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Notes to Accounts of Triveni Turbine Ltd.

Mar 31, 2017

(i) Leased assets

The leasehold land above represents land at Sompura, acquired by the Company during financial year 2014-15 from Karnataka Industrial Areas Development Board, on a lease-cum-sale basis. The land is under lease for initial period often years thereafter the ownership of the land will be transferred in favour of the Company and accordingly has been considered as land under finance lease (refer note40(i)).

(ii) Restrictions on Property, plant and equipment

Refer note 15 & 17 for information on charges created on property, plant and equipment.

(iii) Contractual commitments

Refer note 41 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iv) Capital work-in-progress

Capital work-in-progress mainly comprises new manufacturing facility at Sompura in the process of being installed.

(v) Other adjustments

Represent certain obsolete machines which the Company intends to dispose of and thus has been classified as assets held for sale (refer note 12).

(i) Refer note 38 for disclosures related to credit risk, impairment of trade receivables under expected credit loss model and related disclosures.

(ii) Reconciliation of loss allowance provision on trade receivables:

(iii) Current trade receivables include Rs. 39.28 Million (31 March 2016: Rs. 200.65 Million; 1 April 2015: Rs. 169.30 Million) expected to be received after twelve months within the operating cycle.

(i) The cost of inventories recognized as an expense during the year was Rs. 4,624.54 Million (31 March 2016: Rs. 4,657.14 Million)

(ii) The mode of valuation of inventories has been stated in note 1 (k).

(iii) In view of the order-to-dispatch cycle being normally around twelve months, most of the inventories held are expected to be utilized during the next twelve months. However, there may be some exceptions on account of unanticipated cases where the dispatch is held up due to reasons attributable to the customers, slow movement in spares and advance manufacture in anticipation of orders, but these are not expected to be of material amounts.

(b) Bank balances other than cash and cash equivalents

The Company intends to dispose off certain obsolete machines, the total book value of these machines as at 31 March 2017 was Rs. 6.05 Million. No impairment loss is recognized on re-classification of these machines to "Assets held of sale" as the fair value less cost of sale is higher than the carrying amount, as determined from quotations received from potential buyers.

Terms and rights attached to equity shares

The Company has only one class of equity shares with a par value of Rs. 1/- 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.

In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.

Capital Redemption Reserve was created consequent to redemption of preference share capital, as required under the provisions of the Companies Act, 1956. This reserve shall be utilized in accordance with the provisions of Companies Act, 2013.

(ii) Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Act.

I t represents amount kept separately by the Company out of its profits for future purposes. It is not earmarked for any special purpose.

(iv) Retained earnings

(a) It represents undistributed profits of the Company which can be distributed by the Company to its equity shareholders in accordance with the requirements of the Companies Act, 2013.

(b) As required under Ind AS compliant Schedule III, the Company has recognized remeasurement of defined benefit plans (net of tax) as part of retained earnings.

(c) Details of dividend distributions made and proposed:

(i) Information about individual provisions and significant estimates

(a) Compensated absences

Compensated absences comprises earned leaves and sick leaves, the liabilities of which are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.

(b) Employee retention bonus

The Company, as a part of retention policy, pays retention bonus to certain employees after completion of specified period of service. The timing of the outflows is expected to be within a period of five years. They are therefore measured at the present value of expected future payments at the end of each annual reporting period in accordance with management best estimates.

(c) warranty

The Company, in the usual course of sale of its products, provides warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the specified warranty period. Provisions made represent the amount of expected cost of meeting such obligations of rectifications / replacements based on best estimate considering the historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. The timing of the outflows is expected to be within the period of two years.

(d) Cost to completion

The provision represents cost of material and services required to be incurred at project site in respect of goods supplied for which full revenue has been recognized.

(e) Liquidated damages

Represents the provision on account of contractual obligation towards customers in respect of certain products for matters relating to delivery and performance. The provision represents the amount estimated to meet the cost of such obligations based on best estimate considering the historical liquidated damages claim information and any recent trends that may suggest future claims could differ from historical amounts. The timing of the outflows is expected to be within one year

(f) Corporate social responsibility

Represents provision made for amounts payable under an agreement for CSR activities of the Company. The timing of outflow is expected to be within one year.

( i) Cash credit from banks is secured by hypothecation of entire current assets inclusive of stock-in-trade, raw materials, stores & spares, work-in-progress and trade receivables and a second charge created / to be created on fixed assets block both present and future on a pari-passu basis. Interest rates ranges from 9.55% to 11.35% per annum.

(ii) I n respect of working capital facilities sanctioned by a bank to the joint venture company, M/s GE Triveni Ltd (GETL), the Company has given an undertaking not to dispose of its investments in the equity shares of GETL aggregating to Rs. 80.00 Million (31 March 2016: Rs. 80.00 Million; 1 April 2015: Rs. 80.00 Million) during the tenure of the facilities.

1. SEGMENT INFORMATION

The Company primarily operates in one business segment- Power generating equipment and solutions.

The Company is domiciled in India and all its non-current assets are located in/relates to India except following:

(i) Investment in foreign subsidiary of Rs. 18.47 Million as at 31 March 2017 (31 March 2016: Rs. 18.47 Million; 1 April 2015: Rs. 4.67 Million)

(ii) Capital advances in foreign currency of Rs. 40.34 Million as at 31 March 2017 (31 March 2016: Rs. Nil; 1 April 2015: Rs. Nil)

The amount of Company''s revenue from external customers based on geographical area and nature of the products/ services are shown below:

Revenue by geographical area

There is no single customer who has contributed 10% or more to the Company''s revenue for both the years ended 31 March 2017 and 31 March 2016.

2. EMPLOYEE BENEFIT PLANS

(i) Defined contribution plans

(a) The Company operates defined contribution retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. Following are the schemes covered under defined contributions plans of the Company:

Provident Fund Plan & Employee Pension Scheme: The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India.

Employee State Insurance: The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.

Superannuation Scheme: The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.

(ii) Defined benefit plans

(a) The Company provides for gratuity obligations through a defined benefit retirement plan (the ''Gratuity Plan'') covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement termination of employment or death of an employee, based on the respective employees'' salary and years of employment with the Company.

(b) Risk exposure

These plans typically expose the Company to a number of actuarial risks, the most significant of which are detailed below:

Investment risk: The plan liabilities are calculated using a discount rate set with references to government bond yields as at end of reporting period; if plan assets under perform compared to the government bonds discount rate, this will create or increase a deficit. The investments in plan assets are made in accordance with pattern of investment prescribed by central government and ensures that the funds are invested in a balanced mix of investments comprising central government securities, state government securities, other debt instruments as well as equity instruments. Most of the plan investments is in fixed income securities with high grades and in government securities. The Company has a risk management strategy which defines exposure limits and acceptable credit risk rating.

Interest risk: A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan''s debt instruments.

Life expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during their employment. A change in the life expectancy of the plan participants will impact the plan''s liability

Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability

Attrition rate: The present value of the defined benefit plan liability is impacted by the rate of employee turnover, disability and early retirement of plan participants. A change in the attrition rate of the plan participants will impact the plan''s liability.

The current service cost and the net interest expense for the year are included in the ''Employee benefits expense'' line item in the statement of profit & loss. The remeasurement of the net defined benefit liability is included in other comprehensive income.

The Plan assets comprise principally Group Gratuity Plans offered by the life insurance companies. Majority of the funds invested are under the traditional platform where the insurance companies declare a return at the end of each year based upon its performance. Certain investments are also made in funds (growth plans) managed by the life insurance companies under which the returns are based upon the accretion to the net asset value (NAV) of the particular fund, which are declared on a daily basis. The NAV based funds of the insurance companies are approved and regulated by the Insurance Regulatory and Development Authority of India and the investment risk is mitigated by investment in funds where the asset allocation is primarily in sovereign and debt securities. There has been no change in the process used by the Company to manage its risks from prior periods.

(h) Sensitivity analysis

The sensitivity of the defined benefit obligation to changes in the weigheted principal assumptions is:

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

(i) Defined benefit liability and employer contributions

The Company shall strive to bridge the deficit in defined benefit gratuity plan in the next year

The Company expects to contribute Rs. 37.50 Million to the defined benefit plan during the year ending 31 March 2018.

The weighted average duration of the defined obligation as at 31 March 2017 is 13.1 years.

The expected maturity analysis of undiscounted defined benefit obligation as at 31 March 2017 is as follows:

3. RELATED PARTY TRANSACTIONS

(i) Related parties where control exists

(a) Mr. D.M. Sawhney, Chairman & Managing Director (Key Management Personnel)

(b) Subsidiaries

Triveni Turbines Europe Private Limited (wholly owned subsidiary)

Triveni Turbines DMCC (step-down subsidiary)

(ii) Related parties with whom transactions have taken place during the year :

(a) Investing company holding substantial interest

Triveni Engineering & Industries Limited (TEIL)

(b) Subsidiaries

Triveni Turbines Europe Private Limited (wholly owned subsidiary) (TTEPL)

Triveni Turbines DMCC (step-down subsidiary) (TTD)

(c) Joint Venture

GE Triveni Limited (GETL)

(d) Key Management Personnel (KMP)

Mr. D.M. Sawhney, Chairman & Managing Director (DMS)

Mr. Nikhil Sawhney, Vice Chairman and Managing Director (NS)

Mr. Arun Mote, Executive Director (AM)

Mr. Deepak Kumar Sen, Executive Vice President & CFO (DKS)

Mr. Tarun Sawhney, Promoter Non Executive Director (TS)

Lt. General Kanwal Kishan Hazari (Retired), Independent Non Executive Director (KKH)

Mr. Amal Ganguli, Independent Non Executive Director (AG)

Mrs. Vasantha Bharucha, Independent Non Executive Director (VB)

Mr. Shekhar Datta, Independent Non Executive Director (SD)

(e) Parties in which key management personnel or their relatives have significant influence

Subhadra Trade & Finance Limited (STFL)

Tirath Ram Shah Charitable Trust (TRSCT)

(f) Post employment benefit plans

Triveni Turbine Limited Officers Pension Scheme (TTLOPS)

Triveni Turbine Limited Employees Gratuity Trust (TTLEGT)

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

(v) Terms & conditions:

The sales to and purchases from related parties, including rendering / availment of services, are made at terms which are at arm''s length after taking into consideration market considerations, external benchmarks and adjustment thereof, terms of Joint Venture agreement and methodology of sharing common group costs. There has not been any transactions with key management personnel other than the approved remuneration having regard to experience, performance and market trends. The outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. The Company has not recorded any impairment of receivables relating to amounts owed by related parties for the year ended 31 March 2017 and 31 March 2016.

(vi) Guarantees outstanding comprises a corporate guarantee of Rs. 149.05 Million (31 March 2016: Rs. 169.40 Million; 1 April 2015 '' 164.71 Million) equivalent to GBP 1.76 Million (31 March 2016: GBP 1.76 Million; 1 April 2015: GBP 1.76 Million) given by TEIL on behalf of the Company as a surety for due performance of the Company''s obligations under a contract awarded by an overseas customer and in respect of which, the Company has fully indemnified TEIL against any claims, damages or expenses, including legal costs.

(vii) In respect of figures disclosed above:

(a) the amount of transactions/ balances are without giving effect to the Ind AS adjustments on account of fair valuation/ amortization.

(b) Remuneration and outstanding balances of KMP does not include long term employee benefits by way of gratuity and compensated absences, which are currently not payable and are provided on the basis of actuarial valuation by the Company.

(c) TRSCT''s outstanding balance does not include provision made for amounts payable by the Company under an agreement with TRSCT in respect of CSR obligation of the Company of Rs. 0.14 Million (31 March 2016: Rs. Nil; 1 April 2015: Rs. 4.80 Million).

(viii) There are no reportable transactions / balances as required under clause 34(3) of the listing agreements with the stock exchanges.

4. CAPITAL MANAGEMENT

For the purpose of capital management, capital includes total equity of the Company. The primary objective of the capital management is to maximize shareholder value. The Company is by and large debt free and hence, borrowings are not considered in capital management.

The business model of the Company is not capital intensive and being in the engineered-to-order capital goods space, the working capital is largely funded by advances from customers. The Company, therefore, prefers low gearing ratio. The Company manages its capital structure and makes adjustments in light of changes in economic conditions which may be in the form of payment of dividend subject to benchmark payout ratio, return capital to the shareholders or issue of new shares. Currently, the Company is cash positive and does not require any equity infusion or borrowings.

Further, no changes were made in the objectives, policies or process for managing capital during the years ended 31 March 2017 and 31 March 2016.

The Company is not subject to any externally imposed capital requirements.

5. FINANCIAL RISK MANAGEMENT

The Company''s principal financial liabilities comprises trade payables and other payables and there are no significant borrowings, other than that necessitated by temporary mismatch. The main purpose of the financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade receivables, other receivables and cash and bank balances that derive directly from its operations. The Company also holds FVTPL investments and loans. The Company has substantial exports and is exposed to foreign currencies fluctuations during the contractual delivery period which is normally in the range of one year. The Company uses derivatives to hedge its foreign exchange exposures which arise from export orders.

The Company''s activities expose it mainly to market risk, liquidity risk and credit risk. The monitoring and management of such risks is undertaken by the senior management of the Company and there are appropriate policies and procedures in place through which such financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Company has specialized teams to undertake derivative activities for risk management purposes and such team has appropriate skills, experience and expertise. It is the Company policy not to carry out any trading in derivative for speculative purposes. The Audit Committee and the Board are regularly apprised of such risks every quarter and each such risk and mitigation measures are extensively discussed.

(i) Credit risk

Credit risk arises when a counterparty defaults on its contractual obligations to pay resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities, primarily trade receivables. The credit risks in respect of deposits with the banks, foreign exchange transactions and other financial instruments are only nominal.

(a) Credit risk management

The customer credit risk is managed subject to the Company''s established policy, procedure and controls relating to customer credit risk management. In order to contain the business risk, prior to acceptance of an order from a customer, the creditworthiness of the customer is ensured through scrutiny of its financials, status of financial closure of the project, if required, market reports and reference checks. The Company remains vigilant and regularly assesses the financial position of customers during execution of contracts with a view to limit risks of delays and default. Further, in most of the cases, the Company prescribes stringent payment terms including ensuring full payments before delivery of goods. Retention amounts, if applicable, are payable after satisfactory commissioning and performance. In view of the industry practice and being in a position to prescribe the desired commercial terms, credit risks from receivables are well contained on an overall basis.

The impairment analysis is performed on each reporting period on individual basis for major customers. In addition, a large number of receivables are grouped and assessed for impairment collectively. The calculation is based on historical data of losses, current conditions and forecasts and future economic conditions. The Company''s maximum exposure to credit risk at the reporting date is the carrying amount of each financial asset as detailed in note 5, 6, 7, 8 and 11.

The trade receivables position is provided here below:

From the above table, it can be observed that the concentration of risk in respect of trade receivables is well spread out and moderate. Further, its customers are located in several jurisdictions and industries and operate in largely independent markets. The Company does not hold any collateral as security for such receivables.

(b) Provision for expected credit losses

Basis as explained above, apart from specific provisioning against impairment on an individual basis for major customers, the Company provides for expected credit losses (ECL) for other receivables based on historical data of losses, current conditions and forecasts and future economic conditions, including loss of time value of money due to delays. In view of the business model of the Company, engineered-to-order products and the prescribed commercial terms, the determination of provision based on age analysis may not be a realistic and hence, the provision of expected credit loss is determined for the total trade receivables outstanding as on the reporting date. Considering all such factors, ECL (net of specific provisioning) for trade receivables as at year end worked out as follows:

(ii) Liquidity risk

The Company uses liquidity forecast tools to manage its liquidity. As per the business model of the Company, the requirement of working capital is not intensive. The Company is able to substantially fund its working capital from advances from customers and from internal accruals and hence, its reliance on funding through borrowings is negligible. In view of free cash flows, the Company has even been able to fund substantial capital expenditure from internal accruals.

As could be seen all the ratios are fairly comfortable, indicating easy liquidity. The Company invests surplus funds in bank deposits or liquid mutual funds for appropriate tenures in consonance with cash flow forecasts.

(iii) Market risk

The Company is virtually debt free and is largely insulated from interest rate risks. Even with respect to investments in mutual funds, the impact of interest rate risk is nominal as the investment is carried in liquid or substantially liquid funds. The Company is essentially exposed to currency risks as export sales forms substantial part of the total sales of the Company While the Company is mainly exposed to US Dollars, the Company also deals in other currencies, such as, Euro, GBP etc.

The cycle from booking order to collection extends to about a year and the Company is exposed to foreign exchange fluctuation risks during this period. As a policy, the Company remains substantially hedged through foreign exchange forward contracts or other simple derivative structures. It considerably mitigates the risk and the Company is also benefitted in view of incidental forward premium. The policy of substantial hedging insulates the Company from the exchange rate fluctuation and the impact of sensitivity is nominal.

(b) Sensitivity

The following table demonstrate the sensitivity of net unhedged foreign currency exposures relating to financial instruments to reasonably possible changes in foreign currency exchange rates, with all other variables held constant.

Further, the change in foreign currency rates will impact the fair value of the derivatives and correspondingly impact the profit or loss, but there will not be any impact over the hedge period as the derivatives will enable capturing the hedged rates and the budgeted profitability would remain unchanged.

There is no impact on other components of equity since the Company has not elected to apply hedge accounting.

(ii) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Financial assets and liabilities measured at fair value - recurring fair value measurements

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. No assets are classified in this category.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize 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: I f one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. No assets are classified in this category.

There are no transfers between levels 1 and 2 during the year.

(iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the fair value of the mutual funds is determined using daily NAV as declared for the particular scheme by the Asset Management Company. The fair value estimates are included in Level 2.

- the fair value of foreign exchange forward contracts is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.

(iv) Valuation processes

The Corporate finance team has requisite knowledge and skills. The team headed by Group CFO directly reports to the audit committee to arrive at the fair value of financial instruments.

(v) Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures are required)

Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

(a) The fair values for trade receivables which are expected to be received after twelve months (though within the operating cycle) are computed based on discounted cash flows. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The carrying amounts of the remaining trade receivables are considered to be the same as their fair values, due to their short-term nature.

6. LEASES

(i) Obligations under finance leases

During financial year 2014-15, the Company had acquired land at Sompura from Karnataka Industrial Areas Development Board (KIADB) on a lease-cum-sale basis. The land is under lease for initial period of ten years thereafter the ownership of the land will be transferred in favour of the Company (refer note 3(i)). Initial upfront lease payment (including slum cess and process fee) of Rs. 365.81 Million was made to the KIADB for acquisition of land and thereafter, the Company''s obligations are limited to payment of yearly recurring maintenance charges of Rs. 0.14 Million during the lease period. There is no contingent rent or restriction imposed in the lease agreement.

(ii) Operating lease arrangements As Lessee

The Company has taken various residential / office premises and certain office equipment under operating leases. These leases are generally not non-cancellable, except in the case of some office equipment. The unexpired period of the leases ranges between one month to less than five years and these are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest- free security deposits under certain agreements. There is no contingent rent, sublease payments or restriction imposed in the lease agreement.

Payments recognized as expense

As Lessor

The Company has given certain portions of its office premises under operating leases. These leases are not non-cancellable and are extendable by mutual consent and at mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognized in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognized in the statement of profit and loss. There are no minimum future lease payments as there are no non-cancellable leases. Lease income is recognized in the statement of profit and loss under "Other Income" (refer note 24). Initial direct costs incurred, if any, to earn revenues from an operating lease are recognized as an expense in the statement of profit and loss in the period in which they are incurred.

7. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent liabilities

*Against the VAT demand, the Commercial Taxes Department has withheld the refund of '' 48.37 Million.

The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties, possible payments and reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal position against such disputes.

Contingent assets

Based on management analysis, there are no material contingent assets as at 31 March 2017 (31 March 2016: Rs. Nil; 1 April 2015: Rs. Nil).

8. DISCLOSURE ON SPECIFIED BANK NOTES (SBNS)

Pursuant to MCA notification G.S.R. 308(E) dated 30 March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

* For the purposes of this clause, the term "Specified Bank Notes" shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated 8 November 2016.

9. FIRST TIME ADOPTION OF IND AS

Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet as at 1 April 2015 (the transition date). In preparing its opening Ind AS balance sheet, the Company has made adjustments to the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provision of the Act (previous GAAP or Indian GAAP). Further, in view of the classification of current and non-current items adopted in accordance with the criteria specified in Ind AS 1 Presentation of Financial Statements the corresponding figures of the previous years have been appropriately reclassified wheresoever necessary. An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions A.1.1 Business combinations

I nd AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after the transition date. Business combinations occurring prior to the transition date have not been restated.

A. 2 Deemed cost

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

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

A. 3 Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/ arrangements.

A.4 Investments in subsidiary and joint venture

I nd AS 27 requires an entity to account for its investments in subsidiaries and joint ventures either at cost or in accordance with Ind AS 109. Ind AS 101 provides an option to measure such investments as at the date of transition to Ind AS either at cost determined in accordance with Ind AS 27 or deemed cost, where deemed cost shall be its fair value as at date of transition to Ind AS or previous GAAP carrying amount as at that date.

The Company has elected to measure all of its investments in subsidiary and joint venture at their previous GAAP carrying value.

A.5 Ind AS mandatory exceptions A.2.1 Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP (after adjustments to reflect any difference in accounting policies) apart from certain new estimates that were not required under previous GAAP

A.6 De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

A.7 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets (debt instruments) in terms of whether they meet the amortized cost criteria or the fair value criteria based on the facts and circumstances that existed as of the transition date and the Company has followed the same.

A.8 Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

B. Reconciliations between previous GAAP and Ind AS

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

B.1 Effect of Ind AS adoption on the balance sheet as at 31 March 2016 and 1 April 2015

C. NOTES TO FIRST-TIME ADOPTION:

C.1 Property, plant and equipment

Under the previous GAAP, the Company had classified and accounted the items of machinery spares, stores, tools etc as fixed assets or inventory in accordance with AS 10 Accounting for Fixed Assets and AS 2 Valuation of Inventories Ind AS 16 Property, Plant and Equipment requires tangible assets to be classified as property, plant and equipment (PPE) if they are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period. Depreciation charge shall start on such assets upon capitalization on date of ready to use. Based on the assessment performed by the management, it has been determined that some assets earlier classified as inventories as per previous GAAP qualify to be classified as items of PPE in accordance with Ind AS 16. Consequently, inventories is reduced by Rs. 15.44 Million as at 31 March 2016 (1 April 2015: Rs. 14.44 Million), PPE is increased by Rs. 19.73 Million as at 31 March 2016 (1 April 2015: Rs. 14.44 Million), other expenses for the year ended 31 March 2016 is decreased by Rs. 17.08 Million and depreciation for the year ended 31 March 2016 is increased by Rs. 12.79 Million. Total equity is increased by Rs. 4.29 Million as at 31 March 2016 (1 April 2015: Rs. Nil), profit for the year ended 31 March 2016 is increased by Rs. 4.29 Million and net cash flows from operating activities is increased by Rs. 18.09 Million along with decrease in net cash flows from investing activities with the equivalent amount.

C.2 Leasehold land

Under the previous GAAP, leasehold land were scoped out of AS 19 Leases and hence all such lands were capitalized and formed part of PPE. Under Ind AS, since now the leasehold land is scoped in Ind AS 17 Leases, in view of terms of the lease of land at Sompura being in the nature of finance lease, the Company has accounted for such land in accordance with Ind AS 17 and continued to disclose the same under PPE. There is no impact on the total equity or profit as a result of this adjustment.

C.3 Trade receivables and fair valuation of revenue

As per Ind AS 109 Financial Instruments, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. As a result, the allowance for doubtful debts is increased by '' 3.80 Million as at 31 March 2016 (1 April 2015: Rs. 4.80 Million). Consequently, the total equity as at 31 March 2016 is decreased by Rs. 3.80 Million (1 April 2015: Rs. 4.80 Million) and profit for the year ended 31 March 2016 is increased by Rs. 1.00 Million.

As per Ind AS 18 Revenue, revenue shall be measured at the fair value of the consideration received or receivable and accordingly in case where an entity has provided credit period (beyond normal credit period) without interest or at below-market interest rate, fair valuation of the consideration is determined by discounting all future receipts using an imputed rate of interest. Based on the assessment performed by the management, it has been determined that in one revenue contract there is some component of implicit financing built in the commercial terms and accordingly revenue is accounted for at fair value. Consequently, trade receivables is reduced by Rs. 4.26 Million as at 31 March 2016 (1 April 2015: Rs. 5.16 Million), other income for the year ended 31 March 2016 is increased by Rs. 0.90 Million. Total equity is decreased by Rs. 4.26 Million as at 31 March 2016 (1 April 2015: Rs. 5.16 Million) and profit for the year ended 31 March 2016 is increased by Rs. 0.90 Million.

C.4 Fair valuation of investments

Under the previous GAAP, current investments in mutual funds were carried at lower of cost or fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31 March 2016. Consequently, current investments is increased by Rs. 0.80 Million as at 31 March 2016 (1 April 2015: '' 0.23 Million), other income for the year ended 31 March 2016 is increased by Rs. 0.57 Million. Total equity is increased by Rs. 0.80 Million as at 31 March 2016 (1 April 2015: Rs. 0.23 Million) and profit for the year ended 31 March 2016 is increased by Rs. 0.57 Million.

C.5 Fair valuation of derivatives

Under the previous GAAP, in respect of derivative contracts relating to firm commitments or highly probable forecast transactions, provision was made for mark to market losses, if any, at the balance sheet date and gains, if any, were not recognized till settlement. Foreign exchange forward contracts (not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes) were translated at the balance sheet date. Any gain/loss on translation or settlement were recognized in profit or loss. The difference between the forward rate and exchange rate at the inception of foreign exchange forward contract was amortized as expense or income over the life of the contracts. Under Ind AS, derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. Consequently, unamortized premium of Rs. 7.17 Million as at 31 March 2016 (1 April 2015: Rs. 6.69 Million) is derecognized, derivative assets is increased by Rs. 36.77 Million as at 31 March 2016 (1 April 2015: decreased by Rs. 34.40 Million), other income for the year ended 31 March 2016 is increased by '' 71.65 Million. Total equity is increased by Rs. 43.94 Million (1 April 2015: decreased by Rs. 27.71 Million) and profit for the year ended 31 March 2016 is increased by Rs. 71.65 Million.

C.6 Foreign currency customer advances

Under the previous GAAP, the Company had earlier considered foreign currency customer advances as a monetary item and had accordingly restated its year end balances at year end foreign exchange rates and recognized sales against such advances were at the foreign exchange rates at the date of sales (i.e. at foreign exchange rates that is different from foreign exchange rates at which customer advances were recognized). However under Ind AS, Ind AS 21 The Effects of Changes in Foreign Exchange Rates, foreign currency advances should be treated as nonmonetary item and therefore such advances would not be restated for any subsequent changes in exchange rates and related sales transaction, to the extent of advance received, would be recognized at the same foreign exchange rate at which customer advances were recognized. Consequently, customer advances is decreased by Rs. 4.28 Million as at 31 March 2016 (1 April 2015: Rs. Nil), sales for the year ended 31 March 2016 is decreased by Rs. 2.94 Million and other income for the year ended 31 March 2016 is increased by Rs. 7.22 Million. Total equity is increased by Rs. 4.28 Million as at 31 March 2016 (1 April 2015: Rs. Nil) and profit for the year ended 31 March 2016 is increased by Rs. 4.28 Million.

C.7 Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. Nil as at 31 March 2016 (1 April 2015: '' 238.29 Million) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity is increased by an equivalent amount.

C.8 Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of products is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2016 by '' 265.95 Million. There is no impact on the total equity and profit.

C.9 Remeasurements of defined benefit plans

Under Ind AS, remeasurements on defined benefit plans i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31 March 2016 is decreased by Rs. 3.89 Million. There is no impact on the total equity as at 31 March 2016.

C.10 Other comprehensive income

Under the previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified item of income, expense, gains or losses are required to be presented in other comprehensive income.

C.11 Deferred tax

Under the previous GAAP, deferred tax accounting is done using income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 Income Taxes requires 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 temporary differences which were not required under previous GAAP in addition to the various temporary differences consequent to Ind AS transitional adjustments. Consequently, deferred tax liabilities (net) is increased by Rs. 15.66 Million as at 31 March 2016 (1 April 2015: decreased by Rs. 12.96 Million) and tax expense for the year ended 31 March 2016 is increased by Rs. 28.62 Million. Total equity is decreased by Rs. 15.66 Million as at 31 March 2016 (1 April 2015: increased by Rs. 12.96 Million), profit for the year ended 31 March 2016 is increased by Rs. 27.27 Million and other comprehensive income for the year ended 31 March 2016 is decreased by Rs. 1.35 Million.

C.12 Retained earnings

Retained earnings as at 1 April 2015 has been adjusted consequent to the above Ind AS transition adjustments.

10. RECENT ACCOUNTING PRONOUNCEMENTS

The Ministry of Corporate Affairs (MCA) vide notification dated 17 March 2017 has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and has amended Ind AS 7 Statement of Cash Flows. The amendments to Ind AS 7 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact. However, it will require additional disclosure in the financial statements.

11. APPROVAL OF STANDALONE FINANCIAL STATEMENTS

The standalone financial statements were approved for issue by the Board of Directors of the Company on 18 May 2017 subject to approval of shareholders.


Mar 31, 2014

The accompanying Note Nos.1 to 46 form an integral part of the financial statements.

1. Based on the intimation received by the Company from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006, the relevant information is provided here below:-

2. i) The Company has taken various residential and office premises under operating leases. These leases are not non- cancellable and the unexpired period ranges between 6 months and 4 years. The lease agreements are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest- free security deposits under certain agreements.

a) Lease payments under operating leases aggregating to Rs. 6.58 million (Rs. 6.98 million) are recognised in the statement of profit and loss under "Other expenses" in Note No 25.

b) There are no minimum future lease payments as there are no non-cancellable leases.

c) There are no contingent rents recognised in the statement of profit and loss.

d) There are no sub-lease arrangements entered into by the Company.

ii) The Company has also given certain portions of its office premises under cancellable and non-cancellable operating leases. These leases are extendable by mutual consent and on mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portions of the leased premises are not separately identifable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. Future minimum lease payments under non- cancellable operating leases for the period the facilities are expected to be occupied is as under:

3. Prior period expense Rs. Nil (previous year Rs. 0.16 million represents legal charges in the statement of profit and loss under "Other expenses" in Note No. 25).

4. Disclosure under Accounting Standard (AS) 7 "Construction Contracts" in respect of contracts in progress as at the end of the year is provided here-below:

5. The Company primarily operates in one business segment – Power Generating Equipment and Solutions. There are no reportable geographical segments.

6. Information regarding Related Parties and transactions with them is given below:

a) Related Party where control exists

i) Subsidiary

GE Triveni Limited

ii) Key Management Personnel

Mr. Dhruv M. Sawhney - Chairman and Managing Director

b) details of related parties with whom transactions have taken place during the year :

Name of related Party Relationship

Triveni Engineering & Industries Ltd (TEIL) Investing company holding substantial interest.

GE Triveni Limited (GETL) Subsidiary Company

Mr. Dhruv M. Sawhney (DMS) Chairman & Managing Director (Key Management Person)

Mr. Nikhil Sawhney (NS) Vice Chairman and Managing Director (Key Management Person)

Mr. Tarun Sawhney (TS) Relative of Key Management Person

Mr. Arun Mote (AM) Executive Director (Key Management Person)

Tirath Ram Shah Charitable Trust (TRSCT) Enterprise in which Key Management Personnel or their relatives have

significant infuence

Kameni Upaskar Ltd (KUL) Company in which Key Management Personnel or their relatives have

significant infuence

b) Particulars of un-hedged foreign currency exposures at the balance sheet date Import trade payables

1. US$ 0.13 million (Rs. 7.76 million) [Prev. Yr: US$ 0.88 million (Rs. 48,24 million)]

2. Euro 0.14 million (Rs. 11.46 million) [Prev. Yr: Euro 0.04 million (Rs. 2.72 million)]

3. CHF 0.003 million (Rs. 0.23 million) [Prev. Yr: CHF 0.002 million (Rs. 0.14 million)]

4. GBP 0.09 million (Rs. 8.83 million) [Prev. Yr: GBP 0.03 million (Rs. 2.84 million)]

5. JPY 19.94 million (Rs. 11.77 million) [Prev. Yr: JPY 9.50 million (Rs. 5.57 million)] export trade receivable

1. US$ 0.36 million (Rs. 21.19 million) [Prev. Yr: US$ Nil (Rs. Nil)

2. Euro 0.03 million (Rs. 2.64 million) [Prev. Yr: Euro Nil (Rs. Nil)

3. GBP 0.32 million (Rs. 31.34 million) [Prev. Yr: GBP Nil (Rs. Nil)

7. The Company has made provisions during the year for employee benefits relating to its obligations towards Defined contribution and Defined benefit plans. The required disclosures in this regard are given below:

8. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The management is of the opinion that the transactions specified in the regulations are at arms-length and hence the aforesaid regulation will not have any impact on the financial statements, particularly the amount of tax expense and that of provision for taxation.

e) Remittance in foreign currencies for dividend:

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividend have been made by/on behalf of non-resident shareholders. The particulars of dividend paid to non-resident shareholders (including non-resident indian shareholders) which were declared during the year are as under:-

9. Previous year''s figures have been regrouped/rearranged wherever necessary, to make them comparable to those of the current year.


Mar 31, 2013

1. The Company had earlier exited the rural and semi- urban retail business and engineering business of design, supply and commissioning of specialised sugar manufacturing machinery. The following statement shows the profit / (loss) on disposal of assets and settlement of liabilities relating to discontinued operations:

2. The Company has incurred an expenditure of Rs. 54.22 million (Rs. 42.78 million) for Research and Development activities and such expenditure has been expensed under various heads. The break up of such expenditure is as under:

3. Contingent Liabilities (to the extent not provided for)

Claims against the Company not acknowledged as debts :

(Rs. in Million)

SL No Particulars Amount of Contingent Liability Amount Paid

1 Excise duty 39.92 26.15

(39.68) (26.15)

2 Service tax 42.39 -

(12.80) (-)

3 Others 2.08 -

(2.08) (-)

Total 84.39 26.15

(54.56) (26.15)

a) The outflow arising from these claims is uncertain. Such outflow, if any, will be after adjusting reimbursement of

Rs. 8.06 Million received from customers (Previous year: Rs. 8.06 Million) in respect of excise duty demand on account of denial of benefit under Notification No. 6/2000 issued by the Central Government under Section 5A(1) of the Central Excise Act, 1944.

b) The amounts shown above represent the best estimates arrived at on the basis of available information. The uncertainties, possible payments and reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has a strong legal position against such disputes.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for : Rs. 20.89 Million (Rs. 0.28 Million ) after adjusting advances paid amounting to Rs. 4.40 Million (Rs. 0.10 Million). The Company has also made a commitment to purchase 25 acres of industrial land near Bangalore and paid Rs. 50.12 Million (Rs. 50.12 Milliion) as an advance. The total amount of commitment in this respect is not determinable as the allotment and price are yet to be finalised by Karnataka Industrial Areas Development Board.

5. Title to certain fixed assets vested in the Company under the Scheme of Arrangement and arising out of business conducted till the date the Scheme became effective, could not be transferred in the name of the Company. These assets are being held in trust, by Triveni Engineering & Industries Ltd. The requisite duties, if any, on determination thereof by the Authorities, will be paid and accounted for by the Company appropriately.

6. 40,000 stock options in Triveni Engineering & Industries Ltd. (TEIL) had been granted to an employee of the Company on April 30, 2010, while he was an employee of TEIL, prior to the demerger of its steam turbine business and vesting of such business in the Company under a Scheme of Arrangement, duly approved by the Court. As per the Scheme of Arrangement, an employee stock option scheme styled as ''New Stock Option Scheme'' has been formulated by the Company and the employee has been granted 40,000 stock options in lieu of the stock options held by him in TEIL. In accordance with the Scheme of Arrangement, and in line with the best practices, adjustment has been made for the corporate action of demerger, by adjusting the exercise price and share entitlement ratio under the options granted, so as to ensure that the fair value of options immediately prior to and immediately subsequent to the corporate action remains unchanged.

7. ) The Company has taken various residential and office premises under operating leases. These are not non-cancellable and the unexpired period ranges between 6 months and 3 years and the leases are renewable by mutual consent. The Company has given refundable interest- free security deposits under certain agreements.

a) Lease payments under operating leases amounting to Rs. 6.98 Million (Rs. 6.02 Million) are recognised in the statement of profit and loss under "Rent" in Note No 24.

b) There are no minimum future lease payments as there are no non-cancellable leases.

ii) The Company has also given certain portions of its office premises under cancellable and non-cancellable operating leases. These leases are extendable by mutual consent and on mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portions of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. Future minimum lease payments under non- cancellable leases are as under :

8. Prior period expenses of Rs. 0.16 Million (previous year Rs. Nil) in Note No.24 represents legal charges.

9. Disclosure under Accounting Standard (AS) 7 "Construction Contracts" in respect of contracts in progress as at the end of the year is provided here-below:

10. The Company primarily operates in one business segment - Power Generating Equipment and Solutions. There are no reportable geographical segments.

11. Information regarding Related Parties and transactions with them is given below: a) Related Party where control exists

i) Subsidiary

GE Triveni Limited

ii) Key Management Personnel

Mr. Dhruv M. Sawhney - Chairman and Managing Director

12 . The Company has made provisions during the year for employee benefits relating to its obligations for contributions to defined contribution plans / defined benefit plans. The required disclosures in this regard are given below:

13. Transfer Pricing regulations

The Company has undertaken necessary steps to comply with the Transfer Pricing regulations.The Management is of the opinion that the transactions are at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

14. Previous year''s figures have been regrouped/rearranged wherever necessary, to make them comparable to those for the current year.


Mar 31, 2012

A) Terms/rights attached to equity shares

The Company has only one class of equity shares with a par value of Rs 1/- 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.

In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.

b) Terms/rights attached to preference shares

As per the Scheme of Arrangement ("Scheme") duly approved by Allahabad High Court vide order dated April 19, 2011, 28,000,000 equity shares of Rs 1/- each fully paid up by Triveni Engineering & Industries Limited stood converted into 2,800,000 - 8% Cumulative Reedemable Preference Shares of Rs 10/- each fully paid up. These Preference Shares carry cumulative dividend @8% p.a. 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. The Preference shares are redeemable at par at the end of 5 years from the date of allotment. However, the Company has an option to redeem these shares at any time after the end of 6 months from the date of allotment. The preference shareholders have a preference vis-a-vis equity shareholders with respect to any dividend that may be declared by the Company as well as with regard to redemption of capital in the event of liquidation.

c) Shares allotted as fully paid up pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding) 257,880,150 equity shares of Rs1/- each were allotted on May 10, 2011, as fully paid up to the shareholders of Triveni Engineering & Industries Ltd (TEIL) in the ratio of one equity share for every one equity share held by them in TEIL, pursuant to the Scheme.

Nature of provisions

Warranties: The Company gives warranties on certain products and services, undertaking to repair the items that fail to perform satisfactorily during the warranty period. Provisions made as at March 31,2012 represent the amount of expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within the period of two years.

Liquidated damages: In respect of certain products, the Company has contractual obligations towards customers for matters relating to delivery and performance. The provisions represent the amount estimated to meet the cost of such obligations. The timing of the outflow is expected to be within one year.

Cost to completion: The provision represents costs of materials and services, including balancing of plant, required for integration of turbine package at site, prior to commissioning.

1. Contingent Liabilities (to the extent not provided for)

a) Claims against the Company not acknowledged as debts:

(Rs in Million)

S.No particulars Amount of contingent Liability Amount

1 Excise duty 39.68 26.15

(39.45) (26.15)

2 Service tax 12.80 -

(5.21) (-)

3 Others 2.08 -

(2.08) (-)

Total 54.56 26.15

(46.74) (26.15)

Excise duty: The outflow arising from these claims is uncertain. Such outflow, if any, will be after adjusting reimbursement of Rs 8.06 Million received from customers (Previous year: likely reimbursement of Rs 12.02 Million) in respect of central excise demand on account of denial of benefit under Notification No. 6/2000 issued by the Central Government under Section 5A(1) of the Central Excise Act,1944.

a) The amounts shown above represent the best estimates arrived at on the basis of available information. The uncertainties, possible payments and reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal position against such disputes.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for : Rs 0.29 Million (Rs 72.34 Million) after adjusting advances paid amounting to Rs 0.10 Million (Rs14.45 Million). The Company has also made a commitment to purchase 25 acres of industrial land near Bangalore and paid Rs 50.12 Million (Rs 0.12 Million) as advance. The total amount of commitment in this respect is not determinable as the allotment and price are yet to be finalised by Karnataka Industrial Areas Development Board.

3. Title to certain assets vested in the Company under the Scheme of Arrangement and arising out of business conducted till the date the Scheme became effective, could not be transferred to the name of the Company. Hence, these assets are being held in trust, by Triveni Engineering & Industries Ltd. The requisite duties, if any, on determination thereof by the Authorities, shall be paid and accounted for by the Company appropriately.

4. Pursuant to the Employee Stock Option Scheme (ESOP 2009) framed by Triveni Engineering & Industries Ltd. (demerged company), 2,00,000 stock options had been granted to certain eligible employees of the demerged company including certain employees of the demerged undertaking. The stock options were granted on April 30, 2010 at a grant price of Rs 108.05 per option, at the then prevailing market price of the shares of the demerged company. The options had a graded vesting period - 50% after 12 months and the balance after 24 months from the date of grant and such options were to be exercised within 2 years from the date of vesting.

Consequent to the demerger of the Turbine Business (demerged undertaking) of the demerged company and vesting of business in the Company, all the employees of the demerged undertaking have become employees of the Company. Pending receipt of necessary approvals/clarifications from the Securities and Exchange Board of India ("SEBI")/Bombay Stock Exchange/National Stock Exchange under the SEBI Guidelines, to give effect to the entitlements to stock options as a result of the demerger, such options granted have not been considered or accounted for in the financial statements of the Company.

5. i) The Company has taken various residential and office premises under operating leases. These are not non-cancellable and the unexpired period ranges between 6 months and 3 years and are renewable by mutual consent. The Company has given refundable interest- free security deposits under certain agreements.

a) Lease payments under operating leases of Rs 5.43 Million (Rs 3.26 Million) are recognised in the statement of profit and loss under "Rent" in Note No 24.

b) There are no minimum future lease payments as there are no non-cancellable operating leases.

ii) The Company has also given certain portions of its office premises under cancellable as well as non-cancellable operating leases. These leases are extendable by mutual consent and on mutually agreeable terms. The gross carrying amount, accumulated depreciation and depreciation recognised in the statement of profit and loss in respect of such portion of the leased premises are not separately identifiable. There is no impairment loss in respect of such premises. No contingent rent has been recognised in the statement of profit and loss. Future minimum lease payments under non-cancellable leases are as under:

6. The Company primarily operates in one business segment - Power Generating Equipment and Solutions. There are no reportable geographical segments.

b) Particulars of unhedged foreign currency exposures as at the balance sheet date Import trade payable

1. US$ 602,747 (Rs 31.06 Million) [Prev. Yr. : US$ 262,655 (Rs 1.18 Million)]

2. Euro 175,333 (Rs 12.11 Million) [Prev. Yr. : Euro 314,482 (Rs 20.12 Million)]

3. CHF 20,845 (Rs 1.20 Million) [Prev. Yr. : CHF 29,500 (Rs 1.46 Million)]

4. GBP 88,246 (Rs 7.29 Million) [Prev. Yr. : GBP 16,537 (Rs 1.20 Million)]

5. JPY 19,607,878 (Rs 12.39 Million) [Prev. Yr. : JPY 33,187,484 (Rs 18.20 Million)]

Export trade receivable

1. US$ Nil (Rs Nil) [Prev. Yr. : US$ 34,661 (Rs 1.53 Million)]

2. Euro Nil (Rs Nil) [Prev. Yr.: Euro 24,711 (Rs 1.54 Million)]

7. The Company has incurred an expenditure of Rs 42.78 Million (Rs 20.10 Million) including capital expenditure of Rs 6.93 Million (Rs 3.72 Million) in respect of research and development activities.

8. The Company has made provisions for employee benefits in accordance with the Accounting Standard (AS) 15 "Employee Benefits" During the year, the Company has recognised the following amounts in its financial statements:

9. In view of the vesting of the turbine business in the Company with effect from October 1, 2010 under the Court approved Scheme of Arrangement, the figures for the financial year ended March 31, 2011 include the operations of the turbine business for a period of six months. Accordingly, the performance for the current year is not comparable with that of the earlier year.

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