by the Company through use of foreign exchange forward contracts. The Company has a treasury team which monitors the foreign exchange fluctuations on a continuous basis and advises the management of any material adverse effect on the Company.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and Euro exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company''s exposure to foreign currency changes for all other currencies is not material.

(ii) Equity price risks

The Company only invests in the equity shares of the subsidiaries and some of the group companies as part of the Companyâs overall business strategy and policy. The Company manages the equity price risk through placing limits on individual and total equity investment in each of the subsidiaries and group companies based on the respective business plan of each of the companies. Reports on the investment portfolio along with the financial performance of the subsidiaries and group companies are submitted to the Companyâs management on a regular basis. The Companyâs Board of Directors reviews and approves all investment decisions.

The Companyâs investment in quoted equity instruments (other than subsidiaries) is not material. For sensitivity analysis of Company''s investments in equity instruments, refer note no 43.

II) Credit risks

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

Trade receivables

Customer credit risk is managed by the respective department subject to Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on credibility of the customers.

Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis. The calculation is based on historical data of credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 5 as the Company does not hold any collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries.

III) Liquidity risks

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of cash credits, bank loans among others.

Maturity profile of Financial liabilities

Maturity profile of all financial liabilities is within one year from the end of balance sheet date

8 Capital Management

9 The Hon''ble High Court of Calcutta vide order dated 11th July 2016, sanctioned the Scheme of amalgamation of the wholly owned subsidiaries namely Cimco Equity Holdings Private Limited and Titagarh Marine Limited (along with its two wholly owned subsidiary companies i.e. Corporated Shipyard Private Limited and Times Marine Enterprises Private Limited) with Titagarh Wagons Limited pursuant to the provisions of Sections 391 to 394 and other applicable provisions of the Companies Act 1956. The certified true copy of the said order has been received and filed with the Registrar of Companies, West Bengal on 13th July 2016. Since, the appointed date of the Scheme was 1st April 2015, the effect of amalgamation has been considered in the books retrospectively as per the requirements of Ind AS 103 ''Business Combinations''.

The financial information as at and for the corresponding year ended March 31, 2016, has been prepared considering the impact of aforesaid merger with effect from April 01, 2015. The financial statement and other financial information of these subsidiaries were prepared under Previous GAAP. Adjustments have been made to the previously issued financial information prepared in accordance with the Companies (Accounting Standards) Rules, 2006 after considering the effect of the aforesaid order and on transition to Ind AS.

10 First Time Adoption of Ind As

These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016.

(IV) Footnotes to the reconciliation of Balance Sheet and Equity as at 1st April 2015 and 31st March 2016 and Profit or Loss for the year ended 31 March 2016.

a) Fair value of Property, Plant and Equipment (PPE)

The Company has opted to fair value its property, plant and equipment as on 1st April 2015 (transition date to Ind AS) in terms of exemption given in Ind AS 101 ''First-time Adoption of Indian Accounting Standards''. Consequently, impact of incremental depreciation because of such fair valuation have been accounted for.

b) Investments in equity shares

(i) Under Indian GAAP, all investments in equity shares were measured at cost less provision for other than temporary diminution in the value of investments. As explained in accounting policy in Note 2l (ib) Under Ind AS, investment in shares (other than investment in subsidiaries) are accounted for at fair value. These estimates are based on conditions existing on the respective Balance Sheet date.

(ii) The Company has subscribed to Non cumulative non convertible redeemable preference shares (NCNCRPS) of a subsidiary company, Cimmco Limited. The NCNCRPS have been fair valued as on the date of investment and the difference between the fair value and the carrying value has been take to retained earnings. The company recognizes interest on the said financial asset.

c) Financial Instruments

(i) The Company has issued Corporate Guarantee / Put Option for loans taken by the subsidiary companies. These instruments are accounted for at their respective fair values which were earlier not required to be recognized under Indian GAAP. The company recognizes guarantee income on the said financial asset.

(ii) The Company has given loan to a foreign subsidiary which has been fair valued as per IND AS 109 on the date of loan and the difference between the fair value and the carrying value of the loan has been take to retained earnings.

(iii) The Company has measured and recognized expected credit loss (ECL) on certain receivables as on the date of transition as the management expects such receivables to be collected over a longer period than the usual time required. The Company has discounted the cash flows that it expects to receive at the effective interest rate determined at initial recognition, or an approximation thereof in order to calculate ECL.

(iv) Under Indian GAAP, foreign exchange forward contracts were accounted for based on premium amortization method and no fair valuation was required. However, as per Ind AS all derivatives are measured at fair value and the impact (gain/ loss) of such changes in fair values is recorded in the statement of profit or loss.

d) Dividend

Under Indian GAAP, proposed final dividends including Dividend Distribution Taxes (DDT) are recognized as a liability in the period to which they relate, irrespective of when they are approved. Under Ind AS, such dividend is recognized as a liability when approved by the shareholders.

e) Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

Further, the various transitional adjustments arising on adoption of IND-AS also create temporary differences, deferred tax adjustments whereon are also recognized in Retained earnings, Statement of Profit and Loss or OCI along with the corresponding item of adjustment.

f) Impact of Merger of wholly owned Subsidiaries - Common Control business combination

As mentioned in note no. 46, during the year, the Hon''ble High Court of Calcutta has sanctioned the Scheme of amalgamation of the wholly owned subsidiaries namely Cimco Equity Holdings Private Limited and Titagarh Marine Limited (along with its two wholly owned subsidiary companies i.e. Corporated Shipyard Private Limited and Times Marine Enterprises Limited) with Titagarh Wagons Limited pursuant to the provisions of Sections 391 to 394 and other applicable provisions of the Companies Act 1956. The certified true copy of the said order has been received and filed with the Registrar of Companies, West Bengal on 13th July 2016, thus making the Scheme effective. As all the Transferor Companies were wholly owned subsidiaries of the Company, it is a common control business combination and accordingly accounted for using pooling of interest method with effect from 1st April 2015 i.e. appointed date of the scheme of amalgamation as per Ind AS 103 "Business Combinations".

The financial information as at and for the corresponding year ended March 31, 2016, has been prepared considering the impact of aforesaid merger with effect from April 01, 2015. In view of the brought forward business losses and unabsorbed depreciation of one of the merged subsidiaries now available to the Company, current tax recognized earlier has now been reversed. Also, deferred tax asset on the accumulated brought forward business losses and unabsorbed depreciation of the said merged subsidiary as of 31st March 2016 has been recognized in the books of accounts.

g) Prior Period Items

Under Indian GAAP, prior period errors did not require retrospective restatement of the financial statements. However, Ind AS 8 requires prior period errors to be corrected at the beginning of the earliest prior period presented. Accordingly, following adjustments have been done for the errors relating to the previous year''s:

(i) Certain items of cost included in the capital work in progress/PPE did not meet the definition of cost and certain PPE of merged subsidiaries were not available, hence charged off to retained earnings as on the date of transition / Statement of Profit and Loss of previous year.

(ii) Provision done for certain irrecoverable receivables and inventories of a merged subsidiary, not recognized in earlier years by such subsidiary.

(iii) Provision done for the demand raised by sales tax department on a merged subsidiary, not recognized in earlier years by such subsidiary.

h) Re-classifications

The Company has made following reclassification as per the requirements of Ind-AS:

i) Assets / liabilities which meet / do not meet the definition of financial asset / financial liability have been reclassified from / to other asset / liability respectively.

ii) Re-measurement gain/loss on defined benefit plans are re-classified from statement of profit and loss to OCI.

iii) Excise duty on sale of goods earlier netted off with Sales has been disclosed as a separate item in expenses.

iv) Other reclassifications.

a) Cost of raw material and components sold has been regrouped from other expenses to cost of raw material and components consumed.

b) Trade receivables has been regrouped and classified as non-current and other receivable as on 1st April, 2015.

c) Excise duty on changes on inventory earlier classified in other expenses has been disclosed as a separate item in expenses.

d) Management Fee has been reclassified to revenue from operations from other income

i) Other comprehensive income

IND-AS requires preparation of Statement of Other Comprehensive Income in addition to Statement of Profit and Loss.

j) IND-AS 101 Exemption applied

The Company has adopted following exemptions from retrospective application of certain requirements under IND-AS, as allowed by IND-AS 101 - First-time Adoption of Indian Accounting Standards:

(i) The Company has opted not to apply IND-AS 103 - Business Combinations, to acquistions occurred before 1st April 2015 i.e. date of transition.

(ii) The Company has opted to fair value its property, plant and equipment as on 1st April 2015 (transition date to Ind AS) in terms of exemption given in Ind AS 101 ''First-time Adoption of Indian Accounting Standards'' and considered the same as deemed cost as at 1st April 2015.

(iii) The Company has designated investment in equity instruments (other than investment in subsidiaries) held at 1 April 2015 as FVTPL investments.

Mar 31, 2016

Note: During the year, 2,00,59,069 equity shares of Rs. 10 each were split into 10,02,95,345 equity shares of Rs 2 each pursuant to approval of shareholders obtained through postal ballot on April 13,2015. The record date for the sub-division was April 24,2015.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2/- (Rs. 10/-) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31,2016, the amount of per share dividend recognized as distribution to equity shareholders is Rs. 0.80/- (Rs. 0.80/-). In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

e) Pursuant to the approval of shareholders on April 13,2015, the Company has issued and allotted 1,50,89,025 Equity Shares of Rs.2/- each at an issue price of Rs.99.41 per share (including premium ofRs.97.41 per share) aggregating to Rs. 15,000.00 lacs under Qualified Institutional Placement (QIP) in accordance with Chapter VIII-A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009, which was completed on July 15, 2015.

Notes:

(a) Valued at exchange rate prevailing on the date of transaction.

(b) The 1% Compulsory Cumulative Convertible Preference Shares (CCCPS) are convertible into equity shares on or before August 27,2022 at par.

(c) The 8% Non Convertible Non Cumulative Redeemable Preference Shares (NCNCRPS) are redeemable within five years from the date of allotment i.e. by June 27, 2019at par.

(d) The optionally fully convertible debentures are convertible into equity shares at the option of the Company on or before March 31,2021 at par.

(e) The net worth as per consolidated financial statement of Titagarh Marine Limited (TML) is fully eroded as at March 31, 2016 and the share holder''s funds stood at negative Rs 3111.80 lacs. In view of pending adjustments in the books of accounts pursuant to the Scheme of Amalgamation as referred in note 40, the Company has not made provision against investment in equity shares and 0.1% Optionally Fully Convertible Debentures and loan given to TML amounting to Rs 455.06 lacs, Rs 3,166.50 lacs and Rs 890.93 lacs respectively.

(f) The Company has investment in the equity and preference capital aggregating to Rs. 4,042.57 lacs in its wholly owned subsidiary company "Titagarh Capital Private Limited" (TCPL). As at March 31,2016, being the last audited balance sheet date, the accumulated losses in the books of TCPL is Rs.1,433.40 lacs. However, certain fixed assets of TCPL having net block of Rs 1,035.48 lacs representing 887 wagons, are in possession of Indian Railways as lease since 1998 which have significant residual value. Considering the above, the Company is of the view that the diminution in the value of investment is temporary in nature and accordingly, no provision is considered necessary in these financial statements.

(g) The Company has investment of Rs.6,500 lacs in equity in a Subsidiary "Cimco Equity Holdings Private Limited" (CEHPL). As at March 31,2016, being the last audited balance sheet date, the accumulated losses in the books of CEHPL is Rs. 2,145.14lacs. However, CEHPL is holding certain long term investments in equity shares of Rs. 4,402.70 lacs in its listed subsidiary Company "Cimmco Ltd". Considering the market value of the quoted equity shares, fair value of the freehold and leasehold land and long term business plan and profitability projection of Cimmco Limited, the Company is of the view that the diminution in the value of investment is temporary in nature and accordingly, no provision is considered necessary in these financial statements.

(h) During the year, the Company along with its wholly owned subsidiary company Titagarh Singapore Pte Limited have formed a subsidiary company in Italy in the name of Titagarh Fireman Adler SpA (TFA).TFA has acquired the business and assets of Firema Trasporti SpA, a designer and manufacturer of metro coaches and semi / high speed trains.

Note: The shareholders of the Company have approved the split of each equity share having a face value of Rs 10 into five equity shares having a face value of Rs 2 each through postal ballot on April 13, 2015. The record date for the sub-division was April 24, 2015. Accordingly, the earnings per share for previous year has been adjusted with respect to the aforesaid increase in number of equity shares.

RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS_

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and partly funded with a special deposit scheme with State Bank of Bikaner and Jaipur). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favorable than the provisions of the Payment of Gratuity Act, 1972.

The following tables summaries the components of employee benefit expenses recognized in the statement of profit and loss and balance sheet for the Gratuity plans.

1. The Board of Directors of the Company at its meeting held on September 24,2015 have approved a Scheme of Amalgamation of its wholly owned subsidiaries namely Cimco Equity Holdings Private Limited and Titagarh Marine Limited (along with its two wholly owned subsidiary companies Corporate Shipyard Private Limited and Times Marine Enterprises Private Limited) with Titagarh Wagons Limited pursuant to the provisions of Sections 391 to 394 and other applicable provisions of the Companies Act 1956. The Hon''ble High Court has sanctioned the aforesaid scheme of amalgamation, however the certified true copy of the said order has been applied for and the scheme of amalgamation will be made effective upon filing of the same with Registrar of Companies, West Bengal, pending which, no adjustment has been made in these accounts.

2. Pursuant to a favorable arbitration award received during the year in relation to a disputed claim against a customer, the Company has recognized the income of Rs 835.44 lacs (including interest of Rs. 225.00 lacs) in these financial statements. The said money has also been received.

3. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods, work in progress and saleable scrap.

4. Previous year''s figures including those given in brackets have been regrouped/reclassified, where necessary, to conform to the current year''s classification.

Mar 31, 2015

L] CORPORATE INFORMATION

Titagarh Wagons Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 and existing under Companies Act 2013. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The Company is engaged in the manufacturing and selling of Railway Wagons, Steel Castings, Heavy Earthmoving and mining equipments, Bailey Bridges, EMU etc. The Company primarily caters to the domestic market.

2) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2015, the amount of dividend per share recognised as distributable to equity shareholders is Rs. 4/- (Rs.4/-).

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

A) The shareholders of the Company have approved the sub-division of each equity shares having a face value ofRs10 into five equity shares having a face value of Rs 2 each through postal ballot on April 13, 2015. The record date for the sub-division has been fixed as April 24, 2015.

(B) Represents loss on disposal of fixed assets adjusted against revaluation reserve in terms of the accounting policy 2(b)(ii).

(C) Effective from April 1,2014, the Company has charged depreciation based on the revised remaining useful lives of the fixed assets as per the requirement of Schdule II to the Companies Act, 2013. Further, as per the transitional provision provided in Note 7(b) of Schedule II, an amount of Rs. 271.22 lacs (net of deferred tax of Rs 139.66 lacs) has been adjusted with general reserve for the fixed assets in respect of which the remaining useful life was Nil as on April 1, 2014.

* The classification of provisions for employee benefits into current / non current have been done by the actuary of the Company based upon estimated amount of cash outflow during the next twelve months from the balance sheet date.

D) Cash Credits and Buyers' Credit are secured by first charge on the Company's current assets, present and future and by way of collateral charge on fixed assets of the Company, both present and future. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium member banks.

E) Cash credits carry interest at base rate ranging from 9.70% to 11.00% plus spread ranging between 0.25% to 2.50% p.a. and are repayable on demand.

F) Buyers' Credit carries interest at Libor plus spread ranging between 0.79% to 1.13% and is repayable by December, 2015.

(a) Valued at exchange rate prevailing on the date of transaction.

(b) Cease to be a subsidiary w.e.f February 18, 2015.

(c) The preference shares are convertible into equity shares on or before August 27, 2022 at par.

(d) The preference shares are redeemable within five years from the date of allotment i.e. by June 27, 2019at par.

(e) The optionally fully convertible debentures are convertible into equity shares at the option of the Company on or before March 31, 2021 at par.

(f) As at the balance sheet date, the Company has total investment of Rs 455.06 lacs in the equity shares and Rs, 3,166.50 lacs in the Optionally fully convertible debentures (OFCD) in Titagarh Marine Limited (TML), its wholly owned subsidiary Company. As at March 31, 2014, being the last audited balance sheet date, the accumulated losses in the books of TML is Rs. 285.76 lacs. Considering the long term business plan and profitability projection, the Company is of the view that the diminution in the value of investment is temporary in nature and accordingly, no provision is considered necessary in these financial statements.

(g) The Company has investment in the equity and preference capital aggregating to Rs. 4,042.57 lacs in its wholly owned subsidiary company Titagarh Capital Private Limited" (TCPL). As at March 31, 2014, being the last audited balance sheet date, the accumulated losses in the books of TCPL is Rs. 1,290.66 lacs. However, certain fixed assets of TCPL having net block of Rs. 59.23 lacs represents 687 wagons, are in possession of Indian Railways as lease since 1998 which have significant residual value. Considering the above, the Company is of the view that the diminution in the value of investment is temporary in nature and accordingly, no provision is considered necessary in these financial statements.

(h) The Company had investment of Rs.50 lacs in equity and Rs.6400 lacs in Optionally Fully Convertible Debentures (OFCD) in a Joint Venture Company Cimco Equity Holdings Private Limited"" (CEHPL). On 15th April 2014, the Company has exercised its option for the conversion of such OFCD into equity shares at par and consequently the Company's holding in CEHPL increased to99.23%.On April 16, 2014,the Company purchased 5,00,000 equity shares of Rs.10/- each held by the other shareholder in CEHPL thereby acquiring 100% equity stake. As a result thereof, CEHPL has become wholly owned subsidiary of the Company w.e.f April 16, 2014. CEHPL hold s.74.76% of the total equity capital of Cimmco Limited (Cimmco) and there fore Cimmco has become a step down subsidiary of the Company on and from April 16, 2014. Further,thesaid conversion of OFCD triggered mandatory Open Offer pursuant to the SEBI (Substantial Acquisition &Takeovers) Regulations, 1997 in which 1429 equity shares (0.007% of Cimmco's equity capital) have been tendered post transfer whereof CEHPL's shareholding in Cimmco has increased to 74.77%.

As at March 31, 2014, being the last audited balance sheet date, the accumulated losses in the books of CEHPL is Rs. 2,129.77 lacs. However, CEHPL is holding certain long term investments in equity shares of Rs. 4,313.35 lacs in its listed subsidiary company Cimmco Ltd. Considering the market value of the quoted equity shares, fair value of the freehold and leasehold land and long term business plan and profitability projection of Cimmco Limited, the Company is of the view that the diminution in the value of investment is temporary in nature and accordingly, no provision is considered necessary in these financial statements.

i) The consumption figures shown above are after adjusting excess and shortages, if any, on physical count, unserviceable items, etc. and net off discount received on purchases. Further the above does not include materials received from customers on free supply basis.

j) It is not practicable to furnish further details in view of the large number of items which differ in size and nature, each being less than 10% in value of the total consumption.

3. During the year, the Company has entered into a contract with Indian Railways for supply of wagons. Due to the low volume of procurement by Indian Railways and the resultant intense unhealthy competition, the pricing of the wagon as finalised by the Indian Railway is un-remunerative and is likely to result in loss on execution of this contract over a period of time. Consequently, the Company has recognised loss of Rs. 1,710.15 lacs during the year on such onerous contract in terms of Accounting Standard 29- Provisions, Contingent Liabilities and Contingent Assets and disclosed it as exceptional item.

4. RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with Life Insurance Corporation of India (LIC) in the form of qualifying insurance policy). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972.

The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

The Company expects to contribute Rs. 126.11 lacs (Rs. 73.45 lacs) to the gratuity fund during 2015-16.

5. LEASES

The Company has operating leases for office premises and land that are renewable on a periodic basis and are cancellable by giving a notice period ranging from one month to three months. There is no escalation clause and restriction under the lease agreement. There are no subleases.

6. SEGMENT INFORMATION

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company has identified two business segments i.e."Wagons&Coachesand"Others" :

a) Wagons & Coaches - Consists of manufacturing of wagons, coaches, bogies, couplers and crossings as per customer specification.

b) Others - Consists of miscellaneous business like heavy earth moving machineries, bailey bridge etc. which comprises of less than 10% revenue on individual basis.

Export Segment assets consist of export debtors whose balance is less than 10% of total assets of the business segment and hence not disclosed as per Accounting Standard 17. Since the Company has all fixed assets in India only, separate figures for fixed assets/additions to fixed assets for Domestic and Overseas segments are not furnished.

7. CONTINGENT LIABILITIES

A. Disputed claims contested by the Company and pending at various courts/arbitration 930.27 1,072.24

Customer's Claims (Liquidated Damages) - 442.29 Matters under appeal with:

Sales tax authorities 819.00 427.79

Income tax authorities 535.79 711.54

Customs and excise authorities 11,015.15 10,652.68

Letter of Credit and Bank Guarantees outstanding 19,046.84 12,871.03

Corporate Guaranteegiven/fixed deposit pledged on behalf of a subsidiary Company for working capital limits sanctioned to the subsidiary company 7,426.14 8,433.14

Custom Duty on import of equipments and spare parts under EPCG-scheme 981.00 1,077.24

40,754.20 35,687.95

In respect of above cases, based on favourable decisions in similar cases/legal opinions taken by theCompany/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

B. During the year, Cimmco Limited, a subsidiary company has obtained a loan from ICICI bank for Rs. 4000 lacs which is backed by a "Put Option" of Titagarh Wagons Limited(TWL). In terms of the said put option, upon occurrence of any event of default as per the terms of the facility agreement, ICICI bank shall have the right to call upon TWL to pay the entire outstanding within such time as may be prescribed.

8. The Board of Directors at their meeting dated September 11,2014 has given in-principle approval for the merger of four wholly owned subsidiaries (including step down subsidiaries) namely Titagarh Marine Limited,Cimco Equity Holdings Private Limited, Corporated Shipyard Private Limited and Times Marine Enterprise Private Limited, subject to necessary approvals. The scheme of merger is under preparation.

9. The Shareholders of the Company have approved through postal ballot on April 13, 2015, raising of funds by way of equity shares and / or other securities in accordance with applicable provisions of Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 for an aggregate amount not exceeding Rs 25,000.00 lacs or equivalent thereof in foreign currency in such manner and on such terms and conditions as may be deemed appropriate by the Board.

10. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods, work in progress and saleable scrap.

11. Previous year's figures including those given in brackets have been regrouped/reclassified, where necessary, to conform to the current year's classification.

Mar 31, 2014

L] CORPORATE INFORMATION

Titagarh Wagons Limited (the Company) is a public company domiciled in India and incorporated underthe provisions ofthe Companies Act, 1956. Its shares are listed at Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Company is engaged in the manufacturing and selling of Railway Wagons, Steel Castings, Heavy Earthmoving and mining equipments, Bailey Bridges, EMU etc. The Company primarily caters to the domestic market.

2] LEASES

The Company has operating leases for office premises and land that are renewable on a periodic basis and are cancelable by giving a notice perioc ranging from one month to three months.There is no escalation clause and restriction under the lease agreement. There are no subleases.

3 SEGMENT INFORMATION

Based on the synergies, risks and return associated with business operations and in terms ofAccounting Standard-17, the Company has re-assessed its business segments. The steel foundry division is an integral part of the wagons and coaches division and accordingly reported as one single segment i.e. "Wagons & Coaches". Based on the above re-assessment the current year''s business segments are :

a) Wagons & Coaches - Consists of manufacturing of wagons, coaches, bogies, couplers and crossings as per customer specification.

b) Others - Consists ofmiscellaneous business like heavy earth moving machineries, bailey bridge etc. which comprises ofless than 10% revenue on individual basis.

Export Segment assets consist of export debtors whose balance is less than 10% of total assets of the business segment and hence not disclosed as per Accounting Standard 17. Since the Company has all fixed assets in India only, separate figures for fixed assets/ additions to fixed assets for Domestic and Overseas segments are not furnished.

4] RELATED PARTY DISCLOSURES

Names of related parties and related party relationship Related parties where control exists:

Subsidiary Companies:

Titagarh Singapore Pte Limited Titagarh Capital Private Limited Titagarh Wagons AFR

Greyshamand Co. Private Limited (by virtue of control of composition of the Board of the Company) Titagarh Marine Limited

Titagarh Agrico Private Limited (Formerly Titagarh Cranes Private Limited)

Corporated Shipyard Private Limited (subsidiary of Titagarh Marine Limited)

Joint Venture Companies:

Cimco Equity Holdings Private Limited

Titagarh Freightcar Private Limited (ceased to be a Joint Venture with effect from February 18,2013) Cimmco Limited, subsidiary of Cimco Equity Holdings Private Limited

Associate Companies:

Titagarh Freightcar Private Limited (ceased to be an associate with effect from January 7,2014)

Related parties with whom transactions have taken place during the period:

Key Management Personnel (KMPs):

Mr. J P Chowdhary - Executive Chairman

Mr. Umesh Chowdhary - Vice Chairman & Managing Director

Relatives of KMPs:

Ms. Savitri Devi Chowdhary, Wife of Mr. J P Chowdhary Ms. Rashmi Chowdhary, Wife of Mr. Umesh Chowdhary Ms.Vinita Bajoria, Daughter of Mr. J P Chowdhary Ms.Sumita Kandoi, Daughter of Mr. J P Chowdhary

Enterprises over which KMP/Shareholders/ Relatives have significant influence:

Titagarh Logistics Infrastructure Private Limited Titagarh Capital Management Services Private Limited Traco International Investment Private Limited Titagarh Papers Limited Panihati Rubber Limited

(Rs. in Lacs) As at As at Marc 31, 2014 March 31,2013

5] CONTINGENT LIABILITIES

Disputed claimscontested by the Company and pending atvariouscourts/arbitration 1,072.24 1,155.70

Customer''s Claims (Liquidated Damages) 442.29 442.29

Matters under appeal with:

Sales tax authorities 427.79 348.84

Income tax authorities 711.54 722.97

Customs and excise authorities 10,652.68 9,335.26

Letter of Credit and Bank Guarantees outstanding 12,871.03 21,307.36

Corporate Guaranteegiven on behalf of a subsidiary Company for working 8,257.65 6,954.38

capital limit sanctioned to the subsidiary company

Custom Duty on import ofequipments and spare parts under EPCG-scheme 1,077.24 1,290.21

35,512.46 41,557.01

In respect ofabove cases, based on favourabledecisions in similarcases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

6. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods, work in progress and saleable scrap.

7. PREVIOUS YEARFIGURES

Previous period''s figures including those given in brackets have been regrouped/reclassified, where necessary, to conform to this year''s classification.

Mar 31, 2013

CORPORATE INFORMATION

Titagarh Wagons Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed at Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Company is engaged in the manufacturing and selling of Railway Wagons, Steel Castings, Heavy Earthmoving and mining equipments, Bailey Bridges, EMU etc. The Company primarily caters to the domestic market.

1 RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with Life Insurance Corporation of India (LIC) in the form of qualifying insurance policy). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favorable than the provisions of the Payment of Gratuity Act, 1972. The following tables summarises the components of employee benefit expenses recognised in the Statement of Profit and Loss and Balance Sheet for the Gratuity plans.

2 LEASES

The Company has operating leases for office premises and land that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months.There is no escalation clause and restriction under the lease agreement. There are no subleases.

3 SEGMENT INFORMATIOI

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is engaged in following business segments:

a) Wagons & Coaches - Consists of manufacturing of wagons and coaches as per customer specification

b) Heavy Earth Moving Machineries (HEMM) - Consists of manufacturing of heavy earth moving equipments

c) Steel Foundry - Consists of casting including bogies and couplers

d) Others - Consists of miscellaneous business like bailey bridge etc. are comprising of less than 10% revenue on individual basis

4 RELATED PARTY DISCLOSURES

Names of related parties and related party relationship Related parties where control exists:

Subsidiary Companies: Titagarh Singapore Pte Limited

Titagarh Capital Private Limited

Titagarh Wagons AFR

Greysham and Co. Private Limited (by virtue of control of composition of the Board of the Company)

Titagarh Marine Limited

Titagarh Cranes Private Limited (with effect from August 24,2012) Joint Venture Companies: Cimco Equity Holdings Private Limited

Titagarh FreightCar Private Limited (ceased to be a Joint Venture with effect from February 18,2013)

Cimmco Limited, subsidiary of Cimco Equity Holdings Private Limited AssociateCompanies: Titagarh Freighter Private Limited (with effect from February 19,2013)

Related parties with whom transactions have taken placeduring the period:

Key Management Personnel (KMPs): Mr. J P Chowdhary- Executive Chairman

Mr. Umesh Chowdhary -Vice Chairman & Managing Director Relatives of KMPs: Ms.Savitri Devi Chowdhary, Wife of Mr. J P Chowdhary

Ms. Rashmi Chowdhary, Wife of Mr. Umesh Chowdhary

Ms. VinitaBajoria, Daughter of Mr. J P Chowdhary

Ms.Sumita Kandoi, Daughter of Mr. J PChowdhary Enterprises over which KMP/Shareholders/ Titagarh Logistics Infrastructure Private Limited

Relatives have siqnificant influence Titagarh Capital Management Services Private Limited

5. Traco International Investment Private Limited

Titagarh Papers Limited

Panihati Rubber Limited

The Board of Directors at its meeting held on December 24,2012 had approved a Scheme of Arrangement to demerge the'' Rail Coach Division'' and ''Heavy Earth Moving Machineries''division of the Company by transferring the same on a going concern basis toTitagarh Trains Private Limited and Titagarh Cranes Private Limited respectively with effect from April 1, 2012 subject to approval from respective shareholders and various regulatory authorities. The Board of Directors in its subsequent meeting held on February 18, 2013 has withdrawn the aforesaid Scheme of Arrangement.

6. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods, work in progress and saleable scrap.

7. PREVIOUS YEAR FIGURES

Previous period''s figures including those given in brackets have been regrouped/reclassified, where necessary, to conform to this year''s classification.

Mar 31, 2012

1. Corporate Information

Titagarh Wagons Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The Company is engaged in the manufacturing and selling of Railway Wagons, Steel Castings, Heavy Earthmoving and mining equipments, Bailey Bridges, EMU etc. The Company primarily caters to the domestic market.

a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of dividend per share recognised as distributable to equity shareholders is Rs. 8/- (Rs. 8/-)

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

Notes :

a) Cash credit, Packing credit loan and Buyers' credit are secured by first charge on the Company's current assets, present and future and by way of collateral charge on fixed assets of the Company, both present and future. All the mortgages and charges created in favour of the above lenders rank pari passu with consortium member banks.

b) Cash credit carries interest @11% to 14% p.a and are repayable on demand.

c) Packing credit loan carries interest @ Libor 3.5% and is repayable within three months from the balance sheet date.

d) Short term loan carries interest @ 11.75% and is secured by fixed deposits. The loan is repayable within one month from the balance sheet date.

(a) Formerly Flourish Securities and Finance Private Limited

(b) Valued at exchange rate prevailing on the date of transaction

(c) Subsidiary by virtue of the Company's control over the composition of its board of directors.

1. RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with Life Insurance Corporation of India (LIC) in the form of qualifying insurance policy). Every employee who has completed five years or more of service is entitled to gratuity on terms not less favorable than the provisions of the Payment of Gratuity Act, 1972.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is an unfunded plan.

2. LEASES

The Company has operating leases for office premises and land that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months. There is no escalation clause and restriction under the lease agreement. There are no subleases.

3. SEGMENTINFORMATION

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is engaged in following business segments.

a) Wagons & Coaches - Consists of manufacturing of wagons and coaches as per customer specification

b) Heavy Earth Moving Machineries (HEMM) - Consists of manufacturing of heavy earth moving equipments

c) Steel Foundry - Consists of foundries casting including bogies and couplers

d) Others - Consists of miscellaneous business comprising of less than 10% revenue on individual basis

As at As at March 31, 2012 March 31, 2011

4. CONTINGENT LIABILITIES

Disputed claims contested by the Company and pending at various courts. 411.09 357.35 Matters under appeal with :

Sales tax authorities 594.47 1035.41

Income tax authorities 871.18 53.68

Customs and excise authorities 8,654.70 2,415.32

Letters of Credit, Bills discounted and Bank Guarantees outstanding 25,232.81 14,018.00

Performance Guarantee given on behalf of a subsidiary Company for fulfillment - 2,031.30 of certain obligations

Put Option granted - 13,000.00

Custom Duty on import of equipments and spare parts under EPCG-scheme - 124.55

5. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods, work in progress and saleable scrap.

6. PREVIOUS YEAR FIGURES

Previous period's figures including those given in brackets have been rearranged where necessary to conform to the current period's classification under Revised Schedule VI as stated in Note 2 above.

Mar 31, 2011

1. Contingent liabilities not provided for in respect of: (Rs. in Lacs)

Sl Particulars As at As at No. March 31, 2011 March 31, 2010

A Disputed claims contested by the Company and pending at various courts. 357.35 311.20

B Matters under appeal with:

Sales Tax Authorities 1,035.41 464.59

Income Tax Authorities 53.68 53.68

Customs and Excise Authorities 2,415.32 1,567.74

C Letters of Credit, Bills discounted and Bank Guarantees outstanding 14,018.00 9,253.33

D Performance Guarantee given on behalf of a subsidiary Company for fulfillment of certain obligations 2,031.30 2,031.30

E Put Option granted (Refer Note No. 24 on Schedule 22) 13,000.00 -

F Custom Duty on import of equipments and spare parts under EPCG-scheme 124.55 246.30

In respect of above cases based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

2. Estimated amount of capital commitments (net of advances) remaining to be executed - Rs. 141.77 lacs (Rs. 144.46 lacs).

3. Excise duties on stocks represent differential excise duty on opening & closing stock of finished goods.

4. Working Capital Facilities are secured by hypothecation of stocks, book debts, movable properties of any kind and fixed assets, both present and future and equitable mortgage of immovable properties of the Company and fixed deposits with banks to the extent of Rs. 50.00 lacs.

Short term loans against fixed deposits are secured by pledge of fixed deposits receipts.

5. The Companys application for increase in Gross value of fixed capital Assets by Rs. 78.95 lacs and allowance of sales tax deferment loan aggregating to Rs. 51.72 lacs for the period from January 2005 to March 2005 is pending grant by the relevant authorities. The matter is being pursued by the Company and accordingly, such amount has been included in Sales Tax Deferment loan and shown as Unsecured Loan.

6. During the year, the Company has implemented a new ERP system which required a change in the method of valuation of Raw Materials & Components and Stores & Spare Parts inventories from "First in First out" to "weighted average basis". Further, the management also believes that such change in method of valuation of inventories will result in a more appropriate presentation of these inventories and will give a systematic basis for charge of Raw Materials & Components and Stores & Spare Parts consumption and would be more representative of the time pattern in which the economic benefits will be derived from the use of such inventories. Had the Company continued to use the earlier basis of valuation, the charge to Profit and Loss Account for the year would have been higher by Rs. 18.99 lacs and Raw Materials & Components and Stores & Spare Parts inventories would have been lower by Rs. 39.18 lacs and higher by Rs. 20.19 lacs respectively.

7. Gratuity and other post retirement benefit plans

The Company has a defined benefit gratuity plan which is unfunded (except for Titagarh Steels unit where it is administered through a trust and funded with Life Insurance Corporation of India (LIC) in the form of qualifying insurance policy). Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of the Payment of Gratuity Act, 1972.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment. This is also an unfunded plan.

The following tables summaries the components of net benefit/ expense recognised in the Profit and Loss Account and Balance Sheet for the Gratuity plan.

(h) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

(i) The Company expects to contribute Rs. 6.00 lacs to the gratuity fund during 2011-12.

8. Segment Information Business Segments:

Based on the synergies, risks and return associated with business operations and in terms of Accounting Standard-17, the Company is engaged in following business segments:

a) Wagons & Coaches Ã Consists of manufacturing of wagons and coaches as per customer specification

b) Heavy Earth Moving Machineries (HEMM) Ã Consists of manufacturing of heavy earth moving equipments

c) Steel Foundry Ã Consists of foundries casting including bogies and couplers

d) Others - Consists of miscellaneous business comprising of less than 10% revenue.

Geographical Segments:

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and Overseas Operations.

9. In compliance with Accounting Standard Ã 18, the disclosures regarding related parties are as follows: I. Name of Related parties:

a) Subsidiary Companies

Titagarh Singapore Pte Limited

Flourish Securities and Finance Private Limited

Titagarh Wagons AFR

Greysham and Co. Private Limited

(by virtue of control of composition of Board of the Company)

b) Associate Companies

Continental Valves Limited (upto 29th July, 2010) Tecalemit Industries Limited (upto 30th June, 2010)

c) Joint Venture Companies

Cimco Equity Holdings Private Limited

Titagarh FreightCar Private Limited

Cimmco Limited, subsidiary of Cimco Equity Holdings Private Limited

(with effect from 14th March, 2010)

d) Key Management Personnel (KMP)

Mr. J P Chowdhary Ã Executive Chairman

Mr. Umesh Chowdhary Ã Vice Chairman & Managing Director

(with effect from 1st October, 2010) (Previous Year upto 23rd September, 2009)

e) Relatives of KMP

Ms. Savitri Devi Chowdhary, Wife of Mr. J P Chowdhary Ms. Rashmi Chowdhary, Wife of Mr. Umesh Chowdhary Mr. Umesh Chowdhary, Son of Mr. J P Chowdhary Ms. Vinita Bajoria, Daughter of Mr. J P Chowdhary Ms. Sumita Kandoi, Daughter of Mr. J P Chowdhary

f) Enterprises over which KMP/Shareholders/ Relatives have significant influence

Titagarh Logistics Infrastructures Private Limited

Sourenee Leaves Private Limited

Titagarh Shipyd Limited

Titagarh Capital Management Services Private Limited

Traco International Investment Private Limited

10. Professional Expenses include expenses towards Research and Development Rs. 16.93 lacs (Rs. 8.40 lacs). There is no capital expenditure on account of Research and Development

11. During the year, the Company has issued 1,250,000 convertible equity warrants to its promoter group entity on preferential basis at a resultant price of Rs. 387 each per share (Face value - Rs. 10 each) and has received a sum of Rs. 1,209.38 lacs as advance payment there against. The warrants are convertible into equivalent number of equity shares at the option of warrant holder within 18 months from the date of allotment of the warrants subject to receipt of full consideration.

12. The Company has operating leases for office premises that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

The amount of rent expenses included in Profit and Loss Account towards operating Leases aggregate to Rs. 46.89 lacs (Rs. 45.41 lacs).

13. The Company has made Investments and given Loans & Advances of Rs. 15,552.72 lacs (Rs. 14,145.38 lacs) to a subsidiary and a joint venture company for the purpose of acquiring controlling stake including certain financial assets like leased wagons of another company, which was registered with the Board for Industrial and Financial Reconstruction (BIFR).

The net worth of the said company has since turned positive and BIFR has also de-registered the company from its purview based on progress of rehabilitation scheme. Since the said company has started operations and has also started making profits, the above amounts are considered good of recovery by the management.

14. As per the rehabilitation scheme sanctioned by Board for Industrial and Financial Reconstruction (BIFR) for Cimmco Limited ("Cimmco"), a related party, the Company has been identified as a "co-promoter" for the successful revival of Cimmco and accordingly the Company has granted an option to a lender of Cimmco for Rs. 13,000.00 lacs, towards credit facilities sanctioned to Cimmco, whereby on occurrence of any of the put option events, the lender has a right to call upon the Company to assume and discharge the receivables of the lender under the said credit facilities.

15. During the year, the Company has set up Titagarh Wagons AFR (formerly, La Compagnie AFR Titagarh), a 90% subsidiary in France to takeover the wagon manufacturing facility of another company in France. The Company has invested Rs. 2,864.60 lacs towards share capital and has also given interest bearing loan of Rs. 3,984.12 lacs to fund the operations of the said Company.

16. Previous periods figures including those given in brackets have been regrouped / rearranged where necessary to conform to this years classification.

Mar 31, 2010

1. Contingent Liabilities:-

i. Claims not acknowledged as debts - 311.20 lacs (Rs. 154.06 Lacs).

ii. Income tax demands under appeal Rs. 53.86 lacs (Rs.37.46 Lacs).

iii.Excise demands under appeal Rs. 1,567.74 lacs (Rs. 1,109.84 Lacs).

iv. Sales tax demands under appeal Rs. 464.59 lacs (Rs. 451.77 Lacs).

v. Outstanding Guarantees and Letters of Credit from Banks Rs. 9,253.33 (Rs. 16,127.32 Lacs) and Performance Guarantee given on behalf of a subsidiary Company for fulfillment of certain obligations Rs. 2,031.30 Lacs (Rs 2,292.75 Lacs).

vi. Future export obligation with respect of duty free import against advance/EPCG licenses Rs. 903.74 Lacs (636.55 Lacs).

2. Estimated amount of Capital contracts not provided for (net of advances) Rs.144.46 Lacs (Rs. 166.26 Lacs).

3. Excise duties on stocks represent differential excise duty on opening & closing stock of finished goods.

4. (a) Working capital borrowings, external commercial borrowings from the bankers and non funded facilities comprising of bank guarantees and letters of credit are secured by hypothecation of stocks, book debts, movable properties of any kind and fixed assets, both present and future and equitable mortgage of immovable properties of the Company and fixed deposits with banks to the extent of Rs.50.00 lacs

(b) Short term loans against fixed deposits are secured by pledge of fixed deposits receipts.

5. The Companys application for increase in Gross value of fixed capital Assets by Rs. 78.95 Lacs and allowance of sale tax deferment loan aggregating to Rs 51.72 Lacs for the period from January 2005 to March 2005 is pending grant by the relevant authorities. The matter is being pursued by the Company and accordingly, such amount has been included in Sales Tax Deferment loan and shown as Unsecured Loan.

6. In compliance with Accounting Standard Ã 17 Ã ÃSegment Information notified pursuant to the Companies (Accounting Standards) Rules, 2006 (as amended) in respect of Business Segment are as follows:

Business Segment:

The business segments based on the Companys products have been identified as "Wagon Building", "Heavy Earth Moving Machineries (HEMM)" and "Steel Foundry".

Wagon Building: Consists of manufacturing of wagons as per customers specification Heavy earth moving Machineries: Consists of manufacturing of earth moving equipments.

Steel Foundry: Consists of foundry castings including Bogies and Couplers.

Others: Consists of miscellaneous business comprising of less than 10% revenue.

Geographical Segment

The Company primarily operates in India and therefore the analysis of geographical segment is not applicable to the Company.

7. The Company has operating leases for office premises that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.The amount of rent expenses included in Profit and Loss Account towards operating Leases aggregate to Rs 45.41 Lacs (Rs. 33.93 Lacs).

8. (a) Based on the latest audited financial statements as at June 30, 2009 of Titagarh Paper Limited, there is a diminution in the value of investments to the extent of Rs. 329.03 lacs. However considering the strategic nature of these investment and also because the exact realizable value of the assets held by the aforesaid Company is likely to be significantly higher than the book value, no provision towards diminution, other than temporary in nature, in the value of investment is considered necessary.

(b) Debts amounting to Rs. 746.57 lacs recoverable from a customer have not been realized since last year. The Company has taken reasonable steps in the matter and is hopeful to recover these dues. Accordingly, these dues have been considered good of recovery. For the reasons mentioned above, Terminal Excise duty claim of Rs. 195.34 lacs from the Director General of Foreign Trade have also been considered as good of recovery.

9. Export of finished goods out of material imported against Adavnce License amounting to Rs. 1,949.17 lakhs did not take place during the specified period. Accordingly, custom duty of Rs. 623.79 lakhs and interest of Rs.148.05 lakhs thereon has been provided in the books and Rs. 307.61 lakhs (including interest of Rs. 65.73 lakhs) has since been paid as well.

(b) Debts amounting to Rs. 746.57 lacs recoverable from a customer have not been realized since last year. The Company has taken reasonable steps in the matter and is hopeful to recover these dues. Accordingly, these dues have been considered good of recovery. For the reasons mentioned above, Terminal Excise duty claim of Rs. 195.34 lacs from the Director General of Foreign Trade have also been considered as good of recovery.

10. Export of finished goods out of material imported against Adavnce License amounting to Rs. 1,949.17 lakhs did not take place during the specified period. Accordingly, custom duty of Rs. 623.79 lakhs and interest of Rs.148.05 lakhs thereon has been provided in the books and Rs. 307.61 lakhs (including interest of Rs. 65.73 lakhs) has since been paid as well. transferred companies carried on all their businesses and activities for the benefit of and in trust for, the Company from the Appointed Date. Thus, the profit or income accruing or arising to or expenditure or losses arising or incurred by the transferred companies from the Appointed Date are treated as the profit or income or expenditure or loss, as the case may be, of the Company. The Scheme has accordingly been given effect to in these accounts upon filing of certified copy of the Order of the Honble High Court at Calcutta on November 27, 2009 (the Effective Date).

(c) The Company has issued 3,66,954 equity shares of Rs.10/- each aggregating to Rs.36.70 lakhs to the shareholders of TSL on January 16, 2010, while in case of TBPL which was a wholly owned subsidiary of the Company, all the shares held by the Company in TBPL were cancelled and extinguished. (d) A sum of Rs. 1288.85 lakhs being the difference between the amounts recorded as additional shares of the Company and the total share capital of TSL and TBPL has been adjusted and reflected as general reserve, instead of capital reserve as prescribed under Accounting Standard Ã 14 in terms of the above court order.

11. The Companys investments in and loans to a wholly owned subsidiary Flourish Securities & Finance Pvt. Ltd. (FSPL) and a joint venture company, Cimco Equity Holding Private Ltd. (CHEPL) aggregating to Rs.14,145.38 lacs (Rs.5,495 lacs) have been utilized for acquiring controlling stake in and repurchase of certain financial assets like leased wagons, debts / loans of Cimmco Limited, a company under rehabilitation, the scheme whereof has been approved by the Board for Industrial and Financial Reconstruction (BIFR). In terms of the said approved scheme of BIFR, the rehabilitation of Cimmco Limited is under implementation and the Company, as a copromoter has given financial and other indemnity to BIFR for fulfillment of the terms of the said scheme. In the opinion of the management, all the above loans and investments are strategic in nature, with the objective of business expansion and diversification of the company and accordingly, these are considered good of recovery.

12. Previous years figures have been shown within brackets and have been regrouped / rearranged wherever necessary. In view of the merger of erstwhile TSL and TBPL with the Company with effect from April 1, 2009, pursuant to the Scheme of Amalgamation as mentioned in Note No. 25 above, the figures of the previous year are not comparable with the figures of the current year.

Mar 31, 2008

1. Contingent Liabilities:

a) Claims not acknowledged as debts - Rs.123.20 Lacs (Rs. 34770 Lacs).

b) Income tax demands under appeal - Rs. 80.87 Lacs (Rs. 64.27 Lacs).

c) Excise demands under appeal - Rs. 264.29 Lacs (Rs. NIL).

d) Sales tax demands under appeal - Rs. 223.70 Lacs (Rs. NIL).

e) Sales tax liability and stamp duty liability if any, arising on account of acquisition of "Heavy Engineering Division" from Hyderabad Industries Limited as a going concern in terms of "Business Transfer Agreement" dated 4th April, 2005.

f) Outstanding Guarantees and Letters of Credit from Banks Rs. 11,547.04 Lacs (Rs. 9,558.41 Lacs).

g) Future export obligations with respect to duty free imports against advance/ EPCG licenses -Rs. 886.00 Lacs (Rs. 1201.09 Lacs).

2. Estimated amount of Capital contracts not provided for (net of advances) - Rs. 608.62 Lacs (Rs. 147.52 Lacs).

3. Working capital borrowings and external commercial borrowings from Banks and non funded facilities comprising of bank guarantees and letters of credit are secured by hypothecation of stocks, book debts, movable properties of any kind and fixed assets, both present and future and equitable mortgage of immovable properties of the Company and personal Guarantee of Shri Umesh Chowdhary, Managing Director and Shri J P Chowdhary, Executive Chairman. Loan from a body corporate is secured by exclusive charge on the wheel sets procured/imported with the amount.

4. The Companys application for increase in Gross value of fixed capital Assets by Rs. 78.95 Lacs and allowance of sale tax deferment loan aggregating to Rs 51.72 Lacs for the period from January 2005 to March 2005 is pending grant by the relevant authorities. The matter is being pursued by the Company and accordingly, such amount has been included in Sales Tax Deferment loan and shown as Unsecured Loan.

5. Sales are net of Liquidated damages and de-escalation claims amounting toRs. 342.00 Lacs (Including Rs. 203.14 Lacs for earlier years) (net) (Rs. 102.70 Lacs).

6. In compliance with Accounting Standard -17 issued by the Institute of Chartered Accountants of India (ICAI) the disclosure in respect of Business Segment are as follows:

Business Segment:

The business segments based on Companys products have been identified as "Wagons", "Heavy Earth Moving & Mining equipments (HEMM)" and "Steel Castings".

Wagons : Consists of manufacturing of wagon as per customers specification

Heavy Earth Moving & Mining equipments: Consists of manufacturing of earth moving equipments.

Steel Castings : Consists of foundry castings including Bogies and Couplers.

Others : Consists of miscellaneous business comprising of less than 10% revenue.

Geographical Segment:

The Company primarily operates in India and therefore the analysis of geographical segment is demarcated on the basis of location of its customers in India and outside India.

The Company has common fixed assets for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets/additions to fixed assets thereof cannot be furnished.

7. Miscellaneous Expenses include expenses towards Research and Development Rs. 84.78 Lacs (Rs. 5.10 Lacs).

8. The Company has raised a sum of Rs. 8,800.00 Lacs during the year through issue of 16,79,390 fully convertible preference shares of Rs. 10 each at a premium of Rs. 514.00 per share through private placement. These shares were converted into equity shares on February 1, 2008 into 16,79,390 equity shares of Rs.10 each and consequently, Rs. 8,632.06 Lacs has been added to the Securities Premium Account.

a) The Company has made an Initial Public Offer (IPO) of 23,83,768 equity shares of Rs. 10 each at a premium of Rs. 530 per share (consisting of 20,68,111 equity shares of Rs. 10 each as fresh issue and 3,15,657 equity shares of Rs. 10 each as offer for sale from existing shareholders) on 100% book building basis. The issue was opened on 24th March 2008 and closed on 27th March 2008. Pending allotment of shares as on the balance sheet date, the entire amount received from IPO has been disclosed as "Share application money" in the accounts;

b) The allotment of shares (20,68,111 equity shares of Rs. 10 each) against IPO has since been completed on April 9, 2008. Though the existing provisions of the Articles of Association of the Company provides for pro-rata dividend, the Board has proposed full dividend on the enhanced shared capital as detailed above, since the listing agreement entered into with the stock exchange and the regulations specified by Securities and Exchange Board of India require dividend to be paid on such enhanced capital.

9. On December 31,2007, the Company has entered into a Co-operation and Funding Agreement with JPMorgan Mauritius Holdings Limited (JPM), for the purpose of proposing to Board of Industrial and Financial Reconstruction (BIFR), scheme of revival and rehabilitation of Cimmco Birla Limited (C8L) which is subject to sanction of BIFR and other approvals. If an acceptable scheme which includes restructuring of entire liabilities of CBL and exemption under the Takeover Regulations, is agreed to by both parties and is sanctioned by the BIFR under section 18 of the SICA, the Company may require to invest up to Rs. 3,500 Lacs in CBL. As a part of scheme, the Company intends to acquire equity or such other instruments as may be approved by the Board.

10. The Company has entered into a joint venture agreement dated January 22, 2008 (FCA JVA) with FreightCar America Inc (FCA) to jointly promote and incorporate a private limited company in India (FCA JVA) to develop, design, manufacture, service and distribute an aluminium coal hopper with FreightCar America AutoFloodTM gates and an aluminium coal gondola and such other wagon products as may be agreed from time to time between the parties in selected countries in South Asia (including India) and Africa.

11. The Company has operating leases for office premises/ guest house purpose that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months.

The amount of rent expenses included in Profit and Loss Account towards operating Leases aggregate to Rs 24.31 Lacs (Rs. 25.33 Lacs).

12. No provision has been considered necessary in respect of diminution in the value of unquoted investments of Rs. 77.45 Lacs (66.95 Lacs) in the Subsidiary Company as these investments are strategic in nature and in the opinion of the management, such shortfall is temporary in nature.

13. Previous years figures have been shown within brackets and have been regrouped/rearranged wherever necessary.

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