2.11 Provisions and contingent liabilities:
i) Provisions:
A provision is recorded when the Company has a
present legal or constructive obligation as a result
of past events, it is probable that an outflow of
resources will be required to settle the obligation
and the amount can be reasonably estimated.
The estimated liability for product warranties
is recorded when products are sold based on
technical evaluation.
Provisions are measured at the present value of
management's best estimate of the expenditure
required to settle the present obligation at the end
of the reporting period. The discount rate used to
determine the present value is a pre-tax rate that
reflects current market assessments of the time
value of money and the risks specific to the liability.
The increase in the provision due to the passage
of time is recognised as finance cost.
ii) Contingent liabilities:
Wherever there is a possible obligation that
arises from past events and whose existence
will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events
not wholly within the control of the entity or a
present obligation that arises from past events
but is not recognised because (a) it is not probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation;
or (b) the amount of the obligation cannot be
measured with sufficient reliability. The Company
does not recognise a contingent liability but
discloses its existence in Financial Statements.
2.12 Cash and Cash equivalents:
Cash and cash equivalents comprise cash on hand
and demand deposits, together with other short-term,
highly liquid investments maturing within 3 months
from the date of acquisition that are readily convertible
into known amounts of cash and which are subject to
an insignificant risk of changes in value.
2.13 Cash flow statement
Cash flows are reported using the indirect method,
whereby profit / (loss) before exceptional items and tax
is adjusted for the effects of transactions of non-cash
nature and any deferrals or accruals of past or future
receipts or payments. In the cash flow statement, cash
and cash equivalents includes cash in hand, cheques
on hand, balances with banks in current accounts and
other shortterm highly liquid investments with original
maturities of 3 months or less, as applicable.
2.14 Earnings per share
Basic earnings per equity share is calculated by dividing
the total profit for the period attributable to equity
shareholders (after deducting attributable taxes) by the
weighted average number of equity shares outstanding
during the period. The weighted average number of
equity shares outstanding during the period is adjusted
for events including a bonus issue, bonus element in
a rights issue to existing shareholders, share split and
reverse share split (consolidation of shares). In this
scenario, the number of equity shares outstanding
increases without an increase in resources due to
which the number of equity shares outstanding before
the event is adjusted for the proportionate change in
the number of equity shares outstanding as if the event
had occurred at the beginning of the earliest period
reported.
2.15 Leases:
The Company's lease asset classes primarily consist of
leases for land and buildings. The Company assesses
whether a contract contains a lease, at inception of
a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the
Company assesses whether: (i) the contract involves
the use of an identified asset (ii) the Company has
substantially all of the economic benefits from use of
the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and
low value leases. For these short-term and low value
leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the
term of the lease.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country
of domicile of these leases. Lease liabilities are re¬
measured with a corresponding adjustment to the
related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a
termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
Amendment to Ind AS H6 - Leases:
On 9th September, 2024, the Ministry of Corporate
Affairs notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024. The
amendments to Ind AS 116 clarifies the requirements
that a seller-lessee uses in measuring the lease
liability arising in a sale and leaseback transaction,
to ensure the seller-lessee does not recognise any
amount of the gain or loss that relates to the right of
use it retains. The amendment is intended to improve
the requirements for sale and leaseback transactions
in Ind AS 116 and will not change the accounting for
leases unrelated to sale and leaseback transactions.
These amendments are effective for annual reporting
periods beginning on or after 1st April, 2024, and are
to be applied retrospectively, with earlier application
permitted. The adoption of these amendments to Ind
AS 116 did not have any impact on the Standalone
Financial Statements of the Company.
2.16 Financial instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets
other than equity instruments are classified into
categories: financial assets at fair value through profit
or loss and at amortised cost. Financial assets that are
equity instruments are classified as fair value through
profit or loss or fair value through other comprehensive
income. Financial liabilities are classified into financial
liabilities at fair value through profit or loss or amortised
cost. Financial instruments are recognised on the
balance sheet when the Company becomes a party to
the contractual provisions of the instrument.
At Initial recognition, the Company measures a
financial asset at its fair value plus (in the case of a
financial asset not at fair value through profit or loss)
transaction cost that are directly attributable to the
acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or
loss are expensed in profit or loss. Purchases or sales
of financial assets that require delivery of assets within
a time frame established by regulation or convention in
the market place (regular way trades) are recognised on
the trade date, i.e., the date that the Company commits
to purchase or sell the asset.
i) Classification and subsequent measurement of
financial assets
For the purpose of subsequent measurement
financial assets are classified and measured
based on the entity’s business model for managing
the financial asset and the contractual cash flow
characteristics of the financial asset at:
a) Amortised cost
b) Fair value through other comprehensive
income (FVOCI) or
c) Fair value through profit and loss (FVTPL)"
All financial assets are reviewed for impairment
at least at each reporting date to identify whether
there is any objective evidence that a financial
asset or a group of financial assets is impaired.
Different criteria to determine impairment are
applied for each category of financial assets,
which are described below.
a) Financial asset at amortised cost
Assets that are held for collection of
contractual cash flows where those cash
flows represent solely payments of principal
and interest are measured at amortised cost.
These assets are measured subsequently at
amortised cost using the effective interest
method. The loss allowance at each reporting
period is evaluated based on the expected
credit losses for next 12 months and credit
risk exposure. The Company shall also
measure the loss allowance for a financial
instrument at an amount equal to the lifetime
expected credit losses if the credit risk on
that financial instrument has increased
significantly since initial recognition.
b) Financial asset at fair value through other
comprehensive income (FVOCI)
Assets that are held within a business
model where the objective is both collecting
contractual cash flows and selling financial
assets along with the contractual terms
giving rise on specified dates to cash flows
that are solely payments of principal and
interest in the principal amount outstanding.
At initial recognition, the Company, based
on its assessment, makes an irrevocable
election to present in other comprehensive
income the changes in the fair value of an
investment in an equity instrument that is
not held for trading. These selections are
made on an instrument-by-instrument
(i.e., share-by-share) basis. If the Company
decides to classify an equity instrument as
at FVOCI, then all fair value changes on the
instrument, excluding dividends, impairment
gains or losses and foreign exchange
gains and losses, are recognised in other
comprehensive income. There is no recycling
of the amounts from OCI to profit or loss,
even on sale of investment. The dividends
from such instruments are recognised in
statement of profit and loss.
The fair value of financial assets in this
category are determined by reference
to active market transactions or using a
valuation technique where no active market
exists.
The loss allowance at each reporting period
is evaluated based on the expected credit
losses for next 12 months and credit risk
exposure. The Company shall also measure
the loss allowance for a financial instrument
at an amount equal to the lifetime expected
credit losses if the credit risk on that financial
instrument has increased significantly since
initial recognition. The loss allowance shall be
recognised in other comprehensive income
and shall not reduce the carrying amount of
the financial asset in the balance sheet.
c) Financial asset at fair value through profit
and loss (FVTPL)
Financial assets at FVTPL include financial
assets that are designated at FVTPL upon
initial recognition and financial assets that
are not measured at amortised cost or at fair
value through other comprehensive income.
All derivative financial instruments fall into
this category, except for those designated
and effective as hedging instruments, for
which the hedge accounting requirements
apply. Assets in this category are measured
at fair value with gains or losses recognised
in profit or loss. The fair value of financial
assets in this category are determined by
reference to active market transactions or
using a valuation technique where no active
market exists.
The loss allowance at each reporting period
is evaluated based on the expected credit
losses for next 12 months and credit risk
exposure. The Company shall also measure
the loss allowance for a financial instrument
at an amount equal to the lifetime expected
credit losses if the credit risk on that financial
instrument has increased significantly since
initial recognition. The loss allowance shall
be recognised in profit and loss.
d) De-recognition of financial assets
A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognized
(i.e. removed from the Company’s standalone
balance sheet) when:
a. The rights to receive cash flows from
the asset have expired, or
b. The Company has transferred its rights
to receive cash flows from the asset
or has assumed an obligation to pay
the received cash flows in full without
material delay to a third party under
a 'pass-through’ arrangement; and
either (i) the Company has transferred
substantially all the risks and rewards of
the asset, or (ii) the Company has neither
transferred nor retained substantially all
the risks and rewards of the asset, but
has transferred control of the asset.
When the Company has transferred its
rights to receive cash flows from an
asset or has entered into a passthrough
arrangement, it evaluates if and to
what extent it has retained the risks
and rewards of ownership. When it
has neither transferred nor retained
substantially all of the risks and rewards
of the asset, nor transferred control of
the asset, the Company continues to
recognise the transferred asset to the
extent of the Company’s continuing
involvement. In that case, the Company
also recognizes an associated liability.
The transferred asset and the associated
liability are measured on a basis that
reflects the rights and obligations that
the Company has retained.
Continuing involvement that takes the
form of a guarantee over the transferred
asset is measured at the lower of
the original carrying amount of the
asset and the maximum amount of
consideration that the Company could
be required to repay
ii) Financial liabilities
a) Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge,
as appropriate. All financial liabilities are
recognised initially at fair value and, in the
case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Company’s financial liabilities include
trade and other payables
b) Subsequent measurement
The measurement of financial liabilities
depends on their classification, as described
below:
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are incurred for
the purpose of repurchasing in the near
term. This category also includes derivative
financial instruments entered into by the
Company that are not designated as hedging
instruments in hedge relationships as
defined by Ind AS 109 Financial Instruments
Gains or losses on liabilities held for trading
are recognised in the profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated as such at the initial
date of recognition, and only if the criteria
in Ind AS 109 are satisfied. For liabilities
designated as FVTPL, fair value gains/ losses
attributable to changes in own credit risk are
recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However,
the Company may transfer the cumulative
gain or loss within equity. All other changes
in fair value of such liability are recognised in
the statement of profit or loss. The Company
has not designated any financial liability as at
fair value through profit and loss.
De-recognition of financial liabilities
A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as the derecognition
of the original liability and the recognition of a
new liability. The difference in the respective
carrying amounts is recognised in the
Statement of Profit and Loss.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issuance of new ordinary shares and share
options and buyback of ordinary shares are
recognised as a deduction from equity, net of
any tax effects.
Offsetting of financial instruments
Financial assets and financial liabilities
are offset and the net amount is reported
in the balance sheet if there is a currently
enforceable legal right to offset the
recognised amounts and there is an intention
to settle on a net basis, to realise the assets
and settle the liabilities simultaneously
Fair value of financial instruments
In determining the fair value of its financial
instruments, the Company uses a variety of
methods and assumptions that are based
on market conditions and risks existing at
each reporting date. The methods used to
determine fair value include discounted cash
flow analysis, available quoted market prices,
and dealer quotes. All methods of assessing
fair value result in general approximation of
value, and such value may never actually be
realized. For financial assets and liabilities
maturing within one year from the Balance
sheet date and which are not carried at fair
value, the carrying amounts approximate
fair value due to the short maturity of these
instruments
c) Fair value measurement
Fair value is the price that would be received
to sell an asset or paid to transfer a liability
in an orderly transaction between market
participants at the measurement date. The
fair value measurement is based on the
presumption that the transaction to sell the
asset or transfer the liability takes place
either:
- In the principal market for the asset or
liability, or
- In the absence of a principal market, in
the most advantageous market for the
asset or liability
The principal or the most advantageous
market must be accessible by the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when pricing
the asset or liability, assuming that market
participants act in their economic best
interest.
A fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic
benefits by using the asset in its highest and
best use or by selling it to another market
participant that would use the asset in its
highest and best use.
The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the use of
relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised within the fair
value hierarchy, described as follows, based
on the lowest level input that is significant to
the fair value measurement as a whole:
Levell 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities
Levell 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities
Level 3 - Inputs for the assets and liabilities
that are not based on observable market
data (unobservable inputs)
d) Impairment of financial assets
In accordance with Ind AS 109 Financial
Instruments, the Company applies expected
credit loss (ECL) model and specific
identification method based on the credit
risk for measurement and recognition of
impairment loss for financial assets.
The Company tracks credit risk and changes
thereon for each customer. For recognition
of impairment loss on other financial assets
and risk exposure, the Company determines
that whether there has been a significant
increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to
provide for impairment loss, except for trade
receivables.
ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the
cash flows that the entity expects to receive
(i.e., all cash shortfalls), discounted at the
original EIR. When estimating the cash flows,
an entity is required to consider
- All contractual terms of the financial
instrument over the expected life of
the financial instrument. However, in
rare cases when the expected life of
the financial instrument cannot be
estimated reliably, then the entity uses
the remaining contractual term of the
financial instrument.
- Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms.
The Company uses default rate for credit risk
to determine impairment loss allowance on
portfolio of its trade receivables
Trade receivables
The Company applies approach permitted
by Ind AS 109 Financial Instruments,
which requires expected lifetime losses to
be recognised from initial recognition of
receivables. Default is considered to exist
when the counter party fails to make the
contractual payment within 90 days of
when they fall due. A trade receivable is
considered to be credit impaired when the
management considers the amount to be
non recoverable.
Other financial assets
For recognition of impairment loss on other
financial assets and risk exposure, the
Company determines whether there has
been a significant increase in the credit risk
since initial recognition and if credit risk has
increased significantly, impairment loss is
provided.
The amount of expected credit losses
(or reversal) that is required to adjust the
loss allowance at the reporting date to the
amount that is required to be recognized is
recognized as an impairment gain or loss in
the Statement of Profit and Loss.
e) Impairment of non-financial assets
For impairment assessment purposes,
assets are grouped at the lowest levels for
which there are largely independent cash
inflows (cash-generating units). As a result,
some assets are tested individually for
impairment and some are tested at cash¬
generating unit level.
An impairment loss is recognised for the
amount by which the asset’s (or cash¬
generating unit’s) carrying amount exceeds
its recoverable amount, which is the higher
of fair value less costs of disposal and
value in-use. To determine the value-in-use,
management estimates expected future
cash flows from each cash generating unit
and determines a suitable discount rate in
order to calculate the present value of those
cash flows. The data used for impairment
testing procedures are directly linked to the
Company’s latest approved budget, adjusted
as necessary to exclude the effects of future
reorganisations and asset enhancements.
Discount factors are determined individually
for each cashgenerating unit and reflect
current market assessments of the time
value of money and asset specific risk
factors.
All assets are subsequently reassessed
for indications that an impairment loss
previously recognised may no longer exist.
An impairment loss is reversed if the asset’s
or cashgenerating unit’s recoverable amount
exceeds its carrying amount.
2.17 Government grants
Government grants are not recognised until there is
reasonable assurance that the Company will comply
with the conditions attaching to them and that the
grants will be received.
| Segment information
Operating segments are reported in a manner
consistent with the internal reporting provided to the
Chief operating decision maker. The Managing Director
of the Company has been identified as being the chief
operating decision maker.
In accordance with Ind AS 108, Operating Segments,
the Company has identified manufacture and sale of
Ignition Systems for auto industry with special focus
on two-wheeler and support with the collaborators, the
Company has a developed research and development
centre recognised by DSIR, Government of India. As per
Ind AS 108 Operating Segments, the Chief Operating
Decision Maker (CODM) evaluates the Company’s
performance and allocates resources based on an
analysis of various performance indicators by business
segments. Accordingly, the Company has identified
only one segment as reportable segment for the year
ended 31st March, 2025 and 31st March, 2024.
General Reserve:
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose. As the
general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive
income, items included in the general reserve will not be reclassified subsequently to profit or loss.
Retained Earnings:
The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the separate
financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts
reported above are not distributable in entirety.
Reserve for equity instruments through other comprehensive income:
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive
income. These changes are accumulated within the FVTOCI equity investments reserve within equity. The Company transfers
amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
9| Employee benefits
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a
lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount on the
respective employee's salary and the tenure of employment with the Company. The employee benefits notified under section
133 of the Companies Act, 2013 are given below:
a) Defined contribution plan:
i) Provident fund
Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions
along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the
employee and the Company make monthly contributions to the Employee's Provident Fund scheme administered by
Government of India equal to a specified percentage of the covered employee's salary.
ii) Superannuation fund
Eligible employees receive benefits from the superannuation fund, which is a defined contribution plan. Aggregate
contributions along with interest theron are paid at retirement, death, incapacitation or termination of employment.
The Company makes yearly contributions to the Superannuation Fund Scheme administered by Life Insurance
Corporation of India. Liabilities with regard to the Superannuation fund are determined by the Life Insurance
Corporation of India as the balance sheet date, based upon which, the Company contributes all the ascertained
liabilities to the Life Insurance Corporation of India's Employees Superannuation Fund.
b) Leave encashment:
The Employees of the Company are entitled to compensated absence. Employees can carry forward a portion of the
unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or
termination of employment for the unutilized accrued compensated absence for a maximum of 52 days (up to the age of
50) and 90 days (age beyond 50). The Company records an obligation for compensated absences in the period in which
employees render services that increase this entitlement. The Company measures the expected cost of compensated
absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has
accumulated at the balance sheet date. The liability has been actuarially determined and accounted in the books.
c) Defined benefit Plan:
Gratuity:
The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount
calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit
vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on
termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company
provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India
(LIC).
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and
salary risk.
Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is
determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep
market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans,
investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and
Asset Backed, Trust Structured securities as per notification of Ministry of Finance.
Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an
increase in the return on the plan’s investments.
Longevity risk: 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 and after their employment. An increase in the life expectancy of the plan
participants will increase 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.
i) The Company has received a favourable order from Gurugram District court in respect of a claim for compensation for
a land acquired from the Company in 2010 to the extent of ' 445 Lakhs plus interest as specified in the order. The
Company’s execution petition is in the process of being heard and concluded. The said compensation will be accounted
on conclusion of the matter.
ii) The Company has received an eligibility letter during the year on 24th March, 2025, as per which the Company is entitled
to receipt of capital subsidy for investments from SIPCOT. As per the eligibility letter, the Company has to enter into the
Fair value measurements
(i) Fair value hierarchy
Financial assets and financial liabilities measured at fair value in the statement of financial position are classified into
three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to
the measurements:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
a) Level 1: level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed
equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock
exchanges is valued using the closing price as at the reporting period
b) Level 2: level 2 hierarchy includes mutual funds. The mutual funds are valued using the closing NAV provided by
the fund management Company at the end of each reporting year.
c) Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3
d) The investments in unlisted equity instruments are not held for trading. Instead, they are held for medium or
long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these
investments in equity instruments as at FVTOCI as the directors believe that this provides a more meaningful
presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately
in profit or loss.
e) The Company has invested in the energy generating companies as per the regulation of Electricity Act. Although
the investments are classified as "Equity" shares, as per IND AS 32 -"Financial Instruments, Presentation" the
definition of "equity" requires an entitlement in the residual interest in net assets whereas the Company as per
share holder agreement requires to transfer the shares at cost. However, no changes are given effect to the
above as per IND AS 32, since the regulation of Electricity Act does not permit distribution in any other manner.
IND AS 109 requires an equity share other than investments in subsidiaries, associates and joint ventures to be
valued at "Fair Value Through Other Comprehensive Income" if elected initially or valued at "Fair Value Through
Profit and Loss Account". However, on account of what is stated in the previous paragraph, these shares are
shown at cost and the fair value is deemed to be the cost.
f) The Company has invested in the equity shares of Lucas TVS Limited. This investment is considered to be a
level 3 fair valuation. Valuation technique used - Market Approach: Comparable companies Method ("CCM")
(EV/EBITDA Multiple i.e. Enterprise Value/Earnings Before Interest Tax Depreciation and Amortization multiple).
g) Significant unobservable inputs - EV/EBITDA Multiple at 8x (Previous Year - EV/EBITDA Multiple at 9x)
Relationship of Unobservable Inputs to Fair Value - A slight increase or decrease in the multiple will result in
an increase or decrease in the fair value. A decrease in the multiple by 0.5x would result in a decrease in the
fair value by ' 1,350 Lakhs and an increase in the multiple by 0.5x would result in a increase in the fair value by
' 1,350 Lakhs .
h) The Company has not disclosed the fair values for loans, cash and bank balances, trade receivables, other
financial assets, trade payables, and other financial liabilities because their carrying amounts are a reasonable
approximation to the fair value.
i) There have been no transfers between levels 1 and 2 during the year.
] Financial risk management
Financial Risk Management Framework
Company’s principal financial liabilities comprise trade payables and Other financial liabilities. The main purpose of these
financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include Investments, Trade
receivables, loans, cash and bank balances and other financial assets that derive directly from its operations
Risk Exposures and Responses
The Company is exposed to market risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company’s
senior management oversees the management of these risks. The Company’s senior management assesses the financial risks
and the appropriate financial risk governance framework in accordance with the Company’s policies and risk objectives. The
Board of Directors review and agree on policies for managing each of these risks, which are summarised below.
i) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company has adopted policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts
with entities that are rated the equivalent of investment grade and above. The Company uses other publicly available
financial information and its own trading records to rate its major customers. The Company’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread
amongst approved counterparties.
Trade receivables consist of a four to five major OEMs and large number of small customers, spread across diverse
industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
At 31st March, 2025, the Company did not consider there to be any significant concentration of credit risk which had not
been adequately provided for. The carrying amount of the financial assets recorded in the financial statements represents
the maximum exposure to credit risk.
Other financial assets mainly comprises of rental deposits, security deposits and loans which are given to landlords or
other governmental agencies in relation to contracts executed and related parties are assessed by the Company for credit
risk on a continuous basis.
ii) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market prices comprise three types of risk i.e. interest rate risk, currency risk, and Commodity risk.
Interest rate risk
The Company has no outstanding borrowings and investment in bonds at fixed rates. Accordingly, no Interest risk rate is
perceived.
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because
of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e.
imports of materials, recognised assets and liabilities denominated in a currency that is not the Company’s functional
currency. The Company has not entered into any derivative contracts to hedge its foreign currency exposure during the
reporting period.
Commodity Risk
The Company has commodity price risk, primarily related to the purchases of Steel, Aluminium and Copper. However, the
Company do not bear significant exposure to earnings risk, as such changes are included in the rate-recovery mechanisms
with the customers.
iii) Liquidity risk
The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from
operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is
sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
] Additional regulatory information as required by Schedule III to the Companies Act, 2013
a) The Company does not have any benami property, where any proceeding has been initiated or pending against the
Company for holding any benami property.
b) The Company did not have any transactions with companies struck off.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
d) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(intermediaries) with the understanding that the intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Company ( ultimate beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
f) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the funding party (ultimate beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries,
g) The Company does not have any transaction which is not recorded in the books of account that has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or
any other relevant provisions of the Income Tax Act, 1961).
h) The Company has not been declared willful defaulter by any bank or financial Institution or other lender.
i) The Company does not have any scheme of arrangements which have been approved by the competent authority in terms
of sections 230 to 237 of the Act.
j) The Company has complied with the number of layers prescribed under of Section 2(87) of the Act read with the Companies
(Restriction on number of Layers) Rules, 2017.
k) The Company has no borrowings, accordingly no return is required to be furnished on periodical basis to banks, financial
institutions or others.
Audit Trial:
The Company has deployed various accounting software for maintaining its books of account for the year ended 31st March,
2025, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all
relevant transactions recorded in the software except that audit trail feature was not enabled at the database level to log any
direct data changes with respect to Payroll software.. This has not resulted in any impact on the operating effectiveness of
the Company’s internal financial controls. Adequate alternate control exists to ensure that the internal financial controls over
financial reporting have operated effectively throughout the financial year. The audit trail that was enabled and operated for
the year ended 31st March, 2024, has been preserved by the Company as per the statutory requirements for record retention.
] Material reclassification:
Pursuant to the opinion issued by the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India in
February 2025, the Company has reclassified employee-related payables pertaining to the previous year, amounting to ' 788
Lakhs, from 'Trade Payables’ to 'Other Financial Liabilities’ to ensure alignment with the presentation requirements under Ind
AS and Schedule III to the Companies Act, 2013.
J Particulars of Loans, Guarantees or Investments covered under Section 186(4) of the Companies Act, 2013 :
(i) Advances in the nature of loans given to Companies as at 31st March, 2025: ' Nil (As at 31st March, 2024: ' Nil)
(ii) Details of investments made under Section 186 of the Companies Act, 2013 are disclosed in Note 8. There are no loans/
guarantees issued under Section 186 of the Companies Act, 2013 read with rules issued thereunder.
] Approval of Financial Statements
The Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed
that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised
in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets
in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial
statements at its meeting held on 30th May, 2025.
J Events after the reporting period
No adjusting or significant non-adjusting events have occurred since the reporting date.
For and on behalf of the Board of Directors of
India Nippon Electricals Limited
CIN: L31901TN1984PLC011021
T K Balaji Arvind Balaji
Chairman Managing Director
DIN:00002010 DIN:00557711
Elango Srinivasan S Logitha
Chief Financial Officer Company Secretary
Place: Chennai
Date: 30th May, 2025
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