Pursuant to the directions of the Hon'ble National Company Law Tribunal ('NCLT'), the Company's books of accounts were re-casted and re-audited for the financial years 2014-15 to 2018-19. The said re-casted accounts were taken on record by the NCLT on 26 October, 2021 and consequential revision of books of accounts for financial years 2019-20 and 2020-21 were also performed by the Company. The Company had filed an application with the Central Board of Direct Taxes ('CBDT') seeking its approval to revise the returns of income based on the re-casted / revised books of accounts. As the time limit for the same had elapsed the Company had filed an application u/s 119 of the Income Tax Act, 1961 for condonation of delay for filing of revised returns for the financial years 2014-15 to 2019-20. The CBDT vide its Order dated 29 February, 2024 had rejected the Company's application. Against the said rejection order, the Company had filed Writ Petition before the Hon'ble Bombay High Court. This petition was heard before the Hon'ble Bombay High Court on 30 April, 2024. While writen copy of the order on the matter is awaited, based on communication from the legal counsels received by the Company, the Court has disposed off the above writ petition and pronounced the following directions:

(a)    Allowing the Company to file its revised returns of income based on re-casted / revised accounts for the financial year 2014-15 to 2019-20 within 30 days from the date of receipt of order and directing the income tax department to complete the assessment of the same before 28 February, 2025.

(b)    Holding that the assessment orders passed for the financial years 2014-15 to 2016-17 does not survive and this has the effect of tax demands aggregating to ' 653.57 crores getting extinguished.

The net deferred tax assets of ' 152.80 crores (as at 31 March, 2023'434.17 crores) includes deferred tax assets of ' 194.59 crores (as at 31 March, 2023'445.32 crores) related to tax losses. Based on the future forecast and current economic conditions in India, there is reasonable certainty that the deferred tax assets on tax losses are eligible to be carried forward till assessment year 2029-30, will be realised before their expiry.

During the year, the Company has issued following equity shares under employee stock option scheme:

(i)    201780 equity shares of the face value ' 2 each at a price of ' 156.20 (including premium) per equity share, for an aggregate consideration

of ' 3.15 crores.

During the year ended 31 March, 2023, the Company has issued following equity shares under preferential allotment and employee stock option scheme:

(i)    85233645 equity shares of the face value of ' 2 each at a price of ' 8.56 (including premium) per equity share, for an aggregate consideration of ' 72.96 crores on conversion of 85233645 warrants held by Tube Investments of India Limited ('TII') into equity share.

(ii)    54760 equity shares of the face value ' 2 each at a price of ' 156.20 (including premium) per equity share, for an aggregate consideration of ' 0.86 crores.

(b) Terms / rights attached to equity shares:

The Company has one class of share capital, i.e., equity shares having face value of ' 2 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The Company declares and pays dividend 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.

(a)    Dividend paid and proposed:

The Company has declared and paid interim dividend of ' 1.30 per share for the financial year 2023-24 (previous year ' 1.50 per share).

(b)    Nature and purpose of items in other equity:

(i)    Retained Earnings:

Retained earnings are the profits that the Company has earned till date and includes any transfers to general reserve, dividends or other distributions paid to shareholders.

(ii)    General Reserve:

General reserve comprises of transfer of profits from retained earnings for appropriation purpose, the reserves can be distributed / utilised by the Company in accordance with the Companies Act, 2013.

(iii)    Capital reserve:

Capital reserve mainly represents the amount recognised on demerger of consumer product business and can be utilised in accordance with the provisions of the Companies Act, 2013.

(iv)    Capital redemption reserve:

Capital redemption reserve was created on buy back of shares. The Company may issue bonus shares to its members out of the capital redemption reserve.

(v)    Securities premium:

Securities premium reserve is used to record the premium on issue of shares and can be utilised in accordance with the provisions of the Companies Act, 2013.

(vi)    Share warrant money:

Share warrant money (as disclosed in standalone statement of changes in equity) represents amount received against instruments carrying right exercisable by the warrant holder to subscribe to one equity share per warrant at a specific fixed price within specified period from date of allotment.

(vii)    Share options outstanding account:

Share options outstanding account represents fair value of the options granted which is to be expensed out over the life of the vesting period as employee compensation costs reflecting period of receipt of service.

(a)    Intercompany loan from a subsidiary amounting to ' 2.69 crores (as at 31 March, 2023'2.87 crores) at interest rate of 7.5% p.a. and is repayable in October 2024, hence as at 31 March, 2024 the same has been reclassified to current financial liabilities - borrowings.

(b)    Quarterly returns to bank:

The quarterly returns submitted to the banks by the Company during the year till 31 March, 2024 and previous year 31 March, 2023 are in agreement with books of accounts.

Intercompany loan from a subsidiary amounting to ' 2.69 crores (as at 31 March, 2023'2.87 crores) at interest rate of 7.5% p.a. and is repayable in October 2024, hence as at 31 March, 2024 the same has been reclassified to current financial liabilities - borrowings.

(b) Nature of other provisions:

(i)    Product Warranties: The Company gives warranties on certain products and services in the nature of repairs / replacement, which fail to perform satisfactorily during the warranty period. Provision made represents the amount of the expected cost of meeting such obligation on account of rectification / replacement. The timing of outflows is generally expected to be within a period of two years from the date of balance sheet.

(ii)    Provision for tax related litigations include liability on account of non-collection of declaration forms and other legal matters related to Sales Tax, Excise Duty, Custom Duty, Service Tax and Goods & Service Tax which are in appeal under the relevant Act / Rules. The above provision represents expected future outflows relating to various tax related matters, timing of which cannot be ascertained. The assumptions used to calculate the provisions are based on past experience of similar matters and professional consultations.

(iii)    Provision for other litigation related obligations represents estimated liabilities that are expected to materialise in respect of other matters under litigation. The above provision represents expected future outflows relating to litigation related matters, timing of which cannot be ascertained. The assumptions used to calculate the provisions are based on past experience of similar matters and professional consultations.

Contract assets:

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration and are transferred to trade receivables on completion of milestones and its related invoicing.

Contract liabilities:

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company satisfies the performance obligation.

37. CONTINGENT LIABILITIES AND COMMITMENTS

a)    Matters wherein management has concluded the Company's liability to be probable have accordingly been provided for in the books. (Refer note 27).

b)    Matters wherein management has concluded the Company's liability to be possible have accordingly been disclosed under Note A, Contingent liabilities below.

c)    Matters wherein management is confident of succeeding in these litigations and have concluded the Company's liability to be remote. This based on the relevant facts of judicial precedents and as advised by legal counsel which involves various legal proceedings and claims, in different stages of process.

Notes:

(i)    From time to time, the Company is involved in claims and legal matters arising in the ordinary course of business. Management is not currently aware of any matters that will have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

(ii)    It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at A(a) to A(d) above, pending resolution of the arbitration / appellate proceedings.

(iii)    Sales tax / VAT / goods and service tax cases include disputes pertaining to disallowances of input tax credit and non-submission of various forms with authorities.

(iv)    Excise duty / custom duty / service tax cases include disputes pertaining to inadmissibility of cenvat credit, short payment of service tax on work contracts, refund of excise duty on export of transformers, interest payment on provisional assessment cases, etc.

(v)    Contingent liabilities for Income tax cases pertains disallowance of expenses, etc.

(vi)    The Company has received Assessment Order dated 27 February, 2024 under 143(3) of the Income Tax Act, 1961, pertaining to financial year 2021-22. As per Assessment Order, tax demand payable is ' 188.79 crores. The Company has filed its detailed submissions in response to notices received for the appeal filed before Commissioner of Income Tax (Appeals). Considering the facts, demand raised is mainly on account of disallowance of claims for settlement of Corporate guarantee and non-granting of the of set-off tax losses. The management strongly believes that the demand is not sustainable, bad in law and will be reversed at appellate levels.

Further, as mentioned in Note 9 to the standalone financial statements, the Company had filed Writ Petition before the Hon'ble Bombay High Court for revision of returns for financial years 2014-15 to 2019-20. This petition was heard and conclude before the Hon'ble Bombay High Court on 30 April, 2024. While written copy of the order on the matter is awaited, based on communication from the legal counsels received by the Company in regards to proceeding of hearing in court, the Court has allowed the Company to file its revised returns of income based on re-casted / revised accounts for the said financial years and directed that the proceedings for financial year 2020-21 and financial year 2021-22, would be done after the assessment order for financial year 2019-20 and financial year 2020-21 respectively is passed.

38. LEASES

(i) Company as a lessee

The Company has lease contracts for various items of land, building, furniture and fittings used in its operation. Lease of land generally have lease terms between 30 to 99 years while furniture & fittings and building generally have lease terms between 2 to 9 years. The Company's obligation under the lease is secured by the lessor's title to leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets.

Set out below are the carrying amounts right of use assets and lease liabilities included under financial liabilities and the movements during the year:

(b) Defined benefit plans:

Gratuity:

Under the Gratuity plan operated by the Company, every employee who has completed at least five years of service gets a Gratuity on departure at 15 days on last drawn salary for each completed year of service as per the Payment of Gratuity Act, 1972.

The Company makes annual contributions to the CG Gratuity Fund, which is funded defined benefit plan for qualifying employees. The Board of Trustees of the fund is entrusted with responsibility for the administration of the plan assets and for the investment strategy.

The following table summarizes the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the Balance Sheet.

(i)    The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out as at 31 March, 2024 and as at 31 March, 2023. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

(ii)    Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

(iii)    The salary escalation rate is arrived after taking into consideration the seniority, the promotion and other relevant factors, such as, demand and supply in employment market.

(c) Provident Fund:

During the previous year, the Company had surrendered its Provident Fund to Government administered Employee's Provident Fund Organisation (‘EPFO'). Accordingly, the assets held by trust were sold based on best prevailing market price and amount received on sale of assets was transferred to EPFO. However, there was some shortfall towards employees provident fund liability which had been paid by the company (the employer) to EPFO.

43. SEGMENT REPORTING

The Company has the following reportable segments:

Power Systems    :    Transformer, Switchgear and Turnkey Projects

Industrial Systems    :    Electric Motors, Alternators, Drives, Traction Electronics and SCADA

Identification of segments:

The chief operational decision maker monitors the operating results of its Business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements. Operating segments have been identified on the basis of the nature of products / services and have been identified as per the quantitative criteria specified in the Ind AS.

Segment revenue and results:

The expenses and incomes which are not directly attributable to any business segment are shown as unallowable expenditure (net of unallocated income).

Segment assets and liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipment, trade receivables, cash and cash equivalents and inventories. Segment liabilities primarily include trade payables and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallowable assets / liabilities.

Inter segment transfer:

Inter segment prices are normally negotiated amongst segments with reference to the costs, market price and business risks. Profit or loss on inter segment transfers are eliminated at the Company level.

1    The sales to and purchases from Related Parties are made on terms equivalent to those that prevail in arm's length transactions.

2    During the previous year, the Company has transferred the provident fund to government administered Employee's Provident Fund Organisation ('EPFO') which was earlier managed by "CG Provident Fund".

3    The Company maintains gratuity trust for the purpose of administering the gratuity payment to its employees (CG Gratuity Fund). During the year, the Company contributed ' 10.02 crores (as at 31 March, 2023'5.67 crores).

4    Following subsidiaries are under liquidation process:

i)    CG Sales Network Malaysia Sdn. Bhd.

ii)    PT Crompton Prima Switchgear Indonesia

# During the year, Company has received order with respect to dissolution of one of the Company's wholly owned subsidiaries i.e. CG Power Solutions Limited ('CGPSOL') from the Hon'ble National Company Law Tribunal ('NCLT'). Investment and advances has been written off against provision made earlier.

a)    During the year, reversal of loans and advances on receipt of ' 83.12 crores from subsidiary CG International B.V. and considering sale of assets of QEI LLC (step down subsidiary of the Company), which necessitated a reassessment of the carrying value / recoverability of the value of the related investments in subsidiaries, the Company engaged an independent valuer, to carry out a valuation of the Company's investment in subsidiaries, duly considering recent updates to performance of subsidiaries. Fair valuation of investments was determined by using the discounted cash flow method. Based on this valuation exercise, the carrying value of investment in subsidiaries was determined to be ' 392.57 crores, which consequently resulted in a reversal of impairment of investment of ' 103.82 crores in its subsidiaries CG International B.V. & CG International Holdings Singapore Pte. Limited. (Previous year, provision and its related write off pertain to investment, loan and advances given to subsidiary of ' 1281.90 crores) (Refer note 44).

b)    During the year, the Company has made payment towards settlement of litigations of ' 42.00 crores. (Previous year, the Company has reversed excess provision related to claims under dispute / litigation of ' 31.77 crores).

c)    During the year, the Company has made payment towards compensation to employees pursuant to voluntary retirement scheme for ' 2.45 crores.

d)    During the previous year, the Company had reversed excess provision of ' 24.30 crores towards settlement of corporate guarantee obligation including net foreign exchange gain / (loss).

46. FAIR VALUE MEASUREMENTS

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

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

1.    The Company has not disclosed the fair value of financial instruments such as trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, non-current financial assets - loans, current financial assets - others, current financial liabilities - borrowings, trade payables and other financial liabilities because their carrying amounts are a reasonable approximation of fair value and hence these have not been categorised in any level in the table given below. Further, for financial assets, the Company has taken into consideration the allowances for expected credit losses and adjusted the carrying values where applicable.

2.    The fair values of the quoted investments / units of mutual fund schemes are based on market price / net asset value at the reporting date.

3.    The fair values for loans given are calculated based on discounted cash flows using current lending rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these loans given. Accordingly, fair value of such instruments are not materially different from their carrying values. They are classified as level 2 fair values in the fair value hierarchy.

4.    Fair values of the Company's interest-bearing borrowings are determined by using discounted cash flow method using the current borrowing rates. Fair value of such instruments are not materially different from their carrying values, accordingly non-current borrowings are classified as level 2 fair values in the fair value hierarchy.

5.    The Company has carried all other financial assets and other financial liabilities, other than those disclosed in the table below at amortised cost

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: Quoted (unadjusted) market prices 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.

During the reporting period ending 31 March, 2024 and 31 March, 2023, there were no transfers between Level 1 and Level 2 fair value measurements.

47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's activities expose it to certain financial risks namely credit risk, market risk and liquidity risk. The financial risks are managed in accordance with the Company's risk management policy which has been approved by its Board of Directors.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of risk such as: currency risk, interest rate risk and other price risk. Financial instruments affected by market risk include foreign currency receivables, payables, loans and borrowings and derivative financial instruments.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates. The Company has managed its interest rate risk by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

Foreign currency risk

The Company's functional currency is Indian Rupee. The Company undertakes transactions denominated in foreign currencies and consequently the Company is exposed to foreign exchange risk. Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies. The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies.

Credit risk refers to the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities including loans, foreign exchange transactions and other financial instruments. Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are generally set to manage credit risk. General payment terms include credit period ranging from 45 to 90 days and where applicable, mobilisation advance, progress payments and certain retention money to be released at the end of the project.

Where the loans or receivables are impaired, the Company continues to engage in enforcement activity to attempt to recover the receivable due.

The Company is exposed to credit risk for trade receivables, cash and cash equivalents, investments, other bank balances, loans given, other financial assets and financial guarantees.

In respect of financial guarantees provided by the Company to banks and financial institutions, the maximum exposure which the Company is exposed to is the maximum amount which the Company would have to pay if the guarantee is called upon or in case where settlement is agreed, the settlement amount. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided except as otherwise stated in respect of guarantees where settlement is agreed.

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Maturity profile of financial liabilities:

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

General credit terms for the trade payables are in the range of 30 to 180 days. The Company has access to credit facilities to mitigate any short-term liquidity risk.

Collaterals:

The Company has provided a charge over its current assets as primary security for the banking facilities extended to the Company.

48. CAPITAL MANAGEMENT

For the purposes of the Company's capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company's capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants. The Company monitors capital using gearing ratio, which is total debt divided by total capital plus debt.

51. DETAILS OF LOANS GIVEN, INVESTMENTS MADE AND GUARANTEE GIVEN COVERED UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013.

Loans given and investments made are given under the respective heads and related notes.

53.    OTHER STATUTORY INFORMATION

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

(ii)    The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iii)    The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.

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

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

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

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

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

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

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

(vii)    The Company does not have any transactions with companies which has been struck off by ROC under Section 248 of the Companies Act, 2013.

54.    TRANSFER FROM GENERAL RESERVE TO RETAINED EARNINGS

The Board of Directors of the Company, basis the recommendations of the Audit Committee and Committee of Independent Directors of the Company, at its meeting held on 19 October, 2022 approved the Scheme of Arrangement ("Scheme") between the Company and its shareholders under Section 230 and other applicable provisions of the Companies Act, 2013 ("Act"). The Scheme inter alia provides for capital reorganization of the Company, whereby it is proposed to transfer ' 400 crores from the General Reserves to the Retained Earnings of the Company with effect from the Appointed Date. The Scheme is subject to receipt of regulatory approvals / clearances from the Hon'ble National Company Law Tribunal, Mumbai Bench, the Securities and Exchange Board of India (through BSE Limited and National Stock Exchange of India Limited), BSE Limited and National Stock Exchange of India Limited (collectively referred to as "Stock Exchanges") and such other approval / clearances as may be applicable. BSE Limited has intimated the Company that it can re-submit the scheme with revised rationale. The Company is evaluating the same.

55.    STANDARDS ISSUED BUT NOT YET EFFECTIVE

There are no standards that are notified and yet effective as on the date.

56.    UPDATES ON INVESTIGATION FOR PAST YEARS

The Company is fully co-operating with the ongoing investigation by Serious Fraud Investigation Office (‘SFIO') and other regulatory authorities on the affairs of the Company pertaining to past period and against erstwhile promoters and erstwhile key managerial personnel relating to transactions that took place when the Company was under the control of the erstwhile promoters / management. In respect to this there is no impact on current year financials of the Company.

57.    The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in such software, except that audit trail feature is not enabled for changes made (if any) by users with privileged / administrative access rights to the SAP applications and the underlying database and at the database level insofar as it relates to other accounting software used for payroll processing and approval of discounts. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.

Management is in the process of evaluating appropriate actions having regard to the requirements of the recently issued Implementation Guide on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised) by the Institute of Chartered Accountants of India for enablement of audit trail at the database level for the accounting software used by the Company wherever applicable.

58.    Amounts shown as ' 0.00 represents amount below ' 50,000 (Rupees Fifty Thousand).